CIF3004

Services Marketing

LECTURE 3 (PART 1)
POSITIONING SERVICES IN COMPETITIVE
MARKETS

CIF3004 – A.A.MOHDANY 1
 At the end of this lecture, students should be able to:

oUnderstand how the customer, competitor and company analysis

(i.e., the 3 ‘C’s) helps to develop a customer-driven services
marketing strategy.

oKnow the key elements of a positioning strategy (i.e., STP), and

explain why these elements are so crucial for service firms to
apply.

oSegment customers on needs first before using other common

bases to further identify and profile the segments.

Lecture 3 oDistinguish between important and determinant attributes for

segmentation.
(P1) Learning oUse different service levels for segmentation.
Objectives oTarget service customers using the four focus strategies for
competitive advantage.

oPosition a service to distinguish it from its competitors.

oUnderstand how to use positioning maps to analyze and develop

competitive strategy.

oDevelop an effective positioning strategy.

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Developing A Services Marketing
Positioning Strategy

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 Positioning a Chain of Childcare Centres Away from the
Competition – The Case of Bright Horizons
• Formed partnerships with companies to
offer an on-site day care centre for
employees with young children
• Offered back-up care when traditional
childcare provider is not available or
accessible, such as:
o When a child’s school or day care
centre is closed;
o Temporary change in work schedule
and needs care during the evening or
Figure 3.1 Happy children at a
weekend hours; or childcare centre
o The regular childcare provider is sick
or otherwise unavailable

Read: Bright Horizons Back-up Care Plan Agreement with UI

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Customer-Driven Services Marketing Strategy
Managers need to think
systematically about all aspects
of the service offering.
This typically begins with an
analysis of
◦ customers,
◦ competitors, and
◦ the company. A point of parity is any area
where your business is the same
This is collectively often referred as your competitors to be a buying
consideration for your customers.
to as the 3 Cs. Point of difference refers to the
factors of products or services that
establish differentiation.

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Customer-Driven Services Marketing Strategy
The STP analysis helps a firm to determine the
services positioning strategy, which are
◦ segmentation,
◦ targeting, and
◦ positioning.

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Customer, Competitor, and Company
Analysis (3 Cs)
I. Customer Analysis
Market Analysis
◦ Establish attractiveness of overall market and potential segments within.
◦ Look at the overall size and growth of
◦ the market,
◦ the margins and profit potential, and
◦ the demand levels and trends affecting the market.
Customer Needs Analysis:
◦ Who are the customers in that market in terms of demographics and
psychographics?
◦ What needs or problems do they have?
◦ What are the jobs-to-be-done from the customer’s perspective?
◦ Are there potentially different groups of customers with differing needs and
who therefore require different service products or different levels of service?
◦ What are the benefits of the service each of these group's values most?

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Customer, Competitor, and Company
Analysis (3 Cs)
II. Competitor Analysis
◦ Identification and analysis of competitors.
◦ Analysis of competitors’ strengths and weaknesses.
◦ Understanding opportunities for differentiation and competitive
advantage.

III. Company Analysis

◦ Identify the organisation’s strengths in terms of
◦ its current brand positioning and image, and
◦ the resources the organisation has.
◦ Examining the organisation’s limitations or constraints.
◦ Understand how an organisation’s values shape the way it does business.

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Segmentation, Targeting, and Positioning (STP)
Elements and Key Concepts of a Services Positioning Strategy
Elements of a Positioning Strategy Key Concepts
Segmentation • Segmenting service markets
• Service attributes and service levels relevant for
segmentation
― Important versus determinant attributes
― Establishing service levels

Targeting • Targeting service markets through four focus strategies:

― Fully focused
― Market focused
― Service focused
― Unfocused

Positioning • Positioning services in competitive markets

• Using positioning maps to plot competitive strategy
• Positioning digital services and platforms
• Developing an effective positioning strategy

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Segmenting Service Markets
• Segmentation is one of the most important concepts in
marketing.
• There are many ways to segment a market, and
marketing experts typically combine and integrate
several approaches.
Demographic segmentation

Psychographic segmentation

Behavioural segmentation

Needs-based segmentation

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Segmenting Service Markets
Individuals have different
needs, and their decision-
making criteria vary
accordingly aka the multi-
attribute approach:
◦ The purpose of using the service
◦ Who makes decision
◦ Timing of use (time of
day/week/season)
◦ Whether service is used alone
or with a group
◦ Composition of that group

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Segmenting Service Markets
◦ Demographic segmentation
◦ based on age, gender and income

◦ Psychographic segmentation
◦ people’s lifestyles, attitudes and
aspirations

◦ Behavioural segmentation
◦ usage based: non-users, light users or
heavy users

◦ Needs-based segmentation
◦ multi-attribute decision models: the
purpose, who makes the decision, the
timing of use (time of day/week/season),
whether the individual is using the service
alone or with a group.

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 Segmenting
Service
Markets
Contiki Tours is an
example of a company
that used demographic
and needs-based
segmentation approaches
as a foundation.

Contiki targets young (demographic)

and fun-loving (needs-
based/emotional needs) travellers

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 Important vs Determinant
Service Attributes for Segmentation
‘Safety’ of an airline, but not usually an
Important Attributes attribute that influences choice because of
availability of several other ‘equally safe’
Attributes that are important to the carriers.
consumer but may not be important for a
buying decision. Such attributes should not
be used as a basis for segmentation.

Determinant Attributes Quality of in-flight service; FFP miles and

loyalty programmes; convenient departure
Attributes where customers see significant times, especially for business travellers.
differences between competing alternatives
and will determine the final purchase. Such
attributes are crucial for segmentation.

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Global Airline Network & Loyalty Programme:
Star Alliance, SkyTeam and oneworld
Star Alliance members

oneworld members

SkyTeam members

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 Some service attributes are easily
quantified, while others are qualitative.

Quantitative Aspects:
Segmentation • Price (according to willingness to pay)
based on • Punctuality of transport services can be
Service Levels expressed in terms of the percentage of flights
arriving within a specified time from the schedule

Qualitative Aspects (subject to

individual interpretation):
• Quality of personal service
• A hotel’s degree of luxury

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Targeting Service
Markets
Companies focus their efforts on those
customers they can serve best — the target
segment

1. Market-focus is the extent to which a

firm serves few or many markets
2. Service-focus describes the extent to
which a firm offers few or many services

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Basic Focus Strategies For Services

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How Should a Firm Select
Which of the Focused
Strategies to Pursue?
This decision relates back to the 3 Cs,
segmentation, and targeting analyses.
A fully focused strategy may work well if a
particular segment has
◦ very specific needs and
◦ requires unique design of the service
environment, service processes, and
interaction with the firm’s frontline employees.

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 Principles of
Positioning Services
Positioning strategy – creating, communicating,
and maintaining distinctive differences that will
be noticed and valued by the customers
Positioning Principles (Jack Trout, 1997):
◦ A company must establish a position in the
minds of its targeted customers.
◦ The position should be singular, providing
one simple and consistent message
◦ The position must set a company apart from
its competitors
◦ A company cannot be all things to all people
— it must focus its efforts.

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 Principles of Positioning Services
The position should be singular, providing one simple and
consistent message.
For decades, Visa, the global digital payments
network, has been driven by a set of ideals
anchored in our vision of being the “best way to
pay and be paid.” This has expanded in recent
years to include “for everyone, everywhere.”
By evolving our famous tagline - “It’s everywhere
you want to be” - the company is recommitting
to these ideals and vision for consumers,
merchants, governments, financial institutions
Visa has one simple message globally and employees with a unified message tailored
to each audience.

Visa Launches “Everywhere You Want to Be,” a Corporate Platform That Reconnects the
Company to Its Heritage (January 13, 2014)

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 Using a Positioning Map to Plot
Competitive Strategy
Positioning maps are tools to visualise competitive
positioning along key aspects of its services
marketing strategy.
A map usually has two attributes, although three-
dimensional models can be used to show three of
these attributes.

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 Example of a Positioning Map
Figure 3.11 Positioning map of business hotels in Belleville (Ontario, Canada):
service level vs. price level

Expensive

Grand
Regency PALACE

Shangri-La
High Moderate
Service Atlantic Service
Sheraton

Italia
Castle
Alexander IV
Airport Plaza
Less Expensive

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Applying the Positioning Map to the
Hotel Industry

Dubai’s Burj Al Arab is favourably

positioned along many determinant
attributes like personal service, level
of physical extravagance, and location

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 Developing An Effective
Positioning Strategy
Basic elements to writing a good positioning statement:
◦ Target audience — the specific group(s) of people that the brand wants to sell to
and serve (e.g., professionals as primary target customers, and employers and
advertisers as secondary target audience).
◦ Frame of reference — the category that the brand is competing in (e.g., in the
social networking space).
◦ Point of Difference — the most compelling benefit offered by the brand that
stands out from its competition (e.g., largest network of professionals and
recruiters to help advance your career, industry knowledge and personal
development).
◦ Reason to believe — proof that the brand can deliver the benefits that are
promised (e.g., our network is many times bigger than that of our nearest
competitor).

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Uber’s Positioning Statement
To (Target audience): Anyone just about anywhere with a
credit card and smartphone who needs a local ride,
Uber is the (Category/Frame of reference): next-generation
taxi service
that (Benefit/Point of difference): provides a simpler, more
convenient and higher quality transportation
experience than conventional taxis
because (Support points/Reason to believe): our app makes
hailing and paying for a ride easy, convenient and
reliable, and our personal vehicles feel less
commercial/industrial.

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Rebranding vs Repositioning

While rebranding deals with outward factors like the overall brand image,
repositioning deals with what's on the inside.

A brand can be repositioned without changing its identity. Repositioning focuses

on the customer perception of the brand relative to the major competitors.

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27
 Rebranding
From ‘healthy food’ to more affordable and
accessible image. Read: Behind dahmakan’s
Drastic Decision To Drop The Healthy Food
Image & Revamp As Pop Meals (Vulcan Post,
2021)

The redesigned logo reflects a new era for

Burger King and its commitment to fresher,
cleaner ingredients is best represented by
looking back to simpler, less processed times.
Read: Burger King Rolls Out Its First Rebrand In
More Than 20 Years (Forbes, 2021)

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28
Repositioning
Spotify was already a well-positioned brand in the market, but a
crisis like the COVID-19 pandemic can reshape business models
and consumer needs.

However, the pandemic caused many advertisers to cut

budgets. As a result, Spotify’s business model–which relies
heavily on revenue from advertisements–faltered.

To successfully reposition the brand, they increased their focus

on original content like podcasts and put enormous effort into
curating playlists from internal experts, external experts and
celebrities. This strategy (re)positioned the company not only as
a music provider, but also a tastemaker and content creator.

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 CIF3004
Services Marketing

LECTURE 3 (PART 2)
DE VELOPING SE RVICE PRODUCTS AND BRANDS:
CORE & SUPPLE ME NTARY ELEMEN TS

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 At the end of this lecture, students should be able to:
oUnderstand what constitutes a service product.
oBe familiar with the Flower of Service model.
oKnow how facilitating supplementary services relate to the core
product.
oKnow how enhancing supplementary services relate to the core
product.
oUnderstand branding at the corporate and individual service
product level.
Lecture 3 oExamine how service firms use different branding strategies.
(P2) Learning oUnderstand how branding can be used to tier service products.
Objectives oDiscuss how firms can build brand equity
oUnderstand what is required to deliver a branded service
experience.
oList the categories of new service development, ranging from
simple style changes to major innovations.
oDescribe how firms can achieve success in new service
development.

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Understanding Service Products
Services are often intangible and not well-defined.

This can make them difficult for customers to understand and,

as a result, difficult for the firm to:
➢position,
➢differentiate,
➢communicate, and
➢sell

It is important to develop powerful service products and

branding to address these challenges.

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Understanding Service Products
The idea is to treat service products as concrete objects, albeit
intangible ones.
This makes it easier for service products to be:
➢developed,
➢configured, something poorly specified
➢bundled, vague

➢branded,
➢priced, poorly poorly
➢sold, and understood communicated
➢delivered to customers.

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Servitisation vs Productisation
Servitisation Productisation
A process of value-creation through bundling service A process of transforming service products into concrete,
provision with manufacturing products. Over the years, well-defined service products through specific
providing services embedded within products’ offerings approaches and tools. Service productisation consists of
has gradually become a fundamental business developing and systemising new or existing services by
constituent for the manufacturing sector. adding product-like features to them.
Examples: Examples:
Volkswagen bought a majority stake in Europcar, a car rental A McDonald’s children birthday party consists of a clearly
service with infrastructure laid out across the European defined bundle that customers can customise based on
continent Why? They see the writing on the wall that “cars as specified modules. McDonald’s children birthday parties
a service” is coming! Rather than try to build it all from are branded as McCelebrations with a logo.
scratch, VW took this route to step into a new market and
attempt to beat out not only other traditional automakers, but
In a hospital, annual health check-up that states exactly
also ride share moguls such as Uber and Lyft.
what is covered, how long it takes, the process, and the
Caterpillar offers a portfolio of services beyond test results, reports and consultation the customer will
production. One such service is the Cat® Product Link, a receive.
remote tracking and monitoring service which provides
clients with updates on the location of equipment, and
preventative maintenance monitoring of components.

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Service performances are experienced rather than owned.

There are physical elements to which the customer takes a

title of ownership (Recap – Lecture 1: The Service-Goods
Tangibility Continuum)

A significant portion of the price paid by customers is for

the value added by the service elements. Understanding
Service
A service product comprises of all the elements of the
service performance.
Products

These elements are both physical and intangible.

They create value for customers.

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Designing service products translates
abstract services into concrete
exchangeable objects.

• are well-developed with specified

features, Benefits of Well-
Service • have well-articulated descriptions,

products:
• offer a clear value proposition,
• have a brand,
Developed
• and have a defined pricing structure and
way of buying.
Service Products

Well- • helps better understand the service

products,
designed • can explain them more effectively, and
• know how to consistently and deliver
service: them system-wide at high quality.

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The Components of a Service Product
Creating a service product requires designing and integrating the
following three components:

Delivery
Processes

The Flower of Service: Core

product surrounded by a cluster of
supplementary services

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The Components of a Service Product
Core Product Supplementary Services Delivery Process
The core product is Supplementary services It is the processes used to
• the main component that augment the core product, deliver both the core product
supplies the desired both facilitating its use and and each of the
experience enhancing its value. supplementary
• or the problem-solving services.
benefit that customers are Facilitating Supplementary
looking for Services
• Information
• Order-taking
• Billing
• Payment
Enhancing Supplementary
Services
• Consultation
• Hospitality
• Safekeeping
• Exceptions

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Facilitating and Enhancing Supplementary Services

Facilitating Services Enhancing Services

Information Consultation

Order-taking Hospitality

Billing Safekeeping

Payment Exceptions

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Facilitating Supplementary Services:
Information
To obtain full value from any good or service,
customers need relevant information which
includes:
o Direction to service site
o Schedules/service hours
o Price information
o Terms and conditions of sale/service
o Advice on how to get the most value from a service
o Warnings and advice on how to avoid problems
o Confirmation of reservations
o Receipts and tickets
o Notification of changes
o Summaries of account activities

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Facilitating Supplementary Services:
Order-Taking
Once customers are ready to buy, a key supplementary element
comes into play, i.e., order-taking, which includes:
◦ Order entry
◦ On-site order entry
◦ Mail/telephone/e-mail/online/mobile app order
◦ Reservations or check-ins
◦ Seats/tables/rooms
◦ Vehicles or equipment rental
◦ Professional appointment

Applications:
◦ Memberships in club/programmes
◦ Subscription services
◦ Enrolment-based services

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Facilitating Supplementary Services: Billing
Billing is common to almost all services (unless the service is
provided free-of-charge). It can be:

Periodic statements of account activity

Invoices for individual transactions

Verbal statements of amount due

Online or machine display of amount

due for self-payment transactions

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Facilitating Supplementary Services: Payment
A variety of payment options exist.
◦ Self-service:
◦ Inserting card, cash, or token into machine
◦ Electronic funds transfer
◦ Mailing a check
◦ Entering credit card information online
◦ Online payment systems such as PayPal, Google Wallet, or Bitcoins
◦ Direct to payee or intermediary:
◦ Cash handling or change giving
◦ Check handling
◦ Credit/charge/debit card handling
◦ Coupon redemption
◦ Automatic deduction from financial deposits:
◦ Automated systems
◦ Pre-arranged automatic deduction for bill payment through direct debit

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Enhancing Supplementary Services:
Consultation
Involves a dialogue to probe for
customer requirements and then
develop a tailored solution, such as:
◦ Customised advice
◦ Personal counselling
◦ Tutoring/training in service use
◦ Management or technical
consulting

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Enhancing Supplementary Services:
Hospitality
Reflects pleasure at meeting new
customers and greeting old ones when
they return, which include:
◦ Greeting
◦ Food and beverages
◦ Toilets and washrooms
◦ Transport
◦ Waiting facilities and amenities
o Lounges, waiting areas, seating
o Weather protection
o Magazines, entertainment,
newspapers

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Enhancing Supplementary Services: Safekeeping
Assistance with safekeeping customers’
personal possessions
◦ Childcare, pet care
◦ Parking for vehicles, valet parking
◦ Coat rooms
◦ Baggage handling
◦ Storage space
◦ Safe deposit boxes
◦ Security personnel
◦ Online security (e.g., Wi-Fi network)
◦ Personal data

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Enhancing Supplementary Services: Exceptions
Exceptions are
supplementary services that
fall outside the routine of
normal service delivery
◦ Special requests (e.g., dietary
requirements)
◦ Problem-solving
◦ Handling of complaints/
suggestions/compliments
◦ Restitution

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Managing the Flower of Service
• The eight categories of supplementary services that form
the “Flower of Service” collectively provide many options
for enhancing core products.
• Not every core product is surrounded by supplementary
elements from all eight petals.
• A company’s market positioning strategy helps to determine
which supplementary services should be included.

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 Branding Strategies For Services
Branding helps marketers
◦ to establish a mental picture of the service in customers’ minds, and
◦ to clarify the nature of the value proposition.

•Service organisations offer a line of products rather than just a single product.
•Branding can be employed at both the corporate and product levels by almost any
service business.
•Four broad branding alternatives:
◦ Branded House, used to describe a company, that applies its brand name to multiple
offerings in often unrelated fields
◦ Sub-brands, the corporate or the master brand is the main reference point, but the
product itself has a distinctive name
◦ Endorsed Brands, the product brand dominates but the corporate name is still featured
◦ House of Brands, the corporate brands and its well-known sub brands

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Branding Strategies For Services

Figure 4.16 The spectrum of branding alternatives

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Tiering Service
Products With
Branding
In a number of service industries,
branding is not only used to differentiate
core services, but also to clearly
differentiate service levels. This is known
as service tiering.
It is common in industries such as hotels,
airlines, car rentals, healthcare insurance,
credit card and software support.

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Examples of Service Tiering
Industry Tiers Key Service Attributes and Physical Elements Used
in Tiering
Lodging Star or diamond Architecture; landscaping; room size; furnishings and
rating (5 to 1) décor; restaurant facilities and menus; room service
hours; array of services and physical amenities;
staffing levels’ calibre and attitudes of employees
Airline Classes Seat pitch (distance between rows), seat width, and
(intercontinental): reclining capability; meal beverage service; check-in
first, business, speed; departure and arrival lounges; baggage
premium economy, retrieval speed
economy
Car rental Class of vehicle Based on vehicle size (from subcompact to full size),
degree of luxury, plus special vehicle types (minivan,
SUV, convertible)
Hardware and Support levels Hours and days of service; speed of response; speed
software support of delivering replacements parts; technician-
delivered service versus advice on self-service;
availability of additional services

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Building Brand
Equity
Brand equity is the value premium that comes with a brand -
what customers are willing to pay for the service, beyond what
they are willing to pay for a similar service that has no brand.
Components of Brand Equity
◦ Company’s presented brand — mainly through advertising,
service facilities and personnel.
◦ External brand communications —from word of mouth and
publicity. These are outside of the firm’s control.
◦ Customer experience with the company —what the
customer has gone through when they patronised the
company.
◦ Brand awareness — the ability to recognise and recall a
brand when provided with a cue.
◦ Brand meaning — what comes to the customer’s mind
when a brand is mentioned.
◦ Brand equity — the degree of marketing advantage that a
brand has over its competitors.

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A Service-branding Model

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Moving Towards a Branded
Experience

Shape truly
Create brand
differentiated
promise
customer experience

Give employees
skills, tools, and Measure and
supporting processes monitor
to deliver promise

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 Offering a Branded Experience

“The brand promise or value proposition is not a tag line, an

icon, or a color or a graphic element, although all of these may
contribute. It is, instead, the heart and soul of the brand…”

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Delivering Branded Service Experiences

All Ps of services marketing need to support the service product and

deliver the desired service experience

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 New Service Development
A Hierarchy of New Service Categories
◦ Style changes represent the simplest type of innovation,
typically involving no changes in either processes or
performance.
◦ Service improvements involve small changes in the
performance of current products, including improvements to
either the core product or to existing supplementary services
◦ Supplementary service innovations take the form of
adding new facilitating or enhancing service elements to an
existing core service or significantly improving an existing
supplementary service.

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 New Service Development
◦ Process line extensions offer more convenience and a
different experience for existing customers, or attract new
customers who find the traditional approach unappealing.
◦ Product line extensions are additions to a company’s
current product lines.
◦ Major process innovations consist of using new processes
to deliver existing core products in new ways with additional
benefits.
◦ Major service innovations are new core products for
markets that have not been previously defined.

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Examples of New Service Development (1 of 4)

Style changes
Etihad Airways (Old vs. New Uniforms)

Service improvements
Pos Malaysia (Pos Laju EzDrive-Thru)

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 Examples of New Service Development (2 of 4)

Supplementary service innovations

FamilyMart accepts in-store payment via
TnG eWallet and embeds its app in
TnG eWallet

Process line extensions

Bites launched its Bites Shop App for
grocery shopping. They are now
available via desktop and mobile app

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 Examples of New Service Development (3 of 4)

Product line extensions

McDonald’s ‘local’ menu

Major process innovations

Redesign of education by providing
a flexible way to learn new skills,
advance career and deliver quality
educational experiences at scale

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Examples of New Service
Development (4 of 4)
Major service innovations
o Internet of Things (IoT) in healthcare services
o Robots serve guests at Henn-na Hotel in Japan
o AmazonGo, the future of food retailing?
o Robo-Advisors for financial products
o IKEA launches AR App called IKEA Place

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Major Service Innovations Enabled by
Technology
Digital start-ups are bubbling up in an • Technologies that will bring
astonishing variety of services. opportunities for a wide range of
The building blocks include: service innovations that will
• Snippets of code that can be copied free from
dramatically improve customer
the Internet experience, service quality, and
• Easy-to-learn programing frameworks (e.g., productivity include:
Ruby) • Robots
• Services for finding developers (Upwork), code- • Drone
sharing platforms (GitHub) • Wearable computers and sensors
• Self-driving cars
• Usability testing platforms (UserTesting)
• Virtual reality
• Application programming interfaces (APIs) • Speech recognition
• Robotic process automation (RPA) tools • Biometrics
• AI
• Internet of things

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 Achieving Success In New Service
Development
Services like products are not immune to the high
failure rates
Reasons for failure include not meeting a consumer
need, inability to cover costs from revenues, and poor
execution
Three factors contribute most to success:
oMarket synergy
oOrganisational factors
oMarket research factors

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