MS Chapter 3

Chapter 3
Positioning Services in
Competitive Markets
M.BA Pham Thanh Huyen

Integrate
d Model of
Services
Marketing
By the end of this chapter, the reader should
Learning be able to
Objects • Understand how the customer, competitor, and
company analysis (i.e., the 3 Cs) helps to develop
a customer-driven services marketing strategy.
• Know the key elements of a positioning strategy
(i.e., segmentation, targeting, and positioning;
STP), and explain why these elements are so
crucial for service firms to apply.
3
• Segment customers on needs first before using other
Learning common bases to further identify and profile the
Objects segments.
• Distinguish between important and determinant
attributes for segmentation.
• Use different service levels for segmentation.
4
• Target service customers using the four focus
Learning strategies for competitive advantage.
Objects • Position a service to distinguish it from its competitors.
• Understand how to use positioning maps to analyze
and develop competitive strategy.
• Know how to apply positioning to digital services and
platform business models.
• Develop an effective positioning strategy.
5
Positioning a Chain of Childcare Centers Away
Opening from the Competition
Vignette
Figure 3.1 Happy children at a childcare center
6
Bright Horizons formed partnerships with companies.
Opening
They sought companies that can offer an on-site day care
Vignette center for employees with young children.
The advantages included:
• A powerful, low-cost marketing channel.
• A partner who supplied the funds to build and equip the
center
o Would therefore want to help Bright Horizons to
achieve its goal of delivering high-quality care.
• Benefits for parents included:
o Its nearness to their own workplace
o Decreased travel time offering a greater peace of mind.
7
• Bright Horizons offered a high pay and benefits
Opening package to staff.
Vignette • This was to attract the best staff so that they could
provide quality service.
• They developed a flexible teaching plan called
“World at Their Fingertips.”
8
They developed innovative technologies such as:
Opening
• streaming its classroom activities to parents’
Vignette smartphones;
• posting artwork, menus, calendars, and student
assessments; and
• offering online student assessment capabilities.
9
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.
This is collectively often referred to as the 3 Cs.
10
Customer-Driven Services
Marketing Strategy
This analysis helps a firm to determine the services positioning strategy, which are
• segmentation,
Market segmentation divides customers in a market into smaller and relatively similar groups such as location,
age, income, credit rating, or buying habits. A common way to segment markets is to base the segmentation
on demographics, which results in segments such as age, gender, income, and so on.
Demorgraphic of our project is parents from 30 to 45 years old, they have a strong finance or knowledge.
• Targeting
A target market is a group of people at whom you direct your selling efforts . A Coca-Cola product such as
Sprite is specifically designed to target teens and college students,
• positioning.
creating an identity/ image of the brand or product within the target customers’ minds. McDonald’s positions
itself as a place to get quick and cheap meals. Tesla and Audi position themselves as a luxury status symbol
This is frequently called STP by marketing experts.
11
Customer, Competitor, and Company
Analysis (3 Cs)
Customer Analysis:
Market Analysis
• Establish attractiveness of overall market and potential segments within.
• Look at the overall size and growth of
o the market,
o the margins and profit potential, and
o the demand levels and trends affecting the market.
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Analysis (3 Cs)
Customer Needs Analysis:
• Who are the customers in that market in terms of demographics and psychographics?
Baemin: With the target towards young people, who are often attached to technology
devices, typically Smartphone. In addition, the brand also targets office workers who do
not have time to cook.
• What needs or problems do they have?
Don’t have time to cook
• What are the jobs-to-be-done from the customer’s perspective?
Having a good meal in a short time without cooking
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Analysis (3 Cs)
• Are there potentially different groups of customers with differing needs and who
therefore require different service products or different levels of service?
The Coca-Cola target market focuses on an older demographic specifically with the popular
Diet Coke product, which offers a sugar-free option for diabetics and health-conscious
consumers. Coca-Cola campany has also expanded its product to non-cola beverages to
target those not fond of drinking its regular cola drinks. A
• What are the benefits of the service each of these groups values most?
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Analysis (3 Cs)
Competitor Analysis:
• Identification and analysis of competitors.
• Analysis of competitors’ strengths and weaknesses.
• Understanding opportunities for differentiation and competitive advantage.
Baemin:With the purpose of building emotions on each dish. . Know that most of the customers
use hot and crispy food to keep the flavor on the stove. The brand focuses on distribution in every
small niche. Therefore, receiving orders from 2-3km will help the ordering process go faster.
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Analysis (3 Cs)
Company Analysis:
• Identify the organization’s strengths in terms of
o its current brand positioning and image, and
Baemin designed an exclusive set of fonts for all communication, and a character called
‘Mèo Mập’ (the Fat Cat) for the Vietnamese market. As a result, BAEMIN's interface is
considered by customers to be very unique and user-friendly.
o the resources the organization has.
• Examining the organization’s limitations or constraints.
• Understand how an organization’s values shape the way it does business.
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Segmentation, Targeting,
and Positioning (STP)
Segmentation:
• Dividing the population of possible customers into groups.
• A market segment is composed of a group of buyers who share
o common characteristics,
o needs,
o purchasing behavior, and/or
o consumption patterns.
17
Segmentation:
• variables that can form the base of grouping are
o demographic,
o geographic,
o psychographic, and
o behavioral.
18
Targeting:
• Understanding segment(s) that would most likely be interested in the service, and focus
on how to serve them well.
19
Positioning:
• The unique place that the firm and/or its service offerings occupy in the minds of its
consumers.
• Differentiation is the first step toward creating a unique positioning for a service.
20
Elements and Key Concepts of a Services
Positioning Strategy
Elements of a Positioning Key Concepts
Strategy
Segmentation
• Segmenting service markets
• Service attributes and service
levels relevant for
segmentation
― Important versus determinant
attributes
Market categories ― Establishing service levels
21
Elements of a Positioning Strategy Key Concepts
Targeting
• Targeting service markets through four focus
strategies:
― Fully focused
A fully-focused organization provides a very
limited range of services (perhaps just a single
core product) to a narrow and specific market
segment.
― Market focused
Market focus is the extent to which a firm
serves few or many markets
Viettel bắt đầu với những sản phẩm/dịch vụ2 2viễn
Elements of a Positioning Key Concepts
Strategy
Positioning
• Positioning services in competitive
markets
• Using positioning maps to plot
competitive strategy
• Positioning digital services and
platforms
• Developing an effective
positioning strategy
23
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
Behavioral segmentation
Needs-based segmentation
24
Demographic segmentation
• Based on age, gender, and income
Psychographic segmentation
• People’s lifestyles, attitudes, and aspirations
• Very useful in
strengthening brand identity and
creating an emotional connection with the brand.
25
Behavioral segmentation
• Focuses on observable behaviors such as:
people being nonusers,
light users, or
heavy users.
26
Needs-based segmentation
• Focuses on what customers truly want in a service and close to multi-attribute
decision models:
the purpose and context of using the service, the timing of
use (time of day/week/season), whether the individual is
using the service alone or with a group, and if the latter, the
composition of that group.
27
Contiki Tours is an example of a company that used needs-based segmentation
as a foundation.
Figure 3.4 Contiki targets young and fun-loving travelers
28
Important Versus Determinant Service
Attributes
Important Attributes
Attributes that are important to the consumer
but may not be important for a buying
decision. Such attributes should not be used as
a basis for segmentation.
Determinant attributes
Attributes where customers see significant
differences between competing alternatives and will
determine the final purchase. Such attributes are
crucial for segmentation.
29
Important Versus Determinant
Service Attributes
Figure 3.5 Convenient departure times are determinant

attributes for business travelers
30
Segmentation Based on
Service Levels
Some service attributes are easily quantified, whereas others are
qualitative.
Quantitative aspects:
• Price
• Punctuality of transport services
Qualitative aspects:
• Quality of personal service
• A hotel’s degree of luxury
31
Capsule Hotels
Sources: The Economist (November 17, 2007), “Capsule Hotel: Thinking Small,”
www.yotel.com; http://www.thepodhotel.com; https://sleepbox.com;
https://www.citizenm.com; http://en.wikipedia.org/wiki/Capsule_hotel; The Millennials
Shibuya, www.booking.com, all accessed February 25, 2021.
32
Targeting Service Markets
Companies focus their efforts on those customers they can serve best—
the target segment.
Achieving Competitive Advantage Through Focus
In marketing terms, focus means providing a relatively narrow product mix for a
particular target segment.
33
Targeting Service Markets
The extent of a company’s focus can be described along two
dimensions:
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.
These two dimensions define the four basic focus strategies.
34
Basic Focus Strategies for Services
Figure 3.6 Basic focus strategies for services

Source: Adapted from Robert Johnson.
35
Fully focused:
• Provides a limited range of services to a narrow and
specific market segment.
• There are key risks associated with pursuing the
fully focused strategy.
• The market may be too small to get the volume of
business needed for financial success, and the firm
is vulnerable should new alternative products or
technologies substitute their own.
36
Market focused:
• Offers a wide range of services to a narrowly defined
target segment.
• Following a market-focused strategy looks attractive
because the firm can sell multiple services to a single
buyer.
• This strategy is potentially attractive in B2B markets
where sales efforts tend to be high.
37
Service focused:
• Offers a narrow range of services to a fairly broad
market.
• Require a broader sales effort and greater investment
in marketing communication particularly in B2B
markets.
• Lasik eye surgery clinics and Starbucks coffee shops
follow this strategy.
38
Unfocused:
• Serves broad markets and provide a wide range of
services.
• A few departmental stores followed this strategy.
39
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.
A fully focused strategy can deliver superb quality and at low costs because of its focus and
experience.
40
Market-Focused Brand Across Multiple
Services at Rentokil Initial
Sources: Clive Thompson (1997), “Rentokil
Initial: Building a Strong Corporate Brand for
Growth and Diversity,” in Fiona Gilmore, ed.
Brand Warriors.London: HarperCollinsBusiness,
pp. 123–124; http://www.rentokil-initial.com,
accessed February 25, 2021.
41
Principles of Positioning Services
Positioning strategy:
• creating,
• communicating, and
• maintaining distinctive differences.
These differences will be noticed and valued by the firm’s target
customers.
Positioning Principles (Jack Trout):
— A company must establish a position in the minds of its targeted
customers.
42
—The position should be singular, providing one simple and
consistent message.
Figure 3.8 Visa has one simple message globally
43
—The position must set a company apart from its competitors.
—A company cannot be all things to all people—it must focus its efforts.
Figure 3.9 For powerful positioning, a firm needs to set

itself apart from its competitors
44
The concept of positioning offers valuable insights by
• forcing service managers to analyze their firm’s existing offerings
• and to provide specific answers to the following six questions:
o What does our firm currently stand for in the minds of current and potential
customers?
45
• What customers do we serve now, and which ones would we like to target in the
future?
• What is the value proposition for each of our current service offerings, and what market
segments is each one targeted at?
• How does each of our service products differ from those of our competitors?
• How well do customers in the chosen target segments perceive our service offerings as
meeting their needs?
• What changes do we need to make to our service offerings in order to strengthen our
competitive position within our target segment(s)?
46
Researchers Kevin Keller, Brian Sternthal, and Alice Tybout note:
“Positioning needs to keep competitors out, not draw them in.”
47
Using Positioning Maps to
Plot Competitive Strategy
Positioning maps are tools to
• visualize competitive positioning along key aspects of its services marketing strategy,
• map developments over time, and
• develop scenarios of potential competitor responses.
48
Using Positioning Maps to
Plot Competitive Strategy
A map usually has two attributes.
Three-dimensional models can be used to show three of these attributes.
49
An Example of Applying Positioning Maps to
the Hotel Industry
Managers of The Palace, a successful four-star hotel, developed a positioning map.
It shows their own and competing hotels to get a better understanding of future threats to
their established market position in Belleville.
Four key attributes were selected for study:
• room price,
• level of personal service,
• level of physical luxury, and
• location.
50
An Example of Applying Positioning Maps
to the Hotel Industry
Figure 3.10 Dubai’s Burj Al Arab is favorably positioned along many determinant attributes
like personal service, level of physical extravagance, and location
51
Management collected
• their customer perceptions data and
• information on competing hotels from various sources.
Scales were then created for each attribute
Each hotel was rated on each of the attributes for the positioning maps to be drawn.
52
Figure 3.11 Positioning map of Belleville’s principal business hotels: Service

level versus price level
53
Figure 3.12 Positioning map of Belleville’s principal business hotels: Location

versus physical luxury
54
Figure 3.13 Future positioning map of Belleville’s business hotels: Service level
versus price level
55
Figure 3.14 Future positioning map of Belleville’s business hotels:

Location versus physical luxury
56
Positioning Charts Help Executives
Visualize Strategy
Before discussing changes in strategy strategic planners must ensure that
• all executives have a clear understanding of the firm’s current situation.
Graphic representations of a firm’s strategic profile and product positions are much easier
to grasp than tables of quantitative data or paragraphs of prose.
57
Positioning Charts Help Executives
Visualize Strategy
Charts and maps can help to achieve a “visual awakening.”
Visual presentations can highlight gaps between how customers see the organization and
how management sees it.
58
Positioning Digital Services and Platforms
Attributes of Digital Service Available for Positioning includes:
• ease of use
• convenient sign-up
• intuitive customer
• price
59
Ecosystem Orchestration and Governance
The way a platform orchestrates and governs the different players is an important
differentiating factor if it enhances value and reduces risk.
Source: Adapted from Jochen Wirtz, Kevin Kam

Fung So, Makarand Mody, Stephanie Liu, and Helen
Chun (2019), “Platforms in the Peer-to-Peer Sharing
Economy,” Journal of Service Management, Vol. 30,
No. 4, pp. 452–483.
Figure 3.15 Superior value co-creation and platform governance can be

a competitive advantage
60
Direct and Indirect Network Effects

Direct network effects: The value to users increases as more users join.
• Example: Facebook, TikTok, and Instagram.
Indirect network effects: Two- or more-sided platforms where the value for users
increases when a new user of a different group joins.
• Example: An additional driver on Uber.
There are some platforms with no significant network effects.
61
Figure 3.17 Ride sharing businesses such as Uber have indirect network effects
62
Source: Adapted from Jochen
Wirtz, Kevin Kam Fung So,
Makarand Mody, Stephanie Liu,
and Helen Chun (2019), “Platforms
in the Peer-to-Peer Sharing
Economy,” Journal of Service
Management, Vol. 30, No. 4, pp.
452–483.
Figure 3.16 Direct network effects do not
provide a competitive advantage to all types
of platforms
63
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.
• Frame of reference — the category that the brand is competing in.
• Point of difference — the most compelling benefit offered by the brand that stands out
from its competition.
• Reason to believe — proof that the brand can deliver the benefits that are promised.
64
Developing an Effective Positioning Strategy
Figure 3.18 LinkedIn positioned itself away from social networks by focusing
exclusively on professional networking and career development
65
Conclusion
• Most service businesses face intense competition.
• Marketers need to find ways of creating meaningful value propositions.
• This is for their service offerings that stake a distinctive and defensible position in the
market against competing alternatives.
66
Conclusion
The nature of services introduces a number of distinctive possibilities for
• competitive differentiation,
• going beyond price and product features to include convenience and ease of use of
apps,
• chatbots and online channels,
• location of physical facilities,
• scheduling,
• performance levels such as speed of service delivery, and
• the caliber of service personnel.
67
Conclusion
All successful service firms pursue a focus strategy.

They identify the strategically important elements in their service operations and
concentrate their resources on them.
68
Conclusion
They target segments which they can serve better than other providers.
This is done by offering and promoting a higher level of performance on those attributes
particularly valued by their target customers.
69

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Chapter 3

M.BA Pham Thanh Huyen

Figure 3.1 Happy children at a childcare center

Figure 3.4 Contiki targets young and fun-loving travelers

Figure 3.5 Convenient departure times are determinant

Figure 3.6 Basic focus strategies for services

Figure 3.8 Visa has one simple message globally

Figure 3.9 For powerful positioning, a firm needs to set

Figure 3.11 Positioning map of Belleville’s principal business hotels: Service

Figure 3.12 Positioning map of Belleville’s principal business hotels: Location

Figure 3.14 Future positioning map of Belleville’s business hotels:

Source: Adapted from Jochen Wirtz, Kevin Kam

Figure 3.15 Superior value co-creation and platform governance can be

Direct and Indirect Network Effects

All successful service firms pursue a focus strategy.

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