Chapter 3
Positioning Services in
Competitive Markets
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 1
Search for Competitive Advantage in Services
Requires Differentiation and Focus
 Intensifying competition in service sector threatens firms
with no distinctive competence and undifferentiated
offerings
 Slowing market growth in mature service industries means
that only way for a firm to grow is to take share from
competitors
 Rather than attempting to compete in an entire market, firm
must focus efforts on those customers it can serve best
 Must decide how many service offerings with what
distinctive (and desired) characteristics
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 2
Standing Apart from the Competition
A business must set itself apart from its competition.
To be successful it must identify and promote itself
as the best provider of attributes that are
important to target customers
GEORGE S. DAY
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 3
Basic Focus Strategies for Services (Fig. 3.1)
BREADTH OF SERVICE OFFERINGS
Narrow
Many
NUMBER
OF MARKETS
SERVED
Few
Wide
Service
Focused
Unfocused
(Everything
for everyone)
Fully Focused
(Service and
market focused)
Market
Focused
Source: Robert Johnston
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 4
Four Principles of Positioning Strategy
1. Must establish position for firm or product in minds of
customers
2. Position should be distinctive, providing one simple,
consistent message
3. Position must set firm/product apart from competitors
4. Firm cannot be all things to all people--must focus
Jack Trout
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 5
Uses of Positioning in
Marketing Management
(Table 3.1)
 Understand relationships between products and markets
 compare to competition on specific attributes
 evaluate product’s ability to meet consumer needs/expectations
 predict demand at specific prices/performance levels
 Identify market opportunities
 introduce new products
 redesign existing products
 eliminate non-performing products
 Make marketing mix decisions, respond to competition
 distribution/service delivery
 pricing
 communication
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 6
Possible Dimensions for Developing
Positioning Strategies
 Product attributes
 Price/quality relationships
 Reference to competitors (usually shortcomings)
 Usage occasions
 User characteristics
 Product class
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 7
Developing a
Market Positioning Strategy (Fig. 3.3)
MARKET
ANALYSIS
- Size
- Composition
- Location
- Trends
Define, Analyze
Market Segments
Select
Target Segments
To Serve
INTERNAL
ANALYSIS
- Resources
- Reputation
- Constraints
- Values
Articulate
Desired Position
in Market
Marketing
Action
Plan
Select Benefits
to Emphasize
to Customers
COMPETITIVE
ANALYSIS
- Strengths
- Weaknesses
- Current
Positioning
Analyze
Possibilities for
Differentiation
Source: Adapted from Michael R. Pearce
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 8
Positioning of Hotels in Belleville:
Price vs. Service Level (Fig. 3.4)
Expensive
Grand
Regency
PALACE
Shangri-La
High
Service
Sheraton
Atlantic
Moderate
Service
Italia
Castle
Alexander IV
Airport Plaza
Less Expensive
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3- 9
Positioning of Hotels in Belleville:
Location vs. Physical Luxury (Fig. 3.5)
High Luxury
Regency
Grand
Shangri-La
Sheraton
PALACE
Financial
District
Shopping District
and Convention Centre
Inner
Suburbs
Italia
Castle
Alexander IV
Atlantic
Airport Plaza
Moderate Luxury
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3 - 10
Positioning after New Hotel Construction:
Price vs. Service Level (Fig. 3.6)
Mandarin
New Grand
Heritage
Marriott
Continental
Expensive
Action?
Regency
High
Service
PALACE
Shangri-La
No action?
Moderate
Service
Atlantic
Sheraton
Italia
Less Expensive
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
Castle
Alexander IV
Airport Plaza
3 - 11
Positioning after New Hotel Construction:
Location vs. Physical Luxury (Fig. 3.7)
High Luxury
Mandarin
New Grand
Heritage
Marriott
Sheraton
Shangri-La
Continental
Action?
Regency
PALACE
Financial
District
No action?
Inner
Suburbs
Shopping District
and Convention Centre
Castle
Italia
Alexander IV
Atlantic
Airport Plaza
Moderate Luxury
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3 - 12
Positioning Maps Help Managers to
Visualize Strategy
 Positioning maps display relative performance of competing
firms on key attributes
 Research provides inputs to development of positioning maps
 Challenge is to ensure that
 attributes employed in maps are important to target segments
 performance of individual firms on each attribute accurately
reflects perceptions of customers in target segments
 Predictions can be made of how positions may change in the
light of new developments in the future
 Simple graphic representations are often easier for managers to
grasp than tables of data or paragraphs of prose
 Charts and maps can facilitate a “visual awakening” to threats
and opportunities and suggest alternative strategic directions
Slide ©2004 by Christopher Lovelock and Jochen Wirtz
Services Marketing 5/E
3 - 13