Services MarketingServices Marketing

MBA-term-5MBA-term-5

MODULE-02cMODULE-02c

MODULE-02BMODULE-02BDuration-4 Lectures.Duration-4 Lectures.

► FUNDAMENTALS OF SERVICE FUNDAMENTALS OF SERVICE MARKETINGMARKETING

► Service markets segmentation . Service markets segmentation . ► Market targeting and selection . Market targeting and selection .

Standing Apart from the Standing Apart from the CompetitionCompetition

A business must set itself apart A business must set itself apart from its competition. from its competition.

To be successful it must identify To be successful it must identify and promote itself and promote itself

as the best provider of as the best provider of attributes that are important to attributes that are important to target customerstarget customers

GEORGE S. DAYGEORGE S. DAY

Search for Competitive Advantage in Services Requires

Differentiation and Focus

Basic Focus Strategies for Basic Focus Strategies for Services Services BREADTH OF SERVICE OFFERINGS

NUMBER OF MARKETS SERVED

Narrow

Many

Few

Wide

Service Focused

Unfocused (Everything

for everyone)

Market Focused

Fully Focused (Service and

market focused)

Source: Johnston, R. (1996). Achieving focus in service organisations, The Service Industries Journal, 16, (January) , pp.10-20

Starting from finding the Starting from finding the right segment/s to right segment/s to

targettarget

The classicalThe classical segment - revisitedsegment - revisited

Stable

Measurable

Appropriate Profitable

Unique

Accessible

Substantial

Typical service segment Typical service segment variablesvariables

► Timing of service use Timing of service use - - by hour, day, by hour, day, season etcseason etc

► Heavy or light useHeavy or light use► Single/multiple usersSingle/multiple users► Frequent/infrequent Frequent/infrequent

useuse► Level of skill and Level of skill and

experience as co-experience as co-producer/self-serverproducer/self-server

► Access to remote delivery Access to remote delivery systems – call centresystems – call centre

► Preferred language in Preferred language in face-to-face contactface-to-face contact

► Access to electronic Access to electronic delivery systems – delivery systems – Internet/Interactive Internet/Interactive TV/ATMTV/ATM

► Attitudes toward use of Attitudes toward use of new service new service

technologiestechnologies

Example - financial servicesExample - financial servicesWhat doWhat do c classical segments want?lassical segments want?

• Youth • Independent• Family• Retired•http://uk.youtube.com/watch?v=aPw3rMQ84z8

Example - financial Example - financial ServicesServices

Segment behaviourSegment behaviour

PERCEIVEDKNOWLEDGE

Financially confused• Least financially active• Most likely never to save• Savings of £100 p.a. or less on average• Least likely to make use of loans and credit cards but most likely to use a retailer store card• Credit card balances tend to be paid in instalments, not in full

Cautious investors• Generally very active financially• Tendency to opt for ‘safer’ savings and investment products• Save between £1000 and £3000 p.a.• Avoid ‘riskier’ investments in equities• Not very heavy users of credit cards and tend to pay balances in full

Apathetic minimalists• Exhibit an average use of financial services generally• Moderate saving activity, on average savings of £1000 p.a.• Less likely to have sharers, unit trusts or PEPs• Trusting of financial advisers and are likely to be ‘sold’ financial products

Capital accumulators• The most financially active• The most frequent and heaviest savers• Savings of £3000 p.a. on average• Bias towards equity-based investments• Frequent use of credit cards but mainly to take advantage of the deferred payment period with balances paid in full

low

high

low high FINANCIAL MATURITY

Develop a service concept Develop a service concept for a specific segment for a specific segment

► Individuals may set different Individuals may set different prioritiespriorities for for attributes according to :attributes according to : The purpose of using the serviceThe purpose of using the service Who makes the decision (service Who makes the decision (service

user/administrator/who pay) user/administrator/who pay) The timing of use (time of day/week/season)The timing of use (time of day/week/season) Whether the individual is using services alone or Whether the individual is using services alone or

with a groupwith a group The composition of that group The composition of that group

(family/organisation)(family/organisation)

What attributes provide the What attributes provide the benefits your customers benefits your customers

want?want?

IMPORTANCE•Which service attributes are important to target customers?•Are the distinguishing attributesof our service important tocustomers?

BUTOn which attributes do customersmake their choice?

DETERMINANT ATTRIBUTES•These attributes determine buyer’schoice from competing alternatives•May be a long way down importance list•These are the attributes where buyersperceive differences

INFORMATIONNEEDED

Importance v Determinant

Competitive advantageCompetitive advantage► Creating a competitive advantage is about Creating a competitive advantage is about

establishing a market position that establishing a market position that sets a sets a product/service apartproduct/service apart from a competitive from a competitive product/service, in the eyes of the target marketproduct/service, in the eyes of the target market

► Sustaining competitive advantage requires continual Sustaining competitive advantage requires continual collection and use of marketing informationcollection and use of marketing information to ensure to ensure the needs of the target market are being met more the needs of the target market are being met more effectively and efficiently than by the competitorseffectively and efficiently than by the competitors

► AdjustmentsAdjustments to positioning or marketing mix must be to positioning or marketing mix must be made if any changes in the made if any changes in the environmentenvironment

threaten the businessthreaten the business

Developing a Market Developing a Market Positioning Positioning

Strategy - STP Strategy - STP - Size- Composition- Location- Trends

MarketingAction

Plan

MARKET ANALYSIS

INTERNAL ANALYSIS

- Resources- Reputation- Constraints - Values

COMPETITIVEANALYSIS

- Strengths- Weaknesses- Current Positioning

Define, AnalyzeMarket Segments

Select Target Segments

To Serve

ArticulateDesired Position

in Market

Select Benefitsto Emphasize to Customers

Analyze Possibilities forDifferentiation

Where are we Where do we want to go

How do we get there

Possible Dimensions for Possible Dimensions for Developing Positioning Developing Positioning

StrategiesStrategies► Product attributesProduct attributes► Price/quality relationshipsPrice/quality relationships► Reference to competitors (usually Reference to competitors (usually

shortcomings)shortcomings)► Usage occasionsUsage occasions► User characteristicsUser characteristics► Product classProduct class

Positioning map Positioning map

► Positioning map also referred to as Positioning map also referred to as perceptual map- it is a useful way of perceptual map- it is a useful way of representing consumer’s perceptions of representing consumer’s perceptions of alternative products graphicallyalternative products graphically

► Can be used to plot competitive strategy Can be used to plot competitive strategy ► Also to mapping future scenarios to identify Also to mapping future scenarios to identify

potential competitive responsespotential competitive responses► It illustrate the company’s marketing It illustrate the company’s marketing

position relating to its competitors regarding position relating to its competitors regarding certain service attributescertain service attributes

Positioning Maps Help Managers Positioning Maps Help Managers to Visualize Strategyto Visualize Strategy

► Positioning maps display relative performance of Positioning maps display relative performance of competing firms on key attributescompeting firms on key attributes

► Research provides inputs to development of positioning Research provides inputs to development of positioning mapsmaps

► Predictions can be made of how positions may change Predictions can be made of how positions may change in the light of new developments in the futurein the light of new developments in the future

► Challenge is to ensure that Challenge is to ensure that attributes employed in maps are important to target attributes employed in maps are important to target

segments segments performance of individual firms on each attribute performance of individual firms on each attribute

accurately reflects perceptions of customers in target accurately reflects perceptions of customers in target segmentssegments

Positioning ~ some key Positioning ~ some key issuesissues

Some attributes are easily quantified whereas Some attributes are easily quantified whereas others are qualitative and highly judgementalothers are qualitative and highly judgemental

Positioning is more than just creating an Positioning is more than just creating an imageimage

Positioning can take place at different levels Positioning can take place at different levels for a multi-site, multi-service organisation: for a multi-site, multi-service organisation: firm, outlet or servicefirm, outlet or service

Due to intangible experiential nature of many Due to intangible experiential nature of many services, an explicit positioning strategy is services, an explicit positioning strategy is valuablevaluable

Positions need to evolve and change over Positions need to evolve and change over time ~ may need to reposition time ~ may need to reposition

►Questions?Questions?