Services Marketing MBA-term-5 MODULE-02c MODULE-02c

MODULE-02B Duration-4 Lectures. ► FUNDAMENTALS OF SERVICE MARKETING ► Service markets segmentation. ► Market targeting and selection.

Standing Apart from the Competition Standing Apart from the Competition A business must set itself apart from its competition. A business must set itself apart from its competition. To be successful it must identify and promote itself To be successful it must identify and promote itself as the best provider of attributes that are important to target customers as the best provider of attributes that are important to target customers GEORGE S. DAY

Search for Competitive Advantage in Services Requires Differentiation and Focus

Basic Focus Strategies for 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 right segment/s to target

The classical segment - revisited Stable Measurable Appropriate Profitable Unique Accessible Substantial

Typical service segment variables ► Timing of service use - by hour, day, season etc ► Heavy or light use ► Single/multiple users ► Frequent/infrequent use ► Level of skill and experience as co- producer/self-server ► Access to remote delivery systems – call centre ► Preferred language in face- to-face contact ► Access to electronic delivery systems – Internet/Interactive TV/ATM ► Attitudes toward use of new service technologies

Example - financial services What do classical segments want? Youth Independent Family Retired

Example - financial Services Segment behaviour PERCEIVED KNOWLEDGE 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 lowhigh FINANCIAL MATURITY

Develop a service concept for a specific segment ► Individuals may set different priorities for attributes according to :  The purpose of using the service  Who makes the decision (service user/administrator/who pay)  The timing of use (time of day/week/season)  Whether the individual is using services alone or with a group  The composition of that group (family/organisation)

What attributes provide the benefits your customers want? IMPORTANCE Which service attributes are important to target customers? Are the distinguishing attributes of our service important to customers? BUT On which attributes do customers make their choice? DETERMINANT ATTRIBUTES These attributes determine buyer’s choice from competing alternatives May be a long way down importance list These are the attributes where buyers perceive differences INFORMATION NEEDED Importance v Determinant

Competitive advantage ► Creating a competitive advantage is about establishing a market position that sets a product/service apart from a competitive product/service, in the eyes of the target market ► Sustaining competitive advantage requires continual collection and use of marketing information to ensure the needs of the target market are being met more effectively and efficiently than by the competitors ► Adjustments to positioning or marketing mix must be made if any changes in the environment threaten the business threaten the business

Developing a Market Positioning Strategy - STP - Size - Composition - Location - Trends Marketing Action Plan MARKET ANALYSIS INTERNAL ANALYSIS - Resources - Reputation - Constraints - Values COMPETITIVE ANALYSIS - Strengths - Weaknesses - Current Positioning Define, Analyze Market Segments Select Target Segments To Serve Articulate Desired Position in Market Select Benefits to Emphasize to Customers Analyze Possibilities for Differentiation Where are we Where do we want to go How do we get there

Possible Dimensions for Developing Positioning Strategies ► Product attributes ► Price/quality relationships ► Reference to competitors (usually shortcomings) ► Usage occasions ► User characteristics ► Product class

Positioning map ► Positioning map also referred to as perceptual map- it is a useful way of representing consumer’s perceptions of alternative products graphically ► Can be used to plot competitive strategy ► Also to mapping future scenarios to identify potential competitive responses ► It illustrate the company’s marketing position relating to its competitors regarding certain service attributes

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

Positioning ~ some key issues  Some attributes are easily quantified whereas others are qualitative and highly judgemental  Positioning is more than just creating an image  Positioning can take place at different levels for a multi-site, multi-service organisation: firm, outlet or service  Due to intangible experiential nature of many services, an explicit positioning strategy is valuable  Positions need to evolve and change over time ~ may need to reposition

► Questions?