Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 1 Chapter 13 Developing Marketing Strategies for Services

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 2 Objectives 1.To provide an overview of marketing strategy in service organizations 2.To describe the process of scanning the service environment and examine how the external environment affects the service sector 3.To explain the process of planning a service’s marketing strategy

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 3 Objectives (cont’d) 4.To examine the tasks of positioning and segmentation for the service organization 5.To present the unique strategy challenges facing service organizations 6.To convey the importance of service strategies for competitive advantage

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 4 Outline I.Introduction II.Overview of Marketing Strategy in Service Organizations III.Scanning the Environment IV.Planning the Services Marketing Strategy V.Positioning and Service Segmentation

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 5 Outline (cont’d) VI.Marketing Mix Strategy VII.Strategic Challenges for Services VIII.Service Strategies for Competitive Advantage IX.Summary and Conclusion

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 6 Overview of Marketing Strategy in Service Organizations Marketing strategy is the process of adjusting controllable marketing factors to cope with or exploit uncontrollable environmental forces.

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 7 Overview of Marketing Strategy in Service Organizations (cont’d)

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 8 Scanning the Environment Environmental scanning is the process of carefully monitoring external environments for changes that pose threats or opportunities to the service organization.

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 9 Scanning the Environment (cont’d)

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 10 Scanning the Environment (cont’d)

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 11 Scanning the Environment (cont’d) Reactive strategy is a slow response to environmental changes. Proactive strategy is a rapid response to environmental changes. Hyperactive strategy is a hasty response to environmental changes. Defensive strategies are rapid responses used to protect the organization from environmental threats. Offensive strategies are rapid responses employed to capture opportunities.

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 12 Scanning the Environment (cont’d) Economic and competitive environment –Rapid growth of the service economy is a major source of progress in most countries Ethical and legal environment –Ethics concern personal and professional codes of values –Laws vary greatly across service industries and countries

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 13 Scanning the Environment (cont’d) Social, cultural, and demographic environment –Service industries have often been slow to respond to changing customer tastes and preferences Technology environment –Technology is arguably the strongest force shaping the external environment of services

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 14 Planning the Services Marketing Strategy Planning the strategy – Determination of the service's objectives and manner in which they will be accomplished Designing the strategy – Careful specification of what it is that the organization hopes to accomplish Implementing the strategy – Developing a detailed timetable and itemized budget Controlling the strategy - Continuous assessment and modification of the success of strategies

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 15 Positioning and Service Segmentation Positioning is how marketers attempt to create favorable customer perceptions of their product in relation to all other products. Market segmentation is the division of a heterogeneous market into homogeneous segments.

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 16 Marketing Mix Strategy

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 17 Strategic Challenges for Services 1.Leadership – The strongest service organizations are those where the top management has established a core set of service values and carefully cultivated and protected those values through conversations with employees and customers. 2.Employees – Recruiting, training, compensating, and motivating employees are essential strategic factors for services

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 18 Strategic Challenges for Services (cont’d) 3.Customers – Because most service organizations have more direct contact (than manufacturers) with customers, they must be very sensitive to customer needs 4.Performance – Service performances must be carefully planned with such techniques as blueprinting, scripting, and dramatization 5.Demand – Services must develop very flexible systems to make their service supply meet the demand

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 19 Strategic Challenges for Services (cont’d) 6.Setting – The setting is often the only tangible representation of the service organization's quality 7.Service Quality – Numerous techniques are available to measure and improve service quality

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 20 Strategic Challenges for Services (cont’d) The upside-down organization inverts the typical organizational chart by putting frontline personnel at the top, middle management in the middle, and the CEO at the bottom.

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 21 Service Strategies for Competitive Advantage Surpass Your Competition – The term sur/ petition was coined by Edward de Bono (1992) to describe his concept of surpassing the normal kinds of competition by surpassing competitors. Dramatize Your Performance – The most effective service organizations learn to stage their performances. Build Relationships – Strong customer relationships can lead to customer loyalty.

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 22 Service Strategies for Competitive Advantage (cont’d) Harness Technology – Modern communication and transportation technologies allow service organizations to operate in multiple countries but maintain close contact with employees and customers. Jazz Your Delivery – Like great jazz musicians, great service organizations are great improvisers.

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 23 Web Sites Forbes ( p 191http:// IBM ( p. 192 Starbucks ( p. 193 iTunes ( p. 194 McDonald’s ( p. 194 A&P Grocery Store ( p. 195

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 24 Web Sites (cont’d) Sears ( p. 196 Wal-Mart ( p. 196 Microsoft ( p. 197 FedEx ( p. 197 CNN ( p. 197 Hard Rock Cafe ( p. 197

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 25 Web Sites (cont’d) Furniture.com ( p. 197 IBM’s CityOne Video ( p. 200http:// Disney World ( p. 202 Seaworld ( p. 202 Ritz-Carlton Hotels ( p. 206

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 26 Web Sites (cont’d) Facebook ( p. 206 Wikipedia ( p. 206 Amazon.com ( p. 206 Planet Hollywood ( p. 207 IKEA ( p. 207

Fisk/Grove/John-4e, Copyright © Cengage Learning. All rights reserved. 1 | 27 Web Sites (cont’d) Frugal Fannie’s ( p. 207 Southwest Airlines ( p. 208 Harley-Davidson ( p. 209 Nordstrom ( p. 210