4362ch13 Sp10

Copyright © Houghton Mifflin Company. All rights reserved. 13 | 1

Marketing Strategies for Services (Chap. 13)

• Marketing strategy is the process of adjusting controllable marketing factors to cope with or exploit uncontrollable environmental forces.

• External trends from uncontrollable forces carry great significance for service organizations.


Competing for the FutureFinding unmet and unarticulated customer needs and

filling them (Figure 13.1, pp. 205). Good at finding the future first.

“I skate to where the puck is going to be, not where it has been.” -- Wayne Gretzky


Competing for the FutureInventing the Future:

FedEx – overnight package delivery.

Ted Turner (CNN) – pace of news technology was an opportunity to create the first 24-hour television news channel.

Robert Earl (Hard Rock Café) – global popularity of rock music was an opportunity to create a theme-based restaurant.


Competing for the FutureFour Strategic Choices1. Today’s Business: serve existing customers

with articulated (distinct) needs.

2. Unserved Opportunities: identify new customers with articulated needs; market expansion strategy. Expansion of Starbucks from US to other countries.


Competing for the FutureFour Strategic Choices (cont.)3. Unarticulated Opportunities: find new needs

of existing customers; product expansion strategy. Addition of downloadable television programs to the iTunes website (http://www.apple.com/itunes/

4. Unarticulated and Unserved Opportunities: simultaneously pursue new customers with new products; diversification strategy. Gold’s Gym introduced in Russia.

http://www.apple.com/itunes/


Scanning the Environment• Environmental scanning: process of carefully

monitoring external environments for changes that pose threats or opportunities to the service organization.

• Difference between threat and opportunity is a matter of perspective. EX: success of A&P grocery store during the Great Depression of the 1930s


External Environment• Economic and Competitive: increase in

globalization of service markets – global banks, hotels, restaurants, retailers, etc.Change in employment, price of gas, household income


External Environment• Legal: changes, or expected changes in

laws that affect service business.

• Taxes, government regulation, health care, etc.


External Environment• Social, Cultural, and Demographic: changes,

or expected changes in – people’s worldviews including life, marriage, family, morality, and relationships;

• Different age groups; dual-income families


External Environment• Technology: arguably the strongest force

shaping the external environment of services

• Internet, financial transactions, medical care, communications, entertainment and recreational services


Strategic Adjustments to Environmental Conditions (See Figure 13.3)

Reactive strategy: slow response to environmental changes.

Proactive strategy: rapid response to environmental changes.

Hyperactive strategy: hasty response to environmental changes. Rushing prematurely into new markets or products without proper planning.


Strategic Adjustments to Environment

Defensive strategies: rapid responses used to protect the organization from environmental threats.

• Microsoft repositioned its software products and services to be more compatible with the Internet


Strategic Adjustments to Environment

Offensive strategies: rapid responses employed to capture opportunities.

• FedEx, CNN, Hard Rock Café

• There are several auto repair shops in a three block area. One of the shop owners decides to extend his operating hours until 10:00pm Monday-Thursday and provide a pick-up and delivery service, and guarantee all repairs for six months.


Planning the ServicesMarketing Strategy

Planning the strategy – Determination of the service's objectives and manner in which they will be accomplished .

• Identify opportunities and threats by environmental scanning; gather information from surveys, employees feedback, competitive analysis, etc.

• Ex: Based on trends in social / cultural environment and employee feedback, UCA plans to offer child care facility on campus



Designing the strategy – Carefully specify the central marketing problem or opportunity it faces.

• What are the different ways UCA can develop the child care center? Where should this be housed? Who would benefit from this service? Benchmarking: how did other universities develop this service?

• What are the human resources and operations requirements?



Implementing the strategy – Developing a detailed timetable and itemized budget .

• What are the costs of implementation? Need to check expenditures for deviations from the budget.



Controlling the strategy - Continuous assessment and modification of the success of strategies.

Corrective tactics may be needed such as hire more child care staff, or offer service to the general public.


Positioning andService Segmentation

Positioning is how marketers attempt to create favorable customer perceptions of their product in relation to all other products.

• Firms compete for a "share of mind"• Consider the relative positions of these

organizations:– First Security vs. Centennial Bank– Southwest Airlines vs. American Airlines– UCA vs. UALR


Positioning andService Segmentation

Market segmentation is the division of a heterogeneous market into homogeneous segments.

• Understanding commonalities of a particular segment allows service firm to better serve the customer.

• Selected segments become target markets for the organization’s positioning efforts.


Marketing Mix Strategy

Services Marketing Approach: should reflect the market segment and position the organization seeks and manifests itself in the core product and supplementary services the organization offers; also determines the resources needed to create and deliver the service.

Premium hotel vs. no-frills lodging


Service Strategies forCompetitive 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.


Service Strategies forCompetitive 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.