chapter 3: positioning service in competitive market

CHAPTER3:POSITIONINGSERVICEINCOMPETITIVEMARKET

SERVICEMARKETING

OVERVIEW

3.1FocusStrategiesforServices3.2MarketSegmentation3.3ServiceAttributes3.4DevelopinganEffectivePositioningStrategy3.5UsingPositioningMapstoAnalyzeCompetitiveStrategy

1

FOCUSSTRATEGIESFORSERVICES

2

WHYPOSITIONING?

Everycustomerhasdifferentneeds,purchasingbehavior,consumptionpattern,andenvironmentwhicharehardlyprovidedbyfirm.Hence,eachcompanyneedstofocusitseffortsonthose

customersitcanservebest.

Customers

Needs

PurchasingBehavior ConsumptionPattern

Environment

3

POSITIONINGSTRATEGY

Positioningstrategy:Creating,communicating,andmaintainingdistinctcharacteristicsthatwillbenoticedandvaluedbythosecustomerswithwhomthefirmwouldmostliketodevelopalong-termrelationship

Successfulpositioningrequiresunderstanding firm’stargetcustomers’preferences,conceptionofvalue,andthecharacteristicsofcompetitors’offerings.

4

BASICFOCUSSTRATEGIESFORSERVICES

Inmarketingterms,Focusmeansprovidingarelativelynarrowproductmix foraparticularmarketsegment

Focusstrategiesforservicesaredividedinto4categoriesbasedonbreadthofserviceofferingsandnumberofmarketsserved

MarketFocusedFullyFocused(Serviceand

marketfocused)

Unfocused(everythingforeveryone)

ServiceFocused

Wide Narrow

Few

Many

BREADTHOFSERVICEOFFERINGS

NUMBE

RSOF

MAR

KETSSER

VED

Source:Johnston,R.(1996).Achievingfocusinserviceorganizations.TheServiceIndustriesJournal,16(January),pp.10-20

5

providesalimitedrangeofservices toanarrowandspecificmarketsegmentOpportunities1. Mayprovideprotectionagainstwould-be

competitors2. Allowsfirmstochargepremiumprices

Risks1. Marketistoosmall2. Demandmaybedisplacedbygeneric

competitionfromalternativeproducts3. Purchasersinchosensegmentmaybe

susceptibletoeconomicdownturn

EXAMPLE

AirCharterTeamisaproviderofprivate,corporate,andbusinessairplanecharterservicesthroughouttheworld.No

matterwhattypeofaircraftyouoryourorganizationrequires,wedeliveritwithservicethatsimplycan'tbebeat!

Source:(1)www.aircharterteam.com

6

FULLYFOCUSED

(1)

Providesnarrowmarketsegment buthasawiderangeofservices

Firmneedtomakesureoftheiroperationalcapabilitytodoanddelivereachofthedifferentservicesandalsoneedtounderstandcustomerpurchasingpracticesandpreferences

EXAMPLE

RentokilInitialisoneofthelargestbusinessservicescompanyintheworldprovidingservicesthatprotectpeopleandenhancelives.theyprotectpeoplefromthedangersofpest-bornedisease,therisksofpoorhygieneorfrominjury

intheworkplace.Theyoperateinover60countries

7

MARKETFOCUSED

ServiceFocusedProvidesanarrowrangeofservices toafairlybroadmarket

Ifnewsegmentsareadded,firmneedstodevelopknowledgeandskillsinservingeachsegment

EXAMPLE

ExcellentPackersandMoversisoneoftheleadingpackersandMoversCompanyinIndiawhichisengagedinofferingawiderangeofrelocationandalliedservicesforyourdifferent

kindsofrelocationsituations.

8

SERVICEFOCUSED

UNFOCUSED

Unfocusedprovidesawiderangeofservices toabroadmarketsegment

Riskystrategythatcouldleadfirmtobecoming“jacksofalltradesandmastersofnone.”

EXAMPLE

CJ isKoreanforemostlifestylecompanythatcreatescustomers’health,happiness,andconvenience.CJhasfour

corebusinessdivisionssuchasFood&FoodService,Biotechnology,Entertainment&Media,andNew

Distribution.

9

MARKETSEGMENTATION

10

MARKETSEGMENTATION

Marketsegment: composedofagroupofbuyers whosharecommoncharacteristics,needs,purchasingbehavior,orconsumptionpatterns

Targetsegment:asegment thatafirmhasselected fromamongthoseinthebroadermarketandmaybedefinedonthebasisofseveralvariables

Segmentscanbedeterminedbyfactorssuchasgeographic,demographic,attitudesandbehavioralintentions

11

Inthisera,manyservicefirmsaredevelopingstrategiesbyusingtechnologyfortheirmarketingorevenoperational.Thismeansthattheircustomersaresegmentedtotheirdegreeofcompetenceandcomfortinusingtechnology-baseddeliverysystems

TRAVELOKAMarketsegment:peoplewhohascompetenceandcomfortinusingtechnologysuchassmartphoneandinternet

Targetsegment:Thosepeoplewhoneedtotravel

Picture(1)showstraveloka application,aleadingticketbookingserviceinIndonesia

MARKETSEGMENTATIONBYUSINGTECHNOLOGY

Source:(1)http://press.traveloka.com/wp-content/uploads/2016/05/app-1-1024x512.png

(1)

12

SERVICEATTRIBUTES

13

DEVELOPINGRIGHTSERVICECONCEPTFORASPECIFICSEGMENT

Firmsoftenuseformalresearchtoidentifyandprioritizewhichattributes ofagivenserviceareimportanttospecificmarketsegments

Prioritiesforattributesmaydifferforindividualsaccordingto:1. Thepurposeofusingtheservice2. Whomakesthedecision3. Thetimingofuse(timeofday/week/season)4. Whetherthecustomerisusingtheservicealoneorwithagroup5. Thecompositionofthatgroup

14

IMPORTANTVSDETERMINANTATTRIBUTES

Consumersusuallymaketheirchoicesamongalternativeserviceofferingsbasedonperceiveddifferencesbetweenthem

Determinantattributes:determinebuyers’choicesbetweencompetingalternatives.Listofservicecharacteristicsimportanttopurchasers,buttheyaretheattributesonwhichcustomersseesignificantdifferencesamongcompetingalternatives.

15

ESTABLISHINGSERVICELEVELS

Decisionsaremadeonwhatlevelofperformance firmplanstoofferoneachattribute

• Easilyquantifiedattributes areeasiertounderstand– e.g.,vehiclespeed,physicaldimensions

• Qualitativeattributes subjecttoindividualinterpretation– e.g.,physicalcomfort,noiselevels

Customersoftencanbesegmentedaccordingtowillingnesstotradeoffpriceversusservicelevel:

• Price-insensitivecustomerswillingtopayrelativelyhighpriceforhighlevelsofservice

• Price-sensitivecustomers lookforinexpensiveservicewithrelativelylowperformance

16

DEVELOPINGANEFFECTIVEPOSITIONINGSTRATEGY

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Positioning playsapivotalroleinmarketingstrategybecauseitlinksmarketanalysisandcompetitiveanalysistointernalcorporateanalysis

Developingapositioningstrategycantakeplaceatseveraldifferentlevels,dependingonthenatureofthebusinessinquestion

Positioningofdifferentservicesofferedatthesamelocationmustbeconsistent becausetheimageofonemayaffecttheothers,especiallyifperceivedtoberelated

POSITIONINGSTRATEGY

18

POSITIONINGSTRATEGYEXAMPLE

SiloamHospitalsstrategyistooperateonalowercostbasedoneconomicofscale.

Hence,Siloamisabletoincreaseaffordabilityfromallsocio-economic

backgroundsandprovideaccesstoqualityalloverIndonesia

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Rumah Sakit Bedah SurabayaistheanswerofsurgicalneedsinSurabaya.Thishospitalstrategyistofocusonprovidingthebestserviceinsurgical

services

VS

PossibleOutcomesResultedbyPositioningfailure1. Theorganization(oroneofitsproducts)ispushedintoaposition

whereitfaceshead-oncompetitionfromastrongercompetitor

2. Theorganization(product)ispushedintoapositionnobodyelsewants,becauselittlecustomerdemandexists

3. Theorganization’s(product’s)positionissoblurredthatnobodyreallyknowsitsdistinctivecompetence

POSSIBLEOUTCOMESRESULTEDBYPOSITIONINGFAILURE

20

POSITIONINGFAILUREEXAMPLE

Source:(1)https://www.tripadvisor.in/ShowUserReviews-g295424-d306662-r436490944-Hilton_Dubai_Jumeirah-Dubai_Emirate_of_Dubai.html

Hiltonisoneofthelargesthospitalitycompaniesintheworld.Sincebeingfoundedin1919,Hiltonhasbeenaleaderinthehospitalityindustry.Today,Hiltonremainsabeaconofinnovation,quality,andsuccess.

But,acustomerfeltunsavoryexperience whenstayinginHiltonDubaiJumeirah.3nightsinthis5-starhotelarenightmarebecausethepoorservicegiven.

DuetoHiltonvalueespeciallyinquality,thisincidentshouldhavenothappened

(1)

21

MARKET,INTERNAL,ANDCOMPETITORANALYSIS

MarketAnalysis:consistsoffactors astheoveralllevel andtrendofdemand andthegeographiclocationofthisdemand

22

CompetitorAnalysis:provideamarketingstrategistaccordingtocompetitors’strengthsandweaknesses thatmaysuggestopportunitiesfordifferentiation

InternalCorporateAnalysis:identifytheorganization’sresources,limitationsorconstraints,goals,andvalue

DEVELOPINGAMARKETPOSITIONINGSTRATEGY

Source:(1)DevelopedfromanearlierschematicbyMichaelR.Pearc

Define,AnalyzeMarketSegments

SelectTargetSegmentsToServe

ArticulateDesiredPositioninMarket

SelectBenefitstoEmphasizetoCustomers

AnalyzePossibilitiesforDifferentiation

- Size- Composition- Location- Trends

- Resources- Reputation- Constraints- Values

- Strengths- Weaknesses- CurrentPositioning

MarketingActionPlan

MARKETANALYSIS

INTERNALANALYSIS

COMPETITORANALYSIS

23

(1) Figure(1)identifiesthebasicstepsinvolvedinidentifyingasuitablemarketpositionanddevelopingastrategytoreachit

Thereare3analysisthatrequiretodevelopamarketpositioningstrategy,marketanalysis,internalanalysis,andcompetitoranalysis

Thebestwaytoanticipatepossiblecompetitiveresponses:1. Identify allcurrentorpotentialcompetitors2. Conduct aninternalcorporateanalysisforeach

competitors3. Couplingtheinsightsfromtheanalysiswithdatafromexisting

marketandcompetitiveanalysis(withone’sownfirmcastintheroleofcompetitor)

ANTICIPATERESPONSESTOPOTENTIALPOSITIONINGSTRATEGIES

24

POSITIONSTATEMENT

PositionStatement:Statement consistsofintegrationbetweenmarketanalysis,internalcorporateanalysis,andcompetitoranalysisthatarticulatesthedesiredpositionoftheorganizationinthemarketplace

Positioningcouldchangeinresponsetochangingmarketstructures,technology,competitiveactivity,andtheevolutionofthefirmitself

Repositioning

Addingservicesandtargetsegments

Removingservicesandtargetsegments25

REPOSITIONINGEXAMPLE

Repositioningbyaddingservicesandtargetsegments

Googleisworld'ssecondmostvaluablebrandfoundedbyLarryPageandSergeyBrin in1998.Inthebeginning,GooglewasasearchenginethatuselinkstodeterminetheimportanceofindividualpagesontheWorldWideWeb.Butnow,Googlehasownedmorethan70productsincludingGoogleMaps,GoogleDocument,GoogleDrive,etc.

26

Repositioningbyremoving servicesandtargetsegmentsIndosat intheearlydaysisacompanywhichserviceisInternationalDirectCall(SLI001).Itsmarketsegmentsishomeorbusinessthatneedtocallsomeoneabroad.But,startin2010,Indosat istransformingtobecomeamorefocusedandefficientcompanywithorganizationalrestructuring,modernizationandexpansionofcellularnetworksandinitiativestoachieveoperationalexcellence.

REPOSITIONINGEXAMPLE(2)

27

(1984-2005)

(2005-2015)

(2015-now)

USINGPOSITIONINGMAPSTOANALYZECOMPETITIVESTRATEGY

28

USINGPOSITIONINGMAPSTOPLOTCOMPETITIVESTRATEGY

Positioningmapsaregreattoolstovisualizecompetitivepositioning,tomapdevelopmentsovertime,andtodevelopscenariosofpotentialcompetitorresponses

Amapusuallyisconfinedtotwoorthreeattributes foreaseofunderstanding

Whenmorethanthreedimensions areneededtodescribeproductperformanceinagivenmarket,thenaseriesofseparatechartsneedstobedrawn

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STEPSOFAPPLYINGPOSITIONINGMAPS

1.DATASOURCES 2.SCALESANDRATINGSCreateseveralattributeasascaleandratefirmandcompetitorbasedoneachoftheattributesExampleofattributes:• Price• Location• Physicalcondition• Employeeratio

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Newconsumerresearch

Publishedinformation

Datafrompastsurveys

Reportsfromknowledgeable

person

3.FINDINGSFoundcorrelationbetweentheattributesandinsightvariousclustersintheindustry.Thefindingscouldalsopointouttheexistenceofyourownfirmovercompetitor

STEPSOFAPPLYINGPOSITIONINGMAPS(2)

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EXAMPLEOFAPPLYINGPOSITIONINGMAPSTOTHEHOTELINDUSTRY

Thehotelbusinessisgrowingcontinuouslyandishighlycompetitive.Thereareseveralclassesinthebusiness,eachofwhichhasdifferentcriteria,suchas:1. Thedegreeofluxuryandcomfort inphysicalamenities2. facilities offeredinotherphysicalspaces(thereceptionareatomeeting

rooms,abusinesscenter,restaurants,aswimmingpool,andexercisefacilities)

3. Thequalityandrangeofservicesofferedbyhotelstaff4. Theambiance ofthehotel5. Additionalfactorssuchasquietness,safety,cleanliness,andspecial

rewardsprogramsforfrequentguests32

Jalan Embong Malang25-31 · Surabaya, EastJava, 60261 · IndonesiaRp 1.331.000,- /room/night

323 25

Photos in this slide are accessed from sheratonsurabaya.com

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CASE:SHERATONHOTELSURABAYA

DELUXEROOM CLUBROOM DELUXESUITE

EXECUTIVESUITE PRESIDENTIALSUITE

COREPRODUCT

JUNIORSUITE

ROYALSUITE


34


KENDEDESPOOL GRANDBALLROOM KAWILOUNGE

FITNESS LAPATISSERIEBAKERY

SUPPLEMENTARYSERVICE


35


Prices are accessed from booking.com for every room type equal to Deluxe in 4 October 2015

COMPETITOR

36


JWMARRIOTHOTEL1

2

3

4

5

6

HOTELMAJAPAHIT

PULLMANHOTEL

BUMISURABAYACITYRESORT

SHANGRI-LAHOTEL

CIPUTRAWORLDHOTEL

Jl.EmbongMalangNo.85,Surabaya.

Jl.TunjunganNo.65,Surabaya.

Jl.Basuki Rahmat No.67-73,Surabaya.

Jl.BasukiRahmatNo.106- 128,Surabaya.

Jl.Mayjend Sungkono No.120,Surabaya.

Jl.Mayjen Sungkono Kav.87-89,Surabaya.

Rp.1.100.547,- /room/night


Rp.910.281,- /room/night



Rp.1.214.256,-/room/night

ASCOTTWATERPLACEHOTEL6

7

8

9

THEALANAHOTEL

NOVOTELHOTEL

BESTWESTERNHOTEL

CROWNPRINCEHOTEL10

Waterplace ResidenceTowerD1,Jalan Pakuwon IndahLontar TimurKav 3-5,Surabaya.

Jl.KetintangBaruXNo.12,Surabaya.

Jl.RayaNgagelNo.173-175,Surabaya.

Jl.AhmadYani,Surabaya.

Jl.BasukiRahmatNo.123-127,Surabaya.

Rp.910.140,-/room/night





37


Prices are accessed from booking.com for every room type equal to Deluxe in 4 October 2015

SERVICELEVEL

Pricelevelofeveryhotelinformationareobtainedfrombooking.cominthesameroomcriteriaandbookingday

Servicelevelineveryhotelmeasuredbyresearcheropinionwhenvisitingeachhotel

PRICELEVEL

POSITIONINGMAPOFSERVICELEVELVSPRICELEVEL

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EXPENSIVE

LESSEXPENSIVE

HIGHSERVICE MODERATESERVICE

POSITIONINGMAP1ANALYSIS

39


EXPENSIVE

LESSEXPENSIVE

HIGHSERVICE MODERATESERVICE

GROUP1

Eachhotelinthisgroupis5-starhotelsinSurabayawhichhasexpensiveprice

butalsohasastonishingservice

GROUP2

Eachhotelinthisgroupishotelswhichhasgreatservicewithlessexpensivepricethangroup1

GROUP3

Eachhotelinthisgroupishotelswhichserviceismoderateandhasaffordableprice.Inthismap,thereare4-starhotelsthatispotentialtoreach5-starhotelmarket

HotelSheratonhighqualityserviceareofferedwithlowerpricethanMajapahit HotelandBumi SurabayaHotel

SERVICE PRICE

COMPETITIVEMARKET

POSITIONINGANALYSISOFSHERATONHOTELSURABAYA

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PHYSICALLUXURY

LOCATION

HIGHLUXURY

MODERATELUXURY

FINANCIALDISTRICT INNERSUBURBSSHOPPINGDISTRICT

Locationclassificationisdonewiththeassumption:FinancialDistrictà Basuki Rahmat areaShoppingDistrictàMayjend Sungkono areaInnerSuburbsà AhmadYani area

Thelevelofluxuryofthebuildingisassessedfromtheopinionsofresearcherwhenvisitingeachhotel.

POSITIONINGMAPOFLOCATIONVSPHYSICALLUXURY

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HIGHLUXURY

MODERATELUXURY

FINANCIALDISTRICT INNERSUBURBSSHOPPINGDISTRICT

Viewedfromthemapontheside,thereisnocorrelationbetweenthelocationofthehotelwithluxuryowned.Hotelsintheareaclosetoshoppingcentershaveahigherlevelofluxurythantheexistinghotelsinthebusinessandsuburbs.

GROUP1Everyhotelinthisgrouparelocated

alongthewayofBasuki Rahmat whichisacentraldistrictinSurabaya,

becausethisareaisfamousofitsbusinessoffice,bank,andIDX.

GROUP 2Shoppingdistrict areaisthewesternsideofSurabaya.Thisgrouphasluxuryintermsofbuildingandfacilitiesoffered

GROUP 3Everyhotelinthisgrouphasmoderateluxurybuildingsbuthasstrategiclocationneartheairport.

POSITIONINGMAP2ANALYSIS

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COMPETITIVEMARKET

POSITIONINGANALYSISOFSHERATONHOTELSURABAYA

43


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chapter 3: positioning service in competitive market