SERVICES MARKETING: INTEGRATING PEOPLE,

TECHNOLOGY, STRATEGY
MODULE - 7

DR. ZILLUR RAHMAN

PROFESSOR
DEPARTMENT OF MANAGEMENT STUDIES, IIT ROORKEE

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 Understanding Service Products, Consumers, and Markets
Module 1, 2, & 3: New Perspectives on Marketing in the Service Economy
Module 4, 5, & 6: Consumer Behavior in the Service Context
Module 7 & 8: Positioning Services in Competitive Markets

Applying the 4 Ps of Marketing to

Services
Managing the Customer Interface
Module 9, 10, & 11: Developing
Module 20 & 21: Designing and
Service Products Developing Customer
Managing Service Processes
Module 12 & 13: Distributing Relationships
Module 22, 23, & 24: Balancing
Services through Physical and Module 30, 31, & 32: Managing
Demand and Productive Capacity
Electronic Channels Relationships and Building Loyalty
Module 25 & 26: Crafting Service
Module 14, 15, & 16: Setting Module 33, 34, & 35: Complaint
Environment
Prices and Implementing Revenue Handling and Service Recovery
Module 27, 28, & 29: Managing
Management
People for Service Advantage
Module 17, 18, & 19: Promoting
Services and Educating Customers

Striving for Service Excellence

Module 36, 37, & 38: Improving Service Quality and Productivity
Module 39 & 40: Striving for Service Leadership & Creating the Seamless Service Firms
POSITIONING SERVICES IN COMPETITIVE MARKETS
MODULE - 7

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 MODULE OVERVIEW
• Understand how the customer, competitor and company analysis
(i.e., the 3 ‘C’s) helps to develop a customer-driven services
marketing strategy.
• Know the key elements of a positioning strategy (i.e., STP), and
explain why these elements are so crucial for service firms to apply.
• Segment customers on needs first before using other common
bases to further identify and profile the segments.

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 MODULE OVERVIEW
• Distinguish between important and determinant attributes for
segmentation.
• Use different service levels for segmentation.

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 INTRODUCTION
• As competition intensifies in the service sector, it is becoming ever more
important for service organizations to differentiate their
products in ways that are meaningful to customers.
• How do customers make decisions about buying and using a service?
• What makes consumers or institutional buyers
select — and remain loyal to — one supplier over another?

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CUSTOMER-DRIVEN SERVICES MARKETING STRATEGY

• Without knowing which product features are of specific interest to

customers, it is hard for managers to develop an appropriate
strategy.
• In a highly competitive environment, there is a risk that customers
will perceive little real difference between competing alternatives.
• Therefore customers make their choices based
on who offers the lowest price.

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CUSTOMER-DRIVEN SERVICES MARKETING STRATEGY

• Managers need to think systematically about all aspects of the

service offering.

• And they need to emphasize competitive advantage on attributes

that will be valued by customers in their target segment(s).

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CUSTOMER-DRIVEN SERVICES MARKETING STRATEGY

• This typically begins with an analysis of customers, competitors and

the company, collectively often referred to as the 3 ‘C’s.

• This analysis helps a firm to determine the services positioning

strategy, which are segmentation, targeting and positioning,
frequently called STP by marketing experts.

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DEVELOPING A SERVICES MARKETING POSITIONING
STRATEGY

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Customer Analysis
– Market Analysis
– Customer Needs Analysis

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Customer Analysis
– Market Analysis
• Establish attractiveness of overall market and potential
segments within.
• Look at overall size and growth of market, margins and profit
potential, and demand levels and
trends affecting the market.

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Customer Analysis
– Market Analysis
• Is demand increasing or decreasing for the benefits offered
by a particular type of service?
• Are certain segments of the market growing faster than
others?

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Customer Analysis
– Customer Needs Analysis
• Who are the customers in that market in terms of
demographics and psychographics?
• What needs or problems do they have?

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Customer Analysis
– Customer Needs Analysis
• Are there potentially different groups of customers with
differing needs that require different service products or
different levels of service?
• What are the benefits of the service
each of these groups values most?

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Customer Analysis
– Customer Needs Analysis
• For example, in travel industry ,the wealthy retirees may
value comfort and safety most, and are much less price
sensitive compared to young families.

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Competitor Analysis –
– Identification and analysis of competitors.
– Analysis of competitors’ strengths and weaknesses.
– Understanding opportunities for differentiation and competitive
advantage.
– Goal is to enable managers to decide which
benefits could be emphasized to which
target segment.

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Company Analysis –
– Also known as internal corporate analysis.
– Company analysis helps in identifying the organization’s
strengths.
– Strength in terms of its current brand
positioning and image.
– Strength in terms of the resources the
organization has (financial, human labor
and know-how, and physical assets).
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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Company Analysis –
– Company analysis helps in understanding organization’s
limitations or constraints.
– And how its values shape the way it does business.
– Using insights from this analysis, management can select a limited
number of target market segments.
– That can be served with either
existing or new services.

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 CUSTOMER, COMPETITOR AND COMPANY ANALYSIS
(3 ‘C’S)
Company Analysis –
– The core question is: How well can our company and our
services address the needs and problems faced by each
customer segment?

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SEGMENTATION, TARGETING AND POSITIONING (STP)

Segmentation:
– A market segment is composed of a group of buyers who share
common characteristics, needs, purchasing behavior, and/or
consumption patterns.
– Grouping based on demographic, geographic, psychographic
and behavioral variables.
– Customers in the same segment should have
as similar needs as possible, but between
segments, their needs should be as
different as possible.

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SEGMENTATION, TARGETING AND POSITIONING (STP)

Targeting:
– After segmentation the firm has to assess the attractiveness of
each segment.
– And decide which segment(s) would most likely
be interested in its service, and focus on how to serve them
well.

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SEGMENTATION, TARGETING AND POSITIONING (STP)

Positioning:
– The unique place that the firm and/or its service offerings
occupy in the minds of its consumers.
– Differentiation is the first step towards creating a unique
positioning for a service.

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 ELEMENTS AND KEY CONCEPTS OF A SERVICES
POSITIONING STRATEGY
Elements of a Positioning
Key Concepts
Strategy
Segmentation  Segmenting service markets
 Service attributes and service levels relevant
for segmentation
- Important versus determinant
attributes
- Establishing service levels

Targeting  Targeting service markets through four focus

strategies:
- Fully focused
- Market focused
- Service focused
- Unfocused
 Positioning services in competitive markets
Positioning
 Using positioning maps to plot competitive
strategy
 Developing an effective positioning strategy

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 SEGMENTING SERVICE MARKETS
Segmentation Bases
• Demographic segmentation
― Based on age, gender and income etc.
― Example – Bank Al Habib targets senior citizens, The
Makeup Genius app by L’Oréal targets women.
― However, two people in the exact same
demographics can exhibit very different
buying behaviors (e.g., not all 20-year-old
middle-class males feel and behave the
same way).
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 SEGMENTING SERVICE MARKETS

Segmentation Bases
• Psychographic segmentation
―People’s lifestyles, attitudes and aspirations.
―Very useful in strengthening brand identity and creating an
emotional connection with the brand.
―But may not necessarily map to behaviors
and sales.

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 SEGMENTING SERVICE MARKETS
Segmentation Bases
• Behavioral segmentation
―Behavioral segmentation addresses the shortcoming
of not being able to map behaviors as it focuses on
observable behaviors, such as people being non-users,
light users, or heavy users.
―Usage based: non-users, light users or
heavy users.

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 SEGMENTING SERVICE MARKETS

Segmentation Bases
• Needs-based segmentation
―Focuses on what customers truly want in a service and maps
closely to the multi-attribute decision models which was
discussed earlier.
―Example- a time and quality sensitive
segment versus a price sensitive segment.

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 SEGMENTING SERVICE MARKETS

Segmentation Bases
• Needs-based segmentation
―Often people have different needs and their decision-
making criteria vary according to:
―The purpose of using the service.
―Who makes the decision.

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 SEGMENTING SERVICE MARKETS

Segmentation Bases
• Needs-based segmentation
―The timing of use (time of day/week/season).
―Whether the individual is using the service alone or with a
group, and if the latter, the composition of that group.

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 SEGMENTING SERVICE MARKETS
Segmentation Bases
• Needs-based segmentation
―Consider the criteria that you might use when choosing a restaurant
for lunch when you are:
(1) On vacation with friends or family,
(2) Meeting with a prospective business client, or
(3) Going for a quick meal with a coworker.
Given a reasonable selection of alternatives, it is
unlikely that you would choose the same type of
restaurant in each instance, let alone the same one.

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 IMPORTANT VERSUS DETERMINANT SERVICE
ATTRIBUTES
Important Attributes
– Consumers usually make their choices among alternative service
offerings on the basis of perceived differences between them.
– However, the attributes that distinguish competing services from
one another may not always be the most important ones.
– For instance, many travelers rank “safety”
as a very important attribute in their choice of
an airline and avoid traveling on airlines with
a poor safety reputation.

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 IMPORTANT VERSUS DETERMINANT SERVICE
ATTRIBUTES
Important Attributes
– However, after eliminating such alternatives from consideration, a
traveler flying on major routes is still likely to have several choices
of carriers available that are perceived as equally safe.
– Hence, safety is not usually an attribute that influences the
customer’s choice at this point.

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 IMPORTANT VERSUS DETERMINANT SERVICE
ATTRIBUTES
Determinant attributes
– Those that actually determine buyers’ choices between competing
alternatives.
– Are often lower on the list of service characteristics important to
purchasers.
– However, they are the attributes where
customers see significant differences
among competing alternatives.

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 IMPORTANT VERSUS DETERMINANT SERVICE
ATTRIBUTES
Determinant attributes
– For example, determinant characteristics for business travelers
when selecting an airline could be:
―Convenience of departure and arrival times of an airline.
―Quality of in-flight service.
―The ease of making reservations.
― For budget- conscious vacation travelers, on
the other hand, price might assume primary
importance.
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 SEGMENTATION BASED ON
SERVICE LEVELS
Some service attributes are easily quantified, while others are qualitative.
Quantitative Aspects:
– Price, for instance, is a quantitative attribute.
– Punctuality of transport services can be expressed in terms of the
percentage of trains, buses, or flights arriving within a specified
number of minutes from the scheduled time.

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 SEGMENTATION BASED ON
SERVICE LEVELS
Qualitative Aspects:
– Quality of personal service.
– A hotel’s degree of luxury.
– Qualitative aspects are subject to individual interpretation
e.g.,- If customers say they value physical comfort,
What does that mean for a hotel? ambient
conditions or tangible elements such as the
bed ?

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 CONCLUSION

• This module helped us to understand how the customer, competitor

and company analysis (i.e., the 3 ‘C’s) helps to develop a customer-
driven services marketing strategy.
• We learnt key elements of a positioning strategy (i.e., STP), and why
these elements are so crucial for service firms to apply.
• We tried to understand difference between
important and determinant attributes for
segmentation, and different service
levels for segmentation.

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 REFERENCES

• Wirtz, J., Lovelock, C., & Chatterjee, J. (2017) Services Marketing:

People Technology Strategy, Pearson Education, Eighth Edition.
• Zeithaml, V. A., Bitner, M. J., Gremler, D. D., and Pandit, A. (2009)
Services Marketing: Integrating customer focus across the firm, Tata
McGraw-Hill Education Pvt. Ltd., Fourth Edition.
• Hoffman, K. D., & Bateson, J. E. G. (2007) Services
Marketing : Concepts, strategies, & cases, Thomson
Publication, Third Edition.

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Thank You

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