8 Positioning of services
Dr. Puja Waalia Mann
1.0 Introduction
Frequently heard statements like “value for money”, “our people are the key”, or “convenience” are of little descriptive or differentiating value for developing competitive strategy.
Without knowing which product features are of the specific interest to customers, it’s hard for managers to develop an appropriate competitive strategy for their firm and its products, and harder still to evaluate a product’s subsequent performance in the marketplace.Once that target segment or market is clear, the service marketer has to positionhimself appropriately for that segment. Positioning, as is now well understood in marketing, is an integral part of strategy for a new service provider. Even in the case of a mature business, a service marketer needs to reaffirm its positioning in the minds of target customers. At times, a subtle shift in positioning may also be necessary to keep up with the changing consumer preferences or to cope with the challenges from competitors.
1.1. Learning Objectives
In this module, we will learn:
a) Meaning of Positioning of services
b) Importance of positioning of services
c) Steps in Positioning of services
1.2. Key Words:Positioning , Positioning Maps
1.3. Meaning of positioning
Positioning is concerned with the identification, development and communication of a differentiated advantage which makes the organization’s products and service perceived as superior and distinctive to those of its competitors in the mind of its target customers.
Services have a number of distinguishing features which have special implications for the positioning and attributes to emphasize. Three key characteristics for service positioning are the intangibility, the degree of variability or heterogeneity in quality of a given service, and inseparability.
Briefly, the positioning is a mental image or picture that a service provider wouldlike to have about it in the consumer’s mind. It is a deliberate attempt at building an identityof a certain kind for the service. For example, McDonald’s in India has a slightly up marketimage than in the US, where it is viewed as cheap American fast food. Since a hamburgeris an everyday item of American food, it made sense for McDonald’s to develop thatpositioning. In India, that slot is already occupied by a variety of Indian alternatives. Forexample, the idli-dosa corner food stalls in the south, the paratha serving stalls in the north,or the tea and samosa corners of Kolkata. Therefore, the mind space that McDonald’s has tried to occupy is of two types. One, the affluent, westernized teenager. Second, the modernupscale family possibly driven by children who enjoy the feeling of eating at a McDonald’s.
Positioning has a lot to do with the target segment to which we choose to market, and it has elements like price, packaging, communication and ambience, which reinforce thepositioning, attempted by the company.
Banks, for example, used to position themselves as austere, dull but safe place, youcould trust until recently. Some public sector banks in India have still not changed. However,consumer tastes have changed; competitors in the field have brought in modern viewsfrom the advanced countries. Presently, every bank is trying to offer an ambience, which isfriendly with smiling young tellers and receptionists, and customer service representatives,not to mention the call centers and free photographs to open bank accounts with. Thus,positioning can also be a function of a time, and a place or a function of what the consumersexpect.
1.4 Importance of Positioning
To Make Entire Organisation Market-oriented:
Product positioning is a part of the broader marketing philosophy. It concerns with identifying superior aspects of product and matching them with consumers more effectively than competitions. This philosophy makes the entire organisation market oriented.
To Cope with Market Changes:
Once the product is positioned successfully doesn’t mean the task of manager is over. He has to constantly watch the market. As per new developments in the market place, new competitive advantages should be identified, discovered or developed to suit the changing expectations of the market. It makes the manager active, alert and dynamic.
To Meet Expectation of Buyers:
Generally, the advantages to be communicated are decided on the basis of expectations of the target buyers. So, product positioning can help realize consumers’ expectations.
To Promote Consumer Goodwill and Loyalty:
Systematic product positioning reinforces the company’s name, its product and brand. It popularizes the brand. The company can create goodwill and can win customer loyalty.
To Design Promotional Strategy:
More meaningful promotional programme can be designed. Based on what advantages are to be communicated, appropriate means are selected to promote the product. Product positioning signifies those advantages that are significant to consumers. When such benefits are promoted through suitable means of advertising, it definitely catches the interest and attention of consumers.
To Attract Different Types of Consumers:
Consumers differ in terms of their expectations from the product. Some want durability; some want unique features; some want novelty; some wants safety; some want low price; and so on. A company, by promoting different types of competitive advantages, can attract different types of buyers.
To Face Competition:
This is the fundamental use of product positioning. Company can respond strongly to the competitors. It can improve its competitive strength.
To Introduce New Product Successfully:
Product positioning can assist a company in introducing a new product in the market. It can position new and superior advantages of the product and can penetrate the market easily.
To Communicate New and Varied Feature Added Later on:
When a company changes qualities and/or features of the existing products, such improvements can be positioned against products offered by the competitors. Product positioning improves competitive strength of a company. Normally, consumers consider product advantages before they buy it. So, product positioning proves superiority of company’s offers over competitors. It may also help consumers in choosing the right product.
Tool Box 1
Importance of Positioning
To Make Entire Organisation Market-oriented To Cope with Market Changes
To Meet Expectation of Buyers
To Promote Consumer Goodwill and Loyalty To Design Promotional Strategy
To Attract Different Types of Consumers To Face Competition
To Introduce New Product Successfully
To Communicate New and Varied Feature Added Later on
Positioning’s role in marketing strategy.
Positioning links market analysis and competitive analysis to internal corporate analysis.From these three, a position statement can be developed that enables the service organization to answer the questions:
What is our product (or service concept); What do we want to become;
What actions must an organization take to get there?
Positioning may vary for products, outlets, or may be set for the entire organization. However, overall coherency between different positioning strategies must be present.
Failing to implement positioning (especially for difficult to evaluate intangible services) may result in one of several undesirable outcomes:
The organization (or one of its products) is pushed into a position where it faces head-on competition from stronger competitors;
The organization (product) is pushed into a position which nobody else wants because there is little customer demand there;
The organization’s (product’s) position is so fuzzy that nobody knows what its distinctive competency really is;
The organization (product) has no position at all in the marketplace because nobody has ever heard of it.
CHECK YOUR PROGRESS
1. What do you understand by positioning of services?
2. Give some examples of positioning of services .
3. What is the need of positioning of services?
4. Explain the consequences of failure of positioning of services ?
1.4 Steps in Positioning of services
According to Jack Trout, positioning strategy must establish position for firm or product in minds of customers. It should be distinctive, providing one simple, consistent message, must set firm/product apart from competitors and must focus its efforts
1.5.1. Determining the levels of positioning: Step one is to settle on which level needs positioning attention and focus. For e.g. Vodafone has separate corporate plans and individual plans
1.5.2. Identification of attributes: After step one, specific attributes that customers seek comes into play. For e.g. the purpose of using the banking service may be different for business and personal service seekers. Timing also influences choice of service. For e.g. choice of going to a restaurant will be different for a corporate meeting or a weekend family brunch. The service seeker also evaluates alternatives available to him/her and makes a choice basis his perception. This choice need not necessarily reflect the most important attribute he seeks in a service. For eg. a customer using the services of a particular bank ranks ‘rate of interest as the most important feature. But mostly all banks will have similar rates so he makes his choice basis other factors like, bank timings, atmosphere, friendly staff, netbanking facility etc. the service seekers perceptions of this process is the basis for developing positioning map.
1.5.3. Location of attributes on a positioning map: Positioning maps is a useful way to represent consumer perceptions of alternative products in visual format. They are typically two attributes, but nowadays, 3-D models can be used to portray positions on three attributes simultaneously. They are also known as perceptual maps. Positioning maps can be developed for each segment in the target market and these maps will show the positions of different players, as per the perceptions of the consumers in these segments. Mapping future scenarios help identify potential competitive responses and helps in visualization of strategy.
EXAMPLE :AUTO MARKET
Product: Ferrari, BMW, Kia, Range Rover, Saab, Hyundai
The six products are plotted upon the positioning map. It can be concluded that products tend to bunch in the high price/low economy(fast) sector and also in the low price/high economy sector. There is an opportunity in the low price/ low economy (fast) sector. Maybe Hyundai or Kia could consider introducing a low cost sport saloon. However, remember that it is all down to the perception of the individual.Positioning is all about ‘perception’. As perception differs from person to person, so do the results of the positioning map e.g what you perceive as quality, value for money, etc, is different to my perception. However, there will be similarities.
Products or services are ‘mapped’ together on a “positioning map”. This allows them to be compared and contrasted in relation to each other. This is the main strength of this tool. Marketers decide upon a competitive position which enables them to distinguish their own products from the offerings of their competition. Basic positioning map template :
The marketer would draw out the map and decide upon a label for each axis. They could be price (variable one) and quality (variable two), or Comfort (variable one) and price (variable two). The individual products/services are then mapped out next to each other. Any gaps could be regarded as possible areas for new products.
Tool Box 2
Steps in Positioning of services
Determining the levels of positioning Identification of attributes
Location of attributes on a positioning map Evaluating position options
Implementing positioning
1.5.4. Evaluating position options: According to Ries and Trout, there are 3 positioning options:
- Strengthening current position against competitors: This means to better ones own services and thus strengthening the current position against competitors
- Identifying an unoccupied market position: This means to identify and fill the unoccupied and unnoticed .gaps through better service delivery.
- Repositioning the competition: This means to frequently reposition in order to attain a better position as compared to the competitor can be achieved through advertising and innovation.
1.5.5. Implementing positioning : The positioning should be communicated to target audience by all employees, positioning and advertising .
The research and analysis that underlie development of an effective positioning strategy are designed to highlight both opportunities and threats to the firm in the competitive marketplace, including the presence of generic competitors. Figure 3.3 identifies the basic steps involved in identifying a suitable market position and developing a strategy to reach it.
CHECK YOUR PROGRESS
Fill in the Blanks
1. Product positioning is a part of the ___________philosophy.
2. Products or services are ‘mapped’ together on a “___________”.
3. Positioning is all about ‘_________’.
4. positioning strategy must establish _______for firm or product in minds of customers.
5. Positioning maps is a useful way to represent __________of alternative products in visual format.
ANSWERS:-1. broader marketing2. positioning map 3. perception4. position5.consumer perceptions
1.4 Types of positioning
There are a variety of ways in which positioning can be arrived at. Some major ways of doing this are discussed below.
Tool Box 3
Types of positioning
Positioning by features
Positioning by comparison
Positioning by benefit to consumer: Positioning as an expert
Positioning through guarantees Positioning as a leader
Positioning through smart tag lines Positioning through emotions
1.6.1 Positioning by features: It is based on a single feature or attribute of a service.If your product or service has some unique features that have obvious value this may be the way to go. For example, the largest roller coaster in town: an amusementpark. One new ride added every month, for a similar theme park, live music alongwith a dinner, for the restaurant.
1.6.2Positioning by comparison: In this service is positioned against a particular competitor. For example, the highest occupancy rates in town fora hotel, the highest percentage of satisfied customers for an airline, or the highest percentage of successful candidates, for a coaching class or educational institution. Business schools frequently use rankings in independent surveys to claim they are in the top 10 or 15 in the country. One business school, Indian Institute of Planning and Management (IIPM), even positions itself against the Indian Institutes of Management (IIMs), with the line “Dare to Think Beyond the IIMs”.
1.6.3. Positioning by benefit to consumer: It is based on some benefit the customer derives using a particular service . As in “You have a dream of becoming an expertprogrammer, working for a multinational, going abroad, etc., and we help you tofulfill it”, could be the slogans of a computer training institute such as NIIT or SSI.Or, a caterer could position himself as “taking the hassles out of cooking and cleaningfor a party”, or a resort could position itself as a “get away from the year round hecticpace of life”. Airlines such as Indian Airlines offer the largest connections to mostIndian towns and cities, and try to use it to position themselves.
1.6.4. Positioning as an expert: For example, we understand air travel, for an airline, or, theexpert on budget tours for a tour operator.
1.6.5. Positioning through guarantees: Full satisfaction, or your money back, or returnswith no questions asked, in case of retail stores.
1.6.6. Positioning as a leader: Number 1 in the furniture retailing business, or leadershipwith responsiveness, in the banking industry.
1.6.7. Positioning through smart tag lines, which may implicitly convey some benefit, like the famous line used by Met Life Insurance, USA, which says “Get Met. It Pays.” (In India, they are currently using the tag line “Have you met life today?”). This may indicate that it settles claims with less of fuss than competitors. It may also imply other value, though not explicitly specified.
1.6.8. Positioning through emotions such as fear, love, kinship, concern for the environment, etc. A hotel chain in India calls its properties Ecotels, to indicate the environmental consciousness at various levels. Sahara Airlines, a late entrant into the airline business, positioned itself as “Emotionally Yours”.
CHECK YOUR PROGRESS
1. Explain the steps in positioning of services ?
2. Explain different attributes with examples on whose basis positioning of services in done ?
1.7 Summary
After the logical step of segmenting and targeting the market, a company should position itself in the minds of customers for its unique attributes, as compared to its competitors. Positioning a service is difficult as compared to products because services are intangible in nature. However, a company should identify a competitive position for itself in the market, by differentiating itself from the competitors.Further, a company should add value to its services by improving either its primary activities which consist of inbound logistics, operations, outbound logistics, marketing and sales, and service or its support activities which include the procurement processes, infrastructure of a firm, its human resource management, and the technology development.
These interdependent and interrelated activities, together contribute to the margin that the company aims to earn. This concept of a value chain has helped organizations identify their core and non-core activities so that some of them can be outsourced. The firm’s strengths help the firm gain either a cost advantage or a differential advantage over its competitors.To gain a competitive advantage, a company should differentiate itself from its competitors based on the attributes that are important, distinct, communicable, superior, preemptive, affordable and profitable to the customers. Further, companies should understand the importance of positioning in developing a marketing strategy and its influence on the profit margins of a particular company.This understanding will help a firm in framing a suitable positioning strategy. As part of the positioning strategy, a company should first determine the levels of positioning it wants to occupy in the market, identify the attributes that are important to the target market, and locate these attributes on the positioning map in relation to its customers.Further, it should evaluate the positioning options available and decide if it wants to position itself against its competitor, or occupy a unique position in the market, or reposition itself. Last, it should opt for a good implementation strategy that clearly communicates the desired position to its customers.
Learn More:
- Ravi Shanker, ‘Services Marketing: The Indian Perspective’, Excel Books.
2.Lovelock, ‘Services Marketing: People, Technology, Strategy’, Pearson Education.
3.Zeithaml and Bitner, ‘Services Marketing: Integrating Customer Focus Across the Firm’, Tata McGraw Hill.
4.Rust, Zahorik, and Keiningham, ‘Service Marketing’, Addison Wesley.
5.Fitzsimmons and Fitzsimmons, ‘Service Marketing: Operations, Strategy, and Information Technology’, McGraw Hill.