What is service? Before trying to understand services marketing, let's try to answer this. Service is seen in different perspectives at different times. For our convenience, we divide into two - Historical View and Modern view.
In early times, people focused on wealth creation. They considered goods as wealth (value creation), because ownership can be established on goods and can be exchanged through trade, barter and gifts. Adam Smith, in his book, classified the output as productive and unproductive labor. Productive labor can be produced, stored and exchanged for consideration, usually in financials. Unproductive labor perishes after the time of production and so doesn't contribute to the wealth. Production and consumption cannot be separated. A French economist, Jean-Baptise Say (5 January 1767 – 15 November 1832), detailed that production and consumption are inseparable in services and coined "immaterial products" to describe service.
Now a days, the service perspective totally changed. Production and consumption in service can be separated. Take the case of dry cleaning, lawn moaning, production and consumption are separated. Not all services are perishable in nature. Think about video recordings of lectures. Even after the lecture service, the lecture is preserved in the video and is not perishing. Services can make durable values. Take the case of education, training and preaching. They create value for our lifetime. Thus the perspective of services changed in the modern days.
Now how can we define a service. "All economic activities whose output is not a physical product, generally consumed at the time of production and provides added value that are essentially intangible concerns to its first purchaser"
Let's see the famous definition of Philip Kotler." A service is an act of performance that one party can offer to another that is essentially intangible and does not relate in the ownership of anything. It's production may or may not be tied to a physical product"
Now, we will try to give the vignette of service.
1. Intangible
2. Perishable ( generally perishable, but there are some non perishable also)
3. Simultaneous production and consumption ( asynchronous also happen now a days)
4. Heterogeneous ( no two services will be alike)
5. Cannot be inventoried
6. Labor intensive
7. Very high degree of customer contact
Then what is marketing? It is "meeting needs profitably".( It is notable that marketing is different from marketing management)
What is services marketing? It is simply marketing of services. Thus, identifying the intangible needs and meeting them profitably is services marketing.
What is services marketing? It is simply marketing of services. Thus, identifying the intangible needs and meeting them profitably is services marketing.
Now how can we classify the services which we offer to the customers. There are several ways of classifying services. Let's see one by one.
I. Services are benefits with out ownership. It can be broadly divided (classified on the basis of "benefits without ownership") into five:
1. Rented goods services (boats, cycle, cab service)2. Defined place and rental services (seat in aircraft, table in restaurant, storage space in warehouse)
3. Labor and expertise service (consultants, surgeon, cleaner )
4. Access to share physical environments (museum, theme park, gym)
5. Access to systems and networks (tele-communication, e-banking )
In all these services you will get the benefit but ownership is not transferred. Is there any service where the ownership is transferred? NO! .. Only in goods the ownership can be transferred. In service, the users only get the access for the services.
II. Service are classified on the basis of tangibility
1.Rented goods ( Eg. Cabs, Hotel rooms)2.Owned goods ( Eg. T.V repair, Washing Machine repair)
3.Non-goods ( Eg. Education, Counselling)
III. Services classified on the basis of Skill level of Service provider
1. Professional ( Eg. Doctor, Professor)2. Non professional ( Eg. Delivery boy)
IV. Services classified on the basis of goal of service provider
1. Profit ( Eg. Airlines, hotels)2. Non profit ( Eg. NGO)
V. Services classified on the basis of labor intensiveness
1. People baseda. Skilled ( Eg. Printing, Catering)
b. Unskilled ( Eg.Gardener)
2. Equipment based
a. Completely automated ( Eg. ATM, Coffee vending machines)
b. Partially automated (Eg. Dry cleaning, Movie theatre)
VI. Service classified on the basis of customer contact
1. High ( Eg. Education, hospitality services)2. Low (Eg. Postal service, appliance repair service)
VII. Services classified on the basis of process perspective
1. People processing - Services directed at people's bodies. Eg. Healthcare, Lodging2. Mental stimulus processing - Services directed at people's mind. Eg. Education, Psychotherapy
3. Possession processing - Services directed at physical possession/ things. Eg. laundry, Dry cleaning
4. Information processing - Services directed at intangible assets. Eg. Banking, legal services
VIII. Services classified on the basis of service delivery methods
Nature of interaction between customer and service organization |
Single site |
Multiple Site |
Customer
goes to service provider
|
Theater,
Hair dresser
|
Bus service,
Fast food chain
|
Service
provider comes to customer
|
Lawn care,
Taxi
|
Mail
delivery, Emergency repair
|
Customer and
service provider transact at arm’s length
|
Credit card,
Local TV stations
|
Broadcast
network, Telephone
|
IX. Services classified on the basis of end users
1. Consumer services Eg, Hair saloons2. Business to business services Eg. Market research consultancy
3. Industrial services Eg. Machine installations
Before entering into the components of service marketing, we will try to make the basic differences between service and goods.
1. Ownership
In goods, the title of the goods can be transferred
In services, title cannot be transferred.
2. Tangibility
Goods are tangible in nature
Services are intangible in nature
3. Production and consumption
In goods, production and consumption are separate
In services, both happen simultaneously.
4. Evaluation
In goods, evaluation can be done easier when compared to goods. Eg. Quality check, Control charts can be used
In services, evaluation is difficult.
5. Perish-ability
Goods are not perishable
Services are perishable
6. Storage
Goods can be stored after production
Services cannot be inventories after production
7. Standardization
Goods can be homogenized
Services are heterogeneous. There are no standard services.
8. Customer involvement
Customer involvement is not necessary in goods
Customer involvement is necessary in services.
Next we will see the components of services marketing. The components are eight in numbers.
First four Ps are common to both goods and services and are called Traditional mix. They are:
1. Product
The first P, product refers to the basic thing which the firm is selling, whether it's good or service. Service products lie at the heart of the services marketing firm. Planning the marketing mix begins with creating the service concept which will offer value to the target customers.This service concept is further developed into service product. The service product has two components/ elements. They are (a) Core service product (directly addresses the customer needs) (b) Supplementary service product ( value added enhancements).
2. Place
Place refers to the market place (Physical) or space (cyberspace/ internet) where the product is traded. Place always connected with time. How much time it would be needed to reach that place? This is the basic question we will thing while thinking to commute. Both are inter-related. If we go and avail a service naturally the rate will be cheaper than availing a service by asking the provider to do home service. Even we can save the cost while going to the service provider's place. Factually, speed and convenience of the customer plays important role here.
3. Promotion
Promotion refers to how we market our product. It includes informing, educating, persuading and reminding customers about the service or goods. It's about how we place/ position our service or goods in the minds of the customers.It involves all the communication tools through which we inform about our product.
4. Price
The price has became the quality indicator now a days. This price includes both the cost and profit of a product. Price sets a standard for service. Price is not only related to the benefit of a product but also the place where we deliver, time, Physical environment, quality, people and process. This is the main component in the mix which determines the future of the business.
Next extended four Ps are called Modern mix. They are:
5. Process
The actual procedures, mechanisms, and the flow of activities through which the service is delivered (Service delivery and operating systems). According to the customers and situations the process changes.
6. Physical Environment
The environment in which the service is delivered and where the customers and service providers interact and any tangible component ( brochures, letterhead, business cards, report formats, buildings, landscaping, staff member's uniforms, etc) which facilitate performance or communication of the service. Servicescape- can be put in a word to describe physical environment .
7. People
All human actors who play a part in service delivery and influence the buyer's perceptions, namely customers and firm's personnel. In professions like consulting, counselling, teaching the provider is the service. So people are an important mix in services marketing.
8. Production and quality
Production refers to synergy in value creation. Synergy of both customers and service provider. Because in services customer involvement is very important aspect and needs to be tied with quality.
.
Next important concept is services marketing triangle. This concept is a blend of holistic marketing concept and services marketing.
Each side of the triangle represents a type of marketing and each point represents person who interacts. The top point represents the service providing company, left bottom point represents service providers(employees of the service providing company) and the right bottom point represents customers. The right side represents external marketing, bottom side represents interactive marketing and left side represents internal marketing. Let's see one by one.
1. External marketing - This is between company and customer. The company aims at customers to promote its services through advertising, pricing, distributing,sales promotions, direct sales, and direct marketing. The company informs, educates, persuades the customers through external marketing.
2. Interactive marketing - This is between service providers and customers. How service providers encounters their customers is interactive marketing. It describes the employee's skills in serving the client. Clients not only judge by its technical quality but also by its functional quality. This includes personal selling, customer service customer, servicescapes and so on. This is the main element in the triangle as the service delivery happens here.
3. Internal marketing - This happens between company and employees. This includes communication, training and motivating the employees to serve the customers well.
Next step is we have to understand a service consumption model. Service consumption can be divided into three stages.
I. Prepurchase Stage
This stage begins with need awareness, information search and evaluation of alternatives. Let's see one by one.1.Need awareness - Need arousal is the key factor in availing a service. This need may be triggered by:
(a) Unconscious minds ( personal identity and aspirations)
(b) Physical conditions ( hunger, thirst)
(c) External sources ( firm's marketing activities)
2. Information search - Once the need is found, next a person will search for a solution to satisfy his need. There would be different solutions to a need and the person has to choose a correct solution to satisfy his need. Say, if a person is in thirst(need), he can drink coke, mineral water, fresh juices or carbonated drinks.He has to choose a correct solution for that need. That solution might confront you with different alternatives. This may be because of past experiences, online searches, retail displays, and recommendations. Say, if you have chosen water, there are many mineral water brands, say aquafina, bisleri, Tata water plus, and so on.
3. Evaluating alternatives - Ease or difficult in evaluating a product before purchase is a function of its attributes. There are three attributes.
(a) Search attributes - These are tangible characteristics customers can face before purchase. , which includes style, color, texture, taste and sound. These help customers to understand and evaluate what they will get in exchange of money and reduces the sense of uncertainty and risk associated with the purchase.
(b) Experience attributes - These can not be evaluated before purchase. Customers must experience the service before they assess the attributes such as reliability, ease of use and customer support.
(c) Credence attributes - Product attributes which customers find hard to evaluate even after consumption .
Next is perceived risk which is also associated with the decision. What is perceived risk?
Customer's level of uncertainty regarding outcome of the purchase decision. They do subjective judgement about the characteristics and severity of the service before the purchase. The credential attributes make it more complex. If the purchase decision is bad, they can return in case of goods. But, in services it cannot be returned.
Another important input is service expectations. These expectations are formed during the search and decision making process. These expectations may because of word of mouth comments, news stories, firm's own marketing efforts and also may be situation specific. What are the components of service expectations?
(i) Desired service - the level of service the customer hopes to receive ( wished to receive).
(ii) Adequate service - the minimum level of service the customer will accept without being dissatisfied.
(iii) Predicted service - the level of service which the customers anticipate to receive. It can be affected by word of mouth, service provider promises and past experiences. It directly affects the customer in defining their adequate service.
(iv) Zone of tolerance - It is difficult for the providers to provide consistent services at all levels. Even performance by the same provider will vary from one day to another. The extent to which the customers accept this variation is called zone of tolerance.
II. Purchase Decision
After evaluating the alternatives (by comparing the important attributes with competing offerings, assessing perceived risk, and developing the desired, perceived and adequate service level expectations) they select the best option. After he chooses it, he encounters the product.
Service encounter stage - a service encounter is a period of time during which a customer interacts directly with a service provider. we use number of models and frameworks to understand consumer's behavior during the service encounter experience.
1. Moments of truth - The perceived quality is realized at the moment of truth, when the service provider and the service customer confront one another in the arena. The skill, motivation, and the tools employed by the provider and the expectations and behavior of the customer together will create service delivery process. More or less it is like bull fighting.
2. High/ Low contact service model - Service involves different levels of contact with service operation. It may be high or low according to the service operation. High-contact service involves interaction throughout the service delivery between customers and provider. During the course of service delivery customers usually are exposed to all physical clues about the organization - the externals, interior of the buildings, behavior of the providers and even other customers. The best example is saloon. Whereas in low-contact services, involve very little physical contact between customer and provider. Instead, contact takes place at arm's length through electronic media.
3. The servuction system - French researchers Pierre Eiglier and Eric Langeard were the first to conceptualize the service as a system that integrated marketing, operations and customers. They coined the term servuction system, to describe the part of service environment which is visible and experienced by customers. It consists of technical core and service delivery system.
(a) Technical core system is the invisible back stage where the inputs are processed and the elements of the service products are created.
(b) Service delivery system is the visible front stage where the final assembly takes place and the product is delivered to the customer.
The proportion of the overall visible service operation varies according to the level of customer contact. High customer contact services involve the physical person and entire service components and many interactions - moment of truth - have to be managed. In low customer contact services they only see the front stage operations and the interactions are reduced as much as possible. If there is any problem, customers contact the front office through phone and get the solutions.
4. Theater as metaphor for service delivery - This metaphor is particularly useful approach for high contact service providers such as physicians and hotels. Let's see the stage, members of the cast, and script of the players.
Stage - The setting of the stage changes from one act to another. Some service have minimum props and some have many. Ex., Taxi has minimum props and Resort and hotels have many props which includes exteriors to landscaping.
Members of the cast - The front stage personnel are the members of the cast. Sometimes the members have to wear uniform costumes. Dress code is important for the actors.
Role and Script theory - Role have been defined as combination of social cues, or expectation of the society, that guide the behavior in a specific setting or context. In service encounters both the employees and customers have roles to play. The satisfaction and productivity depends upon each persons level of act. Employees must perform their roles with reference to customer expectations otherwise they will be disappointed. And the customers too, have to play the role by the rules. Script specifies the sequence of behaviors that employees and customers are expected to learn and follow during service delivery. Employees learn from service training and the customers learn scripts through experience, communication with others and designed communications. Depending upon the nature of the work, employees have to learn and repeat specific lines from announcements to sing-song sales spiel. Role and script theory govern both consumer and behavior during an encounter.
These models help to understand how the customer encounters service delivery and provider according to the service nature.
3. The servuction system - French researchers Pierre Eiglier and Eric Langeard were the first to conceptualize the service as a system that integrated marketing, operations and customers. They coined the term servuction system, to describe the part of service environment which is visible and experienced by customers. It consists of technical core and service delivery system.
(a) Technical core system is the invisible back stage where the inputs are processed and the elements of the service products are created.
(b) Service delivery system is the visible front stage where the final assembly takes place and the product is delivered to the customer.
The proportion of the overall visible service operation varies according to the level of customer contact. High customer contact services involve the physical person and entire service components and many interactions - moment of truth - have to be managed. In low customer contact services they only see the front stage operations and the interactions are reduced as much as possible. If there is any problem, customers contact the front office through phone and get the solutions.
4. Theater as metaphor for service delivery - This metaphor is particularly useful approach for high contact service providers such as physicians and hotels. Let's see the stage, members of the cast, and script of the players.
Stage - The setting of the stage changes from one act to another. Some service have minimum props and some have many. Ex., Taxi has minimum props and Resort and hotels have many props which includes exteriors to landscaping.
Members of the cast - The front stage personnel are the members of the cast. Sometimes the members have to wear uniform costumes. Dress code is important for the actors.
Role and Script theory - Role have been defined as combination of social cues, or expectation of the society, that guide the behavior in a specific setting or context. In service encounters both the employees and customers have roles to play. The satisfaction and productivity depends upon each persons level of act. Employees must perform their roles with reference to customer expectations otherwise they will be disappointed. And the customers too, have to play the role by the rules. Script specifies the sequence of behaviors that employees and customers are expected to learn and follow during service delivery. Employees learn from service training and the customers learn scripts through experience, communication with others and designed communications. Depending upon the nature of the work, employees have to learn and repeat specific lines from announcements to sing-song sales spiel. Role and script theory govern both consumer and behavior during an encounter.
These models help to understand how the customer encounters service delivery and provider according to the service nature.
III. POST ENCOUNTER STAGE
In this stage the customer evaluates the service performance they have encountered and compare with their prior expectations. Three things have to be discussed here.
1. Service expectations - During decision making process customers assess the attributes and risks related to the service offering. They develop expectations about how service will perform?( predicted, adequate and desired service levels). The zone of tolerance will be narrow if the attributes were important in the process. The customer will have high expectations if he have paid high premium for a high quality service and will be deeply disappointed if the provider fails.
2. Customer Satisfaction - Satisfaction is an attitude-like judgement following a consumption experience. Confirmation and dis-confirmation is the determinant of satisfaction. Satisfaction judgement is made based on the comparison of the service encounter and expected level of service( predicted service level). If the service is better than expected, it will be labelled as positive dis confirmation, if the service is less than the expected, it will be labelled as negative dis confirmation and if the service is equal to the expected, then it will be labelled as positive confirmation.
3. Customer delight - It is a function of three components - unexpectedly high level of performance, arousal and positive affect It is more than just avoiding problems - zero defects strategy -
This three stage model of service consumption help us to understand how individual recognize their needs, search for alternative solutions, choose, use, experience and finally how they evaluate the service.
Next thing which is necessary to discuss is how to position your service in front the target market. Positioning is concerned with creating, communicating and maintaining the distinctive difference, that will be noticed and valued by the target customers with whom the firm tries to develop long-term relationship. Successful positioning requires to understand the target customer's preferences, their conception of value and features of competitor's offerings. Price and product attributes are closely associated with positioning strategy.
Achieving competitive advantage typically requires a firm to focus. The company has two dimensions to focus - market focus and service focus.
Market focus refers to the extent to which a firm serves a few or many markets. Service focus refers to the extent to which a firm offers few or many services. These two dimensions gave four basic strategies.
1. Unfocused - Organization addresses wide market and provides a wide variety of products.The danger with this strategy is the unfocused firms will be jack of all trades but master of none. Many departmental firms follow this strategy.
2. Service focused - Firms offer a narrow range of products to a wide market. Starbucks coffee shops follow this strategy.
3. Market focused - Firms offer wide range of products to a narrow market. Rentokil Initial Follow this strategy.
4. Fully focused - Organisation provides a limited range of products to a narrow market. Shouldice hospital follow this strategy.
Market segmentation forms the basis for Focused strategies. A market segmentation is composed of a group of buyers who have common characteristics, needs, purchasing behavior, and consumption pattern. A target segment is one that a firm has selected from among those in the broader market and can be defined under certain basis.Marketers must not only select on the basis of their sales and profit potential but also with reference to firm's ability to match or exceed the competing offering in the market.
Once a target segment is selected, firms must provide their market with the right service concept. For this, all firms will conduct formal research to identify which attributes of a given service are important to the target segment and how customers perceive the competing players in the market as performing against their attributes. Individuals may set different priorities for attributes according to -
i. the purpose of using the service
ii. who makes the decision
iii. the timing of use
iv. whether the is using the service alone or with a group and if latter so, what's the composition of that group.
Why we have to position our self different from the competitors.Positioning distinguishes a brand from its competitors. Jack Trout listed the four principles of positioning
1. A company must establish a position in the minds of its target customers
2. The position should be singular, providing one simple and consistent message
3. The position must set a company apart from its competitors
4. A company cannot be all things to all people - it must focus its efforts.
Next we will see, how to develop an effective positioning strategy.
Positioning involves decisions on attributes important to customer.Because of the intangible, experimental nature of many services, an explicit positioning strategy is valuable in helping customers to fix on what to expect. Positioning links market analysis and competitor analysis to internal corporate analysis. From these three a position statement can be developed that allows service organization to answer six questions for developing an effective positioning strategy.What are these questions?
1. What does our firm currently stand for in the minds of current and prospective customers?
2. What customers do we serve now, and which ones would we like to target in the future?
3. What is the value proposition for each of our current service offerings and what market segments in each one targeted at?
4. How does each of our service products differ from those of our competitors?
5. How well do customers in the chosen target segments perceive our service offerings as meeting their needs?
6. What changes do we need to make our offerings in order to strengthen our competitive position within our targeted segment?
This framework gives you the steps involved in identifying a suitable market position and developing a strategy to reach it.
Market analysis - This addresses trend of demand and geographic location of demand. Research needed to gain a better understanding of customer needs and preferences within different segments and also how each perceives the competition.
Internal corporate analysis - The object is to identify the organization's resources, limitation, constraints, goals and it shapes the business. Using the insight of this analysis, company should select limited number of target segments with either existing or new services.
Competitor analysis - This helps to find out competitors' strengths, weaknesses and also opportunities for differentiation. Relating these insight and internal analysis, the management must think in what way it can differentiate and what is its competitive advantage. This analysis consider both direct and indirect competition.
Position statement - The outcome of integrating these three forms of analysis is a statement that articulates the desired position of the organization in the market place. Marketers now can develop a specific plan of action.
This have to be done periodically as position changes overtime. They change according to the change in market structures, technology, competitive activity and evolution of the firm itself. Some companies increase their offerings and expand sales and some companies decrease their offerings and discontinue.
We can use positioning maps to plot competitive strategy. Positioning maps are great tools to visualize competitive positioning. This is a useful way of representing customer's perceptions of alternative product graphically. A map is usually confined to two attributes for ease of understanding. If more than three needed then a series of separate charts needed to be drawn for visualization purpose.
Markets constantly change and so firms have to make significant changes in an existing position. Such a strategy is called re positioning, means redefining service characteristics. Marketers need to find ways of creating meaningful value propositions for their products that stake a distinctive and defensible position in the market.
Service product
Let discuss the components of service. What are they?
1. Core product - It is the central component that supplies the benefits to the customers.
2. Supplementary services - These services augment the core services by facilitating its use and enhancing its value. For competitive advantage supplementary service are suggested.
3. Delivery process - The process which delivers both the core and supplementary products.
Flower of the service
Core service often have a range of similar supplementary service elements. There are two kinds.
1. Facilitating service - required for either service delivery or aid in the use of service product. This includes information, order taking, billing, payment.
2. Enhancing supplementary services - Add extra value for customers. This includes consultation, hospitality, safe keeping, exceptions
Next thing which is necessary to discuss is how to position your service in front the target market. Positioning is concerned with creating, communicating and maintaining the distinctive difference, that will be noticed and valued by the target customers with whom the firm tries to develop long-term relationship. Successful positioning requires to understand the target customer's preferences, their conception of value and features of competitor's offerings. Price and product attributes are closely associated with positioning strategy.
Achieving competitive advantage typically requires a firm to focus. The company has two dimensions to focus - market focus and service focus.
Market focus refers to the extent to which a firm serves a few or many markets. Service focus refers to the extent to which a firm offers few or many services. These two dimensions gave four basic strategies.
1. Unfocused - Organization addresses wide market and provides a wide variety of products.The danger with this strategy is the unfocused firms will be jack of all trades but master of none. Many departmental firms follow this strategy.
2. Service focused - Firms offer a narrow range of products to a wide market. Starbucks coffee shops follow this strategy.
3. Market focused - Firms offer wide range of products to a narrow market. Rentokil Initial Follow this strategy.
4. Fully focused - Organisation provides a limited range of products to a narrow market. Shouldice hospital follow this strategy.
Market segmentation forms the basis for Focused strategies. A market segmentation is composed of a group of buyers who have common characteristics, needs, purchasing behavior, and consumption pattern. A target segment is one that a firm has selected from among those in the broader market and can be defined under certain basis.Marketers must not only select on the basis of their sales and profit potential but also with reference to firm's ability to match or exceed the competing offering in the market.
Once a target segment is selected, firms must provide their market with the right service concept. For this, all firms will conduct formal research to identify which attributes of a given service are important to the target segment and how customers perceive the competing players in the market as performing against their attributes. Individuals may set different priorities for attributes according to -
i. the purpose of using the service
ii. who makes the decision
iii. the timing of use
iv. whether the is using the service alone or with a group and if latter so, what's the composition of that group.
Why we have to position our self different from the competitors.Positioning distinguishes a brand from its competitors. Jack Trout listed the four principles of positioning
1. A company must establish a position in the minds of its target customers
2. The position should be singular, providing one simple and consistent message
3. The position must set a company apart from its competitors
4. A company cannot be all things to all people - it must focus its efforts.
Next we will see, how to develop an effective positioning strategy.
Positioning involves decisions on attributes important to customer.Because of the intangible, experimental nature of many services, an explicit positioning strategy is valuable in helping customers to fix on what to expect. Positioning links market analysis and competitor analysis to internal corporate analysis. From these three a position statement can be developed that allows service organization to answer six questions for developing an effective positioning strategy.What are these questions?
1. What does our firm currently stand for in the minds of current and prospective customers?
2. What customers do we serve now, and which ones would we like to target in the future?
3. What is the value proposition for each of our current service offerings and what market segments in each one targeted at?
4. How does each of our service products differ from those of our competitors?
5. How well do customers in the chosen target segments perceive our service offerings as meeting their needs?
6. What changes do we need to make our offerings in order to strengthen our competitive position within our targeted segment?
Market analysis - This addresses trend of demand and geographic location of demand. Research needed to gain a better understanding of customer needs and preferences within different segments and also how each perceives the competition.
Internal corporate analysis - The object is to identify the organization's resources, limitation, constraints, goals and it shapes the business. Using the insight of this analysis, company should select limited number of target segments with either existing or new services.
Competitor analysis - This helps to find out competitors' strengths, weaknesses and also opportunities for differentiation. Relating these insight and internal analysis, the management must think in what way it can differentiate and what is its competitive advantage. This analysis consider both direct and indirect competition.
Position statement - The outcome of integrating these three forms of analysis is a statement that articulates the desired position of the organization in the market place. Marketers now can develop a specific plan of action.
This have to be done periodically as position changes overtime. They change according to the change in market structures, technology, competitive activity and evolution of the firm itself. Some companies increase their offerings and expand sales and some companies decrease their offerings and discontinue.
We can use positioning maps to plot competitive strategy. Positioning maps are great tools to visualize competitive positioning. This is a useful way of representing customer's perceptions of alternative product graphically. A map is usually confined to two attributes for ease of understanding. If more than three needed then a series of separate charts needed to be drawn for visualization purpose.
Markets constantly change and so firms have to make significant changes in an existing position. Such a strategy is called re positioning, means redefining service characteristics. Marketers need to find ways of creating meaningful value propositions for their products that stake a distinctive and defensible position in the market.
Service product
Let discuss the components of service. What are they?
1. Core product - It is the central component that supplies the benefits to the customers.
2. Supplementary services - These services augment the core services by facilitating its use and enhancing its value. For competitive advantage supplementary service are suggested.
3. Delivery process - The process which delivers both the core and supplementary products.
Flower of the service
Core service often have a range of similar supplementary service elements. There are two kinds.
1. Facilitating service - required for either service delivery or aid in the use of service product. This includes information, order taking, billing, payment.
2. Enhancing supplementary services - Add extra value for customers. This includes consultation, hospitality, safe keeping, exceptions
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