Positioning and Differentiation of Services

Services firms are not identifying their key market segments and then determining how they wish consumers to perceive both their company and its products and services. Positioning is of particular significant in the services sector as it places an intangible service within a more tangible frame of reference. Thus the concept of positioning stems from a consideration of how an organization wishes its target customer to view its products and services in relationship to those of its competitors and their actual, or perceived, needs.

“Positioning is concerned with the identification, development and communication of a differentiated advantage which makes the organization’s products and services perceived as superior and distinctive to those of its competitors in the mind of its target customers.”

Positioning offers the opportunity to differentiate any service. Each service firm and its goods and services has a position or image in the consumer’s mind and this influences purchase decisions. Positions can be implicit and unplanned and evolve over a period of time or can be planned as part of the marketing strategy and then communicated to the target market. The purpose of planned positioning is to create a differentiation in the customer’s mind which distinguished the company’s services from other competitive services. It is important to establish a position of value for the product or service in the minds of the target market, i.e. it must be distinguishable by an attribute, or attributes, which are important to the customer. These attributes should be factors which are critical in the customer’s purchase decision.

There is therefore no such thing as a commodity or ‘standard’ service. Every service offered has the potential to be perceived as different by a customer. Buyers have different needs and are therefore attracted to different offers. It is therefore important to select distinguishing characteristics which satisfy the following criteria:

  • Importance — the difference is highly valued to a sufficiently large market
  • Distinctiveness — the difference is distinctly superior to other offering which are available.
  • Communicability — it is possible to communicate the difference in a simple and strong way.
  • Superiority — the difference is not easily copied by competitors.
  • Affordability — the target customers will be able and willing to pay for the difference. Any additional cost of the distinguishing characteristic(s) will be perceived as sufficiently valuable to compensate for any additional cost.
  • Profitability- the company will achieve additional profits as a result of introducing the difference

Each product or service has a set of attributes which can be compared to competitive offerings. Some of these attributes will be real, others will be perceived as real. A company wishing to position itself should determine how many attributes and differences to promote to target customers. Some marketers advocate promoting one benefit and establishing recognition as being the leader for that particular attribute. Others suggests that promoting more than one benefit will help in carving out a special niche which is less easily contested by competitors. The selection of the differentiating attribute(s) is most successful if it confirms fact which is already in the mind of the target market. Denying or fighting customers’ perceptions of different offerings in the market is unlikely to be successful. A successful positioning strategy takes into account customers’ existing perceptions of market offerings. It determines needs which customers value and which are not being met by competitors’ services. It identifies which unsatisfied needs could be satisfied. The positioning strategy seeks to integrate all elements of the service, to ensure that the perceived position of the service is strongly reinforced.

Services have a number of distinguishing characteristics which have special implications for the positioning and selection of which attributes to emphasize. Three of the key characteristics of services, make positioning strategies of particular importance in marketing a service. These are the intangibility, the degree of variability or heterogeneity in quality of a given service, and inseparability — the fact that the performance of a service will often occur in presence of a customer.

Positioning can permit an intangible service bendfit to be represented tangibly. It can help the customer see an intangible benefit — cleanliness; and this view can be reinforced by plastic covered glasses in rooms and a paper cover over the lid of a lavatory stating ‘sanitized for your protection’. This helps the customer to associate cleanliness with the service offering, reinforcing the position that the hotel wishes to portray. Service companies often promote their reputations in an attempt to ad tangibility.

Services are also highly variable and rely to a great extent on input from company employees for their production. For example, in a restaurant the waiter is the main point of contact with the customer and his service performance will be a major factor in the say the establishment will be judged. His performance will vary at different times, and there will also be variance between his service and that of another waiter or waitress in the restaurant, as a result, the quality of the delivered service can vary widely.

Further, the quality of small elements of a total service offering may affect the received quality of the service as a whole. For instance, a poor check-out procedure from a hotel, may greatly affect the perceived quality of the overall experience of staying on it. The customer’s perception of the quality of the service is therefore greatly affected by the quality of the overall experience of staying in it. The customer’s perception of the quality of he service is therefore greatly affected by the quality of the staff who are responsible for delivery. An advantage can be gained by providing better trained and more highly responsive people. A positioning strategy may therefore include the distinctive characteristic of employing ‘better people”.

Services tend to be inseparable and are characterized by the fact that they are performed in the presence of the customer.

The distinctive features of the services outlined above provides the basis for competitive positioning strategy.

Positioning can be considered at several levels:

  • Industry positioning — the positioning of the service industry as a whole.
  • Organizational positioning — the positioning of the organization as a whole.
  • Product sector positing — the positioning of a range or family of related products and services being offered by the organization.
  • Individual product or service positioning — the positioning of specific products.

Process of Positioning

Product positioning involves a number of steps including the following:

  1. Determining levels of positioning
  2. Identification of key attributes of importance to selected segments
  3. Location of attributes on a positioning map
  4. Evaluating positioning options
  5. Implementing positioning.

Determining levels of positioning

The first step in positioning is to determine which level(s) — service level, product sector level, corporate level — are to receive explicit positioning attention. Some examples will illustrate the choices that are made by some service organizations. The level or levels of positioning to be undertaken are usually fairly clear out, although some organization, have placed different emphasis on these levels at different points in time.

Identification of attributes

Once the level of positioning has been determined it is necessary to identify the specific attributes that are important to the chosen market segments. In particular, the way in which purchasing decisions are made should be considered. Individuals use different criteria fro making a purchase decision of a service.

Location of attributes on positioning map

The positioning process involves the identification of the most important attribute and location of various companies’ services, for these attributes, on a positioning map. Where a range of attributes are identified, statistical procedures exist for combining these attributes into aggregate dimensions. Such dimensions are referred to by various names such as principal components, multidimensional scales, factors etc. depending upon how the data were elicited and which statistical procedures were used. Usually two dimensions are used on positioning maps and these often account for a large proportion of the ‘explanation’ of the customer’s preferences.

Products or services are typically plotted on a two dimensional positioning map. The positioning map can be used to identify the position of competitors’ services in relation to the selected attributes. The analysis can be further developed by drawing separate positioning maps for each market segment. Customers in each market segment may perceive the service and its benefits differently and different map will show these different positions. Positioning maps can be based on either objective attributes or subjective attributes Maps can also use a combination of objective and subjective attributes.

Evaluation positioning options

  • Strengthening current position against competitors to avoid head-on attack.
  • Identifying an unoccupied market position that was not filled by a competitor
  • Repositioning the competition.

Once a company had identified where it is positioned at present, it then needs to determine how to enhance or sustain its position relative to its competitors.

Criteria for good positioning;

  • The positioning should be meaningful.
  • The positioning must be believable.
  • The positioning must be unique.

Implementing positioning and the marketing mix

How a company and service is positioned needs to be communicated throughout all of its implicit and explicit interactions with customers. This suggests that all elements of the company, its staff, policies and image, need to reflect a similar image which together conveys the desires position to the market place. This means that a company must establish a strategic positioning direction, which is followed through in all of its tactical marketing and sales activities.

A successful positioning strategy should make the service clearly distinguishable by features which are desirable and important to the target customer segment. This means that the positioning strategy should be examined from time to time to ensure that it does not become outdated and that it is still relevant to the target market segment.

The marketing mix is the key to implementing a positioning strategy. The design of the marketing mix to implement the positioning must be based on the key salient attributes relevant to the target segment. These attributes should be identified in the context of analysis of competitors, whose positions should be assessed to discover their vulnerability. All the elements of the marketing mix can be utilized to influence the customer’s perception and hence the positioning of the product or organisation concerned. The marketing mix can be used to develop a coherent totality that creates the positioning in the customer’s mind.

Importance of Positioning

Positioning involves both launching new brands into the marketplace (new brand positioning), and repositioning old brands. It is concerned with the differentiation of products and services and ensuring that they do not degenerate into a commodity. To maximize its potential a company should position itself in its core market segments, where it is objectively or subjectively differentiated in a positive way over competing offerings.

Positioning is particularly important for services in the market. As a result of competitive pressure the consumer is becoming increasingly confused by the huge offering of services within each market sector. These offering are communicated by a vast number of advertising messages promoting different features of the services. The key to a successful positioning strategy is to promote the feature which the company is best and which exactly matches the needs of the customer.

Because of intangibility and other features associated with services, consumers find that differentiation of services can be more difficult and complex. Successful positioning makes it easier for the customer to see a company’s services as being different from others and exactly what is wanted.

Positioning is a strategic marketing tool which allows managers to determine what their position is now, what they wish it to be and what actions are needed to attain it. The permits market opportunities to be identified, by considering positions which are not met by competitors’ products. It therefore helps influence both product development and the redesign of existing products. It also allows consideration of competitor’s possible moves and responses so that appropriate action can be taken. The concept is often considered at the product level although it is also relevant at the product sector and organizational level. Positioning involves giving the target market segment the reason for buying your services and thus underpins the whole marketing strategy. It also offers guidelines for development of a marketing mix with each element of he it being consistent with the positioning.

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