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.