CHAPTER 3: SERVICE POSITIONING IN COMPETITIVE MARKETS

Learning Outcomes of the Chapter:

After completing this chapter, students will be able to:

LO1: Explain the significance of analyzing customers, competitors, and the company (3C
analysis) in developing a customer-oriented service marketing strategy.
LO2: Explain the importance of key elements in a positioning strategy and their relevance to
marketing activities in a service business.
LO3: Conduct customer segmentation based on needs before applying other segmentation
criteria.
LO4: Distinguish between important attributes and determinant attributes when segmenting the
market.
LO5: Select target customers based on focused strategies to create competitive advantage.
LO6: Position the service in a way that differentiates it from competitors.
LO7: Implement an effective positioning strategy.

3.1. Customer-Oriented Service Marketing Strategy

As competition intensifies in the service sector, it is more important than ever for service
organizations to differentiate their offerings in ways that are meaningful to customers. This is
especially true in many saturated service industries (e.g., banking, insurance, hospitality, and
education), where for a company to grow, it must either gain market share from competitors or
expand into new markets. Developing customer-relevant value propositions and a viable business
model is a prerequisite for any service offering to compete profitably in the marketplace.

What makes consumers or organizational buyers choose — and stay loyal to — one provider over
another? The term “service” often encompasses a wide range of specific characteristics, from
speed of delivery to the quality of interactions between customers and service staff, and from error
prevention to the provision of desirable supplementary features that complement the core service.
Without a clear understanding of which product features customers care most about, managers will
struggle to develop an effective strategy. In markets where buyers perceive little differentiation
between providers, they often simply choose the one with the lowest price.

Therefore, managers need to systematically evaluate all aspects of the service offering and
emphasize competitive advantages in attributes that are highly valued by customers in their target
segment(s). This systematic process typically begins with an analysis of the Customer, Competitor,
and Company—collectively referred to as the 3Cs. This analysis helps a firm identify the key
components of its service positioning strategy, namely: Segmentation, Targeting, and Positioning
(STP). The essential steps involved in developing a market positioning strategy are illustrated in
Figure 1.

A well-defined positioning strategy has far-reaching implications for a firm’s service marketing
strategy, including the development of the 7 Ps of service marketing (to be discussed in Chapters
4 and 5), the firm’s customer relationship strategy (discussed in Chapter 6), and its productivity
and service quality strategies (which are integrated throughout Chapters 4, 5, and 6).
3.1.1. Customer, Competitor, and Company Analysis (3Cs Model)

➢ LO1: Explain the significance of analyzing customers, competitors, and the company (3C
analysis) in developing a customer-oriented service marketing strategy

(1) Customer Analysis: Customer analysis is typically the first step and often involves:
(i)reviewing the characteristics of the overall market, followed by (ii) a deeper exploration of
customer needs, characteristics, and behaviors.

(i) Market Analysis:

Market analysis seeks to assess the attractiveness of the overall market and potential sub-segments
within it. Specifically, it considers factors such as market size, growth rate, profit margins, profit
potential, and demand levels as well as trends affecting the market. Is demand increasing or
decreasing for the benefits this type of service provides? Are certain market segments growing
faster than others?

For example, in the tourism industry, peer-to-peer (P2P) platforms like Airbnb and Onefinestay
have seen rapid growth. However, there is also a growing segment of wealthy retirees who are not
interested in the sharing economy but instead seek custom-designed tours with private guides and
affordable itineraries. It is important to explore creative and innovative segmentation approaches,
and to evaluate the potential of these different segments.

(ii) Customer Needs Analysis:

Analyzing customer needs involves answering questions such as:

Who are the customers, in terms of demographics and psychographics?

What needs or problems do they have, and what jobs need to be done from the customer’s
perspective?

Are there other potential customer groups with different needs who may demand different
services or levels of service?

What benefits does each of these groups value the most?

Continuing with the tourism example, wealthy retirees may place the highest value on comfort
and safety, and are likely to be less price-sensitive than young families.

(2) Competitor Analysis:

Identifying and analyzing competitors can give marketing strategists insights into their strengths
and weaknesses. When combined with the company analysis in the next section, this information
can highlight opportunities for differentiation and potential competitive advantages, enabling
managers to determine which benefits should be emphasized for which target segments.
(3) Company Analysis:

The goal of this analysis is to identify the organization’s strengths in terms of its current positioning
and brand image, as well as the resources it possesses (e.g., technology, platforms, data and
analytics, human resources and expertise, financial capital, and physical assets). It also involves
examining the limitations or constraints the organization faces, and how its core values influence
the way it conducts business.

By leveraging insights gained from this analysis, management can select a number of target market
segments that can be served either with existing services or with new offerings. The key question
to answer is: How effectively can our company and our services meet and address the needs and
problems of each customer segment?

3.1.2. Market Segmentation, Target Market Selection, and Positioning

➢ LO2: Explain the importance of key elements in a positioning strategy for the marketing
activities of a service business

Linking customer analysis, competitor analysis, and company analysis enables a service
organization to develop an effective positioning strategy. The basic steps involved in identifying
the appropriate market position and developing a strategy to achieve that position are as follows:

Market segmentation is the process of dividing the overall market into groups of customers that
are commonly referred to as market segments or segments. A market segment consists of a group
of buyers who share common characteristics, needs, purchasing behaviors, and/or consumption
patterns. Segmentation is considered effective when buyers are grouped into segments in such a
way that they are as similar as possible within each segment in terms of relevant characteristics.
This means that customers within the same segment should have needs that are as similar as
possible, while the needs between different segments should be as distinct as possible. Once
customers with similar needs are grouped together, demographic, geographic, psychographic, and
behavioral variables can be used to describe them.

Target market selection is carried out after the market segments have been identified and the
attractiveness of each segment has been assessed. Based on this evaluation, the firm decides which
segment(s) are most likely to be interested in its service and focuses on how to serve them
effectively.

Positioning refers to the unique position that a business and/or its service offering occupies in the
minds of consumers. Before a firm can create a unique position for its service, it must first establish
a point of differentiation from competing services. Therefore, differentiation is the first step toward
creating a unique market position for a service.

3.2. Service Market Segmentation

➢ LO3: Perform customer segmentation based on needs before applying other criteria]

3.2.1. Differences Between Service Market Segmentation and Goods Market Segmentation

Many aspects of segmenting and targeting markets for services are similar to those used for
manufactured goods. However, some important differences exist:

The most significant difference relates to the compatibility between segments. Because multiple
customers are often present simultaneously during the delivery of a service, service providers must
select segments that are compatible with one another, or ensure that incompatible segments are not
served at the same time. This is done to prevent conflicts between customers that could negatively
affect their overall satisfaction.

The second key difference between goods and services is that service providers have greater
potential for customization than goods manufacturers. Since every individual or group of buyers
has distinct characteristics and needs, any potential buyer can effectively become a separate target
segment. Service firms may adopt one of the following two customer customization strategies:

Mass customization: This involves delivering a service that includes a few personalized elements
for many customers at a relatively low cost. This strategy is typically executed by offering a
standardized core service, accompanied by supplementary service elements tailored to the specific
needs of each individual customer.

Example: When Mr. and Mrs. Peter traveled from the U.S. to celebrate their 50th wedding
anniversary at the Furama Hotel, they received not only the standard five-star core accommodation
service but also additional customized offerings such as a non-smoking entertainment room, fresh
flowers, and chocolates in their room. These add-ons reflected their personal preferences and needs
but did not significantly increase the hotel's operating costs.
Micro-segmentation: This strategy targets small customer groups that share certain relevant
characteristics at a specific point in time.

Example: Royal Bank of Canada used customer data and advanced analytics software to segment
its customers based on credit risk level, current and projected profitability, likelihood of customer
attrition, preferred transaction channels, and propensity to use other banking products. Based on
these segments, the bank implemented direct marketing programs targeted to each group, which
resulted in high marketing effectiveness.

3.2.2. The Process of Market Segmentation

Market segmentation typically involves (i) selecting segmentation bases and (ii) describing the
market segments.

Selecting segmentation bases:

Traditionally, market segmentation can be based on one or a combination of criteria drawn from
demographic, geographic, psychographic, and behavioral characteristics of customers. These
characteristics become segmentation variables. Essentially, segmentation variables are the features
of customers that create differences in their needs and behaviors.

Demographic segmentation: Variables in this category may include age, gender, family size,
income, occupation, or religion.

Geographic segmentation: Variables include administrative boundaries, region, population

density, etc.

Psychographic segmentation: Variables may include social class, personality traits, and lifestyle.

Behavioral segmentation: Variables include purchase purpose, time of purchase, purchase

frequency, level of loyalty, and sought benefits.

However, modern marketing researchers argue that for companies to segment the market
effectively, the best approach is to start with a deep understanding of customer needs—that is, to
conduct needs-based segmentation.

For example, a restaurant could segment its market based on the specific needs that drive customers
to dine there, such as:

(1) The need for a meal while traveling with family;

(2) The need for a dining space to meet with business partners;

(3) The need for a quick meal with colleagues.

Another application of needs-based segmentation involves classifying customers according to
service attributes they expect—similar to the multi-attribute model used in service evaluation and
selection.

Big data and marketing analytics allow marketers to collect accurate and detailed information at
the individual consumer level, enabling narrow and highly specific segmentation, which is
particularly useful for needs-based segmentation. After this step, marketers can further categorize
the needs-based groups using demographic, psychographic, behavioral, and contextual
consumption variables to better identify and describe key market segments.

Describing market segments:

Each segment should be described in terms of its size and potential, wants and requirements,
purchasing power, and typical buying behavior. In the B2B (business-to-business) market, service
companies can use the consumption habits of buying groups to describe their segments.

Example:

A company providing software solutions to businesses divides its market according to the type of
environment where the software will be installed. It identifies four segments: offices, factories,
distributors, and special markets. Detailed profiles of these four segments are created to help the
service marketer understand customer needs. Descriptive characteristics include:

• Installation time and responsiveness to repair requests

• Level of software complexity
• Type of software used
• Frequency and severity of operational issues
• Other relevant traits

From these insights, marketing approaches and service structures can be developed specifically
for one or more segments.

3.2.3. Needs-Based Segmentation: Important Attributes vs. Determinant Attributes

➢ LO4: Distinguish between important attributes and determinant attributes in market

segmentation

One application of needs-based segmentation involves focusing on the service attributes that
customers desire. It is essential to correctly identify both the underlying needs and their
corresponding service attributes for effective segmentation. Consumers typically make choices
among competing service alternatives based on perceived differences between them. However,
attributes that customers consider important are not always the same as those that actually
differentiate one provider from another. For example, many travelers rate “safety” as a very
important attribute when selecting an airline and tend to avoid carriers with a poor safety
reputation. However, once unsafe airlines have been eliminated from the consideration set, a
passenger flying on a major route is still left with several safe airlines to choose from. At this stage,
safety may no longer be a determinant attribute influencing the final choice.

Determinant attributes (i.e., the attributes that truly influence consumer choice among competing
alternatives) are not always the first attributes customers think of when evaluating their options.
However, they are the features that customers perceive to vary significantly among competitors.
For instance, departure and arrival time convenience, availability of frequent flyer miles and
related loyalty perks, in-flight service quality, or ease of booking may serve as determinant
attributes for business travelers choosing among airlines already perceived as safe. In contrast, for
budget-conscious leisure travelers, price may be the most important determinant.

3.3. Target Market Selection

➢ LO5: Select target customers based on focused strategies to create competitive advantage

It is often unrealistic for a company to try to attract all potential buyers in the market, as customers
tend to be highly diverse in their needs, purchasing behaviors, and consumption patterns.
Moreover, service companies themselves vary significantly in their ability to effectively serve
different types of customers. Therefore, achieving competitive advantage usually requires a
company to adopt a more focused strategy. Instead of attempting to compete across the entire
market, each firm should concentrate its efforts on the customers it can serve best—its target
segment. Nearly all successful service companies follow this approach.

In marketing terminology, “focus” refers to the practice of offering a narrow product range to a
specific market segment—a group of buyers who share similar characteristics, needs, purchasing
behaviors, or consumption styles. This concept lies at the heart of nearly all successful service
strategies. In this approach, a company must identify the strategically important factors and
concentrate its resources on them.

A company’s degree of focus can be described along two dimensions:

Market focus: the extent to which the company chooses to serve a single or a few market segments
versus many segments.

Service focus: the extent to which the company chooses to offer a single or a few service types
versus a wide variety of services.

By combining these two dimensions—market focus and service focus—with two value levels
(“high” and “low”), we arrive at four types of strategic focus, as illustrated in the figure:

a) A Fully Focused Firm

This type of firm offers a limited set of services (or even just a single core service) to a narrow and
specialized market segment.
Examples: A.Đoan Fashion Hair Salon, Furama Hotel, or Wedding Restaurant X, which offers
full-service wedding packages to middle-income customers.

Opportunities: Ability to set premium prices, defend against potential competitors.

Risks: Small market size, vulnerability to substitute products, and sensitivity to economic
downturns.

b) A Market-Focused Firm

This type of company targets a narrow market segment but offers a wide array of services.

Example: Kaila Café and Wedding Restaurant, which serves the same group of customers with
multiple services.

This strategy requires strong managerial capabilities to consistently deliver diverse service
offerings.

c) A Service-Focused Firm

This firm offers a narrow range of services to a broad market.

Examples: FedEx (express delivery across various regions and countries), KFC (fast food service
across many cities), or Vietnam Airlines (air travel service in various markets).

Opportunities: Minimizes risks associated with relying on a narrow market.

Challenges: Expanding into new markets requires local expertise and greater effort in marketing
communication.

d) An Unfocused Firm

This type of company tries to serve broad markets while also offering a broad range of services.

This is not considered an effective strategy for service firms, although public utilities and
government agencies may be obligated to follow this approach.

Example: Vinasin, which operates across various sectors including maritime transport, hospitality,
and real estate in multiple markets.
How do you decide which of the three focus strategies to choose?

Adopting a fully focused strategy involves both risks and opportunities. Developing deep expertise
within a well-defined niche can provide protection against competitors and allow a company to
charge premium prices. The biggest risk, however, is that the market may be too small to generate
sufficient business volume for financial success. Other risks include the possibility that demand
for the service may be replaced by substitutes from within the industry, or that buyers in the chosen
segment may be highly sensitive to economic downturns.

One reason why companies with a narrow service range may choose to serve multiple market
segments (i.e., a service-focused strategy) is to create a diversified customer portfolio that helps
buffer against such risks. However, whenever a new segment is added, the company must develop
expertise in serving that specific segment, which demands broader sales efforts and greater
investment in marketing communication—particularly in B2B markets. Offering a broad range of
services to a narrowly defined target segment may seem appealing due to the potential for selling
multiple services to a single buyer. However, before committing to a market-focused strategy,
managers must ensure that their company has the organizational capability to effectively deliver
each of the diverse services chosen. They also need to have a deep understanding of customer
realities and preferences.
In B2B contexts, many firms experience frustration when attempting to cross-sell traditional
services to the same client, only to discover that the purchase decisions for new services are made
by entirely different departments or teams within the customer’s organization.

In summary, selecting a specific focus strategy helps a business decide how many segments to
serve and which segments to choose, based on an evaluation of market attractiveness.

A segment is considered attractive when it meets the following criteria:

• Measurable: The size and characteristics of the segment can be quantified.

• Accessible: The segment can be effectively reached and served.
• Profitable: The segment offers revenue and margin potential.
• Actionable: Effective marketing programs can be developed to attract and serve the
segment.

To assess the attractiveness of market segments, the following evaluation criteria can be used:

Segment size and growth potential: This includes information on current revenue, projected growth
rates, and expected profit margins.

Structural attractiveness of the segment: This considers the presence of current and potential
competitors, substitute products or services, buyer bargaining power, and supplier bargaining
power.

Company objectives and resources: Does the segment align with the firm’s goals and capabilities?

If a company decides to serve multiple market segments, it must ensure that these segments are
compatible with one another. This is especially critical in service industries, more so than in
product markets, due to the inherent interaction among customers.

Example:

A hotel in the off-season chooses to serve two customer groups—families on vacation and
students. The company must manage these groups carefully, as their lifestyles and expectations
may differ significantly, potentially leading to conflicts that could harm customer satisfaction.

3.4. Service Positioning

➢ LO6: To position the service as distinct from competitors

3.4.1. The Principles of Service Positioning

First, it is important to clearly distinguish between position and positioning:

 • The position of a service refers to everything that exists in the minds of the target customers
regarding the service in comparison to its competitors, such as its concept, image, slogan,
symbol, etc.
• Service positioning is the act of determining the position of a service in the minds of target
customers relative to competitors by developing competitive advantages for the service.

The Meaning of Service Positioning

➢ Establishes a distinctive and impressive image of the service

➢ Serves as a compass for marketing mix policies
➢ Helps maintain and strengthen the service image
➢ Enables repositioning to support business growth

Jack Trout distilled the essence of positioning into four principles:

(i) A business must establish a position in the minds of its target customers.

(ii) The position must be unique, conveying a simple and consistent message.

(iii) The position must make the business distinct from its competitors.

(iv) A business cannot be everything to everyone – it must focus its efforts.

3.4.2 The service positioning process

a. Identifying Competitive Advantages

A competitive advantage refers to a point of differentiation between the company and its
competitors, and this point of difference must possess the following characteristics:

From the customer’s perspective:

Offers value: The point of difference must deliver a benefit that is highly valuable to the customer.

Influences the purchase decision: A customer’s decision to purchase a service is influenced by

various factors, each with different levels of importance. Thus, a valuable point of difference may
not necessarily be the most influential factor affecting the customer’s final decision.
Affordable: The customer must be able to pay for the value provided.

From the competitor’s perspective:

Difficult to imitate: The point of difference should not be easily copied or replicated by
competitors.

From the company’s perspective:

Communicable: The company must be able to effectively communicate the value of this point of
difference to the customer.

Profitable: The point of difference should yield financial gain for the company.

b. Selecting the Competitive Advantage

How many competitive advantages should be chosen for positioning?

• Viewpoint 1: Positioning should rely on only one attribute, and the company should do
everything to become the best at demonstrating this attribute.
• Viewpoint 2: More than one point of difference should be used when two or more
companies claim to be the best at the same attribute.

Common positioning mistakes to avoid:

• Vague positioning: For example, the hydrotherapy massage bathtub by Jacuzzi was
initially hard for customers to understand. However, it gained recognition due to its clearly
communicated and distinctive positioning — “Jacuzzi – water that moves you.” With its
patented hydrotherapy method, Jacuzzi successfully turned uninformed customers into
loyal users of both the bathtubs and spa services that apply this therapy.
• Too narrow positioning: This occurs when the positioning does not provide a complete
picture of the service. For instance, a fashion store advertises itself as “everything priced
at 200K,” but still sells clothing items priced from 100K or even higher than 200K.
• Overly complicated positioning: When too many inconsistent messages about the service
are conveyed.

c. Choosing an Overall Positioning Strategy

At this stage, the service company must create effective signals to help the target market
distinguish it from its competitors through:

• Value Proposition: The outcome of the positioning process that helps employees easily
understand the positioning and provides a core message to guide marketing activities.
• Marketing Mix Policies, including: Product (Service Design); Price; Place (Distribution);
Promotion (Communication); Physical Evidence; Process; People
Common Positioning Strategies (for both goods and services)

Positioning based on features/benefits

Positioning based on price and quality

Positioning based on user type

Positioning based on competitors

Service-Specific Positioning Strategies

Positioning Based on Service Quality Attributes

For most goods and services, quality is a top priority for customers. Thus, positioning based on
service quality is widely adopted by service firms. The question is: How do customers measure
service quality?

Fundamentally, Zeithaml, Parasuraman, and Berry — creators of the SERVQUAL model (Service
Quality) — propose that service quality is determined by five dimensions: Tangibles; Reliability;
Responsiveness; Assurance; Empathy.

In studies specific to other fields, alternative quality models may be used. For instance, automobile
quality is often assessed using six dimensions: reliability, service level, reputation, durability,
functionality, and ease of use.

(i) Reliability

Reliability is the ability to perform the promised service dependably and accurately. This can be
assessed, for example, when a technician tells you that the error on your website will be fixed
within half an hour — do they follow through as promised? We evaluate a company's reliability
based on whether it delivers what it says it will. Once a business commits to being reliable,
customers’ zone of tolerance narrows, and they tend to hold the company to a higher standard.
However, in many cases, reliability is not a strong differentiator, especially in industries where
core service reliability is a basic requirement, such as banking, telecommunications, or aviation.

(ii) Responsiveness

Responsiveness is the willingness to help customers and provide prompt service. This factor
emphasizes thoughtful customer care and agility in handling customer needs, questions,
complaints, and issues. For example, at 11 PM, a guest at the Hyatt Hotel asks to have a jacket
laundered in time for a 7 AM meeting. Although the laundry department is closed, a responsive
hotel will find a way to fulfill this request despite the challenge. To excel in this dimension, the
company must rethink service processes from the customer's perspective, rather than the
company’s own operational standpoint.
(iii) Assurance

Assurance refers to the knowledge and courtesy of employees and their ability to inspire trust and
confidence. This dimension is especially important for high-risk services or services where
customers are unsure how to assess the outcome, such as banking, insurance, stock brokerage,
healthcare, and legal services. Trust and credibility may be demonstrated:

• Through individuals who serve as the contact point between the company and customers
(e.g., stock brokers, insurance agents, lawyers, consultants).
• Through organizational efforts to build trustworthy relationships with clients.

In the early stages of the customer relationship, assurance is often assessed through tangible
evidence, such as awards, certifications, or testimonials from previous clients.

(iv) Empathy

Empathy is the care and individual attention the company provides to its customers. The essence
of empathy lies in delivering personalized service, treating each customer as unique and special.
This is a key competitive factor between small and large firms — smaller companies are often
more capable of understanding their customers personally than larger ones.

(v) Tangibles

Tangibles refer to the appearance of physical facilities, equipment, personnel, and communication
materials. New customers, in particular, often use this factor to evaluate service quality. Service
industries that emphasize tangibles include hospitality, food and beverage, apparel, and
entertainment.

Positioning Based on Service Evidence

Service evidence includes: people, physical evidence, price, and process. Because most services
are intangible, service evidence serves as a critical tool to establish and reinforce service
positioning. If the service evidence is not aligned with the positioning strategy, it may lead to
confusion, inconsistency, and in the worst cases, strategic failure.

(i) People

Here, we consider three groups that most significantly contribute to service positioning:

• Contact employees, Customers, Spokespersons or representatives (e.g., Memory Lounge

restaurant associated with Nguyễn Cao Kỳ Duyên; Cháo Cây Thị endorsed by Đàm Vĩnh
Hưng; a diamond store linked to Lý Nhã Kỳ).
• Uniforms and appearance of employees reinforce and communicate a specific service
positioning. For services that require trust, such as healthcare or law, staff attire should
reflect reliability—e.g., doctors wear white coats, lawyers wear suits. For more
 personalized services, standardized uniforms can reassure customers that they will receive
the promised level of service quality.
• Positioning based on personnel requires careful recruitment and thorough training. These
employees must embody and communicate the message the company wants to deliver.

For example:

• Vietnam Airlines staff are courteous and graceful.

• Pizza Hut employees are quick and communicative.
• Disney staff are capable, polite, cheerful, and responsive to every guest’s needs—they are
rigorously trained to embody Disney’s message: “making dreams come true.”

(ii) Physical Evidence

Includes marketing materials, the service environment, and official documentation.

Marketing materials: brochures, business cards, posters — especially important for services with
little physical presence, such as education, consulting, delivery, or insurance.

Service environment (also known as servicescapes): refers to the style and appearance of the
physical setting and other experiential elements encountered by customers at the point of service.

Key components of a servicescape include:

• Ambient conditions: temperature, air quality, sound, scent, colors

• Spatial layout and functionality of equipment
• Signage and symbols

Since services are intangible and quality is hard to assess directly, customers often use the
servicescape as a proxy for judging service quality. Companies, therefore, invest significant effort
in designing their physical space to signal quality and convey the intended brand image.

Official documentation: includes certifications such as food safety certificates displayed in a

bakery or restaurant.

⚠ However, this positioning strategy carries risk, as customer behavior may shift, and competitors
can quickly imitate or outperform on tangible evidence.

(iii) Price

In consumers' minds, price often correlates directly with perceived quality. Many service firms
leverage this psychological principle by charging premium prices for high-quality services — e.g.,
five-star hotels.
On the other hand, some companies adopt a value-based pricing strategy by:

• Offering high-quality services at affordable prices

• Or delivering acceptable quality at low prices that customers are willing to pay — e.g.,
VietJet Air’s budget flights.

(iv) Process

At the core of any service positioning strategy is the service itself, but we often lack understanding
of how to leverage service processes for positioning purposes.

A service blueprint is a tool that links service processes with positioning objectives.

Service processes involve two main variables:

• Complexity: the number of steps required to deliver the service

• Variability: the degree to which these steps can differ across service instances

Example: Housekeeping in a hotel (low variability, high standardization):

• Knock on the door

• Air out the room
• Remove trash
• Strip pillowcases and bed linens
• Dust ceiling and walls
• Wipe surfaces
• Clean utensils
• Make the bed
• Sanitize restroom
• Mop floor or vacuum
• Inspect
• Turn off lights, close door, and exit

In contrast, services such as painting, music performance, public speaking, or medical consultation
involve higher variability between instances.

Thus:

• A hotel has high process complexity but low variability (standardized).

• A musician or artist may deliver a low-complexity service with high variability.

• When positioning is based on process, the opportunity for repositioning is clearer and more
actionable.
3.4.3. Using a Positioning Map to Outline Competitive Strategy

A positioning map is a highly effective tool for visualizing competitive positioning along key
aspects of a service marketing strategy. It helps track strategic development over time and
anticipate competitive responses.

Creating a positioning map—sometimes referred to as a perceptual map—is a useful way to

visually represent consumer perceptions of competing alternatives.

A map typically involves two attributes, though three-dimensional models may be used when
needed. If more than three attributes are necessary to describe product performance in a given
market, it’s better to use multiple separate charts. The position of a product (or a company's
standing on a given attribute) can be inferred from market data and consumer ratings.

Example: Applying a Positioning Map in the Hotel Industry

The hotel business is highly competitive, especially during periods when supply exceeds demand.
In each hotel category, travelers visiting a major city are often presented with a wide range of
alternatives. Some key selection criteria include luxury and comfort of physical amenities, while
others may focus on location, safety, meeting and business facilities, restaurants, pools and fitness
centers, and loyalty programs for frequent guests.

Let’s assume that the management team at The Palace, a successful four-star hotel, develops a
positioning map that displays their own hotel and competing hotels, with the goal of better
understanding potential threats to their established market position in a major city—let's call it
Belleville. The team identifies four attributes that are both important and decisive in the customer's
selection process—and which the hotel is also considering developing as competitive advantages.
These four attributes form the basis for constructing the positioning map:

• Service level
• Price
• Location
• Luxury level of physical amenities

Data to determine hotel positioning can be drawn from various sources, depending on the attribute
being assessed, such as:

• Customer surveys
• Online reviews
• Industry reports
• Mystery shopper evaluations
 • Third-party booking platforms

By plotting these attributes on two-dimensional maps (e.g., Price vs. Service, Luxury vs.
Location), The Palace can:

• Visualize where it stands relative to competitors

• Identify opportunities to differentiate
• Anticipate market threats
• Formulate targeted marketing and investment strategies
3.5. Implementing an Effective Positioning Strategy

➢ LO7: Ability to implement an effective positioning strategy

After using a positioning map to visualize competitive positioning, the question arises: how can
an effective positioning strategy be developed? In other words, how can the image that the business
wants to build be conveyed into the minds of customers smoothly yet memorably? Based on the
3Cs analysis in section 3.1 and from the previously selected positioning image, the business can
develop a positioning statement that enables the service organization to answer the following
questions:

“What is our service product?”

“Who are our customers?”

“Where do we want our product to be in the minds of customers?”

“What actions must we take to achieve that?”

For example, LinkedIn has made a significant effort to focus on the professional networking space
and to differentiate itself from other social networks like Facebook. LinkedIn focuses on building
user profiles centered on work experience, instead of being a repository for snapshots of vacations
and parties. It has also avoided games and unnecessary updates that often annoy users on other
social platforms. Instead, LinkedIn has opted for a cleaner layout that resembles an online résumé.
This approach targets professionals, as its main customer base is closely tied to its revenue model,
which charges recruiters for access to its member database and advertisers for highly targeted job
ads aimed at a premium, hard-to-reach professional audience. This strategy has clearly been
effective. As of 2020, LinkedIn had over 690 million members across approximately 150
countries, far surpassing its competitors—Viadeo in France and XING in Germany—which had
around 70 million and 20 million members respectively.
There are four fundamental elements for writing a strong positioning statement, and LinkedIn is
used as an illustrative example:

➢ Target audience — the specific group(s) of people the brand aims to sell to and serve (e.g.,
professionals are the main target customers, while recruiters and advertisers are secondary
target audiences).
➢ Frame of reference — the category in which the brand competes (e.g., the social
networking space).
➢ Point of difference — the most compelling benefit delivered by the brand that stands out
from competitors (e.g., the largest network of professionals and recruiters to help you
advance your career, build business acumen, gain industry insights, and support personal
development).
➢ Reason to believe — the proof that the brand can deliver the promised benefits (e.g., our
network is several times larger than that of our nearest competitor).

Developing a positioning strategy can occur at various levels depending on the nature of the
business in question. Among multi-product and multi-location service firms, a position may be
established for the entire organization, for a service outlet, or for a specific service offered at that
outlet.

There must be consistency in the positioning of different services offered at the same location, as
the image of one service can spill over to others—especially if they are perceived as related. For
instance, if a hospital has an outstanding reputation for enthusiastic and competent maternity care
services, it may enhance perceptions of its gynecological and pediatric services as well. However,
conflicting positionings among the three services would be detrimental to all of them.