Services Marketing Planning Process

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Services Marketing Planning Process

• Module 6
• Chapter 6
• Text Reading 5 (p.577)
• Selected R. 6.1 6.2

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Session Overview

• Refer to fig 6.1, study guide, p. 6.3
• Corporate strategic planning for services
• mission and objectives
• Marketing planning for services
• situation analysis
• service objectives

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• Service marketing strategy
• strategies for competitive advantage
• growth strategies
• segmentation and target marketing
• positioning - service blueprinting
• Refining objectives
• Developing the services marketing mix
• Other steps in services marketing planning
• Market forecasting
• Budgeting
• Implementation
• Evaluation and control

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Corporate strategic planning

• company mission
• purpose and direction
• should be customer focused
• example, RMIT, study guide, p. 6.6

What business are we in?
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Corporate Objectives

• what do we want to achieve?
• growth
• market position
• profitability
• productivity
• public responsibility
• quality
• example, British Airways, study guide, p. 6.5

6
Situation analysis (audit)

• refer to fig 6.4 in study guide page 6.9
• what is the current marketing situation?
• internal (company) environment
• market analysis
• external environment
• competitive situation
• are there any gaps between desired and actual
  performance?

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SWOT analysis

• Analyse changes in internal and external business
  environment
• strengths and weaknesses
• Identify distinctive competencies
• what does the firm do well?
• Areas of differential advantage
• what does the firm do well relative to
  competitors?
• Are they sustainable?
• service formats are easy to copy, but
  relationships are not

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Working the SWOT

• What are the implications?
• What does it mean?
• What needs to be done?
• How can we
• capitalise on strengths?
• minimise or overcome weaknesses?
• develop the opportunity?
• minimise the threat?
• Refer to example of bank, table 6.1, study guide,
  p. 6.16

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Evaluating market opportunities

• Which opportunities are attractive to the firm?
• Strategic fit
• match between firms core competencies and market
  opportunities
• Strategic window
• limited periods of time when competencies match
  opportunities

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Develop tentative marketing objectives

• what do we want to achieve?
• tentative objectives
• may be redefined once target markets have been
  selected and positioning has been determined

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Good objectives are ..

• focussed
• markets (current and new)
• services
• relevant
• congruent with mission
• and corporate objectives
• specific
• clear and precise
• quantified and measurable
• time-bound
• challenging yet achievable

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Porters three strategies for competitive
advantage

• overall cost leadership
• lower production and distribution costs
• economies of scale
• learning curve
• leads to lower prices
• high market share

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• differentiation
• adding value
• higher prices
• higher profits
• focus
• niche marketing

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Growth strategies for services
Existing services
New services
1. Market penetration
3. Service development
Existing markets
2. Market development
4. Diversification
New markets
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Growth strategies for services

• market penetration
• existing market and existing services
• stimulate repeat business
• increase usage rate
• market development
• new market and existing services
• target new segments and geographic areas

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• service development
• new service and existing market
• Line extensions
• cross-selling
• diversification
• new service and new market
• acquisitions

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Market segmentation and target market

• Market segmentation
• dividing the total market for the service into
  meaningful segments
• A market segment is
• a group of buyers who share common
  characteristics, needs, purchasing behaviour, or
  consumption patterns (Lovelock et al 2001, p.
  162).

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Bases for segmentation

• geographic
• region, climate
• demographic
• age, sex, income, family lifecycle stage
• psychographic
• lifestyles (AIO), social class, personality
• behavioural variables
• benefits sought, purchase occasion, loyalty
  status, attitudes, usage rate and status

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Effective market segments are.

• Substantial
• size and growth rate
• Measurable
• can be identified
• Accessible and actionable
• can be reached and appealed to
• Homogeneous
• have similar needs, seek similar benefits
• Have unmet needs

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Attractive segments for the firm to target are

• profitable
• actionable
• fit with firms objectives and mission statement
• fit with firms abilities (strengths)
• at least match or exceed competitors offerings
• Structural attractiveness
• Competitors, relative power etc.

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Market targeting strategies

• mass marketing
• undifferentiated or standardised offering for
  mass market
• target marketing
• differentiated offering for each segment
• mass customisation
• partial customisation
• standardised core with customised supplementary
  services (i.e. hotel)

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• concentrated or niche marketing
• one service offering for one segment
• micro-segmentation
• customisation for each individual (i.e. dentist)

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Positioning

• the process of establishing and maintaining a
  distinctive place in the mind of the consumer
• the way a consumer perceives the service on
  determinant attributes relative to competing
  services
• how can we distinguish our service offering from
  competitors offerings?

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Distinguishing characteristics are..

• important to the customer
• represent real value
• distinctive
• unique
• superior
• communicable
• affordable
• profitable for the firm

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Developing a positioning strategy

• Refer to fig 6.3, p. 171
• Analyse the market
• size, location, demand, trends
• Analyse the company
• resources, constraints, values
• Analyse the competition
• strengths, weaknesses, current position
• likely responses

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Developing a positioning strategy cont.

• 1. Define and analyse market segments
• 2. Determine possibility of differentiation
• 3. Select target markets
• 4. Determine benefits sought and determinant
  attributes
• 5. Determine desired position
• 6. Develop marketing action plan

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Develop a positioning map

• perceptual map
• plot competing offerings on two or three
  determinant attributes
• map reveals
• firms current position
• direct competitors
• gaps - opportunities
• ideal product
• Example - hotel, pp. 173-7.

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Positioning Map for Hotel
high service
Hilton
Sheraton
IBIS
high price
low price
YMCA
low service
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Position statement

• written statement of the planned position
• what is our service?
• what do we want it to be?
• what actions must we take to get there?

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Why is positioning important?

• Refer to table 6.1, pp. 168-9
• purpose and uses of positioning
• directs efforts
• who to target and how?
• directs firm to consider important issues
• key benefits and determinant attributes
• improves differentiation
• current image
• simplifies the consumers decision making process

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If we have not achieved the desired position,
we could

• add determinant attributes
• improve the performance of attributes
• change the belief regarding the importance of an
  attribute
• change the belief regarding the performance of
  our brand on important attributes

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Re-positioning

• changing or modifying the existing position
• may be required because of
• changes in the firms operating environment
• changing consumer needs and preferences
• competitors actions
• further, positions evolve over time

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Service positioning through structural change

• Reading 5 - Shostack, pp. 577-87
• two main components
• complexity and divergence
• complexity
• number and intricacy of steps in providing the
  service
• divergence
• variability in each step

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Florist figure 1
Select container
Select flowers
Arrange flowers
Deliver
Take order
Collect payment
Range of containers
Range of flowers
Range of arrangements
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Example of a florist (fig 1)

• low complexity
• very few steps
• high divergence (fan)
• range of potential actions
• variety of options
• highly customised
• leads to marketing effectiveness but operational
  inefficiency

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Florist figure 2
A
A
B
A
B
Take order
B
Deliver
A
A
A
Select container
Collect payment
B
B
A
B
B
Select flowers
Select Arrangement
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• Refer to figure 2
• greater complexity
• more steps
• less divergence
• reduced number of options
• more standardised
• more operational efficiency but may be less
  profitable

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Re-positioning strategies

• reduce divergence
• increase divergence
• reduce complexity
• increase complexity

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Reduce divergence

• less variation in the service offering
• standardise the service offering
• reduce options
• uniform scripts

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Benefits and disadvantages

• Benefits
• reduces costs
• improves productivity
• makes distribution easier
• increases reliability
• reduces variability

• Disadvantages
• less flexible
• less tailored to individual needs
• may be less profitable

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Increase divergence

• increase variability of the service offering
• customise the service offering
• increase options
• tailor delivery
• advantages
• can charge higher prices - profitable
• but
• more difficult to control
• customers may not be prepared to pay higher price

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decrease complexity

• reduce number of steps
• simplify the service delivery process
• advantages
• increased specialisation
• narrower service offering
• but
• may look stripped down
• no frills - less value

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Increase complexity

• add more steps
• enhance current service
• supplementary services
• advantages
• greater revenue
• but
• may be confusing
• service quality may drop

There are so many choices!
I cant make up my mind!
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Refining objectives

• Once the target market has been selected and the
  positioning strategy has been determined, the
  service firm should review and where necessary
  refine its objectives.

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Develop an effective services marketing mix

• Service concept
• core and supplementary
• Pricing
• Promotion
• Distribution
• People
• Processes
• Physical evidence

Is this the right mix?
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Other steps in the service marketing planning
process

• Market forecasting
• measuring the size of the total market and
  predicting the market share of the firm
• trend analysis, expert opinion, scenario building
• Developing a budget
• what resources are required?

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• Implementing the marketing program
• Evaluating the service program and taking
  corrective actions

Fix it
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Summary

• Refer to fig 6.1, study guide, p. 6.3

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Tutorial

• Kiwi Experience, p. 426
• Review questions
• 4, 9, 12 and 14