STANDING APART FROM THE COMPETITION

A fundamental principle for business success is setting oneself apart from the competition. As George S. Day
stated, a business must identify and promote itself as the best provider of attributes that are important to target
customers. This differentiation is crucial for survival and growth in a competitive landscape.

BASIC FOCUS STRATEGIES FOR SERVICES

1. Fully Focused (Service and Market Focused): This strategy involves offering a limited range of services to a narrow
and specific market.

Opportunities: Developing well-recognized expertise in a defined niche can provide protection against competitors and
allow firms to charge premium prices. Shouldice Hospital is an example.
Risks: The market might be too small to generate sufficient volume, demand could be displaced by generic competition,
or purchasers in the chosen segment might be susceptible to economic downturns.

2. Market Focused: This strategy targets a narrow market segment with a wide range of services. Firms need to ensure
they have the operational capability to deliver each of the different services selected. Rentokil Initial (B2B) is an example.

3. Service Focused: This approach offers a narrow range of services to a fairly broad market. As new segments are
added, the firm needs to develop knowledge and skills in serving each segment. Starbucks is an example of a service-
focused company.

4. Unfocused: This strategy involves serving broad markets with a wide range of services. Many service providers fall
into this category, but there's a danger of becoming a "jack of all trades and master of none".

MARKET SEGMENTATION
Market segmentation is crucial because firms vary widely in their abilities to serve different types of customers.
A market segment is a group of buyers sharing common characteristics, needs, purchasing behavior, and consumption
patterns.
When selecting target segments, it's important to consider the firm's ability to match or exceed competing
offerings directed at the same segment, not just profit potential.
There are four main types of market segmentation:

Demographic Segmentation: This is one of the simplest and most effective types, grouping customers by
characteristics such as age, gender, income, level of education, and religion.

Geographic Segmentation: This involves grouping customers based on where they live and shop. People in the same
city, state, or zip code often have similar needs, mindsets, and cultural preferences. Factors include climate, culture,
language, and population density.

Psychographic Segmentation: This groups people based on similar personal values, political opinions, aspirations,
and psychological characteristics. Examples include personality, hobbies, social status, opinions, life goals, values,
beliefs, and lifestyle.

Behavioral Segmentation: This groups customers based on common behaviors they exhibit when interacting with a
brand. This includes spending habits, purchasing habits, browsing habits, interactions with the brand, loyalty, and
product feedback.
SERVICES ATTRIBUTES AND LEVELS

When developing the right service concept for a specific segment, it's important to use research to identify and prioritize
which attributes of a given service are important to specific market segments. Individuals may set different priorities
based on the purpose of using the service, who makes the decision, timing of use, whether the service is used alone or
with a group, and the composition of that group.

A distinction is made between important attributes and determinant attributes. Consumers typically choose between
alternative service offerings based on perceived differences between them. Determinant attributes are those service
characteristics that are important to purchasers and on which customers see significant differences between competing
alternatives. For example, in air travel, safety and price (budget) are determinant attributes.
Customers can often be segmented by their willingness to trade off price versus service level:

Price-insensitive customers are willing to pay a relatively high price for high levels of service.

Price-sensitive customers look for inexpensive service with relatively low performance.

Establishing service levels involves making decisions on the level of performance a firm plans to offer on each attribute.
Easily quantified attributes (e.g., vehicle speed, physical dimensions) are easier to understand, while qualitative
attributes (e.g., physical comfort, noise) are subject to individual interpretation.
Positioning Distinguishes a Brand from its Competitors
Positioning is about distinguishing a brand from its competitors. The document outlines four principles of positioning
strategy:

It must establish a position for the firm or product in the minds of customers.
The position should be distinctive, providing a simple, consistent message.
The position must set the firm/product apart from competitors.
A company cannot be all things to all people; it must focus its efforts.

DEVELOPING AN EFFECTIVE POSITIONING STRATEGY

Market Analysis: Focuses on the overall level and trend of demand, geographic locations of demand, and
understanding the size and potential of different market segments. It also involves understanding customer needs and
preferences and how they perceive the competition.

Internal Corporate Analysis: Involves identifying the organization's resources, limitations, goals, and values. This
analysis helps in selecting a limited number of target segments to serve.

Competitive Analysis: Focuses on understanding competitors' strengths, weaknesses, and current positioning. It also
involves anticipating responses to potential strategies. Competitors might pursue the same market position by
independently performing similar positioning analysis (SWOT), or they might feel threatened by a new strategy and take
steps to reposition their own service. A new entrant might also "follow the leader". It's important to conduct an internal
corporate analysis for challengers and analyze the possible effects of alternative moves, such as the impact of a price
cut on demand, market share, and profits, or responses of different segments to changes in service attributes (e.g.,
lower price, higher service level).

The process flow for developing an effective positioning strategy starts with market analysis to define and analyze
market segments, then selecting target segments to serve. Concurrently, internal analysis informs the articulation of the
desired position in the market, while competitive analysis helps analyze possibilities for differentiation. All these analyses
feed into articulating the desired market position, which then leads to selecting benefits to emphasize to customers and
ultimately, the marketing action plan.