Service Marketing Strategy: Positioning, Branding, and Innovation

Posted on May 25, 2025 in Business Administration and Management (BAM)

Service Marketing Strategy: Core Concepts

Perceived Risks in Service Consumption

When customers evaluate services, they often consider various perceived risks:

  • Functional Risk: Unsatisfactory performance or failure to meet expectations.
  • Financial Risk: Feeling of monetary loss or poor value for money.
  • Temporal Risk: Delays, wasted time, or inconvenience.
  • Physical Risk: Potential for personal injury or harm.
  • Psychological Risk: Fear, anxiety, or negative emotional impact.
  • Social Risk: Concerns about how others might perceive or react to the service choice.
  • Sensory Risk: Unwanted impacts on any of the five senses (e.g., unpleasant smells, loud noises).

Defining Service Positioning

Service positioning is the process of occupying a distinct and valuable space in the minds of target customers. This is achieved through strong, defining features communicated effectively by the company to the market.

Key positioning strategies include:

  1. Positioning for value/price.
  2. Positioning for specific use or user segments.
  3. Positioning based on benefits or attributes.
  4. Positioning through high technology.
  5. Positioning via high-touch service (personal interaction).

Achieving Market Positioning

Effective positioning is acquired through:

  • Strategic market communication.
  • Careful management of the marketing mix (7 Ps of service marketing).
  • Consistent company actions and initiatives.

Strategic Focus in Service Marketing

The Importance of Focus and Differentiation

Successful service positioning requires a clear focus and strong differentiation. Consider these points:

  1. Suppliers lacking distinctive competencies and differentiated offerings face significant threats in competitive markets.
  2. In mature markets, growth often comes from gaining market share from competitors.
  3. Companies should concentrate their efforts on customers they can serve most effectively.
  4. The company must clearly define what services it offers and their desired characteristics.

Types of Strategic Focus

The strategic focus can be directed towards:

  • Market Focus: Determining which specific markets the company will address.
  • Service Focus: Deciding which specific services the company will offer.

Company Focus Strategies

Different approaches to company focus include:

  1. Totally Focused Company: Offers fewer services to a narrow and specific market (e.g., a niche consulting firm).
  2. Market-Focused Company: Serves a broad market with a wide range of services (e.g., a large supermarket chain).
  3. Service-Focused Company: Provides a narrow range of services to a broad market (e.g., a locksmith).
  4. Unfocused Company: Meets broader markets and offers a wide range of services (e.g., universities).

Core Principles of Positioning Strategy

Four fundamental principles underpin effective positioning strategy:

  1. The service provider should establish a clear position in the minds of its target customers.
  2. The position must be unique and convey simple, consistent messages.
  3. The position should clearly differentiate the company from its competitors.
  4. The company should focus its efforts and resources strategically.

Client Selection and Service Creation

Client Selection Criteria

When choosing target clients, consider these criteria:

  1. Qualifiers: Basic requirements that a service provider must meet to be considered (e.g., airline security standards).
  2. Winners: Criteria by which clients ultimately decide on a provider, such as price, convenience, reputation, or quality.
  3. Dissatisfiers (Losers): Factors that lead to client dissatisfaction and rejection of a provider:
    • Competence: The service provider fails to deliver on its promise (e.g., a workshop not fixing the car).
    • Service Quality: Poor customer interaction (e.g., a rude doctor).
    • Speed/Timeliness: Delays or failure to meet deadlines (e.g., an order not arriving on time).

Crafting the Service Product

Creating a compelling service product involves:

  • Aligning marketing opportunities with the company’s resources.
  • Assessing the company’s marketing assets (e.g., customer base, market knowledge, existing positioning, 7 Ps framework).
  • Evaluating the company’s operating assets (e.g., physical facilities, equipment, strategic partnerships).

The amplified product includes the core service plus additional facilitating and enhancing services. Consider the time dimension: What is offered, when, how, and in what sequence?

The Service Flower Model

The “Service Flower” illustrates the core service surrounded by two types of supplementary services:

  1. Facilitating Services: Essential for service delivery.
    1. Information (e.g., schedules, prices, directions).
    2. Order Taking (e.g., registrations, reservations, applications).
    3. Billing (e.g., invoices, statements, payment reminders).
    4. Payment (e.g., payment methods, credit/debit card processing).
  2. Enhancing Services: Add value and differentiate the service.
    1. Consultation (e.g., technical advice, personalized recommendations).
    2. Hospitality (e.g., courtesy, comfortable waiting areas, refreshments, newspapers, TV).
    3. Safekeeping (e.g., security, valet parking, baggage handling).
    4. Exceptions (e.g., handling special requests, problem-solving for malfunctioning equipment, compliments and suggestions, flexibility in service delivery).

Branding and New Service Development

Service Branding Essentials

Branding in services involves managing the brand to promote its identity and positioning in the market. For example, Itaú Bank uses sub-brands like Personalité for specific segments or services (e.g., insurance, private banking).

Brand Equity refers to the value associated with the brand, stemming from customer perceptions and experiences.

Innovating New Services

New service development can take several forms:

  1. Innovations in Core Services: Introducing entirely new core services to new markets.
  2. Innovations in Processes: Developing new processes to deliver existing products and services (e.g., electronic banking or digital payments).
  3. Line Extensions: Adding new services to existing product lines.
  4. Process Line Extensions: Offering alternative service delivery procedures (e.g., Drive-Thru services).
  5. Innovations in Supplementary Services: Adding new facilitating or enhancing elements (e.g., improved customer attendance/support).
  6. Style Changes: Noticeable changes in the design or service delivery processes (e.g., updated branch aesthetics, revised customer journey).