Marketing Strategies for Service Firms 205
price competition since deregulation. In a deregulated environment, the continued
expansion of budget-priced airlines like Southwest Airlines indicated that many fliers
care more about travel costs than service. Similarly, the success of E*Trade and other
discount Web-based brokerages showed that many customers had little loyalty to more
established brokerages when they could save money by trading on-line. To the extent
that customers view a service as fairly homogeneous, they care less about the provider
than the price.
The alternative to price competition in services marketing is to develop a differ-
entiated offer, delivery, or image.
➤ Offer.The service offering can include innovative features. The customer expects
theprimary service package;to this secondary service featurescan be added. Marriott, for
example, offers hotel rooms (primary service package) with connections for
computers, fax machines, and e-mail (secondary service features). Although most
service innovations are easily copied, the company that regularly introduces new
features will gain a succession of temporary competitive advantages and earn a
reputation for innovation. Amazon.com has continually expanded its offering to
include auctions, e-mail greeting cards, and other services, reinforcing the firm’s
reputation as an Internet pioneer and retaining loyal customers.
➤ Delivery.A service company can hire and train better people to deliver its service
(Home Depot, Nordstrom). It can develop a more attractive physical environment
in which to deliver the service (Borders Books and Music stores, Cineplex Odeon
movie theaters). Or it can design a superior delivery process (McDonald’s, eBay).
Delivery thus enhances the firm’s differentiation.
➤ Image.Service companies can also differentiate their image through symbols and
branding. Prudential uses the Rock of Gibralter as its corporate symbol to signify
strength and stability. Differentiation through branding is a specialty of the
charge-card division of American Express. Worldwide, a record 41.5 million
people “can’t leave home without it.” Yet, now the company needs to reinvent
itself: Credit cards like Visa and MasterCard have eaten into Amex’s turf, andFigure 4-6 Continuum of Evaluation for Different Types of Products