Marketing Strategy and Competitive Positioning pdf ebook

CHAPTER 13 COMPETING THROUGH SUPERIOR SERVICE AND CUSTOMER RELATIONSHIPS
To build customer retention, anticipating the major financial benefits it brings, let alone 
longer-term customer loyalty, requires companies to invest in strategies focused on these 
goals, not just on sales volume. But it is suggested that retention is not enough as an absolute 
concept and that these strategies should also be about correcting any downward migration 
in customers’ spending habits long before they defect. A two-year study of attitudes of US 
households about companies in 16 diverse industries showed that ‘improving the man-
agement of migration as a whole by focusing not only on defections, but also on smaller 
changes in customer spending can have as much as ten times more value than preventing 
defections alone’ (Coyles and Gokey, 2005).
This may involve brand building (of the type practised at Virgin), or specific programmes 
(such as ‘loyalty’ schemes or product innovation), but increasingly it involves emphasis on 
achieving excellence in the service activities that augment the basic product offering. None-
theless, for the reasons given previously, a company faces an important strategic decision 
about the level of service and relational investment it should make in a given market or 
customer group, compared to the value of that market and its service delivery capabilities. 
Low-service strategies are a viable option where non-service benefits such as low price are 
key value drivers for some customer groups.
This chapter explores the concept of ‘service’ and examines methods for competing 
through service as an important element of marketing strategy and competitive positioning, 
in which executives face some challenging choices. Figure 13.1 sets out the structure we are 
following to provide systematic appraisal of the key issues in competing through superior 
service and customer relationships.