Services bear a distinct characteristics. It is true that selecting the right marketing elements is crucial in relation to professional services marketing. The marketing selection is a task for management that could bring out unique outcomes for every organisation.
The marketing for the services however is called the extended marketing. Whereas in the goods marketing ,the marketing consists of 4 P’s that is Product, Price, Place, Promotion, in service marketing the same will have 7P’s which are Product, Price, Place, Promotion, Process, Physical Evidence, People. The three additional P’s Process, Physical Evidence, People are exclusive to service marketing.
Learn about the 7 P’s of service marketing: 1. Product 2. Price 3. Place 4. Promotion 5. Process 6. Physical Evidence 7. People.
7 P’s of Service Marketing – Product, Price, Place, Promotion, Process, Physical Evidence and People
7 P’s of Service Marketing
In goods, value is created by mixing four key elements called marketing mix. Service characteristics however alter both the supplier and customer side of marketing equation.
The typical cycle consisting of a sequential process of manufacturing followed by marketing and consumption stands altered in services. This process evolves from linear sequential to concurrent in which production, marketing, and consumption takes place simultaneously. These processes are not divided in time and place.
As a consequence, the twin role of production and marketing is performed by customer-facing employees who create services for customers in service system in their presence. For instance, an aircraft is service production and delivery system in which service is created by employees for passengers in their presence.
The same is true for a lecture in a university and meal in a restaurant. This uniqueness of services gives rise to three more Ps of marketing—people, physical evidence, and processes.
Therefore, service marketing mix stands expanded to 7 Ps:
Product refers to what is offered to customers. It is easier to appreciate the concept of product in good’s context because of its tangibility dimension. For instance, the product aspect of marketing mix of Lux bathing bar includes brand name, size, form, ingredients, quality level, texture, packaging, and label.
All these aspects are combined or assembled by the marketer with an expectation that these will create a value that target customers want. Services, on the other hand do not lend themselves to this kind of analysis because of intangibility. It is difficult to trace a service product to its constituent elements.
However, services do satisfy customers. Customers do buy and discriminate among service brands. Customers achieve satisfaction of their needs and wants by acts, deeds, and performance of service providers in a service facility with or without the use of equipment.
The service package refers to what a service marketer bundles up in terms of goods and services in an environment to satisfy customers.
There are four elements to a service package—supporting facilities that are needed to create a service such as airplane for an airline or building for a hospital, facilitating goods that a service customer buys like items purchased at a show, explicit services that are directly observable benefits and are essential to a service like pain removal by a dental treatment, and implicit service that is the psychological benefits like image enhancement and confidence after graduating from an Ivy League university.
Pricing of intangible product opens up unique challenges. From a customer’s perspective, it is easier to make connections between price and a physical product due to its accessibility to human senses. The perceived quality of goods determines it price. The clarity, cut, transparency, and carat of good become the basis of its price determination.
Services being intangible do not allow this kind of approach. Price’s role in services stands reversed. Customers arrive at quality perceptions on the basis of price. Therefore, costly doctors, lawyers, hotels, and educational institutions are perceived to be better.
Pricing of goods is easier because of uniformity of ingredients. For instance, thousands of cars get assembled at Hyundai’s plant are exact replicas of each other in terms of their components and manufacturing. Therefore, it is easy for the marketers to add a markup or profit on cost to determine price.
On the other hand it is rare to find similar service across customers and across time. For instance, a procedure as simple as tooth extraction differs across customers and two teeth are not just the same. Price in services is not only a matter of monetary sacrifice that customer is expected to incur.
There are other non-monetary aspects to pricing that must be addressed. These include time cost (e.g., wait for surgery), sensory discomfort (e.g., unpleasant smells in a hospital), and psychological cost (e.g., feeling of fear and uncertainty). It is important to consider these costs while setting price of services.
The use of communication tools to inform, persuade, and prompt customers to responds favourably a product is called promotion. The communication mix consists of advertising, personal selling, sales promotions, and publicity. A question that must be answered is how service characteristics prevent using promotional tools in a similar manner.
Service buying process is not different from goods buying; that is, consumers are likely to pass through the same decision-making process. Information plays an important role in pre-purchase stages in order to make pre-purchase selection.
Services being intangible and high on experience and credence attribute create a perception of greater uncertainty and risk. These have implications on promotional strategy. First, it is important that communication provides tangible clues to make services tangible.
For instance, FedEx shows lots of trucks and jets to suggest faster mobility and LIC’s two palms protecting a lamp convey the protective aspect of insurance service. High risk inclines customers to look for trustworthy sources of information. Therefore, impersonal communication should be judiciously mixed with word-of-mouth communications.
Many educational institutions and hospitals show testimonials by previous clients in their advertising. Communication is effective when it gives vivid information. Tangible objects that excite appropriate imagination or evoke distinct mental picture are useful. For instance, the term ‘Blue Dart’ and symbol of a flying dart in the sky vividly conveys that this service is about fast package delivery.
4. Product Distribution:
Distribution is about making the product available to the right customers, at the right time, in the right quantity, and at the right place. However, service characteristics do not allow use of good-oriented approach and strategies in distribution of services. Services being intangible cannot be transported as physical goods can be.
Their inseparability questions the models of free movement of goods from the place of production to consumption. Further, their perishable nature prevents any kind of storing. Two issues are critical here—through what channel the service would be made available and where they would be located because service cannot be separated from their production system.
Three types of distribution strategies exist:
a. Intensive Distribution:
This implies reaching out to maximum number of outlets for convenience goods. Intensive distribution generally is not an option in services because of service inseparability. However, this separation has been made possible by technology mediation in many services; hence banking, Internet, and mobile services are intensively distributed.
b. Exclusive Distribution:
This is done for products that are sought by customers for their uniqueness. Highly exclusive services such as specialized surgery, education, and dining use exclusive distribution strategy by restricting their distribution to limited places.
c. Selective Distribution:
This implies a middle approach that is practiced by adopting franchise model or opening limited number of company-owned outlets. Companies such as Holiday Inn, Courtyard by Marriott, Looks Salon, NUT, Subway, Mother’s Pride, and McDonalds make their services available through the franchise model.
The interactive aspect of service creation and consumption brings customer and service creator in direct contact with each other in many cases. Consider services such as beauty treatment, surgery, education, and dine in restaurant. All these services require customer-employee contact.
In goods marketing this kind of interaction is rare; instead there is interaction between the customer and the good. The intensity and duration of this contact varies. For instance, in psychotherapy the customer- provider contract tends to be intense and long in comparison to fast food restaurants.
Customer contact brings to the fore two distinct aspects unique to services—’what’ and ‘how’ of service product. ‘What’ represents the technical outcome that is created for customer such as the time taken in delivery of a packet or the timeliness of an airline, whereas ‘how’ refers to the process aspect of service creation like how a customer is treated by hotel personnel in check in, room service, check out, restaurant, and club. ‘How’ aspect determines the perception of ‘what’ aspect or the technical aspect of service quality. A highly competent surgeon or doctor who is excellent in technical aspect of service is unlikely to be perceived so if his process of treating the patient is cold, gruff, and unsympathetic.
Management of service personnel assumes importance for their role as service marketer and creator. They are the service organization to customers.
The following issues are important:
(i) Any compromise on employee skills and attitude is likely to produce quality variations or heterogeneous service performance. The lack of consistency works counter to creating a cohesive brand image.
(ii) It is not only important to invest in development of technical service skills, but customer contact employees must also be trained in interpersonal aspects. This requires building customer orientation, interactional skills, and other soft aspects such as attitude and empathy.
6. Physical Evidence:
Physical evidence assumes significance because services are intangible. A physical object defines itself but an intangible is not able to do. The evidence that is discernible by senses associated with a service is carrier of meaning. That is, customer’s bank upon physical evidence to extract what a service is all about.
For instance, the service provided by two restaurants or hotels is not known with experience. However, the evidence that surround these services conveys meaning and suggests how they are different from each other. Physical evidence is a collection of tangible cues that signals service quality. Although physical evidence belongs to operations or production area, it becomes a domain of interest to marketing because of its ability to impact customers.
Cleanliness, wall colour, dress of staff, equipment appearance, signboards, stationery, toilet condition, as well as smells and paint on wall convey what a hospital is all about in terms of its quality standards and position in relation to competition.
There are two types of evidences—essential and peripheral:
i. Essential Evidence:
It represents those things associated with a service that are essential to its creation. Their core nature does not allow a service to be conceived without its presence. For instance, aircraft is essential to airline service and car is essential to a rent a car company.
These are so core to service that they are not passable to customers; however customer may enjoy temporary access to them. The importance of essential evidence stems from the fact that customers form their core opinion or image based on the core evidence. A rent a car company is likely to be perceived poorly if its cars are not maintained properly.
ii. Peripheral Evidence:
Evidence in this case is marginal or operates at the fringe of image-making process. Anything that does not get categorized as essential falls into this category. For instance, newspapers, receipts, magazines, dust on the window panes, and floor mats all form peripheral evidence in case of a rent a car operations. Customers make a perception about restaurant on the basis of table linen and decor.
Three things important to the creation of place of service delivery are ambience, spatial arrangement, and social setting. Ambience refers to stimuli that customer senses are sensitive about such as lighting, sound, scent, temperature, and touch. All these sensory elements must be coordinated in line with the overall service positioning.
The space dimension is about how spatial utilization. How things are to be arranged in restaurant or retail outlet depends upon the service concept. For instance, in CCD outlets the furniture is arranged in a way to facilitate conversation. Finally, social setting means what kind of social environment is created.
For instance, a service may create a formal setting while another service may promote informality. In this regard people, their behaviour, sound conditions, decor, and spatial arrangement play a defining role. The difference in social setting is discernible when a quick service restaurant is compared with fine formal dine in restaurant.
Services are executed through processes. Creation and delivery of services require undertaking of activities in set sequences by following given procedures. Consider a visit to a quick service restaurant like McDonalds. Customers follow a set process to obtain what they want that involves standing in a queue, placing order, collecting ordered things, physically going to table, and later placing the leftovers in the bin.
Corresponding to customer process, employees execute a variety of processes such as order taking, meal assembly, and meal cooking. Airline service also consists of a number of processes that essentially have to be undertaken by a customer at the front-end and by employees at the back-end.
The process differences are discernible when two different service providers are compared such as low cost carrier versus full service airline or quick service restaurant versus dine in restaurant.
Managing the service process is crucial from marketing perspective due to the following:
i. Services are processes that are planned, executed, monitored, and controlled by operations department. Operations are not governed by same considerations as that of marketing. There is likely to be a clash between internal orientation of operations and external orientation of marketing. The operations department is generally guided by the goals of efficiency whereas marketing pursues effectiveness.
ii. It is easier for operations to adopt standardization as it facilitates ease and efficiency of process execution. Marketing on the other hand expects the processes to.be flexible so that variations in customer demands can be accommodated.
The process aspect becomes an element of marketing mix in services because services are created by executing a collection of processes by operations department. Although these processes fall within the domain of operations but their subjects are customers. It is this juxtaposition of customer and operations that necessitates inclusion of process in marketing mix so that these reflect customer needs and wants.
7 P’s of Service Marketing
A prominent concept used in marketing is the ‘marketing mix’ which indicated the components of the subject matter. Since inception, marketing mix has four Ps such as -Product, Price, Place, and Promotion. When, it is applied to services, the distinct qualities of services need additional 3 components; hence they are called 7 Ps service marketing. They are Product, Price, Place, Promotion, People, Processes and Physical evidence.
Services bear a distinct characteristic. Hence, marketing of the same has become a unique area of discussion. In recent years, due to the emergence of information technology and making its own room in all the sectors, the dimensional change is noticeable with services marketing. For example, traditional and modern banking is distinguished based on the technology itself. Hence, discussion on 7 Ps has become an important area for the concerned parties.
What is being sold to customer is product. It is the ‘core’ which is offered. It is the basic thing that satisfies the desire of customer or it is the basic reason why a customer purchases. It is the subject matter. There is no and cannot be any compromise to it. But, when it comes to services, it is an invisible, intangible, perishable and heterogeneous, product offered to customers. Hence, the ‘feel’ of the service cannot be created without its consumption. This feature creates an opportunity of personalizing the services to customers. Marketing people should take note of this feature and market the service.
As services can be personalized so as price also. The basic reason for difficulty in fixing the price is ascertaining the cost of service. The cost of production of goods can be easily ascertained, but not the service cost. For example, men’s beauty Parlour has to charge both for cutting of hair and ambience of the saloon itself. The price has great impact on the customer and level of satisfaction. Usually it is expected that, quality and price are positively related to each other. The marketer has to take care for creating awareness about quality and price related matters.
The production and consumption place of service are one and the same. Services carry the place utility. Hence, where services are provided matters a lot for customer. Service providers have to take care of the ‘place’ providing it. Usually, location of prime services such as, restaurants, lodging, transportation etc. influences a lot on the profitability and the success of business too. The holiday resorts are well located far away from the noisy cities. Some services are needed to be close to customers. The concurrent nature of service is a typical issue in service marketing.
The promotion of services is crucial when one service is to be distinguished from other. If two five star hotels are located side by side, how to differentiate one’s services? Similarly, if two Volvo buses are leaving from the same place, how service promotion has to be undertaken? Hence, service providers invest heavily on promotion and advertisement. You can observe the advertisement made by corporate style hospitals in India.
Similarly, promotion plays role in the perception of the target audience. There should be fit between promotion and the service positioning. The promotion also creates brand image. Recently, the service providers are using all modern tools for promoting the services.
Services are defined by the people who provide the same. Service and provider are inseparable i.e., if actor is not there, then acting cannot be seen. Similarly, without the ability of rendering services, the provider himself has no meaning. The people in the institutions such as – school, banks, departmental stores, insurance agencies have become an important factor. In restaurants, the food serving has gained a lot of importance.
Hence, the service providers train people in the art of rendering services and customer relationship management. The customer relationship management is purely the best relationship between the service provider and receiver.
‘Process’ indicates series of activities undertaken to reach the services to customer. Services being intangible process become more crucial. It is challenging to carry the process-quality through various service activities. Hence, the popular companies prepare their service blue print and see that, they are being implemented.
7. Physical Evidence:
The last ‘p’ of service marketing is its physical evidence. As, services cannot be seen, it’s only the dependency on other uses determines the customer decision. This is the crucial point at which physical evidence plays a role. As a hungry man, when you go to a hotel, which table you select? It all depends on the quality experience.
7 P’s of Service Marketing (With Examples)
It is true that selecting the right marketing elements is crucial in relation to professional services marketing. The marketing selection is a task for management that could bring out unique outcomes for every organisation.
The marketing for the services however is called the extended marketing. Whereas in the goods marketing ,the marketing consists of 4 P’s that is Product, Price, Place, Promotion, in service marketing the same will have 7P’s which are Product, Price, Place, Promotion, Process, Physical Evidence, People. The three additional P’s Process, Physical Evidence, People are exclusive to service marketing.
The Extended Marketing of Services – The 7p’s:
1. The Service Package (Product):
When one looks at a goods-service continuum, one can find the product will have tangible and intangible aspects when it comes to service marketing. The product would be the offering of a service of company to satisfy the customers’ wants and needs.
The product range, the product quality and design; the features and the benefits of the product on offer; sizing and packaging; along with add-ons like guarantees and customer service would become crucial in this whole package of service products.
The service offering needs to be looked at carefully to ensure it meets customer needs as closely as possible. The range of services offered may require extending or updating in response to new developments within the market.
Some large accountancy firms now receive only a small proportion of their income from audit and accounting work as the revenue from their other specialist services has grown as these have developed. Anderson, including Anderson Consulting, is one such example, earning less than 20 per cent of revenue from audit and accountancy in 1994 with the remainder coming from other specialist services.
2. Pricing Policy:
Good pricing decisions are crucial in the success of any service business. This is a long-term strategic decision as well as a short-term tactical level decision. In this element of price one can take into account the list price and discount price, the price sensitivity of your market, and the terms and conditions of payment. The price of the service product will always be related to the positioning done in the in the market. In the pricing decision generally only be one player is the price leader.
Price represents factors which adhere to cost along with other factors like competitive price, prospective clients, quality being offered etc. Price thus is a strategic element of the marketing programme and not just the basic costing for the firm. Some services fees are charged at an hourly rate like that of professional services whereas some could be fixed fees for standard jobs like health screening checks.
3. Promotional Programmes:
A promotional mix which does not have any relationship to the rest of the mix would be a waste of money. The service companies go for different promotional techniques, based on their respective strengths. The same but can be broadly classified into the following five broad categories- Advertising; Public Relations; publicity, Sales Promotions; and Direct Selling. These promotional tools are used to communicate the product benefits to the customers.
Any strategic promotional programme has to list the main objective of the same before it is designed. For example the objective of established brands to advertise could be brand recall whereas that of new brands could be forming brands image. More so some of the service organisations may plainly look at sales as their main objective of promotions.
The professional service providers generally have more than one promotional objective. For the same a variety of messages and media could be used to communicate with the target audiences.
Advertising is one way of increasing the awareness of the organisation and its services. For example the advertisement of Dr.Batras hair clinic and that of VLCC as a slimming clinics advertise widely in India. They lies the mixture of information and the visual effects of the various services to attract customers. Also print media like Newsletters or house magazines are a very useful tool for communicating with customer.
This is so because they can be targeted to the actual target group of the company. For example if the same advertisement of VLCC was to be given in a magazine, it could very specifically be added into Famine or Marie Clair, the magazines which women of the target segment read.
Another way of promotions is the PR and publicity which can be used to improve the corporate image and also to inform the public about the changes and innovations within the organisation. The advertisement not only enhances the image of the company but help in a good recruitment of highly qualified and skilled expertise.
4. Place – Distribution:
The word place is generally used to define the distribution channel of the service company. The place of selling is critical in services marketing as many clients might be effected by the convenience factor in provider selection. For example if one has to get eye test or legal advice, he or she will try and go to the nearest doctor or lawyer respectively.
Location but would not be very critical for the highly complex or specialist services. Thus in this case the accessibility and availability will be more important than physical location. Examples of such specialised service are accounting audits or interior decorator where the service provider will visit the client’s premises.
Service organisations do not have channels like is the case in goods marketing (where channels like retailers and wholesalers are used for distribution). The service marketing usually deals directly with clients. Thus they may have branch offices and subsidiary operations when they want to move to a new market area.
There is a variety of channels to choose. For example, trading on-line is today the best channel for business along with their off-line business. This is because selling directly through the web removes the extra cost of setting up a branch office to deliver the services to the consumers.
Service delivery quality will rely on the person delivering the service. This is because the service is produced and consumed at the same time and the client interaction is crucial in making or breaking a service deal. Internal marketing and staff development programmes will help optimise staff performance.
The employees should be made to understand their role in the organisation and be motivated to the success of the firm. It is the skilled and capable people who could elevate or degrade the image of a service marketing brand. The firm does recognize the power of people in marketing which certainly cannot be underestimated when it comes to service marketing.
This element takes care of the front line sales and customer service employees and is crucial as these employees have a direct impact on the delivery and perception of the company. For example if a hotel staff does not welcome or communicate to the customers politely, then this would hinder the image of the hotel, not that of the employee.
Thus when a service company works on the People factor in its organisation it should judge the employee’s knowledge and skills, motivation and investment in the success of the brand. This element also will have an impact on the other elements of the system. For example if a doctor has made a good appointment system which is a good process in services, but the lower staff does not follow the process properly then this P of people could hinder the other P of process in the delivery of the services.
6. Process Design:
Process design, can play a crucial role in creating and delivering a quality service. The same is more important when one is dealing with the customised specialist services. Thus the Administration quality, appointments systems, customer care, office opening hours, methods of communication, and operating efficiency are all part of the processes in a service.
These thus form a crucial part of the service delivery process. An Efficient appointment systems at the doctor which saves the customer from the waiting or queuing systems problems would be an example of a good process system. The same could lead to an improved satisfaction levels. Also when it comes to legal consultancy the brief regular updates to the clients could be an additional benefit in the service provided to the customer which tells them how the case is progressing and being monitored.
The process part speak of the ‘easy to do business with’ concept. It explain the simplification of processes for the convenience of the customers. In case the queries in the call centre are answered in a longer period of time, it could frustrate the customers. In case the consumers cannot buy a product in the airport shop because the shop is not computerized then he will never visit that shop again.
Thus these examples show the importance of this element of process. If the service is a ‘high contact’ product, and is intangible, then it becomes more important to get the processes right. The same has to be done form the customers’ point of view. The reason why come firms face a process problems is because they are designed form the provider’s convenience point of view and , not that of the customer.
7. Physical Evidence:
As services are intangible product thus making an opinion alone on the intangible part would not be fair. Thus the tangible part of the service which each service product has would also be a measure of the service quality. Some example of tangibles in service are the food in the hotels and clothing given to a patient in the hospital.
The Professional qualifications and affiliations and certificates displayed at the doctors clinic is also a part of physical evidence which speaks of the credibility of the service provided by the doctor. The firm’s premises and working environment will be a tangible evidence which will talk of the company’s professionalism and expertise as a service provider.
This physical evidence will also be a determinant of the prices charged. The uniform of the Staff like white coats, as is seen in the medical professions, and the dress codes in service business are all examples of physical evidence.
When the company is marketing the tangible goods, the customer can be given a chance to try the product before buying it. Also if not try then the customer at least can view the product, touch or smell it before purchase. This is not the case with services. With services, when a company offers free trial, then the customer be able to trust the company. For the trial although there is the need of the tangible evidence of the quality to be portrayed to the customers.
Physical evidence is that tangible, visible touch points which the customer will encounter before they buy the service. Thus from your reception area to the staff’s clothing to the images of the corporate brochure and the food offered in a hotel, all these physical evidence will leave a mark about the brand image in the mind of the consumers.
7 P’s of Service Marketing
Popular service marketing mix is that of Jerome McCarthy and American Professor which consists of 4 p’s which is now slightly amended to have three additional p’s for better utilization in marketing department of organization.
Better management is that which prepares different combinations of this p’s to suit environment variables to have cost effective element. This is a continuous, an ongoing process and must be closely monitored by marketing department. Marketing mix is a universal concept and must be used for goods as well as services. All variables are inter-related and interdependent on each other.
Some thinkers point for an alternative marketing mix for services because of its special and unique characteristics like, perishability, intangibility, absence of inventory, heterogeneity etc.
However it is not recommended to totally alter the previous marketing mix, instead, only three additional p’s should be added to form a 7 P’s Marketing Mix of services considering all its features and characteristics.
It is worthwhile to note here that marketing mix for services is a newer development and it can be further developed in a few years span with further ongoing studies and deep research.
Services are intangible, heterogeneous and inseparable from their products. Services are product in spite of all the above characteristics. Services have different characteristic than product but in spite of that business recognizes services as product. Services are either convenience, shopping of specialty goods with all that implies.
Consumer services like repairing, dry cleaning, clothing alteration are included in convenience type of Services.
Insurance, teleshopping, airlines, banking, are covered under shopping because it involves comparison with different sellers which provide costs, package and terms and conditions.
Third category generally includes professional services of doctors, lawyers, engineers, brokers which provide special services on demand by consumers which after satisfaction pay money to them.
Some producers provide customized services along with their regular service. Many software companies provide client oriented, customized software which satisfies client’s particular demands.
For e.g. software giant Accenture provides consumer oriented customized software packaged to many countries across the world in return of large sums of remuneration.
Services as product attracts some key considerations on the part of marketing department responsible for sales and profit maximization.
It is difficult to brand services, it is intangible so no question of packaging and labeling like an ordinary product.
Steve Jobs, apple former CEO always stressed on this issue and stated that our product is best understood with tons of services.
2. Price and Other Outlays:
It’s a very important p of the marketing mix of services. Services have some inherent nature that makes pricing more difficult compared to tangible product’s pricing decisions. Cut throat competition makes service providers to follow market prices strictly or even below market prices to attract customers and save older ones. Pricing above market price is generally employed by larger organizations who possess special service agenda.
Best example of this is Apple Corporation. Apple don’t negotiate or even tend to follow pricing policies and sometimes Product’s prices are even more than normal market prices. But since apple is most trusted brand in world, it is possible to set different pattern of pricing without losing customer support and sympathy.
In today’s revolutionary era, pricing decisions are very crucial and large amount of search and study required to set an optimum pricing policy. Generally profit margin is fixed before quoting the price. Some key elements must be taken into account before taking pricing decisions because it is the vital aspect for growth of organization.
a. Selling price, discounts, premiums
b. Margins for intermediaries (if any)
c. Credit terms
d. Identifying and maintaining other costs incurred by users such as-
i. Additional monetary costs associated with service usage (e.g. travel to service location, telephone etc.)
ii. Time expenditure [waiting in most cases]
iii. Unwanted mental and physical effort
iv. Negative sense experience.
It is important to note here that cut throat competition have made corporate into parties of war and fighting for brand name, popularity is a general visible thing. Many ill practices have entered in pricing policies including attracting customers on the basis of other brands disadvantages, 0% loan instalments with hidden costs etc.
Pricing competition is rising with rising in ill aims of organizations.
For concluding this point it can be said here that service oriented enterprises pricing policies are demand oriented with many sellers providing similar services.
Many ATM machines are installed in airport, hospitals, hotels or even in shopping malls. This is the best example of placing services at the doorstep of consumers. Generally channels of distribution for intangible services are limited to buyers and sellers. However, sellers use intermediaries to facilitate trade and easy access of services to customers. Some banks offers insurance, mutual fund desks in each branch to get into shoes of customer. These desks acts as intermediaries between consumer and banks.
This channelling concept is rather different in case of product and services, because in service, intermediaries are so closely attached to service provider that they can’t even differentiate their identity. Internet service providers appoints local dealers to present their services to consumers locally.
Some decisions like- Where? When? and How? must be solved in order to get speedy, useful and good service to customers.
Following points are worth considering to understand ‘P’ (place) as in marketing mix for services:
i. Geographic locations served
ii. Service schedules
iii. Physical channels
iv. Electronic channels
v. Customer control and convenience
4. Promotion and Education:
For every marketer promotion and education is very important for selling of services. Service is sold not only with its utility, but with its promotion and reach to the customers. Selling is made not with what is served but what customer ultimately wants and will be generated by.
Subway commercials runs as, “we make our own bread.”
So simple, so easy to read but very effective in reaching customers heart. It stresses exactly what is needed by customers from that particular type of food chain.
Personal selling is most important in service marketing. People are crazy about Vodafone ZOO ZOO ads played on TV during cricket matches. Many people are buying characters from that advertisement.
Sales promotion in the traditional sense of sampling, demonstration and point of purchase display are severely limited because of the characteristics of the intangible dominant service product.
People involvement is increased after the shift from industry to services was made. Every service organization runs with the major contribution from people, internally & externally. People may be directly or indirectly contribute for providing services but without their involvements providing service will be a dream. Moreover, it is funny to note that one who provides service to people, while consumer are also people, there for the people factor in the service marketing mix is perhaps the most important one the organization have to get right.
Service personnel of present at lower levels within the organization structure- Contact personnel & support personal contact personnel are those individuals whom the customer see e.g. waiter, receptionist etc.
While support personnel are responsible for back office or direct on-site support e.g. telephonic support. Personnel are available for almost every product for service in today’s marketing policies that tele caller is a support & personal & person who shows demo of a product or service at customer’s home is a contact person, contact person is a clothing & support person is a back bone of organization.
Main question in any organization is how can a company ensure that its personal at both levels will provide a quality service leaving a favorable impression on costumer?
Internal marketing is the answer for the above question. Motivated & customer conscious employees is the purpose behind that, employees are assured as internal customers & jobs as internal products who work in an organization that should create an internal environment which supports customer considerations & sale mindness among its personnel.
At high level a service will be delivered which will create higher levels of satisfaction in minds of customers. It service organization care about all its personnel as well as people outside the organization.
Thus marketing mix for service element talks about the process of delivering a service to its customer, with the help of personnel in the organization for the satisfaction of consumers needs. This is a two folded aspect of which first one throws light on the inseparability characteristic of services & focuses on how the service is delivered by companies personal & how the customer participates in the service delivery process.
Service production & consumption is a simultaneous process. The second point covers the value addition of the service when it is being experienced by customers.
The second point is for maintaining our competition in the market, because of high competitive environment, e.g. some banks in India provide ATM card blocking service after a phone call is made on toll free no., however, some privet banks not only block cards but, accepts on the spot request for issuing new ATM card for the same customer, also telling them last transaction details, thus this later bank have added value to its service winning competition with same service provided by other banks.
The quality of service depends upon the way which it is offered & not by what is offered.
7. Physical Environments:
‘Picture speaks a thousand words’. It is natural tendency to be fascinated by picture which is physically present, before the human eyes unlike words which are physically present & thus less impactful. Thus, customer is looking for some physical clue regarding the delivery and service. Hence some physical evidence must be provided while the products and service delivery are in operation.
Two types of physical evidence are stated below:
i. Essential evidence – It is so dominative in rapture that it is itself an element which is unlike peripheral evidence not processed by customer, e.g. Audio visual demo of a sound system like Bose will motivate prospective buyer to purchase that system, that demo will act like a boost.
ii. Peripheral evidence – It is possessed by customer as a part of purchase a service but, it has low value & cannot stand independently, e.g. counter trail receipt. Mobile sms, after shopping from e-commerce web sites.
This physical element will boost the sale of particular service & they plays an important role for economic progress of an organization.
7 P’s of Service Marketing (With Examples)
It is the task of the marketing persons to prepare or plan a programme in order to achieve the objectives of the marketing company. The way to achieve the task is by preparing and planning the policies in line with the customer expectations. The process of understanding these customer needs or requirements is greatly enhanced by targeting, segmentation and positioning.
What are the tools and tackles available to the marketer in this battle to win over the customers and remain profitable in the process? These are the variables or the action strategies available at the disposal of the marketer. The well-planned use of these tools can make the marketer very effective in this battle for success.
Conventionally, in the case of product marketing, the following 4 tools or 4 P’s have been considered to be the policy options available to the marketer.
The definition of the broad variable called product is ‘an offering which meets the customer need’. However, the concept of product is much wider and rigorous.
In the case of physical goods, it includes:
i. Features – These are the various physical forms, styling, etc. which give the product the characteristics.
ii. Accessories – The accessories enable the user to make full or best use of the product itself. For example, a portable CD player would require a pair of head-phones, a mains power pack, or a battery eliminator, etc. to supply direct power. In addition, the customer may need a carrying case to clip the product to the waistband.
iii. Packaging – This not only protects the products from the damage, but also provides information about the product, helps to promote the product through the attractiveness of its packing, and can be reused for other purposes (like a Bournvita bottle). In addition, it can preserve the nutrients, provide information on price, date of manufacturing, period for best use, etc.
iv. Warranties – Increasingly, warranties and after-sales service are proving to be the key strategies for not only the services but also to promote the products sales. For example, no motor car or automobile can be sold without the after-sales warranty and services.
v. Brands – The marketing of both products and services is helped tremendously by branding. The branding differentiates one product or service from a competing product or service. In addition, it creates an impact on the potential consumer whereby the characteristics of the brand are associated with the product or service.
For example any business-related course promoted by Harvard Business School would be considered by potential participants to be of high class. The name of Harvard Business School is strongly linked with top-class business education.
This aspect of the marketing is crucial for both products and services—the availability of the product or service at the appropriate place where it is convenient for the customers.
The various aspects of distribution are as follows:
i. Channels – The various modes or chains of operators through which the product is passed on are called the channels of distribution. The depth of a channel (direct marketing versus through one/two or multiple channel members) varies from product to product.
ii. Intermediaries – The various types of intermediaries such as wholesalers, retailers, agents, commission agents, brokers, franchisees, etc. make it possible for the products and services to reach the end consumers effectively.
One of the key aspect of the modern marketing is promotion of the services brought about through sales promotion and advertising methods.
The tools available at the disposal of the marketing manager are:
i. Sales Promotion – The tools include offers, discounts, bundles, direct promotion and many other means of promotion.
ii. Advertising – Each of the product or service information including the price, features and distribution information has to be available to the potential customers. In addition, the advertising helps to persuade the customers to buy a particular product or service brand or an offering. Thus, it creates advantage in the minds of the customers that can be exploited by the advertiser.
Price is a key variable in the marketing of goods and services both. Apart from the different price levels prevailing for different available products or services, in the case of services it helps the service provider to make up a for a number of deficiencies in the other areas such as capacity and availability.
The tools underpricing include:
ii. Discounts, reductions, commissions and margins
iii. Terms of payment – In the case of high value items, the credit terms help to lubricate the sale.
iv. Bundled prices – These enable the customers to achieve greater satisfaction due to the higher value of the need satisfaction.
People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet ‘the individual needs’ of the person consuming it. Most of us can think of a situation where the personal service offered by individuals has made or tainted a tour, vacation or restaurant meal.
People buy from people that they like, so the attitude, skills and appearance of all staff needs to be first class. Here are some ways in which people add value to an experience, as part of the marketing mix – training, personal selling and customer service.
All customer facing personnel need to be trained and developed to maintain a high quality of personal service. Training should begin as soon as the individual starts working for an organisation during an induction. The induction will involve the person in the organisation’s culture for the first time, as well as briefing him or her on day-to-day policies and procedures. At this very early stage the training needs of the individual are identified. A training and development plan is constructed for the individual, which sets out personal goals that can be linked into future appraisals.
In practice most training is either ‘on-the-job’ or ‘off-the-job.’ On-the-job training involves training whilst the job is being performed Off- the-job training sees learning taking place at a college, training centre or conference facility. Attention needs to be paid to Continuing Professional Development (CPD) where employees see their professional learning as a lifelong process of training and development. A well trained employee obviously adds value to the experience of the customer in his interaction with the employee.
There are different kinds of salesperson. There is the product delivery salesperson. His or her main task is to deliver the product, and selling is of less importance, e.g., fast food, or mail. The second type is the order taker, and these may be either ‘internal’ or ‘external’. The internal sales person would take an order by telephone, e-mail or over a counter. The external sales person would be working in the field. In both cases little selling is done.
However, how they interact with the customer, while taking the order or delivering the product or talking on the phone will either add to the customer’s experience or negatively impact the customer. Thus it is very important that sales people have a pleasing personality and interact in a good and polite fashion with the customer. The next sort of sales person is the missionary.
Here, as with those missionaries that promote faith, the salesperson builds goodwill with customers with the longer-term aim of generating orders. Again, actually closing the sale is not of great importance, at this early stage. The forth type is the technical salesperson, e.g. a technical sales engineer. Their in-depth knowledge supports them as they advise customers on the best purchase for their needs.
Finally, there are creative sellers. Creative sellers work to persuade buyers to give them an order. This is tough selling, and tends to offer the biggest incentives. The skill is identifying the needs of a customer and persuading them that they need to satisfy their previously unidentified need by giving an order.
All the different kinds of salespeople, whether they focus on sales or order taking, interact with the customer. The way they interact, their body language, their verbal and non-verbal communication, all have an impact on the consumer. They all add to the feeling of either a good or a bad experience. The sales person is an ambassador of the organisation and a point of interaction with the consumer.
Many products, services and experiences are supported by customer services teams. Customer services provide expertise (e.g. on the selection of financial services), technical support (e.g. offering advice on IT and software) and coordinate the customer interface (e.g. controlling service engineers, or communicating with a salesman). The disposition and attitude of such people is vitally important to a company.
The way in which a complaint is handled can mean the difference between retaining or losing a customer, or improving or ruining a company’s reputation. Today, customer service can be face-to-face, over the telephone or using the Internet. People tend to buy from people that they like, and so effective customer service is vital. Customer services can add value by offering customers technical support and expertise and advice.
Process is the sixth element of the extended marketing mix, or 7P’s. There are a number of perceptions of the concept of process within business and marketing literature. Some see processes as a means to achieve an outcome, for example – to achieve a 30% market share a company implements a marketing planning process.
Another view is that marketing has a number of processes that integrate together to create an overall marketing process, for example – telemarketing and Internet marketing can be integrated. A further view is that marketing processes are used to control the marketing mix, i.e. processes that measure the achievement of marketing objectives. All views are understandable, but not particularly customer focused.
For the purposes of the marketing mix, process is an element of service that sees the customer experiencing an organisation’s offering. It’s best viewed as something that the customer participates in at different points in time. Here are some examples to help build a picture of marketing process, from the customer’s point of view.
Going on a cruise – from the moment that the customer arrives at the dockside, he/she is greeted; his/her baggage is taken to the room. The customer has two weeks of services from restaurants and evening entertainment, to casinos and shopping. Finally, the customer arrives at his/her destination, and the baggage is delivered to him/her. This is a highly focused marketing process.
Booking a flight on the Internet – the process begins with the customer visiting an airline’s website. He/she enters details of the flights and books them. The ticket booking reference arrives by email or SMS. The customer catches the flight on time, and arrives refreshed at the destination. This is all part of the marketing process. At each stage of the process, marketers- deliver value through all elements of the marketing mix.
Process, physical evidence and people enhanced services. Feedback can be taken and the mix can be altered. Customers are retained, and other services or products are extended and marketed to them. The process itself can be tailored to the needs of different individuals, experiencing a similar service at the same time. Processes essentially have inputs, throughputs and outputs (or outcomes). Marketing adds value to each of the stages.
7. Physical Evidence:
Physical evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues.
There are many examples of physical evidence, including some of the following:
(b) Internet/Web pages.
(c) Paper Work (such as invoices, tickets and despatch notes).
(f) Signage (such as those on aircraft and vehicles).
(h) Business cards – The building itself (such as prestigious offices or scenic headquarters).
(i) Mailboxes and many others.
Some organisations depend heavily upon physical evidence as a means of marketing communications, for example tourism attractions and resorts (e.g. Disney World), parcel and mail services (e.g. first flight courier), and large banks and insurance companies.(e.g. ICICI Bank, HDFC Bank)
Marketing Strategy has to be used if business success is desired. Whether a marketer is marketing a product or a service, marketing strategy is a must. However, as a service has certain distinguishing characteristics and is much different from a product, the marketing strategy for marketing of services has to be different. The traditional approach to marketing cannot be used to market a service. What is required is the use of the Seven P’s of marketing, with a focus on ‘internal marketing’ and ‘interactive marketing’.
Interactive Marketing describes the employees’ skills in handling customers.
Without internal marketing and interactive marketing, no marketing strategy for marketing of services will be complete as the experience of excellent service will be felt by the customer only when these two factors are hundred percent in place. In the marketing of services, the performance of the customer-contact people and their behaviour forms a major part of the service experience by the customer.
Take the example of two finance companies. Company A and Company B. Both, providing zero percent finance for purchase of vehicles. The service of that company whose customer-contact staff is more customer service oriented will be thought of as the more efficient supplier of service.
Let us take the example of a bank and see how and why a bank has to use the four P’s of marketing as well as internal marketing and interactive marketing in its marketing strategy. A bank performs various services. The basic reason why the marketing strategy for services is different is because services are intangible. That is, they cannot be seen, can only be experienced.
Thus the major job of a marketer of services is to tangibilise the intangible. That is, he has to manage the evidence. Thus banks have to provide tangible images to tangibilise their services. This cannot be done by using only the four P’s of Marketing. ‘Internal Marketing’ and ‘Interactive Marketing’ form a bulk of the marketing strategies for services.
7 P’s of Service Marketing
Marketing mix for services is different from that of product mix.
Service marketing has seven Ps, which are described below:
The product in service marketing mix is intangible, heterogeneous and perishable in nature. Thus there is a scope for customization as per market. Services rendered by transport industry and educational institutes are the excellent examples.
Finding the cost of input and adding a profit margin to the cost incurred and deciding the final price of the service is a very tough task in service industry For example, in a restaurant the owner can charge people only for the food they are serving. But it cannot charge for the appealing ambience and furniture.
But these elements are cost to the restaurant owner. So these costs should also be taken into consideration while costing. Generally, service pricing involves taking into consideration labor, material cost and overhead costs.
As services delivery is parallel with its production and cannot be stored, location plays an important role. A service provider has to pay attention to where the service will be provided. Hence, a resort owner has to decide what better location is available for a resort, is it in the heart of the city or in the outskirts.
As the offerings in services can be easily replicated promotions play a critical role in differentiating a service offering. Industries such as airlines where the fare of the service provided is as identical as the experience players of such industries have to spend heavily in advertising.
In addition to the traditional four Ps, the services marketing mix also includes- people, physical evidence, and process.
One of the characteristics of services is it is inseparable which means service and service provider cannot be separated. So the service provided is the defining factor of the service delivery.
If a restaurant is popular, it is not only because of the food but also because of the way it is cooked and served. This cooking and serving part has human element in it, because for the customer who is dining in a famous restaurant the courtesies of the waiter, appearance of the staff, their attitude and behaviour how food is served and how quickly it is served are equally important.
In many service situations, customers themselves can also influence service delivery, thus affecting service quality and their own satisfaction. For example, in a spa customers greatly affect the quality of service they receive. Customers not only influence their own service experience, but they can influence other customers as well.
For example, after watching a movie a critic gives one or two stars to that movie based on his knowledge, because of which many people who even wanted to see the movie might not see the movie.
6. Physical Evidence:
As services are intangible in nature, service providers always try to add tangible elements into their offerings. Hence, there are cinema theatres that have well designed ticket counters, food courts inside the theatres, and comfortable chairs to experience the movie. Physical evidence cues provide excellent opportunities for the firm to send consistent and strong messages regarding the organization’s purpose, the intended market segments, and the nature of the service.
In order to maintain the same standard of service delivery most companies focus on the details of the service delivery process. Some services are very complex, requiring the customer to follow a complicated and extensive series of actions to complete the process. For example, in order to get a passport an applicant has to go counter to counter in the passport office to complete the process.
To avoid such complexity, many companies have a service blue print which helps the company to plan the entire process of service delivery beforehand. Another distinctive feature of the process that can provide indication to the customer is whether the service follows a production-line or standardized approach or whether the process is an empowered or a customized one.
For example the insurance plans of HDFC and ICICI, considered as the best insurance companies among the ones in the market, follow different process models. HDFC offers a wide range of plans for various segments of the customers such as for woman, retired persons, for minor children and for a group of individuals. Whereas, ICICI offers limited insurance plans for the customers.