Services Marketing Mix – The 7 P’s of Services Marketing

Marketing mix is the key concept in the marketing task. It is the strategy used to perform marketing functions. Marketing mix is the planned package of elements which will support the organization in reaching its target markets and specific objectives. The common factor behind all the elements of marketing mix is that they are specific parameters which the marketing manager can exercise some control over, within the constraints of their firm’s resources. For example, the marketing manager can control the type of product to be developed, subject to the firm’s technology, as well as the places it is sold, subject to the firm’s distribution network. Ultimately, the aim of the marketing mix is to ensure that all P’s are focused on the target customers, serving their needs and creating value for them

Elements of Services Marketing Mix

The services marketing mix is also known as an extended marketing mix and is an integral part of a service. The services marketing mix consists of 7 P’s as compared to the 4 P’s of a product marketing mix. Simply said, the service marketing mix assumes the service as a product itself. However it adds 3 more P’s which are required for optimum service delivery.

Services Marketing Mix - The 7 P's of Services Marketing

1. Product

The product in services marketing mix is intangible in nature. The product element of the marketing mix includes the tangible good and all of the services that accompany that good to produce the final product. A product is a package, or bundle, of goods and services that comprise the total offering. For example, the purchase of a hotel room includes the guest room, fitness center, pool, restaurants, valet service, concierge, housekeeping service, etc. A restaurant meal consists of the actual food, host/hostess, and waiters, etc. Finally, a travel experience consists of a chain of products and services starting at the time of purchase and ending upon returning from the trip. Everything in between, such as hotel service, restaurants, and transportation (including taxis and buses), affect the overall experience. Some of the variables that are part of the ‘product’ decision include variety, quality, design, features/amenities, brand name, packaging, supporting services, and warranties. As stated earlier, the decision regarding the proper mix of goods and services is based on the wants and needs of consumers.

2. Place

The place element of the marketing mix includes the distribution and logistics of producing a product or service and making it available to the final consumer. The location of a manufacturing or wholesaling facility is determined by considering the costs of resources such as labor, raw materials, and real estate. In addition, it is necessary to have access to the preferred mode(s) of transportation for delivering the products to wholesalers and retailers. The location of a retail establishment is based mainly on accessibility to the final consumers.

Services have relatively short channels of distribution and focus most of their efforts on finding retail locations that are convenient for consumers. For example, restaurants tend to choose high traffic areas close to shopping and other attractions. Similarly, hotels locate their facilities in areas such as airports, urban centers, industrial centers, and tourist attractions that are accessible to their respective target markets. Some of the variables that are part of the ‘place’ decision include the type of channel, location, assortments, coverage area, inventory, and transportation. Many service providers overlook the importance of this variable in the strategic planning process. The channel of distribution tends to be shorter for the marketing of services than that for goods, and most service providers act as manufacturer and retailer. Many managers in service firms assume that once the initial location is determined this variable diminishes in importance. However, hotels and restaurants do switch their operations to a more favorable location on occasion. This is a major decision involving company time and resources, but it can result in long-term growth and increased profit if handled properly.

3. Promotion

The promotion element of the marketing mix includes all of the communications associated with marketing a product or service. The promotion mix consists of four elements: advertising, personal selling, publicity, and sales promotion. Advertising and publicity are forms of mass communication using a variety of mediums such as television, radio, newspaper, magazines, direct mail, and the Internet. Advertising is a paid form of mass communication with an identified sponsor, while publicity is a non-paid form of mass communication without a sponsor (i.e., it is free and objective). Personal selling is a form of interpersonal communication sponsored by the firm. Sales promotion is a short-term inducement to purchase a product or service. Some examples of sales promotions are contests, sweepstakes, premiums, and product bundles.

4. Pricing

Pricing in case of services is rather more difficult than in case of products. Price is the value placed on a product or service. Other terms that can be used to refer to the price component of the marketing mix are: fee, rate, tuition, premium, and toll. There are non-monetary elements to price as well as the more obvious monetary elements. Some examples of non-monetary price are the time it takes to search and evaluate alternative products or services and the convenience of location. If a consumer drives to several locations to shop for a product or service, then there are costs associated with time, gas, and depreciation on the car. Also, there could be tolls for highways, bridges, or subways. In the end, it is the perceived price or the perceived value the consumer associates with a product or service that influences the purchase and the level of customer’s satisfaction. Value is the trade off between price and quality – the benefits the consumer receives for the price paid.

The price of a product is not simply the price that a firm sets for a product; rather it encompasses a whole series of decisions around how the price will be set and adjusted. The primary consideration is the pricing strategy the firm will follow. For example, company’s can choose to “skim” the market by setting a high price and serving only the wealthiest customers, or it can mass market the product by setting it at a price that anyone can afford. The company also needs to consider what volume and early payment discounts it will make; how it will set the price for different channels and seasons; whether the product can be bundled with others for a lower overall price; and whether the firm can attempt to price discrimination, as airlines do with first class and economy class fares.

Elements of Extended Service Marketing Mix

The addition of these extra three factors helped make the 7 P’s a much more comprehensive framework for services marketing. Furthermore, it offers a broader perspective of services marketing, with more refined results. Here on we start towards the elements of the extended services marketing mix.

5. People

The role of the service employee becomes much more critical since to a very real extent the employee is the service, given the absence of any tangible artifact. They carry the responsibility of projecting the image of the service firm. Because of the inseparability of production and consumption of services, service delivery is characterized by interactions between customers and service employees. Service employees who experience positive human resource practices can devote their energies and resources to effectively serving their customers. The service firm’s human resource management practices can create an environment that elicit more positive, courteous and helpful behavior from the employees toward customers. In turn, the behavior that employees display will positively impact on service quality.

6. Physical Evidence

Physical evidence of service includes all the tangible representations of service such as clear signage, good ventilation, adequate space, internet presence, equipment and facility. As services are intangible, customers are searching for any tangible cues to help them understand the nature of the service experience. For example, in the hotel industry, the design, furnishing, lighting, layout and decoration of the hotel as well as the appearance of its employees will influence customer perceptions of the service quality and experiences. For theme parks, restaurants, health clubs, hospitals or schools, the physical facility is critical in communicating the service and making the entire customer experience positive. Ambient conditions include background characteristics of the environment such as temperature, air quality, lighting, noise, music, and scent affect the five senses. Spatial layout of the equipment, and furnishings arranged, the size and shape of these items, and the spatial relationships among them are also crucial to influence customers’ perception.

7. Process

Process is referred to as the procedures, mechanisms and flow of activities by which the service is delivered i.e. the service delivery and operating systems. Delivering customer expectations depends on how well various steps function together. Highly bureaucratized services frequently follow complicated and extensive series of actions, and the logic of the steps involved often confuse the customer. Customers may complain that service firms are slow in response and bureaucratic with the many steps involved. They want easy access to the service process, and they want things to be handled quickly, preferably by the first service employee. Customers describe frustrating experiences when they have to run from pillar to post to complete a simple transaction, experience long waiting time, rules and regulations, and personnel who decline to serve them with the excuse “I’m not allowed to do this” or “this is against our policy”.