Marketing Mixes for Services
Product, Placement, Promotion, and Price
Due to the nature of services, the implications of product, place, promotion and price are different than in the traditional marketing mix.
Describe the 7Ps in the services marketing mix
- In terms of product, with services there is scope for customizing the offering as per customer requirements so the customer encounter assumes particular significance.
- Pricing of services is tougher than pricing of goods because in the case of services there are attendant costs–such as labor and overhead costs–that also need to be factored in.
- Since service delivery is concurrent with its production and cannot be stored or transported, the location of the service product assumes importance.
- Since a service offering can be easily replicated, promotion becomes crucial in differentiating a service offering in the mind of the consumer.
- The essential elements of product, promotion, price and place remain in service the service marketing mix, but three additional elements–people, physical evidence and process –are included to the 7Ps mix.
- noise: data that is not being used to transmit a signal, but is simply produced as an unwanted by-product of other activities
- heterogeneous: Diverse in kind or nature; composed of diverse parts.
- marketing mix: A business tool used in marketing products; often crucial when determining a product or brand’s unique selling point. Often synonymous with the four Ps: price, product, promotion, and place.
- intangible: Incorporeal property that is saleable though not material, such as bank deposits, stocks, bonds, and promissory notes.
To understand the services marketing mix framework, it’s necessary to understand the nature of services. According to Wolak, Kalaftis & Harris, the characteristics of services are:
- Intangibility–the service cannot be touched or viewed, so it is difficult for clients to tell in advance what they will be getting.
- Inseparability (simultaneity)–the service is being produced at the same time that the client is receiving it (eg during an online search, or a legal consultation).
- Heterogeneity (variability)–services involve people, and people are all different. There is a strong possibility that the same enquiry would be answered slightly differently by different people (or even by the same person at different times). It is important to minimize the differences in performance (through training, standard-setting and quality assurance).
- Perishability–unused capacity cannot be stored for future use. For example, spare seats on one airplane cannot be transferred to the next flight, and query-free times at the reference desk cannot be saved up until there is a busy period.
Each of these characteristics plays a role in the service marketing mix.
The Services Marketing Mix
Extending the 4Ps
The services marketing mix is an extension of the 4Ps framework. The essential elements of product, promotion, price and place remain but three additional elements – people, physical evidence and process are included to the 7Ps mix. The need for the extension is due to the high degree of direct contact between service providers and its customers, the highly visible nature of the service process, and the simultaneity of the production and consumption. Although it is possible to discuss people, physical evidence and process within the 4P framework (for example, people can be considered part of the product offering), this extension allows for a more thorough analysis of the marketing elements necessary for successful services marketing.
In the case of services, the “product” is intangible, heterogeneous and perishable. Moreover, its production and consumption are inseparable. Hence, there is scope for customizing the offering as per customer requirements, and the actual customer encounter therefore assumes particular significance. However, too much customization would compromise the standard delivery of the service and adversely affect its quality. Therefore, particular care has to be taken in designing the service offering.
Pricing of services is tougher than pricing of goods. While the latter can be priced easily by taking into account the raw material costs, in the case of services there are attendant costs–such as labor and overhead costs–that also need to be factored in.
A restaurant not only has to charge for the cost of the food served but also has to calculate a price for the ambiance provided.
Since service delivery is concurrent with its production and cannot be stored or transported, the location of the service product assumes importance. Service providers have to give special thought as to where the service is provided. A fine dining restaurant is better located in a busy, upscale market as opposed to the outskirts of a city. A holiday resort is better situated in the countryside away from the rush and noise of a city.
Since a service offering can be easily replicated, promotion becomes crucial in differentiating a service offering in the mind of the consumer. Service providers offering identical services such as airlines or banks and insurance companies invest heavily in advertising their services. This is crucial in attracting customers in a segment where the services providers have nearly identical offerings.
People are a defining factor in a service delivery process, since a service is inseparable from the person providing it. A restaurant is known as much for its food as for the service provided by its staff. The same is true of banks and department stores. Consequently, customer service training for staff has become a top priority for many organizations today.
The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers. Most companies have a service blue print which provides the details of the service delivery process, often going down to even defining the service script and the greeting phrases to be used by the service staff.
Since services are intangible in nature, most service providers strive to incorporate certain tangible elements into their offering to enhance customer experience. Many hair salons have well designed waiting areas, often with magazines and plush sofas for patrons to read and relax while they await their turn. Similarly, restaurants invest heavily in their interior design and decorations to offer a tangible and unique experience to their guests.