SERVICES MARKETING -MIX

• Dr Ashok Khurana
 Service Marketing Mix- Introduction

The marketing mix concept is a well established tool used by

marketers.

The phrase ‘marketing mix’ was first used by ‘Neil H. Borden’.

Borden suggested twelve marketing mix variables in

the context of manufacturers.

Borden’s concept of marketing mix was given due recognition in

marketing theory. It was accepted as the set of marketing tools that a
firm uses to pursue its marketing objectives
 Service Marketing Mix....
It was McCarthy who summed up the twelve elements of Borden’s
marketing mix into 4Ps

- product, price, place (i.e. distribution), and promotion. He even clarified

that the customer is not a part of the marketing mix, rather, he should
be the target of all marketing efforts.

The activities in service marketing are different , and often do not fall
in the conventional marketing mix (4Ps) classification.
 Service Marketing Mix- reasons
• The traditional concept of marketing mix was developed for manufacturing
industries and was more oriented to deal with goods marketing situations.

• Marketing practitioners found that traditional marketing mix not address

the needs of services marketing mix.

• Due to differences in characteristics of physical products

and services, & conventional marketing mix needs to be modified
and broadened.
Services Marketing Mix:
7 Ps for Services

..
 6
Service Marketing Mix
SM

Product

CUSTOMER
Price

Promotion

Physical
Evidence
Contact: +923006641921 Usman Waheed
 Services Marketing Mix:
7 Ps for Services

• Traditional Marketing Mix

• Expanded Mix for Services: 7 Ps
• Building Customer Relationships Through
People, Processes, and Physical Evidence
 The extended P’s

• People- Co. invest in People(attracting, Training, retaining

best talent
• Process – ATMs- reduce human intervention / increase
customer satisfaction.
• Physical evidence – TV commercial / brochures,
.
facilities and amenities etc for holiday destination.
 1.
Product
or
Service Product
or
..
service package
Service Product or service package

 -the term product is frequently used in a broad sense to denote either a

manufactured good or a service.

 “ A service product refers to an activity or activities that a marketer

offers to perform, which result in satisfaction of a need or want of
predetermined target customers.”

 ‘A service product is a package comprising of a series of service

elements executed in proper order in keeping with the needs and
wants of the consumer, with the intention of maximizing consumer
satisfaction’.
Product (Service Product)

 It is this offering of a firm in the form of activities or deeds that satisfy

customer needs and wants such as surgery performed by a surgeon
or hair styling done by a stylist.

 The Package concept of service product suggests that what

you offer to the market is a bundle of different services,
tangible and intangible.
Product (Service Product)

 The marketing of services can be a success only if there is a match

between the service product from the customer’s view point and the
supplier’s view point
Five Product Levels-P. Kotler

1. CORE BENEFIT

2. BASIC PRODUCT

3. EXPECTED PRODUCT

4. AUGMENTED PRODUCT

5. POTENTIAL PRODUCT
 Core Benefit

The core benefit –

“It is the fundamental or essential benefit for

which the customer is buying the service
product.”
• Example:
• Hospital- healthcare
• Hotel-lodgeing
• Airline-Transportation
 Basic product
• It is the product at its most basic level.-Basic, functional
attributes.

• “Tangible aspect attached to a service ,along with the

service is the product itself. This facilitates the delivery
of core product to the customer.”
• For example, basic product for an education institution would include
classroom, desks, board and instructions.
• basic product for restaurant- serving space, food, kitchen, staff,
tables and chairs. …
 Expected product
Set of attributes the buyer normally
expects

• “ The expectations of the customers.”

• In restaurant- cleanliness, hygiene.
• In Hotel-clean room, large towel, quietness.

• * Expected service product should match the

consumer’s expectations
 Augmented product
• “ Anything over and above the expected service.”

• Example:
• In restaurant-augmented product is clean toilets,
good ambience, music, friendliness of staff.
• In hotel- prompt room service.

• * Each augmentation adds to the cost. The

augmented benefits very soon becomes expected
benefits to the consumers.
 Potential product

• “It mean doing all possible extensions and

transformations that might ungergo in the
future.”

• Hair styling – computer aided pictures to help decide a

suitable hair style…..
The service package

• The Package concept of service product suggests that what

you offer to the market is a bundle of different services,
tangible and intangible.

• The service products may be sold separately or bundled with

other products.

• EX:
• Buy Car + Extended 3 year warranty at additional price
2. PRICE
..
 PRICE

Price is the monetary sacrifice that a marketer

expects a customer to make in order to make
use of a service or buy a product.
• PRICE
• Price is one of the important elements of the marketing mix of any firm. It is
important for both the marketer and the customer.
• Price plays a significant role in the marketing mix by attracting
revenue to the marketer.
• Price is a measure of quality of service::Customer turns to pricing to assess the
quality of service , in absence of info from other source.

E.g. a beauty parlor charges 250/- instead of 150 for the same service & is considered
to offer better quality service……Price serves as a basis for perception of
quality. Generally, to most customers, high price means high quality.

• Difficulty in comparing prices of services:: Ex- Insurance Products

• PRICE

• A particular product or service is acceptable to the customer at a

particular price and if price is increased, it is likely that the same product or
service might become less acceptable to the customer.

• However, some customers need the highest quality at the REASONABLE

price.
 Three Main Approaches to
Pricing

I. Cost-based pricing
II. Competition-based pricing
III.Market-based pricing
 Pricing objectives

The important pricing objectives are –

• Survival
• Present profit maximization.
• Present revenue/sales maximization.
• Prestige.
• ROI.

25
3. PLACE
3 . PLACE
Because of intangibility of services, they cannot be stored, transported
and inventoried.

Similarly, because of inseparability, services must be created and sold at the

same time.

Hence, traditional distribution channels available for product marketing

cannot be used for distribution of services.

In order to bring the products to the customer, the marketer has to work
with distribution channels.

Service marketers, like goods marketers, also have to handle distribution

channel problems. They too, have to make their services available to target
customers without which marketing cannot take place.

The characteristics of services make distribution strategy more complex and

difficult.
3 . PLACE: Three Critical issues

Three Critical issues regarding placement of services

(i) Location of the service:

(ii) Channels through which services are provided:

(iii) How to provide service to maximum number of

customers
3 . PLACE: Critical factors affecting choice of location..

The table 2.2 depicts the critical factors affecting the choice
of location/location decisions, vary from one service to
another.
3 . PLACE: Critical factors affecting choice of location..
Critical factors affecting choice of location
Critical factor Services
Convenience Retail stores, health centres, banks,
repair services, theatres,
personal care.
Cost operating Speciality shops, wholesalers, clerical
services.
Proximity with Furniture, fast food, antique shops,
competition to share tailors, designers.
Support system availability Hotels, jewellers, tourism.

Geographic of environ- Beach resorts, Ski

resorts
mental factors
Business climate Insurance companies, private educa
tional institutions, gambling resorts.
Communication networks Banks, financial services.
Transport facilities Mail order houses, couriers, ware houses.
3 . PLACE: channels of distribution

( ii ) Channels through which services are provided:

The second decision variable in the distribution strategy is whether to sell

directly to the customers or through intermediaries.

Traditionally it has been argued that direct sales are the most appropriate form
of distribution for services. Whilst this form of distribution is common in some
service sectors, e.g., professional services.

Many services are now being delivered by intermediaries and these can
take a variety of forms.

The broad channel options for services are:

• Direct sales,
• Agent or broker,
• Franchises or contracted service deliverers, etc.
3 . PLACE: Typical intermediaries for services

Service Intermediaries

Hotels Travel agents, tour operators, airlines

Airlines Travel Agents, hotels

Life Insurance Agents

Shares Stock Brokers

Employment Employment agencies

Financial Services Banks, financial institutions

3 . PLACE: Three Critical issues

( iii ) How to provide service to maximum number of customers:

The third decision variable in the distribution strategy is how to provide the
service to a maximum number of customers in the most cost-effective manner.

Some of the innovations in the area are:

 3 . PLACE: ( iii ) How to provide service to maximum number of
customers:

Some of the innovations (3) in the area are:

 Rental or leasing offers: .

 Franchising offers: .
 Service integration:
 -Integrated services ex: Hotel+local tours
 -‘package tours’ in which they take care of all formalities
such as visa, foreign exchange, reservations, local travel,
etc.
4. PROMOTION

PROMOTION
PROMOTION

Promotion is an important part of the marketing mix for many marketers.

The promotion element of the service marketing mix communicates the

positioning of the service to customers.

Promotion adds tangibility and helps the customer evaluate the service offer
PROMOTION

Personal
Selling
PROMOTION
PROMOTION

The promotion mix includes six elements, namely

(a) Advertising
(b) Personal Selling
(c) Sales Promotion
(d) Public Relations
(e) Word of mouth and
(f) Direct mail.
PROMOTION

George and Berry have identified six guidelines for

services advertising which really are applicable to most
elements of the communication mix.

These apply to a wide range of service industries, but

not to all of them, because of the heterogeneous nature
of services.
PROMOTION: Guidelines for service advertising

1. Provide tangible clues- A service is intangible in the sense that a

performance rather than an object is purchased. Tangible elements
within the product surround can be used to provide tangible clues,
e.g. seating comfort in aircraft.

2. Make the service understood- Services may be difficult to grasp

mentally because of their intangibility. Tangible attributes of the
service can be used to help better understand the service offered,
e.g. Pictures of hair styles.

3. Communication continuity- This is important to help achieve

differentiation and present a unifying and consistent theme over time.
McDonalds and Disney logo provide good examples of such
continuity. LIC-zindgi ke sath bhi, zindagi ke baad bhi.; HDFC Life-
sar utha ke jiyo
PROMOTION
4 Promising what is possible- Service firms need to deliver on
their promises. If a promise such as fast delivery cannot be
consistently met, it should not be made at all, e.g. Domino’s Pizza.

5 Capitalising on word of mouth- Word of mouth is a vitally

important communication’s vehicle in services, as evidenced by the way
we seek personal recommendations for lawyers, accountants,
doctors, bankers, etc.

6 Direct communications to employees- In high contact services

communication should be directed at employees to build their
motivation, i.e. employees retention and motivation. e.g. cabin crew of
airlines.
5. PEOPLE

..
5. PEOPLE…
People can be subdivided into:

(i)Service personnel:
(ii)Customers:
5. PEOPLE
In all the organisations, people play a decisive role. Employees in
the service organisations are the contact people with the
customers. Employees working in a bank, hotel, hair-cutting saloon
etc., are all frontline people.

They are in direct contact with the customers who visit their
services. The role of these frontline people decides the success
of the service organisation.

A service organisation can be only as good as its people. The

strength and success of the service organisation lies in the quality of
the service personnel working in the organisation.
5. PEOPLE…
In services, ‘People’ refers to all human actors who play a part in service delivery
and thus influence the buyer’s perceptions; namely, the firm’s personnel, the
customer, and other customers in the service environment.

How these people are dressed, their personal appearance, and their attitudes and
behaviours all influence the customer’s perception of the service.

If the service personnel are cold and rude, they can weaken all the marketing work
done to attract the customers.

If they are friendly and warm, they increase customer satisfaction and loyalty.

Employee behaviour is often an integral part of the service product.

 5. PEOPLE- ii-Customers

• Services are actions or performances, typically produced and consumed

simultaneously.

• This view of participatory customers is consistent with the idea customers

are always co-creators of value.

• By participating in the service delivery process, customers

create value for themselves
 Figure
Customer Roles in Service Delivery
Das Bild k ann zurzeit nicht angezeigt werden.

Productive Resources

Contributors to
Quality and
Satisfaction

Competitors
6. PHYSICAL EVIDENCE
“It refers to the environment in which service is delivered and where the firm and
customer interact, and any tangible components that facilitate performance or
communication of the service.”

The physical evidence of service includes all the tangible representations of the service such as,
building, equipments, furniture,brochures, letterhead, business cards, report format, equipment,
etc.

Potential customers form impressions about the service organisations on the basis of physical
evidence, like building, furniture, equipments, stationery and brochures.

EXAMPLE

• Cleanliness in a doctor’s clinic,

• The exterior appearance and interior decor of a restaurant,
• The comfort of the seating arrangement in a cinema hall,
• Adequate facility for personal needs at the airport, all contribute towards the image of the
service as perceived by the customer.
6. PHYSICAL EVIDENCE-kinds

There may be two kinds of physical evidence:

(i ) Peripheral evidence
( ii ) Essential evidence
6. PHYSICAL EVIDENCE-i-Peripheral evidence
Peripheral evidence:

“The peripheral evidence is possessed and taken away by the

customer.”

*It is actually possessed as a part of the purchase of service but by itself is of

no value. Ex: An airline ticket, cheque book, are examples of peripheral
evidence. A cheque book is of value only if customer has money in the bank,
without that it is of no significance.

Peripheral evidence adds on to the value of essential evidence, e.g.

complimentary flowers and drinks, etc. in a hotel, which customer may take
away. Such evidence must be designed keeping in mind the overall image
which the organisation wishes to project in the mind of customer .
6. PHYSICAL EVIDENCE-ii- Essential evidence
Essential evidence:

Whereas the peripheral evidence is possessed and taken away by the

customer, “the essential evidence cannot be possessed by the customer;
the building, its size and design, interior layout and decor, logo, etc”. of
the organisations are constituents of essential evidence. The essential
evidence is a very critical input in determining the atmosphere and
environment of the service organisation.

- By making the services more tangible and making it easier for the customer
to grasp the concept of the service.

- Marketers can create the ideal environment for the service offering.
7. PROCESSES
“The processes refers to the actual procedures, tasks, schedules,
mechanisms, and flow of activities by which a service is delivered –the
service delivery and operating systems.”

*In a service organisation, the system by which customer receives

delivery of the service constitutes the process.

EXAMPLE—

In fast food outlets the process comprises buying the coupons at

one counter and picking up the food against that at another counter.
7. PROCESSES
In the manufacturing organisation-The process implies the
conversion of input into the finished product.

In a service organisation, -Process is the actual procedure by which

customer receives delivery of the service .

• Badly designed process creates- dissatisfaction, lower productivity, service

failure.
• Process is critical input from the point of view of customer because it
determines what the customer has to do to get a service.

• Ex: Bank
• - How to get a draft made ?
• - How to use net banking/ATM?
• Process must be convenient from customer’s point of view.
 SUMMARY

One of the most basic concept in marketing is the marketing mix.

The traditional marketing mix is composed of the four P’s:
product, price, place (distribution) and promotion.

The specific nature of services i.e., intangibility, heterogeneity,

inseparability and perishability has service marketers to adopt
the concept of an expanded marketing mix for services.

In addition to the traditional four P’s, the service marketing mix

includes 3 more elements i.e.people, physical evidence, and
process.
 Reference Books on Services
Marketing

1. Valarie A. Zeithaml, Mary Jo Bitner, Dwanye

D. Gremier
2. Wirtz Jochen
3. Christopher Lovelock
THE END