THE MARKETING MIX – FROM 4 PS TO 7 PS
Know the components of the marketing mix
Marketing is a continually evolving discipline and as such can be one that companies find themselves left very much behind the competition if they stand still for too long. Though in place since the 1980’s the 7 Ps are still widely taught due to their fundamental logic being sound in the marketing environment and marketers abilities to adapt the Marketing Mix to include changes in communications such as social media, updates in the places which you can sell a product/service or customers expectations in a constantly changing commercial environment. One example of this evolution has been the fundamental changes to the basic Marketing mix. Where once there were 4 Ps to explain the mix, nowadays it is more commonly accepted that a more developed 7 Ps adds a much needed additional layer of depth to the Marketing Mix with some theorists going even going further. The product marketing mix consists of the 4 P’s which are Product, Pricing, Promotions, and Placement. The extended service marketing mix places 3 further P’s which include People, Process, and Physical evidence.
The service marketing mix is also known as an extended marketing mix and is an integral part of a service blueprint design. The service marketing mix consists of 7 P’s as compared to the 4 Ps 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.
Before we get carried away though what is the Marketing Mix and what is the original 4 Ps principle?
THE MARKETING MIX
Simply put the Marketing Mix is a tool used by businesses and Marketers to help determine a product or brands offering. The 4 Ps have been associated with the Marketing Mix since their creation by E. Jerome McCarthy in 1960.
The Marketing Mix 4 Ps:
The first four elements in the services marketing mix are the same as those in the traditional marketing mix. However, given the unique nature of services, the implications of these are slightly different in case of services.
- Product: In 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. Hence particular care has to be taken in designing the service offering. The Product should fit the task consumers want it for, it should work and it should be what the consumers are expecting to get.
- Place – The product should be available from where your target consumer finds it easiest to shop. This may be High Street, Mail Order or the more current option via e-commerce or an online shop. 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 to where the service would be provided. Thus, a fine dining restaurant is better located in a busy, upscale market as against on the outskirts of a city. Similarly, a holiday resort is better situated in the countryside away from the rush and noise of a city.
- Price – The Product should always be seen as representing good value for money. This does not necessarily mean it should be the cheapest available; one of the main tenets of the marketing concept is that customers are usually happy to pay a little more for something that works really well for them. Pricing of services is tougher than the pricing of goods. While the latter can be priced easily by taking into account the raw material costs, in case of services attendant costs – such as labor and overhead costs – also need to be factored in. Thus 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. The final price for the service is then arrived at by including a mark up for an adequate profit margin
- Promotion – Advertising, PR, Sales Promotion, Personal Selling and, in more recent times, Social Media are all key communication tools for an organization. These tools should be used to put across the organization’s message to the correct audiences in the manner they would most like to hear, whether it be informative or appealing to their emotions. Since a service, the offering can be easily replicated promotion becomes crucial in differentiating a service offering in the mind of the consumer. Thus, 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.
In the late 70’s it was widely acknowledged by Marketers that the Marketing Mix should be updated. This led to the creation of the Extended Marketing Mix in 1981 by Booms & Bitner which added 3 new elements to the 4 Ps Principle. This now allowed the extended Marketing Mix to include products that are services and not just physical things.
The extended 7 Ps:
We now look at the 3 new elements of the services marketing mix – people, process, and physical evidence – which are unique to the marketing of services.
- People – All companies are reliant on the people who run them from frontline Sales staff to the Managing Director. Having the right people is essential because they are as much a part of your business offering the products/services you are offering. People are a defining factor in a service delivery a process since a service is inseparable from the person providing it. Thus, 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.
- Processes –The delivery of your service is usually done with the customer present so how the service is delivered is once again part of what the consumer is paying for. The process of service delivery is crucial since it ensures that the same standard of service is repeatedly delivered to the customers. Therefore, most companies have a service blueprint 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.
- Physical Evidence – Almost all services include some physical elements even if the bulk of what the consumer is paying for is intangible. For example, a hair salon would provide their client with a completed hairdo and an insurance company would give their customers some form of printed material. Even if the material is not physically printed (in the case of PDFs) they are still receiving a “physical product” by this definition. Since services are intangible in nature most service providers strive to incorporate certain tangible elements into their offering to enhance customer experience. Thus, there are hair salons that 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.