MARKETING MIX IN SERVICES

Mc CARTHY
PEACE THROUGH Ps
TRADITIONAL Ps AND EXTENDED Ps

THE FOUR Ps OF SERVICES MARKETING :

PEOPLE, PEOPLE, PEOPLE AND PEOPLE
(RICHARD DOW)
The Marketing Mix
 SERVICE PRODUCT (THE FIRST P)
• TANGIBLE OR INTANGIBLE
• BUNDLE OF BENEFITS
• LEVELS OF PRODUCT (KOTLER)

The fundamental benefit

or service that the
CORE BENEFIT
customer is buying
(Hotel: rest/sleep)

We use the term “product” in a generic way, “offering” is a better term

 SERVICE PRODUCT (THE FIRST P)
• LEVELS OF PRODUCT (KOTLER)

Basic, functional
attributes (room: bed,
BASIC PRODUCT
bath…)

TANGIBILISE THE INTANGIBLE

 SERVICE PRODUCT (THE FIRST P)

• LEVELS OF PRODUCT (KOTLER)

Set of
attributes/conditions the
EXPECTED PRODUCT
buyer normally expects
(clean rooms, large
towel, quietness)

MANAGE THE EVIDENCE

 SERVICE PRODUCT (THE FIRST P)
• LEVELS OF PRODUCT (KOTLER)

That meets the customers

AUGMENTED
desires beyond expectations
PRODUCT
(prompt room services and
checking in/out, music,
aroma)

MANAGE THE SERVICE SPACE

 SERVICE PRODUCT (THE FIRST P)
• LEVELS OF PRODUCT (KOTLER)

The possible evolution to

POTENTIAL
distinguish the offer (all-
PRODUCT
suite hotel)

Doctor’s office should look neat, clean, hygienic

Professor’s room should look untidy, full of papers and books and random material!
Beggar should look unkempt and dirty!
IMAGE, COMMUNICATION & AUGUMENTED SERVICE OFFERING

CORPORATE WORD OF
IMAGE MOUTH
The services concept

The core
services
Accessibility Interaction
Facilitating Supporting
Of services
services services

MARKETING COMMUNICATION
• FACILITATING SERVICES ARE MANDATORY

• SUPPORTING SERVICES alone DO NOT FACILITATE THE

CONSUMPTION OF CORE SERVICE

• ACCESSIBILITY OF THE SERVICE, INTERACTION WITH THE

SERVICE ORGANISATION AND CONSUMER PARTICIPATION
ARE ALSO INTEGRAL ELEMENTS

• MANAGEMENT OF IMAGE THROUGH COMMUNICATION

BECOMES AN INTEGRAL PART OF DEVELOPING THE SERVICE
PRODUCT
 DEVELOPING NEW SERVICE OFFERING
• STEPS

WHAT BENEFITS
CONSUMER CONSUMERS SEEK?
STAGE BENEFIT
I CONCEPT (IMPORTANCE OF
BENEFITS, CHANGE OVER
TIME ETC.)
 DEVELOPING NEW SERVICE OFFERING
• STEPS

STAGE SERVICE WHAT BENEFITS THE

II CONCEPT SERVICE ORGANISATION
SHOULD OFFER?
 DEVELOPING NEW SERVICE OFFERING
• STEPS

ELEMENTS: TANGILE &

STAGE SERVICE INTANGIBLE
III OFFER FORMS: IN WHAT
WAY/HOW
LEVELS: QUALITY, IMAGE,
TECHNIQUES, FUNCTIONAL
QUANTITY: VOLUME,
FLOW, TIMING
 DEVELOPING NEW SERVICE OFFERING
• STEPS

USING BENCHMARKS OF
STAGE SERVICE SERVICE OFFER
IV DELIVERY DEVELOP PROCESS, PEOPLE
SYSTEM AND FACILITIES
 DEVELOPING NEW SERVICE OFFERING
• STEPS

STAGE MANAGING TO SUPPORT AND ENHANCE

V IMAGE & PERCEPTIONS ON SERVICE
COMMN. OFFER
New Service Development Process
 Business Strategy Development or Review

 New Service Strategy

Development
 Idea Generation
Front End
Planning Screen ideas against new service
strategy
 Concept Development and
Evaluation
Test concept with customers and employees
 Business Analysis

Test for profitability and feasibility

 Service Development and Testing

Conduct service prototype test

 Market Testing
Implementation
Test service and other marketing-mix elements

 Commercialization

 Post introduction Evaluation

 Product line mix (Hindustan Unilever)

PRODUCT MIX WIDTH (no. of different pdt lines)

Home & Personal Care
Product Personal wash Laundry Skin Care Hair Care Oral care Deodorants Cosmetics
Lux,
Line Lifebouy
Surf Excel Fair & lovely Sunsilk Pepsodent Axe
Rin Ponds Clinic Close Up Rexona
Lakme

Liril Wheel Vaseline

Length Hamam Ayush
(total number Breeze
of items Dove
In the Rexona
mix) Pears

Foods Water
Tea Coffee Salt Atta Soup Ketchup Jam Squash Pureit
Lipton Bru Annapurna Knorr Kissan
Brooke Bond

Width = 3 (7+8+1), Length = 30 Depth= No. of variants under each

12-16
Consistency = H&P (7), Foods (8), Water (1)
 Product Life Cycle
Sales and Profits Over the Product’s Life From
Introduction to Decline
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Losses/
Investments ($)
 Overview of branding decisions

Branding Brand-sponsor Brand-name Brand-strategy Brand-repositioning

decision decision decision decision decision

Line extension
Manufact. Brand Individual Brand extension
Brand Private brand Blanket Family Multibrands Repositioning
No brand Licensed brand Separate family New brands No repositioning
Company-individual Cobrands
Ingredient branding

Sears:
Kenmore for appliances
Craftsman for tools
Homart for home installations

9-18 Kellog’s Corn Flakes

Price
 PRICING (THE 2ND P)
• ‘THERE AIN’T NO BRAND LOYALTY THAT TWO-CENTS-OFF CAN’T OVERCOME’.
(ANONYMOUS)

• THE REAL ISSUE IS VALUE, NOT PRICE (ROBERT T LINDEGREN)

• THE DILEMMA OF MERCEDES AT LEXUS’ STAND

• THE INTANGIBILITY OF SERVICES MAKES IT MORE DIFFICULT FOR CUSTOMERS TO

COMPARE PRICES

• UNDIFFERENTIATED OFFERINGS ADD COMPEXITIES

SERVICES DIFFER FROM GOODS IN THE DEGREE TO WHICH THEY POSSESS SEARCH,
EXPERIENCE AND CREDENCE ATTRIBUTES

Services are heterogenous and price comparison becomes

hard
•service provider gives only “guesstimate”
 VALUE STRATEGIES FOR SERVICES PRICING
• SATISFACTION-BASED, RELATIONSHIP AND EFFICIENCY PRICING
STRATEGIES (LEONARD L BERRY, MANJIT S YADAV – SLOAN
MANAGEMENT REVIEW; SUMMER 1996)

PRICING STRATEGY PROVIDES VALUE BY IMPLEMENTED AS

Recognizing and
Satisfaction based reducing customers’ Service guarantees
pricing perceptions of
Benefit-driven pricing
uncertainty, which the
intangible nature of Flat-rate pricing
services magnifies

THE GUARANTEE THAT BANK ONE ADOPTED IS STRAIGHTFORWARD:

ANY CLIENTS DISSATISFIED WITH THE SERVICE NEED NOT PAY THE
FEE
 VALUE STRATEGIES FOR SERVICES PRICING
WHAT ROLE SHOULD PRICING PLAY IN RELATIONSHIP MARKETING? AN
OBVIOUS APPROACH IS TO USE PRICE REDUCTIONS TO INITIATE
RELATIONSHIPS

PRICING STRATEGY PROVIDES VALUE BY IMPLEMENTED AS

Relationship pricing Encouraging long term Long term contracts

relationships with the Price bundling
company that customers
views as beneficial

PRICING MUST ESTABLISH AND COMMUNICATE A CLEAR ASSOCIATION

BETWEEN THE PRICE AND THE SERVICE ATTRIBUTES THAT CUSTOMERS
VALUE. RELATIONSHIP PRICING AIMS TO ENCOURAGE THE
DEVELOPMENT OF PROFITABLE, LONG TERM CUSTOMER
RELATIONSHIPS.
 VALUE STRATEGIES FOR SERVICES PRICING

PRICING STRATEGY PROVIDES VALUE BY IMPLEMENTED AS

Sharing with customers

the cost savings that the
Efficiency Pricing company has achieved Cost leader pricing
by understanding,
managing and reducing
the costs of providing
the services

EFFICIENCY PRICERS ALMOST ALWAYS ARE INDUSTRY HERETICS,

SHUNNING TRADITIONAL OPERATING PRACTICES IN SEARCH OF
SUSTAINABLE COST ADVANTAGES
 GUIDELINES FOR SERVICE PRICING

• HANDLE DEMAND FLUCTUATIONS SUCCESSFULLY

• SERVICE PRICES SHOULD BE BASED ON COSTS TAKING INTO ACCOUNT THE
TANGIBLE CLUES (TANGIBILISE THE INTANGIBLE)

• PROVIDE VALUE ADDITION AND QUALITY INDICATION (MANAGE THE

EVIDENCE)
NET VALUE = SUM OF ALL PERCEIVED VALUE MINUS THE SUM OF ALL
PERCEIVED COSTS

• SHOULD OUTSELL COMPETITION

• STANDARDISE THE QUALITY IN THE FACE OF VARIABILITY
 OBJECTIVES
SURVIVAL, MAXIMUM CURRENT PROFIT, MAXIMUM CURRENT
REVENUE, MAXIMUM SALES GROWTH, MAXIMUM MARKET
SKIMMING, PRODUCT-QUALITY LEADERSHIP

* PRICING AFFECTS CUSTOMERS’ PERCEPTUAL POSITIONING

• PLC AND DEMAND ELASTICITY ARE IMPORTANT
• BE CAREFUL OF BLURRED BOUNDARIES (INTRA BRAND AND
OTHER COMPETITIONS)
• STRATEGIC POSITIONING (PENETRATION PRICING)
• APPLY TACTICS THROUGH DIFFERENTIAL/FLEXIBLE PRICING;
DISCOUNT PRICING, DIVERSIONARY PRICING, GUARANTEE
PRICING, LOSS LEADER PRICING ETC.)
Place
 PLACE OR DISTRIBUTION : THE 3RD P

• SERVICES CANNOT BE STORED, TRANSPORTED OR

INVENTORIED, HENCE TRADITIONAL CHANNELS NOT
APPLICABLE (INTANGIBILITY)

• RETAILING NOT AN INDEPENDENT ACTIVITY (INSEPARABILITY)

• MOST SERVICES ARE DISTRIBUTED THROUGH DIRECT SALES

(AGENTS AND BROKERS FACILITATE SELLING)

• AGENTS MAY BE TRAINED IN THE CREATION AND PRODUCTION

OF SERVICE AND THEN FRANCHISED. E.G.: BEAUTY PARLOURS,
TRAVEL AGENCY, EMPLOYMENT AGENCIES ETC.
• THERE COULD BE TANGIBLE REPRESENTATIONS IN THE
EVENT OF NON-TRANSFERABILITY OF PRODUCT
(INSURANCE)

• LOCATION IS A SIGNIFICANT DECISION AREA (EXTENSION

COUNTERS AND ATMS BY BANKS, POs, PDS, NIIT)

• LEGAL FORMALITIES ARE TOUGH FOR LOGISTICS

OPERATIONS

• FRANCHISING WORKS WELL FOR SERVICE DELIVERY

Promotion
 PROMOTION, THE 4TH P

PROMOTION IS IMC.
IT INFORMS, PERSUADES AND REMINDS
IT IS A COMMUNICATION ATTACHED TO AN INCENTIVE (TO MOVE FORWARD)

SALES PEOPLE’S ORIENTATION:

- DEVELOP PERSONAL RELATIONS
- MAKE AN IMPRESSION OF COMPETENCY, HONESTY AND
SINCERITY (PROFESSIONAL ORIENTATION)

- USE INDIRECT SELLING TECHNIQUES (SELL LOCATION, THEN

SERVICESCAPE)
- MAINTAIN A FINE IMAGE THROUGH WORD-OF MOUTH
- CUSTOMISATION (ABILITY TO PACKAGE)
 THE MARKETING COMMUNICATION MIX FOR SERVICES

PERSONAL CUSTOMER ADVERT- SALES PUBLICITY

SELLING SERVICE ISING PROMOTION PR

INSTL. CORP.
MATERIALS DESIGN

BROADCAST: OUTDOOR & RETAIL

WORD OF TV PRINT: BILLBOARDS/POSTERS
MOUTH RADIO NEWSPAPERS ELEC. DISPLAYS
INTERNET MAGAZINE TRANSIT ADVT
RETAIL STORE DISPLAYS

DIRECT:
MAIL
CINEMA TELEMARKETING
FAX/E-MAIL
 PROMOTION TECHNIQUES
• SAMPLING (FREE OF COST)
• PRICE/QUANTITY PROMOTIONS (AIRLINES)
• COUPONS (STRAIGHT PRICE CUT/DISCOUNT/FEE WAIVER FOR
ONE or MORE PATRONS)
• SIGN-UP REBATES (CABLE TV CONNECTION, ENROLLMENT
FEES ETC.)
• FUTURE DISCOUNTS
• GIFT PREMIUMS (NEW ACCOUNT DRIVES)
• PRIZE PROMOTIONS (LOTTERY)

CHECKLIST: PRODUCT SCOPE, MARKET SCOPE, VALUE OF THE

PROMOTION, TIMING, IDENTIFICATION OF THE BENEFICIARIES
AND COMPETITION PROOFING
 GUIDELINES FOR EFFECTIVE PROMOTION
MANAGEMENT

• PLAN A PROMOTION STRATEGY

• LIMIT PROMOTION OBJECTIVES
• SET A TIME LIMIT ON EACH SPECIFIC PROMOTION
• CONSIDER PROMOTION TIE-INS
• CONSIDER PROMOTION OVERLAYS
• MOTIVATE THE ENTIRE MARKETING SYSTEM
• BALANCE CREATIVITY WITH SIMPLICITY
• EVALUATE PROMOTION EFFECTIVENESS
People
 PEOPLE: THE 5TH P

• EMPLOYEES REPRESENT THE ORGANISATION TO CUSTOMERS

(EMPLOYEES ARE THE FIRST INTERNAL MARKET FOR THE
ORGANISATION)

• INTERNAL MARKETING SHOULD BE BROADER THAN TRADITIONAL

MARKETING

• INVESTING IN PEOPLE QUALITY IN A SERVICE BUSINESS MEANS

INVESTING IN PRODUCT QUALITY

• INTERNAL MARKETING PAVES WAY FOR EXTERNAL MARKETING OF

SERVICES
 KNOW THE COMPETE
CUSTOMER FOR TALENT

MEASURE
AND ATTRACTING, OFFER A
REWARD DEVELOPING VISION
MOTIVATING AND
RETAINING
QUALIFIED
LEVERAGE
EMPLOYEES
THE
FREEDOM
FACTOR PREPARE
PEOPLE TO
PERFORM
STRESS TEAM
PLAY

ESSENTIALS OF INTERNAL MARKETING

Physical Environment
 PHYSICAL EVIDENCE: THE 6TH P
• A PHYSICAL OBJECT IS SELF DEFINING; A SERVICE IS NOT

• TANGIBLE CLUES ARE THE BASES FOR PURCHASE

• PERIPHERAL EVIDENCE CAN BE POSSESSED
• ESSENTIAL EVIDENCES CANNOT BE POSSESSED

• PHYSICAL FACILITIES ARE IMPORTANT IN FACILITATING THE

DELIVERY OF SERVICES

• AMBIENT FACTORS RELATE TO THE BACKGROUND CONDITIONS;

DESIGN FACTORS ETC. ARE VISUAL STIMULI AND SOCIAL FACTORS
RELATE TO INTERACTIVE ENVIRONMENT
• ELEM ENTS OF SERVICE EVIDENCE: COMMUNICATION,
ENVIRONMENT AND PRICE

PHYSICAL ENVIRONMENT

AMBIENT FACTORS: DESIGN FACTORS: SOCIAL FACTORS:

AIR QUALITY AESTHETICS APPEARANCE

ARCHITECTURE BEHAVIOUR &
QUALITY OF COLOUR SCHEME NUMBER OF
SCENT SHAPE, STYLE OF SERVICE PERSONNEL
ACCESSORIES QUALITY AND
DEGREE OF MATERIALS USED QUANTITY OF
CIRCULATION LAYOUT OTHER CUSTOMERS
 SHAPING FIRST
IMPRESSION

SOCIALISING
EMPLOYEES
MANAGING
TRUST
ROLE OF EVIDENCE

PROVIDING
SENSORY
STIMULI
FACILITATING
QUALITY OF
SERVICE
CHANGING
THE IMAGE

ESSENTIALS OF INTERNAL MARKETING

Process
 PROCESS: THE 7TH P

• PROCESS MANAGEMENT ASSURES SERVICE AVAILABILITY AND

CONSISTENT QUALITY