Services Marketing Mix: Understanding the 7P’s
Services marketing is simply strategizing your marketing for the provision of services both in the context of a business serving a consumer and as a business serving another business. These include tax and accounting services, the hotel industry, airlines, telecoms, hairdressers, tailors, dry cleaners, and so on. It may also include services that are contained in what is a traditional physical product’s sales environment, such as tech and customer support.
A service is defined as any economic activity that is not tangible, not stored, and does not result in the transfer of ownership. It is consumed immediately where the sale is made. With this definition in mind, the three new Ps added to the traditional marketing mix give it a lot of new depth. Since you it is not tangible and you have to consume it as soon as you buy it, there are a few factors that determine whether the customer walks away satisfied. These are the environment in which the service is delivered, the process through which the service is delivered, and the person who delivers the service
The need for extension is due to high degree of direct contact between the firm and the customer, the highly visible nature of the service production process, and simultaneous production and consumption of services.
The 7Ps of Service Marketing
Physical products can be inspected and tried before buying but pure services are intangible. A customer cannot go to a showroom to see a medical operation that he is considering. This means that customers of services suffer higher perceived risk in their decision-making process.
They do not know whether they have purchased the right service until they have used it and in some cases like medical service and car service, they cannot be sure whether they have received the right service long after they have consumed the service.
The three elements of the extended marketing mix—people, physical evidence and processes provide clues about the quality of the service to the customer, and are crucial in influencing the customers’ perception of service quality.
Brand name of a service can also influence the perception of a service. It is sad that service providers do not expend necessary resources and efforts in building strong brands. In situations where customers are unsure of the quality of their purchases, strong brands provide an assurance to customers that the company has a history of good quality.
Customers spend lot of time, money and effort in ascertaining the likely quality of service they propose to buy and the providers do the same in assuring the customers of high quality of their offering. Both parties would be greatly served if service providers build strong brands.
Customers would be less unsure of the quality that they will get. Besides promoting its service, a provider should provide high quality of services consistently so that customers talk about it favourably. A strong service brand is built by a combination of advertising and positive word-of- mouth publicity. Both are necessary.
Positive word-of-mouth publicity without being supplemented with advertising will create a strong local brand. Customers from distant locations would not be attracted to it. Advertising without being supplemented with positive word-of-mouth publicity will create awareness but customers will still look for affirmation from customers who have actually used the service.
For some services, trial is possible. Some hotels invite key decision makers of communities to visit their hotels free of charge to sample the facilities and services. The hotels hope that they will recommend the hotel to their members.
The intangible elements of service are difficult to communicate. It may be difficult to represent courtesy, hard work and customer care in an advertisement. The idea then is to use tangible cues that will help customers understand and judge the service.
A hotel can show the building, swimming pool, friendly staff and happy customers. Testimonials from satisfied customers can be used to communicate service benefits. Personal selling can also be effective in services marketing because of the high perceived risk inherent in many service purchases.
A salesperson can explain details of a personal health plan can answer questions and provide reassurance. Because of high perceived risk inherent in buying services, sales people should develop lists of satisfied customers to be used in reference selling. Sales people need to be trained to ask for referrals.
Customers should be asked if they know of other people or organizations that might benefit from the service. The customer can then be used as an entry and point of reference when approaching and selling to the new prospect. Word-of-mouth publicity is critical to success because of the experimental and experiential nature of services. Talking to people who have visited a resort is more convincing than reading holiday brochures.
Price is an important tool in marketing of service. Since it is often difficult to evaluate a service before purchase, price acts as an indicator of perceived quality. For example, a patient expects a surgeon to charge high fees, otherwise he cannot be good.
Price is also an important tool in managing demand. Bars charge higher rates in the evenings when they expect a lot of rush. They charge lower price during daytime expecting some customers, who otherwise would have visited in the evenings, to visit during daytime due to the lower prices. Less number of customers have to be turned away in the evening.
Low prices can also attract new customers who cannot afford to or do not want to pay the high prices charged in the evenings. The facility is more evenly utilized throughout the day. Matching demand and supply is critical in services because services cannot be stored.
A less utilized facility at some part of the day or year means lost revenue which cannot be compensated. But the price differential has to be significant to be able to shift customers, as enjoyment of some services is closely related to the time at which they are consumed.
The experience of watching a movie in a theatre at the weekend is very different from watching it on a weekday. People would prefer going to a hill-station in summers than at any other time of the year.
Price sensitivity is a key segmentation variable in service sector. Some customers are willing to pay a much higher price than others. Time is often used to segment price sensitive and insensitive customers. Long-distance phone calls are cheaper at some part of the day than others.
Some customers may be willing to pay more to get the service early or whenever they want it. It is often debatable if a patient willing to pay more than the normal fees should be allowed access to a doctor before another patient who has been waiting for his turn.
But it is slowly being accepted that customers who pay more can have faster access to the service. But the discrimination has to be done in a discreet and subtle manner, especially when both set of customers are in the same place, as it often happens in entertainment parks, where two queues of guests move at different paces toward the rides.
Distribution channels for services are more direct. There is no storage of services. Production and consumption is simultaneous, and hence direct contact between customer and service provider is essential for most services. Growth for many service companies means opening new facilities in new locations, due to simultaneous production and consumption. The evaluation of locations is a critical skill for such services.
Expansion often means a multi-point strategy because the whole setup for service production and marketing has to replicate. Success of many service providers has been due to their ability to choose profitable new sites and replicating their operations at the new sites.
New technologies permit service companies to provide services without customers coming to their facility. Information and financial services are leading this revolution. A customer can carry out transactions with a bank through ATMs, Internet, or the phone. Information products can be widely distributed through Internet.
But there are many other services where contact between the provider and the customer is still essential. But service companies should be looking for an alternative to personal contact with customers for at least a part of the service.
Service quality is inseparable from quality of service providers. The company has to set standards to improve quality of service provided by employees and monitor their performance. Without training and control, employees tend to be variable in their performance leading to variable service quality. Training is crucial so that employees understand the appropriate norms of behavior.
A service provider trains its employees to identify and categorize different personality types of customers, and to modify their behavior accordingly. Employees need to know how much discretion they have to talk informally to customers.
They also need to control their own behavior so that they are not intrusive, noisy or immature. They need to adopt a customer-first attitude rather than putting their own convenience and enjoyment before those of their customers.
Employees of service organizations have to be adept in multiple roles. They have to be good in their primary task and they have to be good in interpersonal skills. They also should have empathy to judge the service requirement and mood of the customer, and modify their service and behavior accordingly.
A service professional has to have the combined skills of an operations man, a marketer and a human resource manager. It is not easy to find employees with such diverse skills.
The service facility’s marketing mix should be such that it attracts customers desiring similar benefits from the provider. The target market has to be very homogeneous and the positioning very precise.
Physical evidence is about the environment in which the service is delivered and it includes any tangible goods that facilitate the performance and communication of the service. Customers look for cues to have an idea about the likely quality of a service by inspecting the tangible evidence.
Prospective customers may peep through a restaurant window to check the appearance of the waiters, the decor and the furnishings. The layout of a service operation has to balance the operational need for efficiency and marketing desire for effectively serving the customer.
Service providers should research the concerns of the customer regarding the service and also find out the cues that the customer will be searching to get an idea of that part of the service which is of concern to him. The service provider should strengthen those cues.
These are the procedures, mechanisms and flow of activities by which a service is delivered to customers. Self-service cafeteria is very different from a restaurant. The company needs to research the requirements of its customers and set its processes accordingly so that the required service is delivered. Since requirements of customers vary widely, processes cannot be standardized.
But if a process is allowed too much flexibility, the efficiency of the facility goes down. Therefore customer requirements should not be allowed to vary widely. Through targeting the smaller segment of customers, variations in their requirements can be controlled.
The process is important because in some services, they are visible to customers. Sometimes the effectiveness of a process can be compromised in the effort to make it look good to the customer. Some patients feel good when they are extensively examined by the doctor though it may not be necessary.
Some processes in personal grooming and hair care saloons are not really required but service professionals have to carry them out because customers have come to expect them.