In the early 1960s, Professor Neil Borden of the Harvard Business School identified a number of company performance actions he believed influenced the consumer decision to purchase goods or services. Borden suggested that these actions represented a “Marketing Mix”, which he published in a Harvard Business Review article. Professor E. Jerome McCarthy, a contemporary colleague also at the Harvard Business School, then took Borden’s work forward and suggested that the Marketing Mix could be summated into four elements: product, price, place and promotion. Thus was codified the famous four Ps (4Ps) which have gone on to become perhaps the most famous term in marketing to date.
As with any ‘mix’ the concept is straightforward; it provides a list of basic elements whose proportions can be altered to produce a variety of ‘mix’ with different outcomes, e.g. cement as opposed to mortar, bread as opposed to cake. In fact to illustrate this let’s think about a cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it. So for a sweet cake add more sugar, for a fruit cake add fruit, chocolate cake – add chocolate.
Exactly the same principles apply with the marketing mix. The offer you make to you customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price. For a luxury item you control distribution – Place – optimise the quality – product – and quite probably maximise the price. Co-ordinating the decisions is based on marketing research and results in a marketing plan; a blueprint to optimise the use of the business’s resources to maximise the satisfaction to the customers and the gains of the business.
There are major differences when it comes to services marketing versus the marketing of tangible products. The aim differences include:
- The buyer purchases are intangible, you gain ‘ownership’ of nothing
- The service may be based on the reputation of a single person or entity, so branding becomes vital
- It’s more difficult to compare the quality of similar services, there isn’t a list of Features and attributes you can easily compare
- The buyer cannot return the service; the act of purchase is the act of consumption
These differences mean that there are new elements in the marketing mix; in fact there are three new elements so we call this the ‘7Ps’ or Extended marketing mix.
Let’s think about a service – Car Insurance. In terms of the 4Ps you ‘own’ a right to compensation if in any sort of accident – that’s the product. You know the price and indeed all the other elements of price that might be included, e.g. payment by installment. The Place was done either indirectly – through the mail as an automatic renewal, or directly by you contacting the insurance company. Promotion could have been via any of the means listed later in this chapter. But does that cover all the elements that went into your decision to buy car insurance?
In fact for services the additional ‘4Ps’ of the ‘7P’ extended marketing mix consist of People, Physical evidence, and Process. In our car insurance example, you might have spoken to a salesperson in your home or a broker; you might have spoken to a customer service person by phone, or at a branch office. You might have been impressed by industry reports or experts, this could have even been online, or by the quality of the documents you received or even by the way the person you spoke to sounded or were dressed. All of these start to bring Physical evidence into play which often overlaps into the Place and People elements.
Finally and perhaps in a world dominated by distance purchasing via electronic media such as the internet and telecommunications the speed, accuracy responsiveness, and reliability of the processes in respond to you as a customer and also vital. You only have to think about how many times you abandon a web site if it’s slow to appreciate how vital processes are within the extended marketing mix. Service marketing also includes the concept of ‘servicescape’ referring to but not limited to the aesthetic appearance of the business from the outside, the inside, and the general appearance of the employees themselves; in essence the concept of servicescape underlines the interrelated nature of several elements of the 7Ps when viewed from a customer perspective – it is a marketing concept philosophy approach.
Service Marketing has been rapidly gaining ground in the overall spectrum of marketing and particularly as a focus of marketing education as the developed economies move farther away from industrial importance to service oriented economies. This can also be seen in developing economies, where the shift to services means a shift away from customer decisions based on tangible FABs to intangible service elements.
In many services marketing is rapidly moving into the experiential, with an emphasis on quality of experience and feedback. This has given rise to the phrase “Managing the evidence”, which refers to the act of informing customers that the service encounter has been performed successfully by us and how was it for you. It is best done in subtle ways like providing examples or descriptions of good and poor service that can be used as a basis of comparison. The underlying rationale is that a customer might not appreciate the full worth of the service if they do not have a good benchmark for comparisons.