MARKETING MIX FOR SERVICES

In the context of goods marketing, we are quite familiar with marketing mix. The elements of product, place, promotion and price are well known. Naturally,

these elements are also very much a part of the standard marketing mix for the services.

Traditional Marketing Mix

• The traditional marketing mix is composed of the four P’s product, price, place and promotion.

• These elements appear as core decision variables in any marketing plan.

• The notion of a mix implies that all the variables are interrelated and depend on each other to some extent.

• Further, the marketing mix philosophy implies an optimal mix of the four factors for a given market segment at a given point in time.

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• Careful management of product, place, promotion and price will also be essential to the successful marketing of services.

• However, the strategies for the four P’s require some modifications when applied to services.

• For example, traditionally promotion is thought of as involving decisions related to sales, advertising, sales promotions and publicity.

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• In services these factors are also important, but because services are produced and consumed simultaneously, service delivery people (such as clerks, ticket takers, nurses and phone personnel) are involved in real-time promotion of the service even if their jobs are typically defined in terms of the operational function they perform.

Expanded Mix for Services

• Because services are usually produced and consumed simultaneously, customers are often present in the firm’s factory, interact directly with the firm’s personnel and are actually part of the service production process.

• Also, because services are intangible, customers will often be looking for any tangible cue to help them understand the nature of the service experience.

• For example, in the hotel industry the design and decor of the hotel as well as the appearance and attitudes of its employees will influence customer perceptions and experiences.

• In addition to the traditional four P’s, the services marketing mix includes people, physical evidence and process.

1.People

• 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.

• All the human actors participating in the delivery of a service provide cues to the customer regarding the nature of the service itself.

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

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• The service provider or contact person are very important.

• In fact, for some services, such as consulting, counseling, teaching and other professional relationship-based services, the provider is the service.

• In other cases, the contact person may play what appears to be a relatively small part in service delivery – for instance, a telephone installer, an airline baggage handler, or an equipment delivery dispatcher.

2. Physical Evidence

• The environment in which the 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 brouchers, letterhead, business cards, report formats, signage and equipment.

• In some cases it includes the physical facility where the service is offered – the “servicescape” – for example, the retail bank branch facility.

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• In other cases, such as telecommunication services, the physical facility may be irrelevant.

• In this case other tangibles such as billing statements may be important indicators of quality.

3. Process

• The actual procedures, mechanisms, and flow of activities by which the service is delivered – the service delivery and operating systems.

• Some services are very complex, requiring the customer to follow a complicated and extensive series of actions to complete the process.

• For example, two successful airline companies, Southwest and Singapore Airlines, follow extremely different process models.

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• Southwest is a no-frills(no food, no assigned seats), low priced airline that offers frequent, relatively short domestic flights.

• All the evidence it provides is consistent with its vision and market position.

• Singapore Airlines, on the other hand, focuses on the business traveler and is concerned with meeting individual traveler needs.

• Thus, its process is highly customized to the individual, and employees are empowered to provide nonstandard service when needed.

• Both airlines have been very successful.

Mix Elements Common to both Goods and Services 1. Product

• Let us consider a first class air travel service offered by an airline on the domestic sector. The various constituent elements of the service product are:

1. Basic service provided: Transportation by air from designated point A to point B in the first class.

2. Quality of the service: Seats that are wider and more spacious than economy class seats, ceramic crockery, more personalized service provided by one hostess per eight passengers instead of one hostess per twenty passengers in the economy class, better choice of reading material etc.

1. Product

3. Accessories to the service: Free use of special lounge at the originating airport.

4. Service warranties: If the flight is delayed by more than 1 hour, 50 percent of ticket cost can be refunded by way of a discount coupon for the next flight. Full refund in case the flight is cancelled.

5. Branding: The first class service is called Sky Club and promoted accordingly.

Thus many elements of product mix are also present in the case of services mix.

2. Place

• Let us consider the example of a Pizza Hut outlet to understand the constituent elements of a place. Place is the location or channel through which the service is delivered.

1. Channel member: The channel member delivering the Pizza Hut service may be a franchisee. Such chains find it economically viable to appoint franchisees at various locations to make the service available.

2. Service intermediaries: In this case, the intermediaries may be the parent company designing the service and making available the service materials such as dough, sauce and other kitchen requirements, décor materials etc.

2. Place

3. Outlet location: Typically, the outlet for Pizza Hut would be located near a busy office or shopping area that has high number of footfalls.

4. Channel management: The franchiser would ensure a high-class outlet and service by training the outlet staff, specifying the quality norms for size and weight of pizzas, manner of serving, cleanliness standards, supply of standardized materials to ensure uniformity etc.,

2. Place

5. Transportation: This probably is very important in the case of home delivery of the pizzas. The packing, heat preserving containers and the time within which it is delivered may be important.

Thus, the place elements are equally vital in the case of services.

3. Promotion

• Let us consider the elements of promotional mix for a software marketing company. The service offered by the software is ‘structural designing of the concrete bridges’. The various elements of promotional mix may be:

1. Sales promotion: Carried out through trained marketing personnel who make calls on consultants, designers and larger civil engineering companies including design cells of government departments.

2. Advertising: Carried out through civil engineering trade journals, at conferences and seminars on civil engineering, newsletters for professionals etc.

3. Promotion

Extensive use is made of sample CD or floppies that work like the real product either for a limited time or provide sample solutions.

3. After-sales service and training: Used as a promotional strategy to generate and sustain interest in the product. More the number of people using the product in the organization, more the popularity.

4. Publicity: Carried out through articles covering the product in engineering journals.

Thus, promotion of services requires all the elements of the promotional mix.

4. Pricing

• Pricing is one of the key elements of the services marketing mix. Various ways of pricing affect both the promotion and the profitability of the services offered. For an airline, the elements of pricing used may be;

1. List price: The announced price as per the current tariff will be list price.

2. Marginal price: Price for a standby ticket with no guarantee or reservation.

3. Price level: Different list prices for first class, business class, economy class and tourist class.

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4. Price discount: Discounts are offered for early booking, for groups of 10 or more, for disabled persons and for senior citizens over 65.

5. Allowances: Extra baggage allowance is given to the members of the frequent flying club, including free upgrades for them.

Special Marketing Mix Elements for Services

• In addition to the above, there are certain other marketing mix elements that are considered to be vital in the case of services.

• The people element is important because almost all the services are delivered by one human being to another, and their interaction and the person delivering the service affect the customer satisfaction and perception of the service.

• In lieu of the product in the physical form, physical evidence serves to give an impression of physical form, which is also considered important by the service customers.

5. People

• Let us take the example of the front desk person in a hotel to illustrate the role of the people in the marketing of services.

1. Recruitment: The recruitment of front desk people is crucial for they are the first and major elements of personal contact. You need to select people who have generally a pleasant disposition and extrovert attitude, interpersonal skills to relate to people, and the necessary language skills.

2. Training: the potential employees need to be trained to carry out their duties, and also learn about people skills emphasizing on customer centricity and sensitivity to customer demands.

5. People

3. Motivation: The front desk employees need to be continuously motivated to ensure continued performance. This may be in the form of internal evaluation and awards or rewards to encourage the employees.

4. Team work: The hospitality industry performance depends on teamwork of cooks, waiters, room service, housekeeping, security etc., Role playing and teamwork training is an important aspect of the total service delivery.

5. People

5. Customer education:

• The customers themselves form vital part of the people element of the mix.

• In the case of a hotel, customers need to be informed about the availability of facilities and how to make best use of them. Thus information booklets, internal telephone directory and sign posting are important elements of the education.

6. Physical Evidence

• The physical evidence of a service has a very large role to play in the services scenario. Let us take the example of an airline service to highlight some of the key elements.

1. Aesthetics of the facility: The checking-in facilities, arrangements and layout, and décor of the aircraft are proof of the aesthetics.

2. Signage: The signage provide crucial information regarding checking-in counters, boarding gates, use of toilets, personal lights and air-conditioning faucets, gate numbers, boarding directions etc.

3. Ambient conditions: The pressure and temperature has to be maintained at precisely comfortable level throughout the flight.

6. Physical Evidence

4. Equipment: Equipment such as lockers, stowing facilities, reclining sets, pull-out trays, toilet equipment, and seat belts all serve as important ingredients of equipment facilities.

5. Employee appearance: Distinctive uniforms that are attractive yet functional serve to reassure the passengers. The pilots with standard flying uniform and gold-braided caps serve to establish authority.

6. Tangible elements: Air ticket, boarding passes, food and drinks menu, baggage tags and in-flight magazines serve to provide tangible elements of the service.

7. Process of Service Delivery

• Before taking up new employment, prior to acceptance of life insurance policy, before doing a major surgical procedure, etc. people may be required to undergo systematic health check-ups.

• The elements of a check-up process are important to these customers to boost their confidence, reduce their anxiety and give them assurance of high class service. Some of the key elements may include:

7. Process of service delivery

1. Flow of activities: Registration and check-in, explanation about the test procedure, wait before the tests to be carried out, final results handover etc. represent vital steps in the delivery of the service.

2. Level of customer involvement: The co-operation of the customer regarding remaining in fasting condition for certain checks, inhaling/exhaling, etc., is vital for carrying out the tests.