7Ps of Marketing Mix is also called the extended Marketing Mix. It was first introduced by Bernard H. Booms and Mary J. Bitner in 1981 who extended the traditional Marketing Mix for goods developed by the American Professor of Marketing Jerome McCarthy into the services Marketing Mix.
Booms, B.H. and Bitner, M.J. (1981). Marketing Strategies and Organization Structures for Service Firms. In: Marketing of Services, American Marketing Association.
As economies in developed countries were transitioning from being dependent on secondary sector to tertiary sector, services are now playing more important role in the economic structure of developed countries. Services now account for the largest share of national income in developed economies.
That is why the concept of traditional 4Ps of Marketing Mix was extended to encompass growth of service industry in recent decades. Hence, the 7Ps model of Marketing Mix is dedicated for service-based markets.
What is a service?
A service is an intangible product. It is not made of the materials, hence services are about experiences. A service is an action of doing something for someone else. People pay for services to fulfill their needs and wants.
For instance, taking a TAXI, attending a business lesson, having a haircut, a train trip from Paris to London, etc, a hairdresser giving you a haircut, a chef fixing you dinner or even a teacher teaching you about business management. You do not really get something solid, like a book or a CD, but you do get ‘something done‘ for you that you need or want. On the contrary, a good is a tangible product.
There are two types of services such as consumer services and producer services:
A. Type of product: Consumer services. Consumer services are intangible products provided by businesses to the general public, individual customers, rather than to other businesses or governments. They are not tangible in nature, but their results, outcomes, are tangible. Meaning, when taking a bus ride, we can see and touch the bus which transports us from Point A to Point B. But, we are not buying that particular bus. We are using a service which that bus (and the bus driver) provides. And, this service of ‘being moved’ from one place to another cannot be touched. Other examples of consumer services include personal banking, investments and financial services, private education, Michelin-star dining, healthcare, etc.
B. Type of product: Producer services. Producer services are intangible products provided by businesses to other businesses or governments to help them run their businesses on daily basis. The producer services are not tangible, but their results are. Examples of producer services include legal services, accounting services, security guards, transportation services, corporate banking, etc.
👍 | You can check more about Classification of Businesses – By Types of Products: Consumer Goods and Services, Capital Goods and Services.
Unlike physical goods, services have different features. The differences between the marketing of goods and services include the following five characteristics:
- Intangibility – Services cannot be touched. Buyers do not take anything with them after the payment is made.
- Inseparability – Services are consumed at the time of purchase.
- Heterogeneity (Variability) – Services offer different customers different experience each time, so quality is therefore varied.
- Perishability – Services cannot be stored or kept.
- No rights of ownership – Services cannot be legally owned. There is no ownership of the product.
👍 | You can check those five characteristics of services in details in the article I have written some time ago called Marketing of Goods vs. Marketing of Services.
What does 7Ps of Marketing Mix include?
The 7Ps model in the marketing of services has been extended to include elements more suited to the features of a service.
In addition to 4Ps of Marketing Mix which include Product, Price, Place and Promotion, 7Ps of Marketing Mix of services include three additional elements such as: People, Processes and Physical Evidence.
In the marketing of services, skilled knowledgeable and motivated people, processes that allow customers to access the service as well as physical environment where people make the purchase are as important as the original 4Ps for selling tangible goods.
Businesses use different marketing tools to entice customers to purchase different services, hence product differentiation is important for marketing of services.
PART 1: Four basic Ps for Marketing of Services
Both marketing of goods and marketing of services use researching and developing new products, promotion to build brand recognition, brand awareness and trust, appropriate pricing strategies to generate profits and suitable location to deliver the products to customers.
1/7: PRODUCT
A business selling services must first decide whether it will be offering standardized services or customized services per each individual customer.
While standardized services enable the firm to serve more customers faster, the companies providing customized services can offer a tailored experience.
Some companies provide value-added services to attract customers in addition to selling only goods. This includes supermarkets and restaurants offering home delivery services, banks selling gold bars and silver coins, or universities selling hoodies and other merchandize with the university logo on them.
2/7: PRICE
Pricing services is not easy for marketers as it is difficult to get the right pricing strategy the first time.
Firstly, the appropriate pricing strategy should both appeal to customers, cover the costs of delivering the service and generate profits for the firm. And secondly, the value for customers can come from the final benefit they receive, the expertise required to provide the service or the time spent on serving the customer.
All these need to be reflected in the price to some extent, hence the cost and the price of services can to be quite high.
3/7: PROMOTION
Promoting services is challenging for Marketing Managers because services are intangible, so customers cannot see them.
Therefore, in order to help customers to visualize the quality of services being provided, companies use promotional strategies related to the visible aspect of services. This includes emphasizing attractive physical environment, the use of branding to create a certain image, catchy slogans, memorable logos, etc.
4/7: PLACE (Distribution)
The location decision is way more important when we talk about services than for goods. Services are all about serving the people, therefore businesses should pick the most convenient locations.
It is because customers are very unlikely to visit banks, restaurants, schools, hotels, theaters, retail stores, ATMs, supermarkets, etc. in remote locations far away from the downtown.
Being close to customers through convenient location is vital for any company offering services.
PART 2: Three additional Ps for Marketing of Services
Let’s take a look in details at those three additional Ps in the marketing of services including people, process and physical evidence.
5/7: PEOPLE
People mean all employees in the firm who can heavily influence the marketing of a product either positively or negatively. Skillful and knowledgeable workforce provides competitive advantage which is crucial in achieving marketing objectives. Most importantly, people should act ethically and efficiently solve customers’ problems.
Excellent employees are necessary for developing and maintaining effective long-term relationships with customers keeping them satisfied. To find and maintain highly-skilled employees, it is crucial to establish quality recruitment, training and appraisal processes.
All in all, people represent the business through their appearance and body language. They should be culturally sensitive and proudly represent the corporate culture of the firm. In the end, it is the human beings who provide long-lasting image of the company to the customers.
The P of People mainly boils down to:
- Appearance and body language of the staff.
- Aptitudes and attitudes.
- Feedback.
- Efficiency.
6/7: PROCESSES
Processes mean all the ways in which services are provided to customers. These systems support the delivery of services along the way demonstrating the benefits to the final clients.
The purpose of having well-established systems includes fulfilling customer expectations and maximizing customer satisfaction.
Without good processes, or when changes have negative impact on a process, all of the other 6Ps of Marketing Mix will be undermined. Therefore, processes are crucial to customer loyalty as they will determine whether the customer will repeat the purchase in the future.
The P of Processes mainly includes a few elements such as:
- Payment methods.
- Waiting time.
- Customer services.
- After-sales care.
- Delivery processes.
7/7: PHYSICAL EVIDENCE
Physical evidence means the tangible aspect of an intangible service. It includes all the visible aspects of the environment where the service is being offered to customers.
Physical presentation of the environment is important in marking a service as it can influence the perception of the customer about the business portraying it as a firm providing either high standards or low standards.
Tangible physical evidence in marketing a service includes everything that customers can see, touch and hear that makes them feel in a certain way.
The P of Physical Evidence can be expresses through:
- Layout of the premises.
- Decorations.
- Upkeep.
- Levels of noise.
- Aroma (smell).
In summary, 7Ps of the Marketing Mix of services is comprised of Product, Price, Promotion, Place, Process, People and Physical Evidence. While the concept of 4Ps of the Marketing Mix applies to physical goods, the concept of 7Ps of the Marketing Mix applies to marketing of services.
Examples of services that businesses can provide to individual customers include a subway ride, opening a bank account, a visit to the library, a trip to the theater, wealth management, a haircut in a beauty salon, etc. Additionally, businesses can provide services to other business organizations including transportation, insurance, corporate banking, legal, consulting, accounting, security, distribution services, etc.
