Services marketing Mix: 7P’s of Services Marketing

Services Marketing Mix: Understanding the 7P’s

Services marketing involves strategizing to effectively market services to both consumers and businesses. Services are intangible, not stored, and consumed immediately, such as tax, accounting, hotel, airline, telecom, hairdressing, tailoring, and dry cleaning services.

7Ps of Service Marketing

• Product:
• Intangibility: Unlike physical products, services can't be seen or tried before purchase. This increases perceived risk for customers. For example, a customer cannot preview a medical operation or a car service until it is performed.
• Quality Perception: Customers rely on clues such as the brand name, the behavior of service staff, the physical environment, and service processes to judge the quality. Strong brands can reduce perceived risk and assure customers of consistent quality.
• Brand Importance: Service providers should invest in building strong brands through advertising and positive word-of-mouth. This combination helps create awareness and trust, making customers more comfortable with their purchase decisions.

• Promotion:
• Tangible Cues: Since services are intangible, visual elements (e.g., images of the hotel building, swimming pool, friendly staff, and happy customers) help convey quality and create a positive perception.
• Personal Selling: Effective for high-risk services where direct communication with salespeople can provide detailed explanations and reassurance. Salespeople should be trained to ask for referrals and use satisfied customers for reference selling.
• Word-of-Mouth: Critical due to the experiential nature of services. Referrals and testimonials from satisfied customers are highly influential and can convince potential customers more effectively than traditional advertising.

• Price:
• Quality Indicator: Price often serves as an indicator of perceived quality. For example, a higher fee charged by a surgeon may be perceived as an indicator of better quality.
• Demand Management: Pricing strategies help manage demand and optimize utilization. For example, bars may charge higher rates in the evening when demand is high and lower rates during the daytime to attract more customers.
• Segmentation: Price sensitivity is a key variable in segmenting the market. Different prices can cater to different customer segments, such as offering discounted rates during off-peak hours or higher rates for faster service.

• Place:
• Direct Distribution: Services often require direct contact between the provider and the customer due to simultaneous production and consumption. Growth for many service companies involves opening new facilities in new locations.
• Multi-point Strategy: Expansion often involves replicating the service setup in new locations, which requires careful evaluation of new sites.
• Technology Use: Technology allows remote service delivery, reducing the need for physical presence. For example, banking services can be accessed through ATMs, internet banking, or phone banking.

• People:
• Service Quality: Directly linked to the quality of service providers. Training and monitoring are crucial to maintain consistent service quality.
• Training: Essential to ensure employees understand appropriate behavior and customer service standards. Employees should be trained to adapt their behavior to different customer personalities and situations.
• Multiple Roles: Employees need skills in operations, marketing, and human resource management. They should have empathy and be able to modify their service and behavior according to customer needs.

• Physical Evidence:
• Service Environment: Tangible elements (e.g., decor, cleanliness) influence customer perceptions. Prospective customers may inspect the physical evidence to judge the likely quality of the service.
• Cues for Quality: Service providers should strengthen the physical cues that indicate quality to reassure customers. For example, a well-maintained restaurant with clean and elegant furnishings can create a positive impression.

• Process:
  • Service Delivery: Procedures and activities involved in providing the service. The process can vary widely, from self-service cafeterias to full-service restaurants.
  • Customer Requirements: Processes should be designed to meet customer needs while maintaining efficiency. Researching customer requirements helps in setting appropriate processes.
  • Flexibility vs. Standardization: Balancing customization with standardization ensures effective service delivery. Too much flexibility can reduce efficiency, while too much standardization can reduce customer satisfaction.

Key Points

• Intangibility: Services can't be touched or tried before purchase, increasing perceived risk. Customers rely on brand reputation, physical evidence, and service processes to judge quality.
• Simultaneous Production and Consumption: Direct interaction between provider and customer is often necessary. Service companies may need to open new facilities to grow and reach new markets.
• Customer Perception: Influenced by tangible cues, brand reputation, and service quality. Positive word-of-mouth and strong branding help reduce perceived risk.
• Demand Management: Pricing and place strategies help manage demand and optimize utilization. Different prices cater to different customer segments, and technology can facilitate remote service delivery.
• Employee Training: Crucial for maintaining consistent service quality and appropriate behavior. Employees should have multiple skills and be able to adapt to different customer needs.
• Physical Environment: Tangible elements influence perceptions of service quality. Strengthening physical cues helps reassure customers.
• Process Efficiency: Balancing customization with standardization ensures effective service delivery. Researching customer requirements helps in designing appropriate processes.

Understanding and implementing the 7Ps of service marketing helps businesses deliver high-quality services, manage customer expectations, and ensure customer satisfaction.