Marketing and the four P's.

Booms and Bitner5, suggested 3 additional Ps to the traditional marketing mix, to ensure, service marketing receives the attention it deserves:

The Service marketing

                                 Addition to the traditional marketing mix

 

(Source: Booms and Bitner, as cited in Donald Cowell, “marketing of service”, pp)

• People – as in the service industry the customer comes into the direct contact with the employees of the company to avail of the service and would draw the impression of the entire company based on the behaviour of that one employee. Perfect examples is banking sector where customer comes in direct contact with the employees. Therefore these employees need to be properly selected, trained and be kept motivated to perform up to the set standards and maintain a goodwill for the company.

This is even supported by Gronroos (1978)4, as he considers the human resource as an important channel to make service by far  accessible to the customers. According to (.Ahmed, Rafiq, Saad, 2003, pp1221) 6 internal marketing can be used to motivate employees. They state that:

“The concept of internal marketing mix can be used effectively to influence employees so that they are motivated and act in a customer-oriented fashion”

Companies adopting internal marketing, as a key business strategy will need to consider their human resources in a new light. The employee is central to internal marketing for, without their commitment the initiative will fail. In the traditional marketing context, the company view their employees in context of traditional command and control paradigm outlined by F.W.Taylor, whereas internal marketing requires the company to view its employees as persons with whom new value can be created. For example, in a company following the traditional marketing concept emphasis is on typically mass training for the employees using the standardised content whereas in a company following the internal marketing, learning needs geared to delivering customer requirements of individual relationship with the supplier.

• Physical Evidence – service quality of a firm can also be exhibited through a physical evidence, a special feature or style that has been taken by a firm which differentiates it from others, providing a competitive edge, also helps creating an identity for them, and at the same time plays a major role in its marketing mix. Thus components of physical evidence will influence consumer’s judgement of a service marketing organization. Physical evidence includes elements like physical environment (e.g. colours, layout, furnishings etc.), the goods that enable the service to be provided (e.g. vehicle in a vehicle rental company).

For example DHL courier services have the feature of speed – delivers to any corner of the world in 24 hours – gives confident identity/image of the firm also differentiates their service from other courier service providers giving it an competitive edge.

• Process – finally the Organisations success would depend on its selection of the process in order to deliver the service. As the customer can only see the quality of service being provided to him and the surrounding environment, and not the process involved in delivering the service. It is up to the success of this process whether the customer will return. Processes generally include the policies and procedure adopted, the mechanisation involved, the level of customer involvement in the process, the flow of information and service, on which the company’s overall system operates. For e.g. a cheerful, attentive and concerned staff can help the customer problems of having to queue for service or soften the blow of any sort of technological failure leading to delays.

The deregulation of service industries and interaction among the participants at an American Marketing Association conference during 1980-85 were considered as two most significant developments by Brown, Fisk, Bitner (1994)2 in the ‘Scurrying about’ phase. They observed that with this deregulation the role of marketing within the service firms was transformed from being not important, to being a core function-vital to the survival of the organisation. With increasing significance of customers in service economy the idea of relationship marketing was recognised. An idea that has been observed earlier by J.M.Rathmell (1966)7 ‘that in a service transaction buyer is a client rather then a customer of the seller’ gained significance with the development of the research in the service sector. With the recognition of the fact that in a service sectors it is not the product of the company, which the customer deals in, but it is the relationship, which effects the buyer-seller association, the thoughts from relationship marketing were applied to service marketing concept., Gronroos (1996)8 define that the core of relationship marketing is relations, a maintenance of relations between the company and the actors in its microenvironment that is its stakeholders and of course customers as the most important one. The concept of managing relationships with customers is not new. Companies have been interfacing with customers since the beginning of trade. Most haven’t been very effective. In the ‘70s, when the customers had to go to the airports to buy tickets from airlines. And, when asked why, the airlines said, "Because that’s where we keep them!" Over the years, customers grew accustomed to being treated badly and still bought from the companies that abused them. In that era a "Customer" was considered as, one who regularly or repeatedly purchases of a trader. Notice that there is no focus on meeting needs or satisfaction.

With the intensified competition, companies have now realized that they need to treat their customers differently - with respect. Customers have a lot more choices and they don’t have to be loyal to any company. Companies are now desperately trying to figure out ways to manage customer relationships effectively, not only to acquire new customers but also to retain their existing ones. According to a Harvard Business Review study, some companies can boost profits by almost 100% by retaining just 5% of more of their customers.

 

• Marks and Spencer (M&S), the well known chain of stores, operates on the basic fundamental philosophy to offer its customers a selective range of high quality, well designed and attractive merchandise at reasonable rates. The emphasis on the quality relates not only to the product quality but also the quality of services. M&S, enjoys customer loyalty because every transaction a pleasure. The no-question asked return policy entitles a customer, who is not satisfied with the goods purchased at its stores, to return the same at any of its chain stores and obtain cash refund.

In the third phase of ‘walking erect’ Brown, Fisk, Bitner (1994) 2 there was more emphasis on the quality of service, internal marketing and customer retention. This phase also stated a more clear and refined distinction between the product and service.

Adcock, Halborg, Ross(4 ed.:183)9 defines product as:

“Anything that can be offered to a marketing for attention, acquisition or consumption including physical objects, services, personalities, organisations and desires.” 

 “Product is, everything that the customer receives that is of value in terms of a perceived want, need or problem.” 

Kotler (10 ed.:398)10 defines product as:

“Anything that can be offered to a market to satisfy a want or need” 

Thus on the basis of above definitions it can be drawn out that a product is tangible, storable and is transportable. For a consumption to take place it is necessary that a product is produced in advance that is in a product, production precedes consumption. Also an important feature of product is that it is measurable.

        

Kotler (10 ed.:428)10defines services as:

“A Services as any act or performance that one party can offer to another that is essentially in tangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.”

The American Marketing Association11 defines services as:

“Services as those separately identifiable, essentially intangible activities which provide want-satisfaction, and that are not necessarily tied to the sale of a product or another service. To produce a service may or may not require the use of tangible goods. However when such use is required there is no transfer of title (permanent ownership) to these tangible goods.” 

It is clear from the above definitions that services are intangible activities resulting in customer satisfaction. Services have many unique characteristics, which make it stand out from tangible goods. According to Kotler10 (10th ed:429) and Martin (1999)12 Services have 4 major characteristics that differentiate it from any product and affect the process of designing a marketing mix for them. Services cannot be defined in physical terms as it is in case with the products. They cannot be felt, seen or tasted. For example-the person being treated by a physiotherapist does not know the exact outcome of the treatment till he actually goes through it.

It could often makes buying decision difficult for the customer as he does not know – what he is paying for, will satisfy his need/want. Thus services are intangible. The most important feature according to Gronroos (1978)4, which distinguishes services from the product is that service is intangible.

                 

                                                                                         Counselling

                          Training

                                                  Financial management

                                  Hospital care

                                         Microwave meals

                           Shampoo

                                     Alcoholic drink

                                          Computer hardware

                     Bread                                

The mix of intangibility and tangibility in an offering

                                 (Source: Adcock, Halborg, Ross, 4ed:187) 9

 As services have no physical form they cannot be stored and provided to the customer on a later date. They are produced and consumed at the same time. Here both the producer and the consumer of the service have to present at the same time and have affect on the final outcome. Thus they are inseparable .For example-a student has to be present when a teacher is conducting lectures in order to avail the teaching service. They are highly variable, in other words inconsistent, as all service provider do not provide the same kind of service at the same time and place and differ from one another in ways in which they provide these services makes services highly variable. For example-one barber can be good at a particular kind of hair cut whereas the other may not be as good at that – their service standards would vary also they may be charging varying rates etc. To manage this variability and satisfy customer needs and wants is a major task for the organization. As mentioned earlier services cannot be stored since they do not have a physical shape, therefore they are perishable. Thus precise planning is very important. In few cases irrespective of the number of customer or no customers at all the service has to be produces/delivered as in case of a public bus service. This feature often proves to be a disadvantage for a service offering company.

The vast advances made in technology also affected the service sector marketing to a great extent. Moreover, the companies could now realise their corporate goals in a more organised and scientific way, that is, the use of technology based tools provided a strong base to the company interacting with its stakeholders and customers. In the past marketing had barely recognized the dramatic changes in technology, which facilitated the service marketing, with entirely new strategic capabilities. Marketing was one area that resisted integration into technology-led change. Competition, driven by the Internet has changed all this. The Internet has lowered the barriers for new players to enter markets and offer goods at much lower prices regardless of location. Competition has been further fuelled by deregulation of the telecommunications industry. Customers now have a choice and, most importantly, they are aware of their choices. The power has shifted to the customer. The customer now is truly the king!

• The fact that more and more customers rate reliability, quick service and consistency of supply as more important to price is substantiated to number of people making a beeline to supermarkets, in spite of many stores selling goods at wholesale prices. For instance, at the Bangalore (India)-based ‘Nilgiris Departmental Store’, the computer-generated adhesive labels, incorporating barcodes, enables billing to be done in jiffy. Apart from being able to serve a large number of customers, such systems also increase productivity, reduce the risk of human error and save time for the customers.

• Automatic Teller Machines [ATM] have revolutionized banking services enabling customers to draw cash at any point of the day. To save time and money for the customers, the Canara bank (India) has introduced tele-answering machines through which customers can have there complaints registered on telephone.

Many authors (among others: Paynee1995)12 stressed the importance of the information technology revolution. By making intensive use of information and production technologies, it is possible to acquire detailed customer knowledge. The traditional marketing tools like tele servicing, creative, direct mail and written surveys may still be appropriate in certain situations, but there are other newer options that are now available to service marketers. Tools like database management, variable digital communications, e-mail marketing, e-commerce and Internet are now comfortable and can be employed to help companies come closer to their stakeholders.

Also technological innovations will influence the employment and output level of company’s in the service sector. As we have already seen, most company’s in the service sector (e.g. Airline, Banking etc.) have started employing technology exhaustively and this involvement and more technological advancement is expected to increase in future. Through this advancement the service sector will be able to handle larger volumes of services quicker and more accurately providing higher customer satisfaction. For e.g. banks have installed ATMs and use electronic cheque clearing as a means to make the service quicker and easily accessible to the customer. However the impact of technological advancement on the service sector is not completely prospective but has a flip side to it, with technology, mechanisation would evolve-reducing employment, whereas providing employment was one point to support the survival of service sector. The companies would incur more cost on training employees if any are required for performing technological operations. Also more the

technology advances, the higher will be the barrier in the path of service sector growth and existence. The reason being technology would provide service consumers with tools to perform these services themselves. For e.g. with the invention of television and home theatre systems the consumer will be able to experience the effect of services provided by the cinemas/theatres at home and this would lead to loss of income for the entertainment industry in the service sector. Similarly easy-care fabrics would replace cleaning at laundry services and cars manufactured to survive longer service intervals and equipments with throwaway replaceable parts will replace/reduce maintenance services. Thus technological advancements and innovations would be beneficial as well as harmful to the growth service sector in the new millennium.

As the new millennium draw closer more and more service providing companies realised the importance of customer interaction and the advantage of developing a long lasting and harmonious relationship with the customer. This is where the relationship marketing matured into the veins of the service-marketing sector. This concept was further transformed to meet the individual customer needs through customisation or in other words customer designing the products according to their taste and requirements.

 

• In the U.S. based Hallmark Cards, the largest manufacturer of greeting cards in the world, customers can design their own greeting cards. Computerized kiosks, installed in selective locations, allows customers to design and print their own customized greeting cards

• ‘Make your own Sundae’ is a concept of Baskin Robins-a chain of  ice-cream parlour, where a customer is given an opportunity to make his/her own sundae ice-cream according to his own taste and preferences.

After the personalisation concept worked amazingly well for the manufacturing sector as a method of marketing, that is getting in touch with the customer through direct marketing tools like personalised mails for offers and discounts etc., several marketers thought that this concept would do the same for the service marketing sector as well. Goldsmith (1999:178)13 proposed a new area of decision-making responsibility and a competitive tool, personalisation, as one of the most crucial for marketers in today’s and tomorrow business environment. And also suggested a new presentation of the marketing management mix, which he called the 8 Ps, the 8th p being personalisation to carry the marketing theory and practice into the next century. However this personalised concept in service sector will not last for long with more and more technological advancement taking place and mechanisation. 

Another important development in this phase was the increasing competition in the product market. Charles L. Martin (1999)14 perceives, with this increasing competition in the product market – quality, pricing etc. the service concept gained importance. The services emerged as the point of differentiation between companies giving them a competitive edge over others. It is then, the manufacturers realised the importance of service concept.  

 There was also a tremendous change in the economies of the developed countries with countries like US, Western Europe and Australia adopting service economies.  People were spending more on services then on tangible goods and services have become a major contributor to these countries Gross Domestic Product (GDP). Also there has been the growth in demand of these services, which seems to have increased employment opportunities for the local labour force in the service sector, indirectly contributing to the countries economic development. Looking at the global economic picture it can be seen that with increasing income levels and standard of living, the requirement of the customer for the kind of services has changed. According to Whiteman (1981:320) 15 the private consumer demand for leisure and recreation-related services may tend to increase faster then the personal income of the economy. Whereas the demand for complementary services (e.g. computing, finance, research etc.) will be influenced as per the conditions/situations of the manufacturing sector that they are associated with. For e.g. if the banking sector is in a bad state and its growth is stagnate, the computing or any other complementary service associated with it will suffer too.

On the basis of above discussions it can be concluded that with technological advancements there is more scope for growth for the service sector. Also in today’s scenario it is important for the service sector to take into consideration various other marketing concepts like internal marketing, relationship marketing to their fullest so as to realise its organisational objectives.

BIBLIOGRAPHY

1. Borden, Neil H, “Marketing Domain: a critical review of the development of the marketing concept”, journal of advertising research, sep 84 supplement Vol 24 issue 4

2. Stephen W.Brown, Raymond P.Fisk, Mary Jo Bitner (1994), “The Development and emergence of services marketing thought”, international journal of service industry management, volume 5, no. 1

3. G.L. Shostack (1997), “Breaking Free from Product Marketing”, Journal of Marketing, Vol. 41(April), p73-80

4. C.Gronroos (1978), “A service-oriented approach to marketing of services”, European journal of marketing, 12(8), 588-601

5. Booms and Bitner as cited in “Marketing management, 10th edition, pg 434) and Pervaiz K.Ahmed, Mohammed Rafiq (1995), “using the 7ps as a generic marketing mix”, marketing intelligence and planning, vol 13, no.9, pp 4)

6. Pervaiz K.Ahmed, Mohammed Rafiq, Norizan M.Saad (2003), “internal marketing and the mediating role of organisational competencies”, European journal of marketing, vol. 37, no.9, pp.1221-1241.

7. J.M.Rathmell (1996), “What Is Meant by Services”, Journal of Marketing, , Vol. 30 Issue 4, pp.32-36

8. Ravald, Annika, Gronroos (1996), “The Value concept and Relationship marketing”, European journal of marketing, vol30 issue 2

9. Dennis Adcock, Al Halborg, Caroline Ross, as cited in “Marketing principles and practices”, 4 edition, Prentice Hall

10. Kotler, as cited in “marketing management”, 10 ed.

11.  Donald Cowell, “The Marketing of Services” pp 22

12. Paynee A, 1995, “Advances in Relationship Marketing.”

13. Ronald E.Goldsmith (1999), “The Personalised Marketplace: Beyond The 4 Ps”, Marketing Intelligence and Planning, 17/4, pp.178-185

 

14. Charles L.Martin (1999), “the history, evolution and principles of services marketing: poised for the new millennium”, marketing intelligence and planning, vol.17, no.7

15. Whiteman (1981) as cited in Donald Cowell, “The Marketing Of Services”, and Heinemann: London

                                        REFERENCES

1. Christopher H.Lovelock, “Services Marketing: text, cases and readings”, 1984, Prentice-Hall

2. Donald Cowell, “The Marketing Of Services”, Heinemann: London

3. Mark Gabbott, Gillian Hogg, “Contemporary Services Marketing Management: A Reader”, The Dryden Press

4. Adcock, Halborg, Ross, “Marketing Principles and Practices”, 4 ed., Prentice Hall

5. Philip Kotler, “Marketing Management”, the millennium ed.,  Prentice Hall of India Pvt. Ltd.

6. John E.G. Bateson, “Managing Services Marketing: text and readings”, 2 ed., The Dryden Press

7. Steve Baron and Kim Harris, “Services Marketing: text and cases”, 2 ed., Palgrave

8. Borden, Neil H (1984), “Marketing Domain: a critical review of the development of the marketing concept”, journal of advertising research, Vol 24 issue 4

9. Stephen W.Brown, Raymond P.Fisk, Mary Jo Bitner (1994), “The Development and emergence of services marketing thought”, international journal of service industry management, volume 5, no. 1

10. G.L. Shostack (1997), “Breaking Free from Product Marketing”, Journal of Marketing, Vol. 41(April), p73-80

11. C.Gronroos (1978), “A service-oriented approach to marketing of services”, European journal of marketing, 12(8), 588-601

12. Booms and Bitner as cited in “Marketing management, 10th edition, pg 434) and Pervaiz K.Ahmed, Mohammed Rafiq (1995), “using the 7ps as a generic marketing mix”, marketing intelligence and planning, vol 13, no.9, pp 4)

13. Pervaiz K.Ahmed, Mohammed Rafiq, Norizan M.Saad (2003), “internal marketing and the mediating role of organisational competencies”, European journal of marketing, vol. 37, no.9, pp.1221-1241.

14. J.M.Rathmell (1996), “What Is Meant by Services”, Journal of Marketing, , Vol. 30 Issue 4, pp.32-36

15. Annika Ravald, Christian Gronroos (1996), “The Value concept and Relationship marketing”, European journal of marketing, Vol.30 issue 2

  16. Charles L.Martin (1999), “the history, evolution and principles of services marketing: poised for the new millennium”, marketing intelligence and planning, vol.17, no.7

17. Christian Gronroos (1988), “Marketing Services: the case of a missing product”, journal of business and industrial marketing, Vol.13, No.4/5, PP.322-338

18. Christian Gronroos (1966), “Relationships Marketing: strategic and tactical implications”, Management Decision, Vol. 34, NO.3, PP.5-14

19. Stephen J.Grove, Raymond P.Fisk, Joby John (2003), “The Future Of Services Marketing: forecast from ten services expert” journal of services marketing, Vol. 12, No.2, pp.107-121

20. Agueda Esteban, Angel Millan, Arturo Molina, David Martin-Consuegra (2002), “Market Orientation in services: a review and analysis”, European journal of marketing, Vol.36, No.9/10, pp.1003-1021

21. Evert Gummesson (1997), “Relationship marketing as a paradigm shift: some conclusions from the 30R approach”, Management Decision, Vol.35, No.4, pp.267-272

22. Ronald E.Goldsmith (1999), “The Personalised Marketplace: beyond the 4Ps”, marketing intelligence and planning,