MARKETING

7 Ps OF MARKETING
IN LIC

Submitted to- Prof. Vikram Trivedi

 INTRODUCTION TO MARKETING
The marketing concept holds that achieving organisational goals depends on
knowing the needs and wants of target markets and delivering the desired
satisfaction better than competitors do.

- Kotler and Armstrong (2010).

The marketing concept arrived after a series of other orientations that

marketing companies underwent during the 20th Century. Initially there was
production orientation where a company focused upon the science of
manufacturing. Then there was a product orientation where a business is not
only focused on the production processes but also upon the quality and
desirability of a particular product. Then marketing companies progressed to a
selling or sales orientation whereby products will proactively sold based upon
features rather than the benefits to the individual customer and his or her needs.
Hence the arrival of a market orientation which underpins our marketing
concept, where needs and wants are satisfied through the delivery of value to
satisfied customers. Below are some definitions of the marketing concept which
demonstrate the breadth and scope of the term.

Marketing is not only much broader than selling; it is not a specialized

activity at all. It encompasses the entire business. It is the whole business seen
from the point of view of the final result, that is, from the customers point of
view. Concern and responsibility for marketing must therefore permeate all
areas of the enterprise.

- Drucker (1955, 2007).

The marketing concept is a philosophy. It makes the customer and
the satisfaction of his or her needs the focal point of all business activities. It is
driven by senior managers, passionate about delighting their customers.

The important elements summarised as follows:

* Contemporary marketing focuses on the satisfaction of customer needs, wants

and requirements.

* Its about the delivery of value to satisfied customers, through an exchange

process.

* The philosophy of marketing needs to be owned by everyone from within the

organization.

* Future needs have to be identified and anticipated.

* There is normally a focus upon profitability, especially in the corporate sector.

* More recent definitions recognize the influence of marketing upon society.

* There is a longer-term relationship with customers.

 MARKETING DEFINITIONS
There are many marketing definitions. The better definitions are focused
upon market orientation and the satisfaction of customer needs.

Marketing is the social process by which individuals and organizations

obtain what they need and want through creating and exchanging value with
others.

- Kotler and Armstrong (2010).

The definition is based upon a basic marketing exchange process, and

recognises the importance of value to the customer.

The process by which companies create value for customers and build
strong customer relationships in order to capture value from customers in
return.

- Kotler and Armstrong (2010).

Kotler and Armstrong develop their original definition to recognise the

importance of the longer-term relationship with the customer. This is achieved
by relationship marketing and Customer Relationship Management (CRM).

Marketing is the management process for identifying, anticipating and

satisfying customer requirements profitably.

Marketing is the activity, set of institutions, and processes for creating,

communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large. (Approved October 2007)

- American Marketing Association Board of Directors.

Again, in common with Kotler and Armstrong above, the AMA focuses
its definition on value creation and delivery, and the longer-term retained
customer.
 FEATURES OF MARKETING
Some of the most important characteristics of marketing are as follows:

1. Organization-wide Function:

Marketing is not a function of marketing department alone. Every

department and individual contributes sufficiently towards marketing. The
production department has to see that products do not falter after sale. The
receptionist, the first point of contact, is the image bearer.

The account department must see that the invoice is customer-friendly.

Management guru Peter F. Drucker very rightly claimed that marketing "is so
basic, it cannot be considered a separate function.... It is the whole business seen
from the point of view of its final result, that is, from the customer's point of
view."

2. Marketing is a socially pervasive process:

Marketing is a process as it begins with the consumers and ends with the
consumers. As a process, first marketing has to scan the business environment
of which customers are part and parcel, including SWOT analysis; then it has to
formulate marketing strategy and prepare tactical plans; then to implement
them; and finally controlling, i.e. Monitoring actual performance and to see how
effective the market planning was.

It is social, because exchange is possible only between two social units.

And it is pervasive because it goes much beyond selling soaps, toothpaste or
shampoos.

Whether the organisation is commercial or non-commercial, government

or non-government, everyone has to market. A nation has to go in for
international marketing to get across the points to citizens of that country.
3. Marketing is both a Science and Art:

Marketing is a science as it provides some general principles to guide the

managers in their working. Marketing is an art as every situation requires to be
tackled differently and in an effective manner.

Neither the science should be over-emphasized nor should art be

discounted. The reality is that both of them go together and are both mutually
interdependent and complementary.

4. Voluntary Exchange of Values:

Marketing is always about exchange of value to each other without any

coercion or force, i.e., voluntary exchange. Selling is only a tip of marketing
iceberg. Value assessment is a subjective assessment of benefits.

A customer benefits include what a buyer receives in exchange. Buyer's

cost includes price, time, effort, and risk (s)/he undertakes. The marketer must
provide equal value through marketing mix.

5. Achievement of Organisational Objectives and Customer Needs:

Marketing is a purposeful activity. It is always to achieve the

organisational objectives as well as satisfying customers. Organisational
objective for a .commercial organisation may be profit and for a non-
commercial organisation it may be different (police wants to bring down crimes,
and anti-tobacco campaign wants to eliminate tobacco consumption).

6. Selection of Target Markets:

No marketer can satisfy everyone in the market. A marketer has to select

target markets rather than a quixotic attempt to win every market and be all
things to all men. Not everyone likes the same diaper, shampoo or car.

Therefore, marketers start with market segmentation, choosing a target

groups (s), identifying target group needs and requirements and meeting these
needs in a better way than the competitors through suitable marketing mix.
7. Beneficial to all the Stakeholders:

Favouring one of the stakeholders at the cost of others cannot be marketing.

Profit maximisation, by hook or crook, may be beneficial to the firm, but
customer will lose. Making use of polythene bags may make convenience for
the customers, but environment will suffer
 FUNCTIONS OF MARKETING
1. Gathering and Analysing Market Information:

Gathering and analyzing market information is an important function of

marketing. Under it, an effort is made to understand the consumer thoroughly in
the following ways:

(a) What do the consumers want?

(b) In what quantity?

(c) At what price?

(d) When do they want (it)?

(e) What kind of advertisement do they like?

(f) Where do they want (it)?

What kind of distribution system do they like? All the relevant information
about the consumer is collected and analysed. On the basis of this analysis an
effort is made to find out as to which product has the best opportunities in the
market.

2. Marketing Planning:

In order to achieve the objectives of an organisation with regard to its

marketing, the marketer chalks out his marketing plan. For example, a company
has a 25% market share of a particular product.

The company wants to raise it to 40%. In order to achieve this objective

the marketer has to prepare a plan in respect of the level of production and
promotion efforts. It will also be decided as to who will do what, when and how.
To do this is known as marketing planning.
3. Product Designing and Development:

Product designing plays an important role in product selling. The

company whose product is better and attractively designed sells more than the
product of a company whose design happens to be weak and unattractive.

In this way, it can be said that the possession of a special design affords a
company to a competitive advantage. It is important to remember that it is not
sufficient to prepare a design in respect of a product, but it is more important to
develop it continuously.

4. Standardisation and Grading:

Standardisation refers to determining of standard regarding size, quality,

design, weight, colour, raw material to be used, etc., in respect of a particular
product. By doing so, it is ascertained that the given product will have some
peculiarities.

This way, sale is made possible on the basis of samples. Mostly, it is the
practice that the traders look at the samples and place purchase order for a large
quantity of the product concerned. The basis of it is that goods supplied
conform to the same standard as shown in the sample.

Products having the same characteristics (or standard) are placed in a

given category or grade. This placing is called grading. For example, a company
produces commodity X, having three grades, namely A. B and C,
representing three levels of quality; best, medium and ordinary respectively.

Customers who want best quality will be shown A grade product. This
way, the customer will have no doubt in his mind that a low grade product has
been palmed off to him. Grading, therefore, makes sale-purchase easy. Grading
process is mostly used in case of agricultural products like food grains, cotton,
tobacco, apples, mangoes, etc.
5. Packaging and Labelling:

Packaging aims at avoiding breakage, damage, destruction, etc., of the

goods during transit and storage. Packaging facilitates handling, lifting,
conveying of the goods. Many a time, customers demand goods in different
quantities. It necessitates special packaging. Packing material includes bottles,
canister, plastic bags, tin or wooden boxes, jute bags etc.

Label is a slip which is found on the product itself or on the package

providing all the information regarding the product and its producer. This can
either be in the form of a cover or a seal.

For example, the name of the medicine on its bottle along with the
manufacturers name, the formula used for making the medicine, date of
manufacturing, expiry date, batch no., price etc., are printed on the slip thereby
giving all the information regarding the medicine to the consumer. The slip
carrying all these is details called Label and the process of preparing it as
Labelling.

6. Branding:

In order to realise his wish he has to give a name to his product which has
to be distinct from other competitors.

Giving of distinct name to ones product is called branding. Thus, the

objective of branding is to show that the products of a given company are
different from that of the competitors, so that it has its own identity.

For instance, if a company wants to popularise its commodity X under

the name of 777 (triple seven) then its brand will be called 777. It is
possible that another company is selling a similar commodity under AAA
(Triple A) brand name.

Under these circumstances, both the companies will succeed in

establishing a distinct identity of their products in the market. When a brand is
not registered under the Trade Mark Act, 1999, it becomes a Trade Mark.
7. Customer Support Service:

Customer is the king of market. Therefore, it is one of the chief functions

of marketer to offer every possible help to the customers. A marketer offers
primarily the following services to the customers:

(i) After-sales-services

(ii) Handling customers complaints

(iii) Technical services

(iv) Credit facilities

(v) Maintenance services

Helping the customer in this way offers him satisfaction and in todays
competitive age customers satisfaction happens to be the top-most priority.
This encourages a customers attachment to a particular product and he starts
buying that product time and again.

8. Pricing of Products:

It is the most important function of a marketing manager to fix price of a

product. The price of a product is affected by its cost, rate of profit, price of
competing product, policy of the government, etc. The price of a product should
be fixed in a manner that it should not appear to be too high and at the same
time it should earn enough profit for the organisation.

9. Promotion:

Promotion means informing the consumers about the products of the

company and encouraging them to buy these products. There are four methods
of promotion: (i) Advertising, (ii) Personal selling, (iii) Sales promotion and (iv)
Publicity. Every decision taken by the marketer in this respect affects the sales.
These decisions are taken keeping in view the budget of the company.
10. Physical Distribution:

Under this function of marketing the decision about carrying things from
the place of production to the place of consumption is taken into account. To
accomplish this task, decision about four factors are taken. They are: (i)
Transportation, (ii) Inventory, (iii) Warehousing and (iv) Order Processing.
Physical distribution, by taking things, at the right place and at the right time
creates time and place utility.

11. Transportation:

Production, sale and consumption-all the three activities need not be at

one place. Had it been so, transportation of goods for physical distribution
would have become irrelevant. But generally it is not possible. Production is
carried out at one place, sale at another place and consumption at yet another
place.

Transport facility is needed for the produced goods to reach the hands of
consumers. So the enterprise must have an easy access to means of
transportation.

Mostly we see on the road sides private vehicles belonging to Pepsi,

Coca Cola, LML, Britannia, etc. These private carriers are the living examples
of transportation function of marketing. Place utility is thus created by
transportation activity.

12. Storage or Warehousing:

There is a time-lag between the purchase or production of goods and their

sale. It is very essential to store the goods at a safe place during this time-
interval. Godowns are used for this purpose. Keeping of goods in godowns till
the same are sold is called storage.

For the marketing manager storage is an important function. Any

negligence on his part may damage the entire stock. Time utility is thus created
by storage activity.
 INTRODUCTION TO SERVICES MARKETING
What Is Services Marketing?

A service is the action of doing something for someone or something. It

is largely intangible (i.e. Not material). You cannot touch it. You cannot see it.
You cannot taste it. You cannot hear it. You cannot feel it. So a service context
creates its own series of challenges for the marketing manager since he or she
must communicate the benefits of a service by drawing parallels with imagery
and ideas that are more tangible.

Search quality is the perception in the mind of the consumer of the

quality of the product prior to purchase through making a series of searches. So
this is simple in relation to a tangible product because you might look at size or
colour for example. Therefore search quality relates more to products and
services.

Experience quality is easier to assess. In terms of service you need to

taste the food or experience the service level. Therefore your experiences allow
you to evaluate the level and nature of the service. You remember a great
vacation because of the food or service, but by the same token you remember an
awful vacation because of the hopeless food or poor service.

Credence quality is based upon the credibility of the service that you
undertake. This is down to the reputation of a dentist or of a decorator. Credence
is used where you have little knowledge of the topic and where you rely upon
the professionalism of the expert.
 FEATURES OF SERVICE MARKETING
Western economies have seen deterioration in their traditional
manufacturing industries, and a growth in their service economies. Therefore
the marketing mix has seen extended and adapted to create the services
marketing mix, also known as the 7Ps or the extended marketing mix
physical evidence, process and people.

A product is tangible (i.e. Material) since you can touch it or own it. A service
tends to be an experience that is consumed at the point where it is purchased
and cannot be owned since it quickly perishes. A person could go to a caf one
day and enjoy excellent service, and then return the next day and have a poor
experience. Marketers talk about the nature of a service as being inseparable,
intangible, perishable, homogenous and variable.

1. Perishable

In that once it has occurred it cannot be repeated in exactly the same way.
For example, once a 100 meters Olympic final has been run, there will not be
another for 4 more years, and even then it will be staged in a
different place with many different finalists. You cannot put service in the
warehouse, or store in your inventory. An interesting argument about
perishability goes like this, once a flight has taken off you cannot sell that seat
again, hence the airline makes no profit on that seat. Therefore the airline has no
choice but to price at peak when it sells a seat at busy times in order to make a
profit. Thats why restaurants offer vouchers to compensate for quieter times,
and it is the same for railway tickets and matinees in Broadway during the
middle of the week.

2. Variability-

Since the human involvement in service provision means that no two

services will be completely identical, they are variable. For example, returning
to the same garage time and time again for a service on your car might see
different levels of customer satisfaction, or speediness of work. If you watch
your favourite music group on DVD the experience will be the same every time
you play it, although if you go to see them on tour when they are live no two
performances will be identical for a whole variety of reasons. Even with the
greatly standardized McDonalds experience, there are slight changes in service,
often through no fault of the business itself. Sometimes Saturday lunchtime will
be extremely busy, on other days you may have to wait to go via the drive
through. So services tend to vary from one user experience to another.

3. Homogeneity-

It is where services are largely the same (the opposite of variability

above). We considered McDonalds above which is a largely homogeneous
service, so now lets look at KFC and Pizza Hut. Both of these businesses
provide a homogeneous service experience whether you are in New York, or
Alaska, or even Adelaide. Consumers expect the same level of service and
would not anticipate any huge deviation in their experience. Outside of the main
brands you might expect a less homogeneous experience. If you visit your
doctor he or she might give one interpretation, whereas another doctor might
offer a different view. Your regular hairdresser will deliver a style whereas a
hairdresser in the next town could potentially style your hair differently.
Therefore standardization is largely embodied by the large global brands which
produce services.

Right of ownership is not taken to the service, since you merely

experience it. For example, an engineer may service your air-conditioning, but
you do not own the service, the engineer or his equipment. You cannot sell it on
once it has been consumed, and do not take ownership of it.

Inseparable from the point where it is consumed, and from the provider of the
service. For example, you cannot take a live theatre performance home to
consume it (a DVD of the same performance would be a product, not a service).
The consumer is actually involved in the production process that they are
buying at the same time as it is being produced, for example an eye test or a
makeover. One benefit would be that if you are unhappy with you makeover
you can tell the beautician and that instant feedback means that the service
quality is improved. You cant do that with a product. Another attribute is that
services have to be close to the person consuming them i.e. Goods can be made
in a central factory location which has the benefits of mass production. This
localization means that consumption is inseparable from production.
4. Intangible-

They cannot have a real, physical presence as does a product. For

example, motor insurance may have a certificate, but the financial service itself
cannot be touched i.e. It is intangible. This makes it tricky to evaluate the
quality of service prior to consuming it since there are fewer attributes of
quality in comparison to a product. One way is to consider quality in terms of
search, experience and credence.
 CONCEPT OF MARKETING MIX
The marketing mix is one of the most famous marketing terms. The
marketing mix is the tactical or operational part of a marketing plan. The
marketing mix is also called the 4Ps and the 7Ps. The 4Ps
are price, place, product and promotion. The services marketing mix is also
called the 7Ps and includes the addition of process, people and physical
evidence.

The marketing mix is the set of controllable tactical marketing tools

product, price, place, and promotion that the firm blends to produce the
response it wants in the target market.

- Kotler and Armstrong (2010).

The concept is simple. Think about another common mix 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!

It is the same with the marketing mix. The offer you make to
your 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.

Another way to think about the marketing mix is to use the image of an
artists palette. The marketer mixes the prime colours (mix elements) in
different quantities to deliver a particular final colour. Every hand painted
picture is original in some way, as is every marketing mix. Lets look at the
elements of the marketing mix in more detail.

1 PRICE

Price is the amount the consumer must exchange to receive the offering.

- Solomon et al (2009).

The companys goal in terms of price is really to reduce costs through

improving manufacturing and efficiency, and most importantly the marketer
needs to increase the perceived value of the benefits of its products and services
to the buyer or consumer. There are many ways to price a product. Lets have a
look at some of them and try to understand the best policy/strategy in various
situations.

2 PLACE

Place includes company activities that make the product available to target
consumers.

- Kotler and Armstrong (2010).

Place is also known as channel, distribution, or intermediary. It is the

mechanism through which goods and/or services are moved from the
manufacturer/ service provider to the user or consumer.

3 PRODUCT

Product means the goods-and-services combination the company offers to the

target market.

- Kotler and Armstrong (2010).

For many a product is simply the tangible, physical item that we buy or
sell. You can also think of the product as intangible i.e. A service.

4 PROMOTION

Promotion includes all of the activities marketers undertake to inform

consumers about their products and to encourage potential customers to buy
these products.

- Solomon et al (2009).

Promotion includes all of the tools available to the marketer for

marketing communication. As with Neil H. Bordens marketing mix, marketing
communications has its own promotions mix. Whilst there is no absolute
agreement on the specific content of a marketing communications mix, there are
many promotions elements that are often included such as
sales, advertising, sales promotion, public relations, direct marketing, online
communications and personal selling.
5 PHYSICAL EVIDENCE

Physical evidence is 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.

- Zeithaml et al (2008)

Physical Evidence is the material part of a service. Strictly speaking there

are no physical attributes to a service, so a consumer tends to rely on material
cues. There are many examples of physical evidence, including some of the
following buildings, equipment, signs and logos, annual accounts and business
reports, brochures, your website, and even your business cards.

6 PEOPLE

People are all human actors who play a part in service delivery and thus
influence the buyers perceptions; namely, the firms personnel, the customer,
and other customers in the service environment.

- Zeithaml et al (2008).

People are the most important element of any service or experience.

Services tend to be produced and consumed at the same moment, and aspects of
the customer experience are altered to meet the individual needs of the person
consuming it.

7 PROCESS

Process is the actual procedures, mechanisms, and flow of activities by which

the service is delivered this service delivery and operating systems.

- Zeithaml et al (2008).
There are a number of perceptions of the concept of process within the business
and marketing literature. Some see processes as a means to achieve an
outcome.1. PRODUCT

Three Levels of a Product

1. The CORE product is NOT the tangible physical product. You cant touch it.
Thats because the core product is the BENEFIT of the product that makes
it valuable to you. So with the car example, the benefit is convenience i.e. The
ease at which you can go where you like, when you want to. Another core
benefit is speed since you can travel around relatively quickly.

2. The ACTUAL product is the tangible, physical product. You can get some
use out of it. Again with the car, it is the vehicle that you test drive, buy and
then collect. You can touch it. The actual product is what the average person
would think of under the generic banner of product.

3. The AUGMENTED product is the non-physical part of the product. It usually

consists of lots of added value, for which you may or may not pay a premium.
So when you buy a car, part of the augmented product would be the warranty,
the eservice support offered by the cars manufacturer and any after-sales
service. The augmented product is an important way to tailor the core or actual
product to the needs of an individual customer. The features of augmented
products can be converted in to benefits for individuals.
Features and benefits of products

Features and benefits of a product are also relevant to the three levels of the
product. Products tend to have a whole series of features but only a small
number of benefits to the actual consumer.

Lets look at this another way, if you buy a Nintendo console it has many
features; for example you can play games alone or you can play against another
opponent or two or three opponents. You can also have access to the Internet.
Avatars are adaptable so you can create yourself and your friends. These are all
examples of features to the consumer. However a consumer may buy it because
he or she wants to stay fit and will use software and peripherals to become
healthier. Becoming healthier is the benefit to the consumer.

The consistent marketer will aim to discover the consumers preference for
benefits and will match individual features to the preference. That is why
professional salespeople for example, often ask many questions whereas a
novice salesperson will just tell you the features of the product.
New Product Development (NPD)

New Product Development (NPD) will take in to account the consumers

preference for benefits over features by considering research into their needs.
NPD aims to satisfy and anticipate needs. NPD delivers products which offer
benefits at the core, actual and augmented levels.

NPD might offer a replacement product for a current line, it could add
products to the current line, it could discover new product lines and sometimes
it delivers very innovative products which the world might not have seen
before.

New products are launched for all sorts of reasons. As we know from our
previous lesson on the business environment, legislation i.e. Changes in the law
can mean that companies have to design and develop new products. An example
of this was when we moved from videotape recorders to digital and DVD
recorders. So products need to be modified for changing target markets.

Sometimes the company will need to increase the volume that a

production plant delivers, since maybe it is not running at full capacity. An
example of this would be a food manufacturer of tinned soup that has a factory
which can operate 24/7, designing different derivatives of the soup in order to
lower the unit cost of production. So product lines are extended, in this case the
reason being is to ease operational efficiency.

Intense competitive rivalry in the market will also lead to the need for
NPD. Just think about your smart phone and how quickly such products go
through their product life cycles, throughout your customer life-cycle.

Change in any element of the marketing mix would influence NPD, for
example there is a movement to shop online and some products need to be
distributed via online retailers, and the product is adapted to make it compact
and simple to deliver. NPD can be driven by many influences from changing
consumer tastes to the need to adapt products and services for local or
international market.
 Strategies For The Differing Stages Of The Product Life Cycle.

1. Introduction.

The need for immediate profit is not a pressure. The product is promoted
to create awareness. If the product has no or few competitors, a skimming price
strategy is employed. Limited numbers of product are available in few channels
of distribution.

2. Growth.

Competitors are attracted into the market with very similar offerings.
Products become more profitable and companies form alliances, joint ventures
and take each other over. Advertising spend is high and focuses upon building
brand. Market share tends to stabilise.

3. Maturity.

Those products that survive the earlier stages tend to spend longest in this
phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to
differentiate products and brands are key to this. Price wars and intense
competition occur. At this point the market reaches saturation. Producers begin
to leave the market due to poor margins. Promotion becomes more widespread
and use a greater variety of media.

4. Decline.

At this point there is a downturn in the market. For example more

innovative products are introduced or consumer tastes have changed. There is
intense price-cutting and many more products are withdrawn from the market.
Profits can be improved by reducing marketing spend and cost cutting.
 2. PRICE
Price refers to the value that is put for a product. It depends on costs of
production, segment targeted, ability of the market to pay, supply - demand and
a host of other direct and indirect factors. There can be several types of pricing
strategies, each tied in with an overall business plan. Pricing can also be used a
demarcation, to differentiate and enhance the image of a product.

Various elements of pricing are as follows:

1. Positioning:

A marketing strategy that aims to make a brand occupy a distinct

position, relative to competing brands, in the mind of the customers. Companies
apply this strategy either by emphasizing the distinguishing features of their
brand (what it is, what it does and how etc.) Or they may try to create a suitable
image through advertising.

2. List:

In retail, price regularly quoted to customers before applying discounts.

List prices are usually the prices printed on the dealer lists, invoices, price tags,
catalogs, or dealer purchase orders.

3. Discounts And Allowances:

Discounting is a financial mechanism in which a debtor obtains the right

to delay payments to a creditor, for a defined period of time, in exchange for
charge or fee.

Discounts and allowances are reductions to a basic price of goods or services.

4. Payment Period:

The stipulation by a business as to when it should be paid for goods or

services supplied. For example: cash with order, payment on delivery, or within
a particular number of days of the invoice date.
5. Free or Value Added Elements:

Free or value added element would include product of the same category
or a different category given at same cost with the prime product as a
complimentary benefit. Example: you buy a pencil and you get an eraser free
(which would be a different way to attract customer and increase marketing).
Pricing Strategies

In terms of the marketing mix some would say that pricing is the least attractive
element. Marketing companies should really focus on generating as high a
margin as possible. The argument is that the marketer should
change product, place or promotion in some way before resorting to pricing
reductions. However price is a versatile element of the mix as we will see.

Our financial objectives in terms of price will be secured on how much

money we intend to make from a product, how much we can sell, and what
market share will get in relation to competitors. Objectives such as these and
how a business generates profit in comparison to the cost of production, need to
be taken into account when selecting the right pricing strategy for your mix. The
marketer needs to be aware of its competitive position. The marketing
mix should take into account what customers expect in terms of price.

There are many ways to price a product. Lets have a look at some of
them and try to understand the best policy/strategy in various situations

1. Penetration Pricing.

The price charged for products and services is set artificially low in order
to gain market share. Once this is achieved, the price is increased. This
approach was used by France Telecom and Sky TV. These companies need to
land grab large numbers of consumers to make it worth their while, so they offer
free telephones or satellite dishes at discounted rates in order to get people to
sign up for their services. Once there is a large number of subscribers prices
gradually creep up. Taking Sky TV for example, or any cable or satellite
company, when there is a premium movie or sporting event prices are at their
highest so they move from a penetration approach to more of a
skimming/premium pricing approach.

2. Economy Pricing.

This is a no frills low price. The costs of marketing and promoting

a product are kept to a minimum. Supermarkets often have economy brands for
soups, spaghetti, etc. Budget airlines are famous for keeping their overheads as
low as possible and then giving the consumer a relatively lower price to fill an
aircraft. The first few seats are sold at a very cheap price (almost a promotional
price) and the middle majority are economy seats, with the highest price being
paid for the last few seats on a flight (which would be a premium pricing
strategy). During times of recession economy pricing sees more sales. However
it is not the same as a value pricing approach which we come to shortly.

3. Price Skimming.

Price skimming sees a company charge a higher price because it has a

substantial competitive advantage. However, the advantage tends not to be
sustainable. The high price attracts new competitors into the market, and the
price inevitably falls due to increased supply.

Manufacturers of digital watches used a skimming approach in the 1970s. Once

other manufacturers were tempted into the market and the watches were
produced at a lower unit cost, other marketing strategies and pricing approaches
are implemented. New products were developed and the market for watches
gained a reputation for innovation.

4. Product Line Pricing.

Where there is a range of products or services the pricing reflects the

benefits of parts of the range. For example car washes; a basic wash could be
Rs.200, a wash and wax Rs400 and the whole package for Rs.600 Product line
pricing seldom reflects the cost of making the product since it delivers a range
of prices that a consumer perceives as being fair incrementally over the range.

If you buy chocolate bars or potato chips (crisps) you expect to pay X for a
single packet, although if you buy a family pack which is 5 times bigger, you
expect to pay less than 5X the price. The cost of making and distributing large
family packs of chocolate/chips could be far more expensive. It might benefit
the manufacturer to sell them singly in terms of profit margin, although they
price over the whole line. Profit is made on the range rather than single items.
5. Optional Product Pricing.

Companies will attempt to increase the amount customers spend once

they start to buy. Optional extras increase the overall price of the product or
service. For example airlines will charge for optional extras such as
guaranteeing a window seat or reserving a row of seats next to each other. Again
budget airlines are prime users of this approach when they charge you extra for
additional luggage or extra legroom.

6. Captive Product Pricing

Where products have complements, companies will charge a premium

price since the consumer has no choice. For example a razor manufacturer will
charge a low price for the first plastic razor and recoup its margin (and more)
from the sale of the blades that fit the razor. Another example is where printer
manufacturers will sell you an inkjet printer at a low price. In this instance the
inkjet company knows that once you run out of the consumable ink you need to
buy more, and this tends to be relatively expensive. Again the cartridges are not
interchangeable and you have no choice.

7. Product Bundle Pricing.

Here sellers combine several products in the same package. This also
serves to move old stock. Blu-ray and videogames are often sold using the
bundle approach once they reach the end of their product life cycle. You might
also see product bundle pricing with the sale of items at auction, where an
attractive item may be included in a lot with a box of less interesting things so
that you must bid for the entire lot. Its a good way of moving slow selling
products, and in a way is another form of promotional pricing.

8. Promotional Pricing.

Pricing to promote a product is a very common application. There are

many examples of promotional pricing including approaches such as BOGOF
(Buy One Get One Free), money off vouchers and discounts. Promotional
pricing is often the subject of controversy. Many countries have laws which
govern the amount of time that a product should be sold at its original higher
price before it can be discounted. Sales are extravaganzas of promotional
pricing!

9. Geographical Pricing.

Geographical pricing sees variations in price in different parts of the

world. For example rarity value, or where shipping costs increase price. In some
countries there is more tax on certain types of product which makes them more
or less expensive, or legislation which limits how many products might be
imported again raising price. Some countries tax inelastic goods such as alcohol
or petrol in order to increase revenue, and it is noticeable when you do travel
overseas that sometimes goods are much cheaper, or expensive of course.

10. Value Pricing.

This approach is used where external factors such as recession or

increased competition force companies to provide value products and services
to retain sales e.g. Value meals at McDonalds and other fast-food restaurants.
Value price means that you get great value for money i.e. The price that you pay
makes you feel that you are getting a lot of product. In many ways it is similar
to economy pricing. One must not make the mistake to think that there is added
value in terms of the product or service. Reducing price does not generally
increase value.

11. Premium Pricing.

Use a high price where there is a unique brand. This approach is used
where a substantial competitive advantage exists and the marketer is safe in the
knowledge that they can charge a relatively higher price. Such high prices are
charged for luxuries such as Cunard Cruises, Savoy Hotel rooms, and first class
air travel.
 3. PROMOTION
Promotion is the marketing term used to describe all marketing
communications activities and includes personal selling, sales promotion, public
relations, direct marketing, trade fairs and exhibitions, advertising and
sponsorship. Promotion needs to be precisely coordinated and integrated into
the businesses global communications message, and this is called
Integrated Marketing Communications (IMC). IMC integrates the message
through the available channels to deliver a consistent and clear message about
your companys brands, products and services. Any movement away from the
single message confuses the consumer and undermines the brand.

The promotions mix (the marketing communications mix) is the specific

blend of promotion tools that the company uses to persuasively
communicate customer value and build customer relationships.

- Kotler (2010).

Promotion is the element of the marketing mix which is entirely

responsible for communicating the marketing proposition. Marketers work hard
to create a unique marketing proposition for their product or service.
McDonalds is about community, food and enjoyment. Audi is about the driver
experience and technology.

Think of it like a cake mix, the basic ingredients are always the same.
However if you vary the amounts of one of the ingredients, the final outcome is
different. It is the same with promotions. You can integrate different aspects of
the promotions mix to deliver a unique campaign. Now lets look at the different
elements of the promotions mix.

The elements of the promotions mix are:

Personal Selling.
Sales Promotion.
Public Relations.
Direct Mail.
Trade Fairs and Exhibitions.
 Advertising.
Sponsorship.
And also online promotions.
Marketing communications process

The elements of the promotions mix are integrated to form a coherent

campaign. As with all forms of communication, the message from the marketer
follows the communications process as illustrated above. For example, a radio
advert is made for a car manufacturer. The car manufacturer (sender) pays for a
specific advert with contains a message specific to a target audience (encoding).
It is transmitted during a set of commercials from a radio station
(message/medium).

The message is decoded by a car radio (decoding) and the target consumer
interprets the message (receiver). He or she might visit a dealership or seek
further information from a web site (Response). The consumer might buy a car
or express an interest or dislike (feedback). This information will inform future
elements of an integrated promotional campaign. Perhaps a direct mail
campaign would push the consumer to the point of purchase. Noise represents
the thousands of marketing communications that a consumer is exposed to
everyday, all competing for attention.
The Promotions Mix.

Let us look at the individual components of the promotions mix in more detail.
Remember all of the elements are integrated to form a specific
communications campaign.

1. Personal Selling.

Personal Selling is an effective way to manage personal customer

relationships. The sales person acts on behalf of the organization. They tend to
be well trained in the approaches and techniques of personal selling. However
sales people are very expensive and should only be used where there is a
genuine return on investment. For example salesmen are often used to sell cars
or home improvements where the margin is high.

2. Sales Promotion.

Sales promotions tend to be thought of as being all promotions apart from

advertising, personal selling, and public relations. For example the BOGOF
promotion, or Buy One Get One Free. Others include couponing, money-off
promotions, competitions, free accessories (such as free blades with a new
razor), introductory offers (such as buy digital TV and get free installation), and
so on. Each sales promotion should be carefully costed and compared with the
next best alternative.

3. Public Relations (PR).

Public Relations is defined as the deliberate, planned and sustained effort

to establish and maintain mutual understanding between an organization and its
publics (Institute of Public Relations). PR can be relatively cheap, but it is
certainly not free. Successful strategies tend to be long-term and plan for all
eventualities. All airlines exploit PR; just watch what happens when there is an
incident. The pre-planned PR machine clicks in very quickly with a very
effective rehearsed plan.
4. Direct Marketing.

Direct marketing is any marketing undertaken without a distributor or

intermediary. In terms of promotion it means that the marketing company has
direct communication with the customer. For example Nintendo distributes via
retailers, although you can register directly with them for information which is
often delivered by e-mail or mail.

Direct mail is very highly focussed upon targeting consumers based upon a
database. As with all marketing, the potential consumer is targeted based upon a
series of attributes and similarities. Creative agencies work with marketers to
design a highly focussed communication in the form of a mailing. The mail is
sent out to the potential consumers and responses are carefully monitored. For
example, if you are marketing medical text books, you would use a database of
doctors surgeries as the basis of your mail shot.

Similarly e-mail is a form of online direct marketing. You register, or opt in, to
join a mailing list for your favourite website. You confirm that you have opted
in, and then you will receive newsletters and e-mails based upon your favourite
topics. You need to be able to unsubscribe at any time, or opt out. Mailing lists
which generate sales are like gold dust to the online marketer. Make sure that
you use a mailing list with integrity just as you would expect when you sign up.
The mailing list needs to be kept up-to-date, and often forms the basis of
online Customer Relationship Management (CRM).

5. Trade Fairs and Exhibitions.

Such approaches are very good for making new contacts and renewing
old ones. Companies will seldom sell much at such events. The purpose is to
increase awareness and to encourage trial. They offer the opportunity for
companies to meet with both the trade and the consumer.

6. Advertising.

Advertising is a paid for communication. It is used to develop attitudes,

create awareness, and transmit information in order to gain a response from the
target market. There are many advertising media such as newspapers,
magazines and journals, television, cinema, outdoor advertising.
7. Sponsorship.

Sponsorship is where an organization pays to be associated with a

particular event, cause or image. Companies will sponsor sports events such as
the Olympics or Formula One. The attributes of the event are then associated
with the sponsoring organization.

The elements of the promotional mix are then integrated to form a unique, but
coherent campaign.

Online Promotions

Online promotions will include many of the promotions mix elements which we
considered above. For example advertising exists online with pay per click
advertising which is marketed by Google. You can sponsor are website for
example. Online businesses regularly send out newsletters which are targeted
using e-mail and mailing lists, which is a form of direct marketing. Indeed
websites are premium vehicle in the public relations industry to communicate
particular points of view to relevant publics.

The online promotions field is indeed emerging. The field will soon spread into
Geo targeting of adverts to people in specific locations via smart phones.
Another example would be how social media targets adverts to you whilst you
socialising online.
 4. PLACE
Place refers to the point of sale. In every industry, catching the eye of the
consumer and making it easy for her to buy it is the main aim of a good
distribution or 'place' strategy. Retailers pay a premium for the right location. In
fact, the mantra of a successful retail business is 'location, location, location'.
Place represents the location where a product can be purchased. It is often
referred to as the distribution channel. It include any physical store as well as
virtual stores on the internet.

A marketing channel is a set of interdependent organisations that help

make a product or service available for use or consumption by the consumer or
business user.

- Kotler (2010)

A channel of distribution comprises a set of institutions which perform

all of the activities utilised to move a product and its title from production to
consumption.

- Bucklin Theory of Distribution Channel Structure (1966)

The Bucklin definition above albeit more than 50 years old still represents the
basic concept of place in the marketing mix.

Marketing place has a number of names. Place is also known as channel,

distribution or intermediary. It is the mechanism through which goods and/or
services are moved from the manufacturer/ service provider to the user or
consumer. So lets take a look at some basic distribution or channel decisions,
and how we decide on the best distribution channel for our product or service.
There are six basic channel decisions:

Do we use direct or indirect channels? (e.g. direct to a consumer, indirect via

a wholesaler).

Single or multiple channels.

Cumulative length of the multiple channels.
Types of intermediary
Number of intermediaries at each level. Which companies as
intermediaries to avoid intrachannel conflict (i.e. Infighting between
local distributors).
Selection Consideration how do we decide upon a distributor?
Market segment the distributor must be familiar with
your target consumer and segment.
Changes during the Product Life Cycle different channels can be
exploited at different points in the PLC e.g. Foldaway scooters are now
available everywhere. Once they were sold via a few specific stores.
Producer/distributor fit Is there a match between their polices,
strategies, image, and yours? Look for synergy.
Qualification assessment establish the experience and track record of
your intermediary.
How much training and support will your distributor require?
As you will be aware from your experiences as a consumer, producers
rarely sell their goods or services directly to the person that consumes
them.
Marketing channels, or place in terms of the marketing mix, are the
means by which interdependent organizations
move products or services from the producer to the person that purchases
or consumes the product. This is the basic role of distribution.
Different customers have different needs. Customers in different
segments have different needs, for example a food distributor will sell
flour in different ways when it sells to a hotel as opposed to when the
sales to a wholesaler. A business customer will have different needs to a
retail customer, for example a stationary distributor will sell printer paper
in bulk directly to a large company but will sell a single ream (500 sheets)
indirectly to the average householder via his local stationery store.
Types of Channel Intermediaries.

There are many types of intermediaries including wholesalers, agents, retailers,

the Internet, licensing and franchising. The main modes of distribution will be
looked at in more detail as follows:

Channel Intermediaries Wholesalers

They break down bulk into smaller packages for resale by a retailer.

They buy from producers and resell to retailers. They take ownership or title to
goods whereas agents do not (see below).

They provide storage facilities. For example, cheese manufacturers seldom wait
for their product to mature. They sell on to a wholesaler that will store it and
eventually resell to a retailer.

Wholesalers often reduce the physical contact cost between the producer and
consumer e.g. Customer service costs, or sales force costs.

A wholesaler will often take on some of the marketing responsibilities. Many

produce their own brochures and use their own telesales operations.

Channel Intermediaries Agents

Agents are mainly used in international markets.

An agent will typically secure an order for a producer and will take a
commission. They do not tend to take title to the goods. This means that capital
is not tied up in goods. However, a stockist agent will hold consignment stock
(i.e. Will store the stock, but the title will remain with the producer. This
approach is used where goods need to get into a market soon after the order is
placed e.g. Foodstuffs).

Agents can be very expensive to train. They are difficult to keep control of due
to the physical distances involved. They are difficult to motivate.
 Channel Intermediaries Retailers

Retailers will have a much stronger personal relationship with the consumer.

The retailer will hold several other brands and products. A consumer will expect
to be exposed to many products.

Retailers will often offer credit to the customer e.g. Electrical wholesalers, or
travel agents.

Products and services are promoted and merchandised by the retailer.

The retailer will give the final selling price to the product.

Retailers often have a strong brand themselves e.g. Ross and Wall-Mart in the
USA, and Alisuper, Modelo, and Jumbo in Portugal.

Channel Intermediaries Internet

The Internet has a geographically dispersed market.

The main benefit of the Internet is that niche products reach a wider audience
e.g.
Scottish salmon direct from an Inverness fishery.

There are low barriers to entry as set up costs are relatively small.

Use e-commerce technology (for payment, shopping software, etc)

There is a paradigm shift in commerce and consumption which benefits

distribution via the Internet

There is a huge growth in online retailing. People buy physical products from
companies such as Amazon or Ebay, as well as a whole plethora of other smaller
retailers marketing in a wide variety of small niches, also known as the long
thin tail of marketing. There are many transaction related products such as
theatre tickets and software upgrades that can be bought solely online. One way
of segmenting.
 Licensing and franchising

Some businesses are hothouses of ideas and innovation but they may lack
expertise in terms of business and finance. In these situations licensing or
franchising are an ideal option.

Licensing is essentially a contract which allows another business to manufacture

or provide a service which conforms to your licence. Licensing is useful if the
business wishes to quickly move into foreign countries, if manufacturing in a
local market is too expensive then manufacturing could be undertaken overseas
under licence, if shipping costs are too expensive or perhaps a market overseas
would prefer a locally branded item. In return the licensee will get fees, will be
able to penetrate a wide range of overseas markets, generally can control quality
and production levels, and ultimately Connectors those new to the Internet
who want to connect with others via Facebook and Twitter, with little
knowledge to go much further.

Franchising

It is similar to licensing but tends to be used where there is a brand name or a

particular format that a company owns. There are lots of familiar examples of
franchising including KFC and many familiar high street and mall names
marketing everything from hamburgers to jewellery.

Changing roles of logistics

Place also includes logistics. Logistics historically were largely about the
physical distribution of goods from manufacturer to consumer by road and rail,
sea and air. Logistics has undergone many changes since the 1970s. The cargo
container was developed which reduced the amount of times the products
needed loading on and off vehicles, and in and out of warehouses. More
recently goods are loaded onto the container at the factory and products stay in
the container until they are unloaded in at their final destination.

Supply chain management is now a focal discipline which takes logistics to the
next level. Distribution is a central strategic management topic, and involves
logistics professionals with highly technical information technology, resources
and software.
The logistics manager integrates all elements of physical distribution and will
optimise the flow of services and goods. There is a large amount of planning
and organising in terms of the whole process, which includes selecting other
agents and suppliers who are integrated into the process. Often logistics will
integrate forwards with the supply chain of a large customer.
 5. PROCESS
Process is another element of the services marketing mix or 7Ps.There is
a number of perceptions of the concept of process within the business
and marketing literature. Some see processes as a means to achieve an outcome,
for example to achieve a 30% market share, a company implements
a marketing planning process.

At each stage of the process, marketers:

Deliver value through all elements of the marketing mix.

Process, physical evidence and people enhance services.
Feedback can be taken and the mix can be altered.
Customers are retained, and other services or products are extended and
marked to them.

The process itself can be tailored to the needs of different individuals,

experiencing a similar service at the same time.

Processes essentially have inputs, throughputs and outputs (or outcomes).

Marketing adds value to each of the stages. Take a look at the lesson on value
chain analysis to consider a series of processes at work.

There are a number of types of processes. Technological processes include

the process of manufacturing goods and adapting them for the needs of clients.
For example Rolls-Royce motor cars will build a Phantom which is adapted to
the requirements of each individual client. There are also electronic processes
which include things like Electronic Point-Of-Sale (EPOS), barcodes
on products which are scanned on phones or by checkout people and other
means such as loyalty cards.

Processes include direct activities and indirect activities. Direct activities add
value at the customer interface as the consumer experiences the service. Many
processes are supported by indirect activities, often known as back office
activities, which support the service before, during and after it has been
consumed.
 Another view is that marketing has a number of processes that integrate
together to create an overall marketing process, for example telemarketing
and Internet marketing can be integrated. A further view is that marketing
processes are used to control the marketing mix, i.e. Processes that measure the
achievement of marketing objectives. All views are understandable, but not
particularly customer focused.

For the purposes of the marketing mix, process is an element of service that
sees the customer experiencing an organizations offering. Its best viewed as
something that your customer participates in at different points in time. Here are
some examples to help you build a picture of a marketing process, from the
customers point of view.

Going on a cruise from the moment that you arrive at the dockside, you are
greeted; your baggage is taken to your room. You have two weeks of services
from restaurants and evening entertainment, to casinos and shopping. Finally,
you arrive at your destination, and your baggage is delivered to you. This is a
highly focused marketing process, and is an example of the importance of
process in enabling delivery of the customer proposition. Another way of
looking at this example is that there is end to end service support, which has
enabled transactions between the company and its customers.
 6. PEOPLE
People are the most important element of any service or experience. Services
tend to be produced and consumed at the same moment, and aspects of
the customer experience are altered to meet the individual needs of the person
consuming it. Most of us can think of a situation where the personal service
offered by individuals has made or tainted a tour, vacation or restaurant meal.
Remember, people buy from people that they like, so the attitude, skills and
appearance of all staff need to be first class. People have an important role in
service delivery, they are relied upon to deliver and maintain
transactional marketing and people play an important part in the customer
relationship.

Here are some ways in which people add value to an experience as part of
the marketing mix. Lets consider training, personal selling and customer
service.

1. Personal Selling

There are different kinds of salesperson. There is the product delivery

salesperson. His or her main task is to deliver the product, and selling is of less
importance e.g. fast food, or mail. The second type is the order taker, and these
may be either internal or external. The internal sales person would take an
order by telephone, e-mail or over a counter. The external sales person would be
working in the field. In both cases little selling is done.

The next sort of sales person is the missionary. Here, as with those
missionaries that promote faith, the salesperson builds goodwill with customers
with the longer-term aim of generating orders. Again, actually closing the sale is
not of great importance at this early stage. The forth type is the technical
salesperson, e.g. a technical sales engineer. Their in-depth knowledge supports
them as they advise customers on the best purchase for their needs. Finally,
there are creative sellers. Creative sellers work to persuade buyers to give them
an order. This is tough selling, and tends to offer the biggest incentives. The
skill is identifying the needs of a customer and persuading them that they need
to satisfy their previously unidentified need by giving an order.
2. Customer Service

Many products, services and experiences are supported by customer services

teams. Customer services provide expertise (e.g. on the selection of financial
services), technical support (e.g. offering advice on IT and software) and
coordinate the customer interface (e.g. controlling service engineers, or
communicating with a salesman). The disposition and attitude of such people is
vitally important to a company. The way in which a complaint is handled can
mean the difference between retaining or losing a customer, or improving or
ruining a companys reputation. Today, customer service can be face-to-face,
over the telephone or using the Internet. People tend to buy from people that
they like, and so effective customer service is vital. Customer services can add
value by offering customers technical support, expertise and advice.

People deliver services in all sorts of settings. It is an important element of

the services marketing mix. If you go to an organized event such as the
Olympics then everything about the experience is underpinned by people.
Behind-the-scenes there are project managers and chefs, maitre d and
accountants. The people deliver the service and this is the same for restaurants,
hairdressers and auto mechanics.

People are the transactional interface between the company and its customers
so people deliver the service and they collect money i.e. get paid on behalf the
company for the service. So if you go to a restaurant the waiter will greet you,
take your order and serve your food and finally he or she will take the money
which completes the contractual transaction.

People underpin the customer relationship between the company and the
consumer. Remember that people buy from people (as we always remind you on
Marketing Teacher) and that the relationship between the person you are dealing
with and yourself add much value to the transaction.

Marketing today is based on Customer Relationship Management (CRM)

and the relationship with people that youre dealing with at the company can
recruit you as a customer, retaining you as a customer and encourage you to
remain a customer in the future. This is where people underpin the long-term
customer relationship.
 3. Training.

All customer facing personnel need to be trained and developed to maintain

a high quality of personal service. Training should begin as soon as the
individual starts working for an organization during an induction. The induction
will involve the person in the organizations culture for the first time, as well as
briefing him or her on day-to-day policies and procedures. At this very early
stage the training needs of the individual are identified. A training and
development plan is constructed for the individual which sets out personal goals
that can be linked into future appraisals. In practice most training is either on-
the-job or off-the-job. On-the-job training involves training whilst the job is
being performed e.g. training of bar staff. Off-the-job training sees learning
taking place at a college, training centre or conference facility. Attention needs
to be paid to Continuing Professional Development (CPD) where employees see
their professional learning as a lifelong process of training and development.
 7. PHYSICAL EVIDENCE
Physical evidence as part of the marketing mix-

Services as we know are largely intangible when marketing. However

customers tend to rely on physical cues to help them evaluate the product before
they buy it. Therefore marketers develop what we call physical evidence to
replace these physical cues in a service. The role of the marketer is to design
and implement such tangible evidence. Physical evidence is the material part of
a service.

Physical Environment

The physical environment is the space by which you are surrounded when
you consume the service. So for a meal this is the restaurant and for a journey it
is the aircraft that you travel inside. The physical environment is made up from
its ambient conditions; spatial layout and functionality; and signs, symbols, and
artefacts - (Zeithaml 2000).

Ambience

The ambient conditions include temperature, colour, smell and sound,

music and noise. The ambience is a package of these elements which
consciously or subconsciously help you to experience the service. Ambience
can be diverse. The ambience of a health spa is relaxing and calm, and the
music and smells underpin this experience. The ambience of a nightclub will be
loud noise and bright lights which enhance this customer experience, obviously
in a different way. The marketer needs to match the ambience to the service that
is being delivered.

Spatial Layout

The spatial layout and functionality are the way in which furniture is set
up or machinery spaced out. Think about the spatial layout of your local cinema,
or a church or temple that you have visited and how this affects your experience
of the service. Functionality is more about how well suited the environment is to
actually accomplish your needs. For example is the seat in the cinema
comfortable, or can you reach your life jacket when on an aircraft?
Corporate branding (signs, symbols and artefacts)

Finally corporate image and identity are supported by signs, symbols and
artefacts of the business itself. Examples of this would be the signage in
Starbucks which reassures the consumer through branding. When you visit an
airport there are signs which guide you around the facility smoothly, as well as
statues and logos displayed throughout the complex. This is all important to the
physical evidence as a fundamental element of the services marketing mix.

There are many examples of physical evidence, including some of the

following:

The building itself (such as prestigious offices or scenic headquarters).

This includes the design of the building itself, signage around the
building, and parking at the building, how the building is landscaped and
the environment that surrounds the building. This is part of what is
known as the services cape.
The interior of any service environment is important. This includes the
interior design of the facility, how well it is equipped, internal signage,
how well the internal environment is laid out, and aspects such as
temperature and air conditioning. This is also part of the services cape.
Packaging.
Internet/web pages.
Paperwork (such as invoices, tickets and dispatch notes).
Brochures.
Furnishings.
Signage (such as those on aircraft and vehicles).
Uniforms and employee dress.
Business cards.
Mailboxes.
Many others . . .
 A sporting event is packed full of physical evidence. Your tickets have your
teams logos printed on them, and players are wearing uniforms (i.e. The team
colours/colours and clothing). The stadium itself could be impressive and have
an electrifying atmosphere. You travelled there and parked quickly nearby, and
your seats are comfortable and close to restrooms and store. All you need now is
for your team to win!

Some organizations depend heavily upon physical evidence as a means of

marketing communications, for example tourism attractions and resorts (e.g.
Disney World), parcel and mail services (e.g. UPS Courier Services), and large
banks and insurance companies (e.g. Lloyds of London). This is important to
their corporate image. Of course there are other examples with a slightly more
tangible offering such as Rolls-Royce motor cars and P&O cruises.