Unit2 Marketing of Service Note3: Product

Unit2
Marketing of service
Note3
Q.Explain briefly the 7 P’s of service marketing mix.

Answer.
The service marketing mix is also known as an extended marketing mix and is an integral
part of a service blueprint design. The service marketing mix consists of 7 P’s as compared
to the 4 P’s of a product marketing mix.
The product marketing mix consists of the 4 P’s which are Product, Pricing, Promotions and

place. These are discussed in my article on product marketing mix – the 4 P’s.The extended
service marketing mix places 3 further P’s which include People, Process and Physical
evidence. All of these factors are necessary for optimum service delivery.
PRODUCT: The product in service marketing mix is intangible in nature. Like

physical products such as a soap or a detergent, service products cannot be measured.
Tourism industry or the education industry can be an excellent example. At the same time
service products are heterogeneous, perishable and cannot be owned.
PLACE : Place in case of services determine where is the service product going to be

located. The best place to open up a petrol pump is on the highway or in the city. A place
where there is minimum traffic is a wrong location to start a petrol pump. Similarly a
software company will be better placed in a business hub with a lot of companies nearby
rather than being placed in a town or rural area. Read more about the role of business
locations or Place element.
PROMOTION: Promotions have become a critical factor in the service marketing mix.

Services are easy to be duplicated and hence it is generally the brand which sets a service
apart from its counterpart. Generally a lot of banks and telecom companies promoting
themselves rigorously. It is because competition in this service sector is generally high and
promotions is necessary to survive. Thus banks, IT companies, and dotcoms place
themselves above the rest by advertising or promotions.
PRICE: Pricing in case of services is rather more difficult than in case of products.Eg. a
restaurant owner can price people only for the food he/she is serving. But then who will pay
for the nice ambiance he/she has built up for his/her customers? Who will pay for the band
they have for music?
Thus these elements have to be taken into consideration while costing. Generally
service pricing involves taking into consideration labor, material cost and overhead costs.
By adding a profit mark up get final service pricing.
PEOPLE: People is one of the elements of service marketing mix. People define a
service. In an IT company,software engineers define service. In case of a restaurant, chef
and service staff defines service. In banking, employees in a branch and their behavior
towards customers defines banking service. In case of service marketing, people can make
or break an organization. Thus many companies nowadays are involved into specially
getting their staff trained in interpersonal skills and customer service with a focus
towards customer satisfaction. In fact many companies have to undergo accreditation to
show that their staff is better than the rest. Definitely a USP in case of services.
PROCESS: Service process is the way in which a service is delivered to the end customer.
Lets take the example of two very good companies – McDonalds and Fedex. Both the
companies thrive on their quick service and the reason they can do that is their confidence
on their processes.
On top of it, the demand of these services is such that they have to deliver optimally without
a loss in quality. Thus the process of a service company in delivering its product is of utmost
importance. It is also a critical component in the service blueprint, wherein before
establishing the service, the company defines exactly what should be the process of the
service product reaching the end customer.
PHYSICAL EVIDENCE: The last element in the service marketing mix is a very important
element. As said before, services are intangible in nature. However, to create a
better customer experience tangible elements are also delivered with the service. Take an
example of a restaurant which has only chairs and tables and good food, or a restaurant
which has ambient lighting, nice music along with good seating arrangement and this also
serves good food. Which one will be more preferable? The one with the nice ambience.
That’s physical evidence.
Several times, physical evidence is used as a differentiator in service marketing.
Q. Explain the different steps in new service development.
Answer. In a systematic, staged process, which organizations should adopt to screen out
new service ideas and maximize their chances of success in the market. An appropriate
framework or process comprises of the following stages:
 Generation of ideas
 Screening
 testing the
 testing the concept business analysis or
 business analysis/ evaluation
 development
 market testing
 market testing
 service launch
Ideas generation: Ideas can be generated from within an organization and also
from outside, either formally or informally in other words it can come from
both internal and external sources. The internal sources could be from sales
staff, frontline personnel, the suggestion box, new development arising from
existing services and external sources could be from customers, experts in the
field, market demand analysis and gap analysis.
Screening: A number of ideas generated in the first stage must be screened to

ensure
 their consistency with the organization’s existing strategy

 the extent to which they fit the image of the organization and its
capability, their appeal to particular segment and
 their cost and profitability impimplications
Screening requires thorough evaluation, the application of weights to the

different criteria and the development of ranking for the various ideas in terms
of the suitability.
Testing the concept: The ideas which constitutes the new product or service
must be translated into a specific features and attributes which the product or
service will display. Concept testing is usually done through marketing research
it involves presenting the idea or concept to the target market and studying their
reaction to make necessary modifications to the product or service before it is
launched. The extensive test marketing should be carried out to set the benefits,
not only in terms of feedback but also in terms of developing an appropriate
marketing to find the product launch.
Business Analysis: At this stage ideas which have been selected to be

developed further require in-depth exploration and evaluation. The business
analysis focuses on defining the market, market size and structure, consumer
trends in the market, levels of demand, current and future external
environmental factors likely to affect performance,competition,market share
forecasts, financial forecasts ,costing, break even analysis etc.
Practical development: At this stage preparations are made for developing and
launching the service. The service providers undertake the work of designing
and supply of literature and supporting materials.A detailed marketing program
is developed to cover all aspects of marketing mix.
Market testing: Marketing research is carried to test the concept; it is

necessary to test the market to reduce the risk.This may be done artificially by
using panels of consumers who will use the product or service at their residence
or testing in the actual market but in its small area.The test marketing can help
organizations to blend the elements of marketing mix to optimize the chances of
success and also be a strong in indication of likely performance in the wider
market.
Service launch:The service launch is the final stage and the organization now
can make decisions on when to introduce the new service, where, to whom and
how to introduce the new service.At this stage that the life cycle is set to
commerce and the new service moves from being purely cost to bringing in
revenue. In this stage major decisions are taken regarding the timing of the
launch, the geographical locations of the launch and the specific marketing
tactics to be used in support of deck launch.

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Unit2

Q.Explain briefly the 7 P’s of service marketing mix.

The product marketing mix consists of the 4 P’s which are Product, Pricing, Promotions and

PRODUCT: The product in service marketing mix is intangible in nature. Like

PLACE : Place in case of services determine where is the service product going to be

PROMOTION: Promotions have become a critical factor in the service marketing mix.

Several times, physical evidence is used as a differentiator in service marketing.

Q. Explain the different steps in new service development.

Screening: A number of ideas generated in the first stage must be screened to

 their consistency with the organization’s existing strategy

Screening requires thorough evaluation, the application of weights to the

Business Analysis: At this stage ideas which have been selected to be

Market testing: Marketing research is carried to test the concept; it is

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