Marketing of Services

One of the very first things that a B-school student learns under marketing course is the 4Ps of marketing: Product, Place, Price and Promotion. However, many of usdo not know that there also exists something called 7Ps of marketing which are especially important for the service sector. The 7Ps comprise of the 4Ps along with People, Process and Physical evidence.

“People” includes the customers, employees, management, organisation culture and customer service orientation. If we think of it, the people in an organisation indeed play a very vital role in service industry, where there are no intangible products and the service given by the employees coupled with the overall experience of the customer counts the most. The people aspect can lend a company a huge competitive advantage, and is one of the key drivers of the success of an organisation.

“Process” talks about the service delivery process and, to some extent, service consumption process. The delivery of burgers at McDonalds in two minutes constitutes the process part of 4Ps which is giving it an advantage over many other fast food chains. Similarly, when we automatically get the delivery of our new credit card upon expiration of the older one, this fast service of the bank is also an example of process. An efficient service generates a good opinion about the company amongst its customers and further generates loyalty. It also facilitates word-of-mouth advertising. Thus the process part also forms a very important aspect for the service industry.

“Physical evidence” for a service sector deals with the infrastructure and facilities related to the service. Restaurants investing heavily in their interiors are an example of physical evidence. The restaurant chains such as Café Coffee Day which have similar interiors in all their cafes constitute the physical evidence. This is not only because the plush interiors of the cafe constitute a good experience for the customer but also becausethe identical interiors creates a unique identity for that chain which helps the restaurant in differentiating itself from its competitors. Hence physical evidence can also be the source of competitive advantage for a service sector company.

Now, let us take a look at some examples to develop a better understanding of how people, process and physical evidence can impact the perception of an organisation in the minds of its various stakeholders.

TajResorts, hotels and palaces, a part of Tata group would serve as a perfect example of the “people” aspect of marketing mix. The Taj Group imparts its employees extensive training so that they are able to provide the best in class services to their guests. It is always stressed that guests should be kept happy under all circumstances. The 26/11 Mumbai attack bears witness to the ingrained values of the well-being of guests in the work culture of the organisation and its employees. During the attack,the hotel staff did not run away to save their lives,instead the safety of the guests was given prime importance. The employees rushed the guests to safe places like basement and kitchens. The telephone operators were at their places, alerting guests to lock their rooms and not to step out. The kitchen staff formed human shields to safely evacuate their guest. Mr. Karambir Singh Kang (General Manager) even lost his wife and two sons in the attack at night, but still worked for the evacuation of the guests till next day noon. Eleven Taj employees lost their life to save 1200-1500 guests that day. This incident and the impromptu response by the Taj staff take customer service to an entirely new level. However, it should be kept in mind that organisations must have a reward system in place to motivate the employees so that they give their best. In case of the Taj Group, a Special Thanks and Recognition System (STARS) is in place, which links customer delight to employee reward, thus giving incentives to the employees to give their best.

United Airlines is one organisation where the lack of focus on the “people” and “process” led to a lot of negative publicity for the airline company. Dave Carroll, a musician was once travelling in a United Airlines flight in 2008 from Halifax to Omaha. His guitar was broken in the transit, due to the negligence of the staff of the airlines, which paid no heed to his concerns regarding the handling of the baggage. Also, some of the fellow passengers had observed that while transferring luggage from one aircraft to another, the guitar cases were being “thrown” by the luggage handlers. Mr. Dave tried getting a claim from the company for more than nine months, but to no avail. The airline had an extremely unresponsive customer service and grievance redressal system in place. Mr. Dave went on to produce a music video “United Breaks Guitars” and uploaded it on Youtube. The video became an instant hit and had over half a million hits within three days of its launch. This led to a lot of negative publicity for United Airlines and some news reports claimed that this also led to a fall of around 10% in its stock price.

If the airlines had a proper focus on the aspects of “People” and “Process”, perhaps this fiasco could have been avoided. The crew and the baggage handlers should have been trained to listen to and to respond to the concerns of a passenger instead of being indifferent. Also, the process of handling of luggage should have been designed in a manner to minimize damages to the luggage. Last, but not the least, the process for responding to grievances of the customers should have been designed in a manner that minimizes the dissatisfaction and discontent of the customers and ensures prompt action if a stakeholder has been wronged.

Flipkart is another organisation where there has been a great emphasis on the “process” aspect of the 7Ps, right from the day when it was launched. The products available for sale are divided into different categories on the home page itself, so that when a potential customer visits the site, he/she can easily manoeuvre through the website. The compare feature on the site gives a user the option to effectively compare products on several important parameters, thus making his /her purchase decision easier. Also, once a product is ordered, the customer is given various options for making payment like credit or debit card payment, net-banking, cash-on-delivery, etc, thus enhancing the convenience of the customer. Flipkart is also prompt in responding to the grievances of the customers and has a dedicated team to respond to queries pertaining to delay in delivery, etc. To sum it up, the processes are designed in a manner that maximizes customer satisfaction and thus ensures high loyalty and repeat purchases.

Big Bazaar is an excellent example of an organisation that focuses a lot on the “physical evidence” aspect. When Big Bazaar stores were launched in India, the culture of shopping in malls or organised stores was not too prevalent in the country. Most of shoppers belonging to the middle class were very hesitant to go to big stores. The Big Bazaar stores were designed in such a manner that the customers who visited the stores felt that they were visiting a normal neighbourhood “mom and pop” store. The Indian customer is more accustomed to selecting food grains after feeling them. In the Big Bazaar stores, open bags of rice, wheat, flour, etc, were a common sight, which made the customers feel more comfortable. Also, the layout and the design were such that the customer felt he/she was in a normal market and not some retail outlet meant for the elite. Big Bazaar was able to understand the typical Indian customer and was able to connect with them by careful planning and execution.

Apple stores in USA are another good example of “physical evidence”. People flock to the Apple store in USA to buy Apple products whereas they can buy the same products at places like WalMart, Target, etc., where products are often discounted in many ways. People buy from Apple store for its experience and they are willing to pay a premium for it. 

All Apple stores have the attractive and shiny white apple logo at the top. On entering the store, one is exposed to lines of neatly displayed products on shiny white counters. Products in the store can be touched, used and explored.  The employees also have a fixed uniform which is a blue coloured shirt with the Apple logo on it. Although Apple productssell for their technology, the physical evidence also plays vital role init.

Thus, we see how marketing of services is a different ball game as compared to marketing of products and how important it is to focus on “people”, “process” and “physical evidence”.

(Co-authored with Dhwani Magoo, PGDM 2012-14, IMT Ghaziabad)