Management Science II

Dr. S.Bharadwaj

MODULE 1

Services – 4 Ps

4 Ps

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What are the 4 Ps of Marketing?

Who coined the term?

Why are 4 Ps important?

4 Ps are Product, Price, Promotion & Place

McCarthy coined the term

Marketing is all about management of 4 Ps

4 Ps define an offering’s positioning

What is positioning?

4 Ps – Product

We use the term “product” in a generic way, “offering” is a better term

What are some main differences between a physical product and a

service?

4 Ps – Product Vs. Service

Service is intangible – no ownership of anything at end

Service is inseparable from production

Hence, not possible to store it

Cannot inventory it

Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj

ence time is important

Customers involved in production of service

Achieving a standardised offering is hard

Services need to be delivered real time

There is variability
Services maybe high on credence qualities

Distribution possible through other sources

Importance of the human element greater

4 Ps – Product

“tangibilise the intangible”

Okay, so how do some of these differences impact the first P?

Which ones do you think affect the first P more?

It is very important to “manage the evidence”

Manage the servicescape

How?

First, see whether service has any tangible parts at all

Then, work on enhancing tangible cues and supplying new ones, is

possible

Thus, doctor’s office should look neat, clean, hygienic

Professor’s room should look untidy, full of papers and books and

random material!

Beggar should look unkempt and dirty!

It is also important to have supplementary services – why?

Since they may be necessary for the performance of the main service

E.g. Car park in hotel

Services cannot be inventoried

Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj
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Thus, you go to a specialist, see 20 people waiting

What does the nurse tell you?

You go to service your bike

Waiting room with TV, newspapers

Same case with barber

Thus, without supplementary services, will lose customers

Hence, e.g., resort needs to have plenty of attractions

Must give total customer experience, the entire package is important

Hence size becomes important

Disneyland has 100’s of attractions

IIT’s are huge, though small by US universities’ comparison

It is no coincidence that the world’s No. 1 co is a service co

It is also important to have a service blueprint

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A layout of what happens in the service production process

Factory has one, here it is more important, why?

It is important to carefully check the weak links

Plus, people are part of the “product”, in a sense

Also, extreme efforts need to be taken in order to standardise service

offering

After all, customers pay the same, hence, expect equal treatment

How to standardize

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4 Ps - Price

Which service-product differences pertain to price?

Services are heterogenous and price comparison becomes hard

e.g. life insurance

Retailer displays prices of Surf, Rin, Tide

Plus, service provider gives only “guesstimate”

E.g. X has severe stomach ache, can Dr. give him exact estimate?

Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj

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Customer needs vary, hence price comparisons are harder still

Price may be a cue for quality

Unique models possible e.g. Annapoorna in Singapore, KL

What are the three common approaches to pricing decisions?

Cost-based, competition-based and demand-based pricing

Let us study each briefly

Some example of each?

Cost-based pricing is used by say us in special programmes

However, there are special problems here, like?

Estimating costs is hard, time is hard to estimate

Value is different to the customer e.g. tailoring a suit vs. shorts

Demand-based pricing is also hard, since there are ethical concerns

What are these and what to do?

When the Cbe bomb blast happened, auto drivers charged Rs. 500 for

5 kms!!
Companies cannot do this, hence, shift demand to other time,

wherever possible

Example would be?

Competition-based pricing is quite popular

Ps - Place

Though I suspect that pricing will be done using all 3

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What are some relevant differences here?

What can be done about these?

In a sense, services are easier to distribute, since

logistical nightmare is not present to that extent

Standardisation is a problem however

Plus service distribution, delivery and production all overlap

Hence, “place” overlaps to some extent with “product”

Indian Institute of Technology Madras

Management Science II

Dr. S.Bharadwaj
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But not fully

PO is present in 1000’s of places

PDS is quite poor

NIIT has hundreds of locations

There are unique aspects like franchising, which work

to Marketer’s advantage

Who pioneered this?

What is the product (good) equivalent?

Plus in services, have the option of online delivery in many cases

I ke software

so free medical advice

Not so haircut!

4 Ps – Promotion

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Promotion now is termed IMC

What are some differences that are relevant here?

Use attractive, vivid information since no “product” is there

Hence, holiday resorts use excellent imagery

As do airline ads

Focus on the tangibles

See above

Feature employees/users

Again, one finds this in several airline ads, educational institutions ads

If possible, smiling students, professors all giving the image of

one happy family

Summary

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Services have certain unique elements

These have to be taken into account while managing ]4 Ps

Usually a problem

However, sometimes also an advantage