CHAPTER TWO

EXTENDED MARKETING MIX FOR SERVICES

Objectives
The objectives of this unit are:
 To introduce the extended marketing mix for services
 To describe the fifth 'P' of the marketing mix called 'People' and emphasize on the need for
internal marketing in a service organization
 To discuss the relevance and roles of 'Physical Evidence' in service marketing
 To explain the meaning and significance of 'Process Management' in marketing of services
and the issues involved therein.

Structure

2.1. Introduction
2.2. People
2.3. Physical Evidence
2.4. Process
2.5. Summary

2.1. INTRODUCTION
For service industries, it was observed that the traditional marketing mix was inadequate because
of three main reasons. The first reason was that the original marketing mix was developed for
manufacturing industries, which implies that the services offered by service companies ought to
be changed in a more product like manner so that the existing marketing tools can be applied.
This was practically difficult. The second reason was that the marketing practitioners in the
service sector found that the marketing mix does not address to their needs. They observed that
the services have certain basic characteristics, which in turn have marketing implications (as
discussed in Unit 1).

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For example there is a problem as regard to maintaining the quality due to lack of standardization
or services cannot be inventoried, patented or transferred. The third reason was that since
services are basically different in comparison to physical products the marketing models and
concepts have, therefore, to be developed in direction of the service sector.

2.2. PEOPLE

People play a crucial importance in service organizations. To have the right people in the
organization, therefore, is critical. They are the ones who satisfy customers by performing
different roles and are looked upon by customers as:
 The company
 The brand
 The service, and
 The marketers

There are a complex set of strategies that help organizations work toward closing this gap. Such
strategies are based on the premise that basically promises are to be fulfilled and it is the people
who will perform to make that happen. Therefore, four strategies are suggested by experts. All
these are sub-divided into three areas each.

 Hire the right people

 Develop people to deliver service quality
 Provide needed technical support
 Retain best people

2.3. PHYSICAL EVIDENCE

Managing the firm’s physical evidence includes everything tangible, from the firm’s physical
facilities, to brochures and business cards, to the firm’s personnel. A firm’s physical evidence
influences the consumer’s experience throughout the duration of the service encounter. Consider
the average consumer’s restaurant experience.

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Elements of Physical Evidence

The elements of physical evidence are broadly categorized as:

 Exterior of the facility (exterior design, signage, parking, landscaping, and

surrounding environment etc.)
 Interior of the facility (design, layout, signage, furniture and equipment, air quality
and ambient temperature etc.)
 Other tangibles (business cards, stationery, billing statements, reports, employees’
dress, uniforms, brochures and web pages etc.)

Actually, physical evidence is much more than a collection of different elements. The whole is
much greater than the sum total of all the parts put together. This implies that if physical
evidence is created appropriately, which positions the service the way it is intended, then it can
create a great impact on the customers.

Types of Physical Evidence

Depending on the nature of the service and the organizational goals, physical evidence are
categorized as:
 Remote
 Self-service
 Interpersonal
Remote
The remote services like telecommunication, utilities, or credit card billing sections may be the
ones hardly visited by customers. These therefore are lean physical evidence not involving much
complexity. These, however, should meet employees’ requirements for them to stay productive,
efficient, and motivated. Hence, this evidence requires meeting organizational goals of keeping
their employees satisfied from the working standpoint

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Self-Service

The physical evidence for a self-service set up is a little different and calls for attention to
fulfilling marketing goals of the organization. The examples are ATMs, self-service petrol
stations where it is the customer who has to play an active role without much help from the
providers. The physical evidence therefore should take into consideration customers’ comfort
and the fact that their requirements are fulfilled and expectations met. The evidence moves from
being simple to a little marketing-oriented signifying the need for fulfillment of the marketing
goals of the organization.

Interpersonal

This form of physical evidence calls for an elaborate setup that fulfills the requirements of both
customers as well as employees. The examples are hotels, banks, restaurants, hospitals, and
education institutions etc., where interaction between customers and employees take place to the
experience and satisfaction of the customer. Apart from being elaborate, this physical evidence
could be very complex for involving not just steps of one but rather a combination of processes.

A hotel is an ideal example of having different services like restaurants, business centers, and
that of grand wedding functions. The complexity of the combination of different areas involves
developing physical evidence compatible with the nature of such services. The physical evidence
must be designed to satisfy customers and facilitate working of the staff members.

The Strategic Role of Physical Evidence

Due to the intangibility of services, service quality is often difficult for consumers to evaluate
objectively. As a result, consumers often rely on the tangible evidence that surrounds the service
to help them form their evaluations. Regardless of the variation in usage, all service firms need
to recognize the importance of managing their physical evidence in its multi-faceted role of:

 Packaging the service

 Facilitating the flow of the service delivery process
 Socializing customers and employees alike in terms of their respective roles,
behaviors, and relationships and
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  Differentiating the firm from its competitors.

Effects of Physical Evidence on Behavior

The type and quality of the evidence can have different kinds of impact on customers and
employees behavior and it evokes multiple kinds of responses from them. The impact on
behavior basically owes to the “Stimulus-Organism-Response” theory. According to this, the
evidence or the servicescape is the stimulus; customers and employees organisms and their
behavior to the stimulus are the responses.

This is a fact of environmental psychology, according to which the behavior of individuals is

influenced by the set up in which it occurs or it is a part of. According to environmental
psychology, the relationship between the servicescape (stimulus) and customers/employees
(organisms) can be grouped as two sets of behavior – individual behaviors and social
interactions.

Figure 2.1. Stimulus-Organism-Response Theory-Impact on Behaviors

Customers
Approach
Ambient Conditions
 Temperature
Avoidance
 Quality of air
 Sound/Noise
 Music
 Smell

Space and Functional Conditions

 Layout and design
 Equipment
 Furnishings

Signs, Symbols and Artifacts Employees

 Signage Approach
 Décor
 Artifacts Avoidance

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The above figure presents a list of environmental dimensions that will influence the behavior of
people involved in the service process. Here we need to understand the environmental
dimensions that generate certain responses. It is due to these dimensions that people form certain
behaviors and respond in a certain way.
e non-verbal language to the liking and attraction of all.

2.4. PROCESS

It refers to the actual procedures, mechanisms and flow of activities by which the service is
delivered -the service delivery and operating system. The actual delivery steps or the operational
flow of the services will provide customers with evidence on which to judge the service. Some
services are very complex, requiring customers to follow a complicated and extensive series of
actions to complete the process.

Another distinguishing characteristic of the process that can provide evidence to the customer is
whether the service follows a line operations or job shop operations. Self-service restaurants and
shops are examples of line operations. The consumer moves through logically arranged
operations that are arranged in a sequence. In a self-service departmental store, the consumer
starts picking up the items he needs and pays for them near the exit. This kind of delivery
process is relevant when the service you are providing is fairly standardized and the consumers'
requirement is of a routine nature. When the consumers require a combination of services using
different sequences, the job shop type of operation is more useful. Hospitals and restaurants
usually have this type of delivery process.

None of the above operational flow of the service are inherently better or worse than another.
Rather, as a manager you should be interested in optimizing the efficiency of your organization
without sacrificing the qualitative aspect. Some of the critical questions you need to focus upon
are:
 What are the steps involved in delivering the service to the consumer?
 Are they arranged in the most logical sequence?

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  If not, can some steps be eliminated, combined or rearranged to form a smoother
sequence?
 What are the steps in which the consumer is involved?
 Can the consumers' contact be reduced or totally eliminated?
 Can we introduce automation to speed up the delivery process?

You will appreciate that the importance of process management is that it assures service
availability and consistent quality. Without sound process management, balancing service
demand with service supply is extremely difficult. Service cannot be inventoried; therefore, it
becomes essential to find out ways and means to handle peak load to optimize different customer
needs with varied expertise levels within the service organization.