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Marketing organizations around the world have
been using the traditional marketing mix to develop,
design and market products/services that satisfy customers
needs. The success of a product in the market depends on a
marketers ability to mix the elements namely product,
price, place, promotion in the right proportion.
The way a product is priced should reflect the
value it delivers, keeping the competitors pricing structure
in mind. Promotion helps a company create awareness and
build recognition for itself and its products in the target
market through advertising, sales promotion etc.,. A
company can gain higher profits if it can choose the right
place in terms of distribution channels like distributers,
wholesalers, and retailers etc., to sell its products.
The four traditional Ps of the marketing mix-
product, place, price and promotion are adequate for
marketing a product. However they fail to cover the
following aspect, which differentiate products from
services and are therefore, important for services
o The product element involves only tangible aspects
and is therefore not appropriate for services, which are
basically intangible in nature.
o A part of the promotion of the services usually takes place
at the time of consumption itself. This is not so in the case
of a product. In fact, the people involved in service
production handle the promotion too in most cases.
o In the Indian scenario, the public sector produced most of
the services until very recently. Very often still, the end
consumer pays the standardized and subsidized price, and
this aspect is ignored by the price mix.
o The dual role played by service customers as co-
producers and end consumers in the production of
service goes unnoticed by four traditional Ps.
o The four traditional Ps fail to capture the importance
of distribution for services. In most of the services, the
production and consumption takes place at the same
time; therefore, the distribution channel is either
absent or is very small.
o Further, consumers are unable to perceive the quality
standards of service before consumption. On the other
hand, marketers are not able to identify and measure
the elements of the marketing mix that can deliver
The above problem faced by marketers have led
to the addition of another three Ps for marketing
services, namely, people, process management, and
Marketers have identify three levels in developing
the product element of the marketing mix as far as services
are concerned. The ‘core’ level aims to satisfy the important
needs of the customer while the ‘tangible’ level manages the
appearance of the product. The ‘augmented’ level involves
the addition of supplementary services to the basic offering.
These three levels can be condensed into two, the core
level that caters to the basic benefits and a secondary level
which includes the tangible as the augmented service levels.
The core level basically deals with service offering while
the secondary service level deals with the delivery of service.
The pricing of services is very different from the pricing of goods
for various reasons. Service for example, can be differentiated
based on their price, as a higher price is generally associated with
better quality. The fixed cost is higher and the variable cost is low
in the case of service. Pricing of the same service can be changed
depending on the demand for the service. Though this happens
with some of the products which are seasonal.
Service providers should aim to promote their service in
order to eliminate the perceived risk. This can be best
achieved by encouraging and promoting positive
word-of-mouth publicity, developing strong brands,
offering a trial use and finally by managing advertising
and public relation effectively to clearly communicate
the message to the customers.
Place relates to the ease in accessing the service. Due to
the inseparability of service, they are produced and
consumed at the same place. This make its impossible
for service providers to produce the service at a place
where the cost are low and sell at a place where there is
a high demand for it.
Service organizations perceive people as a means to gain
a competitive advantage in the industry. Therefore
they invest in attracting, training and relating the best
Many service organizations involve their personnel both at
the point of frontline delivery and during the production
process that does not involve the final consumer.
The service 0personnel have an important role in not only
designing the service, but also in delivering it.
Involve consumers as co-producers in designing the service
offering to suit their individual preferences. In this case the
service personnel play an important role in helping the end
consumer present his requirements precisely.
The production and delivery process in the manufacturing
sector is easier than in the service sector. Marketers of
service are often confused, as there is little difference
between marketing and operations management in
services. Customer service encounters have an impact on
the quality of service delivered by the organisation. A
service encounter is the actual time period during which an
interaction take place between the service provider and the
over the years, some service organizations have
mechanized their service processes to reduce the
element of human judgment and error in service
delivery. For example, banks has introduced ATMs to
offer convenience to customers and also reduce labor
cost which along with competition in the service
industry has increased tremendously.
Service customers experience a great perceived risk as they
cannot rate a particular service until it is consumed.
Therefore they attach an element of tangibility to their
service offering. The physical evidence can be in any form,
for example, brochures or TV commercials showing the
detail of holiday destination, pleasent and courteous
behavior of the service personnel in a bank, the location
and ambience of a food outlet etc.,