Extended Marketing Mix

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This presentation evaluates the additional elements—process, people and physical layout—of the marketing mix. It begins with a brief historical account of the emergence of the marketing mix. It then examines the weakness of using the traditional marketing mix (4Ps) to market a service. The presentation demonstrates how process, "people", and physical layout could be designed to provide a superior service experience or augment the value of a product for customers and clients.

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Extended Marketing Mix

  1. 1. MARKETING MIX EXTENDED
  2. 2. © 2015 Berlin Asong. All rights reserved. 2 I. Analyse the additional elements of the extended marketing mix. Learning Objective
  3. 3. © 2015 Berlin Asong. All rights reserved. 3 Physical layout Process People The Extended Marketing Mix refers to three elements that were later added to the classical marketing mix, the 4Ps.
  4. 4. © 2015 Berlin Asong. All rights reserved. 4 To understand how and why “process”, “people” and “physical layout” made their way into the marketing mix family, we need to understand the history of the marketing mix.
  5. 5. © 2015 Berlin Asong. All rights reserved. 5 The elements of the marketing mix were originally… 12, …developed by Harvard Business School Professor Neil H. Borden long before they were published in 1964. Borden, N. H. (1984), “The Concept of the Marketing Mix”. Journal of Advertising Research, vol. 2, p. 9
  6. 6. © 2015 Berlin Asong. All rights reserved. 6 1. Product planning. 2. Pricing. 3. Branding. 4. Channels of distribution. 5. Personal selling. 6. Advertising. 7. Promotions. 8. Packaging. 9. Display. 10. Servicing. 11. Physical handling. 12. Fact finding and analysis. Mohammed Rafiq and Pervaiz K. Ahmed, (1995) "Using the 7Ps as a Generic Marketing Mix: An Exploratory Survey of UK and European Marketing Academics", Journal of Marketing Intelligence & Planning, Vol. 13 Iss: 9, pp.4 - 5 The Original Elements of the Marketing Mix
  7. 7. © 2015 Berlin Asong. All rights reserved. 7 The 12 elements were then condensed to 4 elements, and given the name… 4Ps, …by E. Jerome McCarthy in 1964. Goi, C. L. (2009), “A Review of the Marketing Mix: 4Ps or More”. International Journal of Marketing Studies, vol. 1, no. 1, p. 2 Place PromotionProduct Price
  8. 8. © 2015 Berlin Asong. All rights reserved. 8 10minutes However, something was not right with the 4Ps. Can you see the problem? What’s the problem?
  9. 9. © 2015 Berlin Asong. All rights reserved. 9 It appears the 4Ps framework was meant for product marketing. It largely ignores the marketing of services. For example…
  10. 10. © 2015 Berlin Asong. All rights reserved. 10 For example, if you own a hair salon. Do the 4Ps provide any clue about designing or marketing the service? Picturesource:hairport.wordpress.com
  11. 11. © 2015 Berlin Asong. All rights reserved. 11 Picturesource:sunnsandvacation.com You own a travel agency with a focus on Seychelles as a holiday destination. Are the 4Ps helpful in designing a holiday experience for customers?
  12. 12. © 2015 Berlin Asong. All rights reserved. 12 Picturesource:foxsportsasia.com Does the 4Ps framework advise on how to market a person (e.g. expert, presidential candidate, footballer, music artist, etc.)?
  13. 13. © 2015 Berlin Asong. All rights reserved. A product’s quality can be judged via touch, taste, sight or smell… 13
  14. 14. 14 A service such as banking, broadband, or musical concert is intangible. Do the 4Ps advise on ways the customer can appreciate service quality? Picturesource:realisation.co.uk © 2015 Berlin Asong. All rights reserved.
  15. 15. © 2015 Berlin Asong. All rights reserved. 15 There’s a time lag between making and consuming a product. Picturesource:bet.com
  16. 16. © 2015 Berlin Asong. All rights reserved. A service such as hairdressing is produced and consumed simultaneously. 16 Picturesource:nhc.ac.uk
  17. 17. © 2015 Berlin Asong. All rights reserved. In fact, the customer owns some resources (e.g. information, customer presence & behaviour) needed to produce the service. 17 Picturesource:nhc.ac.uk
  18. 18. © 2015 Berlin Asong. All rights reserved. 18 Do the 4Ps provide a clue on how the relationship between the customer and firm in service production be managed?
  19. 19. © 2015 Berlin Asong. All rights reserved. 19 Unlike products (e.g. wine) that can be stocked to meet demand, services cannot be stocked. Do the 4Ps provide a guide on how to manage the supply of services in line with demand?
  20. 20. © 2015 Berlin Asong. All rights reserved. Ask 10 customers to buy Miss Dior perfume from this shop. The chances are they would be given the same product. 20Picture source: © 2012 Tofu photography
  21. 21. © 2015 Berlin Asong. All rights reserved. 21 Ask the same 10 individuals to open a bank account from Nationwide bank. They would likely have different experiences of the service received from the bank. Picturesource:realisation.co.uk
  22. 22. © 2015 Berlin Asong. All rights reserved. 22 Do the 4Ps advise on how service provision can be standardised? Does it even matter to standardise service provision?
  23. 23. © 2015 Berlin Asong. All rights reserved. 23 Because the 4Ps failed to address the problem of service marketing, 3 elements were then added to the marketing mix by Booms and Bitner in 1981. Booms, B.H. and Bitner, M.J. (1981 ), "Marketing Strategies and Organization Structures for Service Firms", in Donnelly, J.H., George, W.R. (Eds),Marketing of Services, American Marketing Association, Chicago, IL, pp.47-51 . People Physical layout Process
  24. 24. © 2015 Berlin Asong. All rights reserved. The addition came at a time where product companies realised how services can be used to differentiate their offerings, or increase the value of a product to customers. 24
  25. 25. © 2015 Berlin Asong. All rights reserved. 25 I. Analyse the additional elements of the extended marketing mix. Learning Objective
  26. 26. © 2015 Berlin Asong. All rights reserved. 26 Now that we have understood how and why the marketing mix was extended from the 4Ps to 7Ps, it is important we appreciate the usefulness of “process”, “people” and “physical layout” in the design and delivery of quality services for customers. We’ll be using Starbucks, a coffeehouse retailer, as our case study to analyse the extended marketing mix elements.
  27. 27. © 2015 Berlin Asong. All rights reserved. 27 PictureSource:wikihow.com
  28. 28. © 2015 Berlin Asong. All rights reserved. 28 A series of actions performed to make something or achieve a result. Process
  29. 29. © 2015 Berlin Asong. All rights reserved. 29 10minutes Consider a service like coffee-making. You’ve received a guest who has asked you for a coffee drink. What are the steps involved in coffee-making?
  30. 30. © 2015 Berlin Asong. All rights reserved. Steps in Making a Coffee Drink 30
  31. 31. © 2015 Berlin Asong. All rights reserved. 31 10minutes What actions would you take to improve the coffee-making process for the situation above? Your guest did not enjoy the coffee. The guest complaint it took too long to receive the coffee drink. The guest also complaint the coffee drink wasn’t hot enough, and was too strong.
  32. 32. © 2015 Berlin Asong. All rights reserved. 32 You now begin to understand process-issues that can affect the quality of a service received by the customer.
  33. 33. © 2015 Berlin Asong. All rights reserved. 33 More than a 100 processes are behind a coffee drink served to the customer. PictureSource:southerncurlsandpearls.com
  34. 34. © 2015 Berlin Asong. All rights reserved. 34 Customers visit Starbucks among other reasons for quality coffee, customised coffee and speedy service.
  35. 35. © 2015 Berlin Asong. All rights reserved. 35 Let’s focus on two critical processes—order taking and drink making—that affect the customer experience of Starbucks. PictureSource:smakeats.com
  36. 36. © 2015 Berlin Asong. All rights reserved. 36 Order taking and drink-making are complex processes given that Starbucks offers 87,000 different drink combinations. Source: The Wall Street Journal (2006) PictureSource:atantrum.wordpress.com
  37. 37. © 2015 Berlin Asong. All rights reserved. 37 How does Starbucks design its order-taking and drink-making processes to provide customers quality coffee, customised coffee and speedy service? 10minutes
  38. 38. © 2015 Berlin Asong. All rights reserved. 38 Itallhas todo with(amongother things): Order-taking and coffee-making policy, Staff training, and Technology.
  39. 39. © 2015 Berlin Asong. All rights reserved. 39 Order-taking policy PictureSource:smakeats.com
  40. 40. © 2015 Berlin Asong. All rights reserved. 40 Source: eoinkcostello.wordpress.com
  41. 41. © 2015 Berlin Asong. All rights reserved. 41 PictureSource:atantrum.wordpress.com Drink-making policy
  42. 42. © 2015 Berlin Asong. All rights reserved. 42 Use of technology to simply and speed up drink-making process. PictureSource:cafe-future.net
  43. 43. © 2015 Berlin Asong. All rights reserved. 43 PictureSource:thenextweb.com Starbucks has introduced mobile payment to reduce customer wait time.
  44. 44. © 2015 Berlin Asong. All rights reserved. 44 Hence, the design of a service-process affects the quality of the service received or consumed by the customer.
  45. 45. © 2015 Berlin Asong. All rights reserved. 45 The abilities, motivation and behaviour of staff affect the quality of service offered to customers. People
  46. 46. © 2015 Berlin Asong. All rights reserved. 46 Employee Competence Customer Satisfaction/RetentionEmployee Satisfaction Customer EngagementEmployee Commitment Service Innovations Service Quality The quality of a firm’s human resources and how well they are managed affect service quality and customer satisfaction and repeat purchase.
  47. 47. © 2015 Berlin Asong. All rights reserved. 47 Customers expects quality coffee, customised coffee, speedy and friendly service from Starbucks. How does the company manage the people element to meet customer expectations? 10minutes
  48. 48. © 2015 Berlin Asong. All rights reserved. 48 PictureSource:wordsandpics.co.uk
  49. 49. © 2015 Berlin Asong. All rights reserved. 49 PictureSource:wordsandpics.co.uk
  50. 50. © 2015 Berlin Asong. All rights reserved. 50 Click slide to watch video. Internet connection is required.
  51. 51. © 2015 Berlin Asong. All rights reserved. 51 Happy customerMotivated staff Service experience: welcoming, warmth, personal, speedy, reliable, customisable and safe . Picture Source: wordsandpics.co.uk
  52. 52. © 2015 Berlin Asong. All rights reserved. 52 Physical layout is the environment in which the service is delivered, and any tangible cues that communicate the service or can be used by customers to assess the quality of service provided. Physical layout Also called physical evidence Mohammed Rafiq, Pervaiz K. Ahmed, (1995) "Using the 7Ps as a Generic Marketing Mix: An Exploratory Survey of UK and European Marketing Academics", Journal of Marketing Intelligence & Planning, Vol. 13 Iss: 9, p. 7
  53. 53. © 2015 Berlin Asong. All rights reserved. Components of Physical Layout Building. Layout. Ambience. Furnishings. Décor. Colours. Pictures. Staff outfits. Etc. 53
  54. 54. © 2015 Berlin Asong. All rights reserved. 54 Starbucks store layout, furnishings and décor. PictureSource:inc.com
  55. 55. © 2015 Berlin Asong. All rights reserved. 55 PictureSource:londoncalling.co Comfy seats Ambience
  56. 56. © 2015 Berlin Asong. All rights reserved. 56 PictureSource:blog.svconline.com Artefacts—logo, objects, colours, etc. are used to convey a premium coffeehouse setting.
  57. 57. © 2015 Berlin Asong. All rights reserved. 57 Clean facilities PictureSource:thebiggreen.net
  58. 58. © 2015 Berlin Asong. All rights reserved. 58 PictureSource:laughingplace.com Point-of-sale displays
  59. 59. © 2015 Berlin Asong. All rights reserved. 59 PictureSource:atantrum.wordpress.com Coffee machines, payment terminals and other facilities are working properly.
  60. 60. © 2015 Berlin Asong. All rights reserved. 60 Staff pleasantry and outfit Picture Source: www. wordsandpics.co.uk
  61. 61. © 2015 Berlin Asong. All rights reserved. 61 Picture Source: crainsnewyork.com Free wireless broadband
  62. 62. © 2015 Berlin Asong. All rights reserved. 62 User friendly website
  63. 63. © 2015 Berlin Asong. All rights reserved. 63 …contribute to deliver a superior coffee experience. People Physical layout Process Picture Source: www. wordsandpics.co.uk
  64. 64. © 2015 Berlin Asong. All rights reserved. 64 NEXT CLASS Illustrate differences in marketing products and services to businesses rather than consumers.

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