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7Ps of Marketing | Additional Elements of Marketing mix

by MartinAugust 12, 2014

 


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Over the years, as the concept of marketing has evolved, and the definition of a product has grown more complex, the traditional marketing mix has also been redefined and extended. In this article, we will discuss some of these newer versions of the marketing mix by looking at 1) the extended models of marketing mix, 2) the 7P model for service marketing, 3) and an example of the McDonald’s marketing mix.

THE EXTENDED MODELS OF MARKETING MIX

The traditional marketing mix comprised of the 4Ps of productpriceplace and promotion has enjoyed tremendous popularity over the years. When it was first articulated by McCarthy in 1960, it consisted of 12 parameters that were to be mixed like ingredients by a marketer. Eventually brought down to the much smaller number of 4, the framework became simpler and easier to understand but there was a lack of depth and several important elements were missed out such as the provision of services to the consumer.



A New Look At The 4Ps Of Marketing

 

Keeping in mind these shortcomings, marketing experts and researchers have expanded on these over the years. Some of these expansions have included:



The 5Ps Model

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Proposed by Judd in 1987, a fifth P was added to the model. This stood for People. The basis for this was that the people providing the product or service to the customer had an important role to play in communicating the right message and had a significant impact on the user experience.

The 6Ps Model

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In 1987, Kotler proposed an additional two Ps to the original model of 4. These were political power and public opinion formation. Kotler proposed that when entering foreign markets, there was a need to satisfy an audience beyond the target market. These were the governments, regulatory bodies, trade associations and even other interested groups who had power over the intended market. Hence the political power and public opinion formation was needed to gain their support.



The 7Ps of Services Marketing

This model has gained significant traction over the years as services and their marketing is increasingly being given due importance as an independent field of study. This model, proposed by Booms and Bitner in 1981, extends the marketing mix by 3 new Ps that directly relate to the service provision industry. These are people, physical evidence and process.

 

The 15Ps Model

The longest extension to the original model was proposed by Baumgartner in 1991 and includes peoplepoliticspublic relationsprobepartitionprioritizepositionprofitplanperformance, and positive implementations.

In an attempt to add depth, much complexity has also been added to the model. The most widely used extension of the traditional marketing mix is the 7P model for services marketing.

THE 7Ps MODEL

What is the 7Ps Model?

The traditional marketing mix was designed and gained popularity in an era where most businesses sold products. Any service provision and the role of good customer service was largely ignored and the potential impact on brand development and the user experience was not understood. This was remedied when Booms and Bitner proposed their extension to create the services marketing mix that we see today. The extended model should now be used to create competitive strategies in a more holistic manner.



Defining Services Marketing

Now a recognized offshoot of the traditional field of marketing, services marketing is the design of strategy to address the provision of services, both in a business to consumer context and the business to business scenario. Some examples of core services are telecom services, airlines, accountancy or tax services, the hotel industry and professional services such as hair dressers, dry cleaners or tailoring services. Services marketing may also cover elements in a traditional physical product sales environment such as customer services and tech support.

A service is ‘a type of economic activity that is intangible, it is not stored and does not result in ownership. A service is consumed at the point of sale.’ Given this definition, the new Ps added to the model gain new importance. Since the service cannot be owned and is consumed at the point of delivery, the process through which it is delivered, the person who delivers it, and the environment in which it is delivered become an indicator of whether a customer leaves satisfied and if they will want to return.

Fundamental Characteristics of a Service

There are five fundamental defining characteristics of a serviceThese characteristics are the basis of the 7P model for marketing. These are:



  1. Intangible – Primary to the definition of a service is the notion that there is no tangible result of the service in the customer’s hand. The customer does gain something when they leave. This may be legal advice or a checkup by a doctor. Tangibility needs to be created within the experience and this is done through the environment in which the service is delivered.

  2. Heterogeneous – All service experiences are unique. This means that there is a variety that needs to be anticipated and catered for. Factors external to a customer or a service provider such as traffic or a storm can impact the service experience. In addition, factors internal to either of the two participants can also have an impact such as personality traits or a bad day. Apart from this, the same person may react to the same situation differently on two different days. All these factors make it hard to provide a standard service experience.

  3. Production and Consumption – A service is created and used up at the same point in time. This means that the customer and the employee are both part of the process and are equally important to the experience. The employee needs to be trained extensively while the customer’s expectations can be managed through marketing communication activities.

  4. Perishable – A service can be stored, returned or resold. This means that it is immediate and bound by time. Proper processes need to be in place to make sure that service provision capacity is utilized to an optimum degree, to mitigate periods of high or low demand.

  5. Lack of Ownership – Because the customer does not end up retaining ownership of a tangible product, they have nothing to take away from the service except their experience. This means that over time, once the experience memory has diluted, there may be an issue with comparing brands. Companies are constantly trying to differentiate themselves from their competitors to build a loyal customer base.

7Ps Elements

The 7Ps includes the traditional elements, plus three new elements. In the services marketing concept, these are defined as following.



The Traditional Elements

1. Product
In the service industry, the production and consumption of the product are simultaneous and the product is intangible, diverse and perishable. The nature of this ‘product’ allows for on the spot customization. This also means that the point at which this activity is occurring becomes very important. Ideally, to ensure repeat experiences of similar quality and a consistently good user experience, most service providers aim to give some customization within an overall standardized mode of delivery.

2. Pricing
Since a service cannot be measured by what material goes into its creation nor is the actual tangible cost of production measurable, it can be challenging to put a price tag on it. There are some tangibles of course, such as the labor costs and overheads. But additionally, the ambiance, the experience and the brand name also factor into the final price offering.

3. Place
As mentioned, the service is produced and consumed in the same place. It cannot be owned and taken away from the location. This is why the place at which this transaction occurs is of vital importance. The location of the service provision is carefully analyzed to allow ease of access and the desire to make the effort to reach it. Fast food restaurants and sales and service centers may be located in busy main streets to allow walk in customers, while a fine dining restaurant may be located in a quiet street to maintain exclusivity and privacy.

4. Promotion
Promotion fulfills the same role as it does in any other marketing context. A service may be more easily replicated than a physical product. To prevent a service becoming interchangeable with its competitors, it becomes vital to create a desirable brand image and name in the market. Differentiation becomes a key goal in order to attract both new and repeat customers.

The New Elements

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5. People

This is a vitally important element of the service marketing mix. When a service is being delivered, the person delivering it is not unique from the service itself. When dining at a restaurant, if a rude waiter is encountered, the entire experience will be labeled as bad service. This is why many businesses invest in defining the right kind of person to fill their service role and then making efforts to find or train people to fit this definition.



6. Process

Since service provision needs to strike a balance between customization and standardization, the processes involved in the activity require special mention and attention. A process needs to be clearly defined for the service provider. This basic process should ensure the same level of service delivery to every customer, at any time of day, on any day. Within this process, there should be defined areas where a customer preference can be accommodated to provide a unique experience.



7. Physical Evidence

The location of the service delivery also takes on significance. The level of comfort and attractiveness of a service location may make a lot of difference to the user experience. A calm and soothing environment with thoughtful comfort measures may provide a sense of security to a new customer which will make them return.

Service Marketing Mix – 7p’s/Extended Marketing Mix

 

Important Questions in Designing a 7P Model

When setting out to design or improve a marketing mix for a service provider, the marketer should ask the following questions:


  1. How can we develop our ‘product?

  2. How can we price fairly?

  3. How can be provide the right place for the customer to access and experience our product?

  4. How can be promote our product to create an impact, differentiate from competitors and further brand image?

  5. What is the process we will use to deliver our service to the customer?

  6. Who are the people who represent us and what are the skills that they need?

  7. How can be provide physical evidence of the superior nature of our product?

EXAMPLE – 7Ps MARKETING MIX AT McDONALD’S

The Company

McDonald’s was created by Richard and Maurice McDonald in 1937. They created food processing and assembly line techniques at a tiny drive-in restaurant near Pasadena, California. In 1954, the restaurant was franchised in the USA. In 1967, the restaurant went global with a foothold in Canada. The key to Mcdonald’s successful global presence has been franchising. Through this activity, the product and its delivery are translated to fit local sensibilities while maintaining an essential McDonald’s experience.



The McDonald’s Marketing Mix

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© Flickr | Rupert Ganzer

An effective and relevant marketing mixhas enabled the restaurant to flourish while remaining true to its ‘think global, act local’ philosophy.

1. Product

The product offered is a standard set of items that are similar in taste and appearance wherever in the world they are being sold. There is some adaptation according to local tastes and laws. For example, a more vegetarian menu is offered in India, where a majority does not eat meat. In Muslim countries, any pork products are eliminated and halal meat is used. There are also taste adaptations such as beer in Germany, yogurt drinks in Turkey and espresso in Italy. There are also burger variations in different countries. Despite these differences, the menu is structured in the same way which allows for the same experience everywhere.



2. Price

The organization attempts to price differently across its operations. This means that the right price is selected for the right market. Pricing decisions are made by setting a pricing objective, determining demand, estimating costs, analyzing competing offers, deciding on a pricing method and then finalizing a price. By following this method and primarily assessing competitors, the company can understand what the customer is willing to pay and what value they attach to the product.



3. Place

McDonald’s has presence in 116 countries of the world. The organization believes in strategic expansion that focuses on a location’s long term potential.



4. Promotion

By first understanding cultural differences, a localized promotion strategy is employed. The focus is on both the brand’s global image and its local sensitivity.



5. Process

In all of the thousand’s on McDonald’s worldwide, the same process is used for making the food. The food specifications for size, weight and content are the same everywhere. All suppliers need to meet these specifications. Kitchen and restaurant layouts are the same. To cater to language differences, the menu displays contain images that help create similarities everywhere. There are also defined processes for service delivery such as all orders need to be filled within 90 seconds in the restaurant while drive through wait time is 3.5 minutes.



6. People

The company staffs locally and also promotes from within. This allows the team managing the operations to understand local cultures as well as the corporate philosophy. The people chosen are trained in both technical skills and customer focus. A Hamburger University in the USA as well as other training centers in different parts of the world teach standard practices that are to be employed in restaurants all over the world. This training helps standardize product and service delivery.



7. Physical Evidence

All McDonald’s locations are similarly created with a family friendly environment. There is a play area for children, and service is always provided with a smile. All menus are structured in similar ways with fries and drink combos. The children’s meal always has toys. These are all elements of physical evidence that are standard in all Mcdonald’s locations.



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Marketing Theories – The Marketing Mix – From 4 Ps to 7 Ps

Brilliant workshop, Will was a fantastic tutor and I thoroughly enjoyed both days learning from him. He was great in terms of applying the theory to real situations, and getting us to think about them further. This workshop has already helped me in my professional work and I really appreciate it. Great group size also, allowed enough discussions but not too large. 



Fliss, CIM Professional Diploma in Marketing student



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Marketing is a continually evolving discipline and as such can be one that companies find themselves left very much behind the competition if they stand still for too long. One example of this evolution has been the fundamental changes to the basic Marketing mix. Where once there were 4 Ps to explain the mix, nowadays it is more commonly accepted that a more developed 7 Ps adds a much needed additional layer of depth to the Marketing Mix with some theorists going even going further.

Before we get carried away though what is the Marketing Mix and what is the original 4 Ps principle?

THE MARKETING MIX

Simply put the Marketing Mix is a tool used by businesses and Marketers to help determine a product or brands offering. The 4 Ps have been associated with the Marketing Mix since their creation by E. Jerome McCarthy in 1960 (You can see why there may have been some need to update the theory).



The Marketing Mix 4 Ps:

  • Product - The Product should fit the task consumers want it for, it should work and it should be what the consumers are expecting to get.

  • Place – The product should be available from where your target consumer finds it easiest to shop. This may be High Street, Mail Order or the more current option via e-commerce or an online shop.

  • Price – The Product should always be seen as representing good value for money. This does not necessarily mean it should be the cheapest available; one of the main tenets of the marketing concept is that customers are usually happy to pay a little more for something that works really well for them.

  • Promotion – Advertising, PR, Sales Promotion, Personal Selling and, in more recent times, Social Media are all key communication tools for an organisation. These tools should be used to put across the organisation’s message to the correct audiences  in the manner they would most like to hear, whether it be informative or appealing to their emotions.

In the late 70’s it was widely acknowledged by Marketers that the Marketing Mix should be updated. This led to the creation of the Extended Marketing Mix in 1981 by Booms & Bitner which added 3 new elements to the 4 Ps Principle. This now allowed the extended Marketing Mix to include products that are services and not just physical things.

The extended 7 Ps:

  • People – All companies are reliant on the people who run them from front line Sales staff to the Managing Director. Having the right people is essential because they are as much a part of your business offering as the products/services you are offering.

  • Processes –The delivery of your service is usually done with the customer present so how the service is delivered is once again part of what the consumer is paying for.

  • Physical Evidence – Almost all services include some physical elements even if the bulk of what the consumer is paying for is intangible. For example a hair salon would provide their client with a completed hairdo and an insurance company would give their customers some form of printed material. Even if the material is not physically printed (in the case of PDFs) they are still receiving a “physical product” by this definition.

Though in place since the 1980’s the 7 Ps are still widely taught due to their fundamental logic being sound in the marketing environment and marketers abilities to adapt the Marketing Mix to include changes in communications such as social media, updates in the places which you can sell a product/service or customers expectations in a constantly changing commercial environment.

Is there an 8th P?

In some spheres of thinking, there are 8 Ps in the Marketing Mix. The final P is Productivity and Quality. This came from the old Services Marketing Mix and is folded in to the Extended Marketing Mix by some marketers so what does it mean?



The 8th P of the Marketing Mix:

  • Productivity & Quality - This P asks “is what you’re offering your customer a good deal?” This is less about you as a business improving your own productivity for cost management, and more about how your company passes this onto its customers.

Even after 31 years (or 54 in the case of the original P’s) the Marketing Mix is still very much applicable to a marketer’s day to day work. A good marketer will learn to adapt the theory to fit with not only modern times but their individual business model.

At Professional Academy the Marketing Mix is used across all of our marketing qualifications and first taught as part of the CIM Foundation Certificate in Professional Marketing but every level of qualification there are nods back to the Marketing Mix P’s in some way shape or form so making them key knowledge for any marketer to be used alongside other Marketing theories such as SWOT AnalysisPESTEL Theorythe Boston Consulting Group Matrix and Stakeholder Mapping.

For more information on the Professional Academy’s Marketing Qualifications please download a Prospectus today.

For more in-depth information on the Marketing Mix you can download this Free CIM Guide to Marketing and the 7 P’s.




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Brian Tracy

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Chairman and CEO of Brian Tracy International, Speaker and Author

May 17, 2004 9 min read

Opinions expressed by Entrepreneur contributors are their own.

Once you've developed your marketing strategy, there is a "Seven P Formula" you should use to continually evaluate and reevaluate your business activities. These seven are: product, price, promotion, place, packaging, positioning and people. As products, markets, customers and needs change rapidly, you must continually revisit these seven Ps to make sure you're on track and achieving the maximum results possible for you in today's marketplace.


Product


To begin with, develop the habit of looking at your product as though you were an outside marketing consultant brought in to help your company decide whether or not it's in the right business at this time. Ask critical questions such as, "Is your current product or service, or mix of products and services, appropriate and suitable for the market and the customers of today?"

Whenever you're having difficulty selling as much of your products or services as you'd like, you need to develop the habit of assessing your business honestly and asking, "Are these the right products or services for our customers today?"

Is there any product or service you're offering today that, knowing what you now know, you would not bring out again today? Compared to your competitors, is your product or service superior in some significant way to anything else available? If so, what is it? If not, could you develop an area of superiority? Should you be offering this product or service at all in the current marketplace?

Prices


The second P in the formula is price. Develop the habit of continually examining and reexamining the prices of the products and services you sell to make sure they're still appropriate to the realities of the current market. Sometimes you need to lower your prices. At other times, it may be appropriate to raise your prices. Many companies have found that the profitability of certain products or services doesn't justify the amount of effort and resources that go into producing them. By raising their prices, they may lose a percentage of their customers, but the remaining percentage generates a profit on every sale. Could this be appropriate for you?

Sometimes you need to change your terms and conditions of sale. Sometimes, by spreading your price over a series of months or years, you can sell far more than you are today, and the interest you can charge will more than make up for the delay in cash receipts. Sometimes you can combine products and services together with special offers and special promotions. Sometimes you can include free additional items that cost you very little to produce but make your prices appear far more attractive to your customers.

In business, as in nature, whenever you experience resistance or frustration in any part of your sales or marketing plan, be open to revisiting that area. Be open to the possibility that your current pricing structure is not ideal for the current market. Be open to the need to revise your prices, if necessary, to remain competitive, to survive and thrive in a fast-changing marketplace.

Promotion


The third habit in marketing and sales is to think in terms of promotion all the time. Promotion includes all the ways you tell your customers about your products or services and how you then market and sell to them.

Small changes in the way you promote and sell your products can lead to dramatic changes in your results. Even small changes in your advertising can lead immediately to higher sales. Experienced copywriters can often increase the response rate from advertising by 500 percent by simply changing the headline on an advertisement.

Large and small companies in every industry continually experiment with different ways of advertising, promoting, and selling their products and services. And here is the rule: Whatever method of marketing and sales you're using today will, sooner or later, stop working. Sometimes it will stop working for reasons you know, and sometimes it will be for reasons you don't know. In either case, your methods of marketing and sales will eventually stop working, and you'll have to develop new sales, marketing and advertising approaches, offerings, and strategies.

Place


The fourth P in the marketing mix is the place where your product or service is actually sold. Develop the habit of reviewing and reflecting upon the exact location where the customer meets the salesperson. Sometimes a change in place can lead to a rapid increase in sales.

You can sell your product in many different places. Some companies use direct selling, sending their salespeople out to personally meet and talk with the prospect. Some sell by telemarketing. Some sell through catalogs or mail order. Some sell at trade shows or in retail establishments. Some sell in joint ventures with other similar products or services. Some companies use manufacturers' representatives or distributors. Many companies use a combination of one or more of these methods.

In each case, the entrepreneur must make the right choice about the very best location or place for the customer to receive essential buying information on the product or service needed to make a buying decision. What is yours? In what way should you change it? Where else could you offer your products or services?

Packaging


The fifth element in the marketing mix is the packaging. Develop the habit of standing back and looking at every visual element in the packaging of your product or service through the eyes of a critical prospect. Remember, people form their first impression about you within the first 30 seconds of seeing you or some element of your company. Small improvements in the packaging or external appearance of your product or service can often lead to completely different reactions from your customers.

With regard to the packaging of your company, your product or service, you should think in terms of everything that the customer sees from the first moment of contact with your company all the way through the purchasing process.

Packaging refers to the way your product or service appears from the outside. Packaging also refers to your people and how they dress and groom. It refers to your offices, your waiting rooms, your brochures, your correspondence and every single visual element about your company. Everything counts. Everything helps or hurts. Everything affects your customer's confidence about dealing with you.

When IBM started under the guidance of Thomas J. Watson, Sr., he very early concluded that fully 99 percent of the visual contact a customer would have with his company, at least initially, would be represented by IBM salespeople. Because IBM was selling relatively sophisticated high-tech equipment, Watson knew customers would have to have a high level of confidence in the credibility of the salesperson. He therefore instituted a dress and grooming code that became an inflexible set of rules and regulations within IBM.

As a result, every salesperson was required to look like a professional in every respect. Every element of their clothing-including dark suits, dark ties, white shirts, conservative hairstyles, shined shoes, clean fingernails-and every other feature gave off the message of professionalism and competence. One of the highest compliments a person could receive was, "You look like someone from IBM."

Positioning


The next P is positioning. You should develop the habit of thinking continually about how you are positioned in the hearts and minds of your customers. How do people think and talk about you when you're not present? How do people think and talk about your company? What positioning do you have in your market, in terms of the specific words people use when they describe you and your offerings to others?

In the famous book by Al Reis and Jack Trout, Positioning, the authors point out that how you are seen and thought about by your customers is the critical determinant of your success in a competitive marketplace. Attribution theory says that most customers think of you in terms of a single attribute, either positive or negative. Sometimes it's "service." Sometimes it's "excellence." Sometimes it's "quality engineering," as with Mercedes Benz. Sometimes it's "the ultimate driving machine," as with BMW. In every case, how deeply entrenched that attribute is in the minds of your customers and prospective customers determines how readily they'll buy your product or service and how much they'll pay.

Develop the habit of thinking about how you could improve your positioning. Begin by determining the position you'd like to have. If you could create the ideal impression in the hearts and minds of your customers, what would it be? What would you have to do in every customer interaction to get your customers to think and talk about in that specific way? What changes do you need to make in the way interact with customers today in order to be seen as the very best choice for your customers of tomorrow?

People


The final P of the marketing mix is people. Develop the habit of thinking in terms of the people inside and outside of your business who are responsible for every element of your sales, marketing strategies, and activities.

It's amazing how many entrepreneurs and businesspeople will work extremely hard to think through every element of the marketing strategy and the marketing mix, and then pay little attention to the fact that every single decision and policy has to be carried out by a specific person, in a specific way. Your ability to select, recruit, hire and retain the proper people, with the skills and abilities to do the job you need to have done, is more important than everything else put together.

In his best-selling book, Good to Great, Jim Collins discovered the most important factor applied by the best companies was that they first of all "got the right people on the bus, and the wrong people off the bus." Once these companies had hired the right people, the second step was to "get the right people in the right seats on the bus."

To be successful in business, you must develop the habit of thinking in terms of exactly who is going to carry out each task and responsibility. In many cases, it's not possible to move forward until you can attract and put the right person into the right position. Many of the best business plans ever developed sit on shelves today because the [people who created them] could not find the key people who could execute those plans.



Excerpted from Million Dollar Habits


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