Week 8.1 Seven Ps of Service

Services represent intangible activities, benefits, or satisfactions that an organization provides to its consumersThis is different than the businesses that market products. 

The service sector represents a large portion of Canada’s GDP. Over 75% of the labour force in Canada is employed in the service industry.

Air Canada airplane

Example: Services include restaurant services; hotels; transportation services such as Air Canada; and electricity, internet, and phone providers.

We have seen the traditional marketing mix elements that are also known as controllable factors. They are composed of the four Ps: product, price, place, and promotion.

 
Interlocking gear icons representing the 4 traditional marketing mix elements listed in caption.
Traditional marketing mix elements. Traditional marketing mix elements are composed of product, price, place, and promotion.
 
These 4Ps also apply to service organizations. However, in addition to the traditional four Ps, the services-marketing mix includes three more factors: people, physical evidence, and process. This creates the seven Ps of services marketing:
  1. Product (Service)
  2. Price
  3. Place (Distribution)
  4. Promotion
  5. People
  6. Physical Evidence
  7. Process
Interlocking gear icons representing the 7 Ps of service marketing listed in caption.
Seven Ps of Service Marketing: product (service), price, place (distribution), promotion, people, physical evidence, and process.

Marketers work on creating a proper blending of these seven Ps to satisfy the needs of consumers in the service sector. Let us explore the 7Ps starting with product.

7-ps-product Product

Product in the service industry refers to the service itself. Marketers design the service based on the features and benefits desired by customers. Comparing services to goods, services are intangible. Services are not physical goods and most of them have no shelf space. As a result, they are more difficult to describe. Brand name or identifying logo is particularly important in identifying services. Service organizations pay attention to branding strategies in order to distinguish themselves in the minds of the consumers. The brand is the signal not only of identification but also of differentiation and the image. A well-known brand name makes it easier for service organizations to maintain their current services as well as to introduce new services.      

carpet cleaner

Example: An example of a service is carpet cleaning or deck cleaning.

7-ps-price Price

Services are intangible activities. Pricing is often seen as an indicator of quality for services. Consumers compare the price to the value they receive from the service. 

sign for dentist office

Critical Thinking Activity: You walk into a dental service location, which is new to the area. They do not bill directly to insurance companies but they advertise that they have reasonable pricing. You ask for the pricing and scheduling for a dental surgery. The price they give you is $30 and they have an opening this afternoon. Would you consider scheduling this $30 surgery?

7-ps-place Place (Distribution)

The place where a service is received is often the location of the producer. Customers go the hairdresser’s salon or to the dentist’s office. For that reason, place, or distribution, is a major factor in providing services. 

Recently, the inseparability of services from the producer has started to change. Technology is enabling producers to provide some services online without customers physically going to the service provider’s location. 

hands with smartphone doing online banking

Example: banking services. Online platforms are available for many transactions from depositing checks to transferring money and paying your bills online.

Service providers are using the latest technology to provide the value of convenient distribution. Some service providers like dentists and hairdressers must use their locations. They open multiple locations to provide easy access. Some other service providers rely on distributing their services over the internet. Travel services, banking, education, and entertainment depend on the internet for global access.  

7-ps-promotion Promotion

Times square in New York and night filled with illuminated advertising signage.

Due to the intangible nature of services, promotion (especially advertising) is very valuable for many services. Most services do not occupy a shelf space and the only way to be seen or heard is through advertising. Advertisements can be done on TV, magazines, radio, internet, billboards, and social media.

Public relations is also an important promotional tool for service firms. Many public relations tools, such as event sponsorship or public-service activities, are often applied by service companies. The goal is to be more visible and communicate the value they provide. 

Personal selling is an imperative part of services marketing. Most consumers are directly in contact with the person who is providing the service.

Personal assurance on the quality of the service makes it more comfortable for the consumers.  

7-ps-people People

a group of kitchen staff

Service organizations are judged based on the performance of the people who provide the service. People who create and deliver the service are critical for the success of the service organization. That is why service organizations have a special focus on the people who provide the service. This is related to the concept of internal marketing. 

Internal marketing refers to how an organization must care for and treat their employees, since the employees are the key to providing the best service to its customers. Organizations must treat their employees like valued customers. Internal market refers to the employees of the organization. Successful marketing strategies start with the satisfaction of employees before reaching out to the customers. Internal marketing includes properly selecting, training, and motivating all employees. Employees must function well as a team to provide service quality, excellent customer experiences, and customer satisfaction.

 

7-ps-physical Physical Evidence

The physical environment in which the service provider and customer interact plays an important role. It has an impact on the customer's perception of the service. 

The physical evidence of the service includes all the tangibles surrounding the service: the buildings, landscaping, vehicles, furnishings, signage, brochures, social media, websites, and equipment. 

Service providers pay a lot of attention to how they manage physical evidence, in order to leave a good impression of the service on the customer. This is related to the concept of impression management, or evidence management. 

Loaves of bread in baskets
Example: You walk into a bakery to buy freshly baked bread. They have a good variety of choices and their samples taste great. However, you notice that the floor and counters are dirty and there are spider webs in the corners of the walls. Even though you like their freshly baked goods, you decide not to go back to the bakery again. It is an example of how impression management is crucial for service organizations. Even though their service is exceptional, physical evidence might leave a bad influence on the customers. 

7-ps-process Process

In the case of services, how the service is created should be well defined. Process is the definition of how the service is provided in a step-by-step manner. Process refers to the actual procedures, mechanisms, and flow of activities by which the service is created and delivered.

Most service organizations create a customer contact audit to identify the steps taken when providing the service. The customer contact audit is the flow chart of the points of interaction between the customer and service provider. It provides guidelines for both employees and customers. It also helps to improve the quality of the service by ensuring that the necessary steps are taken for a smooth delivery of the service.   

Example: The figure below is a customer contact audit for a car rental company. The steps are clearly identified at each point of interaction between the service provider and the customer. White boxes indicate customer activity and the yellow boxes indicate service provider activity. Each of the steps numbered 1 to 10 are customer contact points where the tangible aspects of the car rental service are seen by the customer. Steps A to D show a series of steps that involve two levels of inspections on the automobile. These steps are necessary to providing a working rental car, but these points are not points of costumer interaction. 

A complex flow chart listing approximately 14 types of interactions related to car rental.
Critical Thinking Activity: Prepare a customer contact audit for an ice cream shop. Try to think about all the details regarding the interactions between the service provider and the customer. Alternatively, if your group project is the study of a service organization, you are encouraged to prepare a customer contact audit for the organization. This can be included in your written report.

The Day Spa as an Example of the Seven Ps

man and woman lying face down with massage stones on their backs

Product

Massage at a spa
150 Canadian dollars

Price

$150.00 per hour
A resort exterior among a tropical forest.

Place

Secluded building in a resort
spa-promotion

Promotion

Buy one get one free
A massage therapist.

People

Massage therapist
Room interior with 2 massage tables, each with pillows and several folded towels.

Physical Evidence

Physical space for massage. Also includes their social media account and company website. 
spa-process

Process

  1. Select massage type
  2. Receive full body scrub
  3. Receive facial massage
  4. Finish with a glass of tea

Capacity Concerns

As we discussed earlier, most services are delivered in the service provider’s location. Such is the case when you visit the dentist, hairdresser, a restaurant, or a university, for example. Service providers face the issue of limited capacity as they try to maximize their use of space and resources. 

Empty classroom with rows of tables and chairs facing a blackboard.
Example: Each classroom at the university has a schedule. Only one class can be held in a classroom at one time. Scheduling classes and exams is a challenging task. Online classes reduce capacity constraints to some degree.   

Even service providers with relatively fixed capacity must make full use of their limited capacity in order to be as productive as possible without compromising service quality. This is referred to as capacity management.

One tool that is used in capacity management is off-peak pricing. 

Off-peak pricing is charging different prices during different times of the day or days of the week to reflect variations in demand for the service.

Many service organizations apply off-peak pricing strategies in order to manage their capacity at the most productive levels. 

Menu cover that reads," Early Bird Menu."
Example: Airlines offer discounts for people who book ahead of time, which allows them to make arrangements for their crew members and flights. Movie theatres offer matinee pricing, and restaurants offer early-bird pricing, in order to maintain the productivity of their service capacity.

Concept Check Questions:

1. Jacqueline decides to try a new hair salon. When she is waiting for the hairdresser, she notices that the counter is dirty and that the mirror is cracked at the station where her hair is being cut. While she found the haircut to be acceptable, the ____________ of the salon contributes to her decision not to return.

 

2. An airport limousine service will transport people between their homes and the local airport. Since demand is much higher before 9 a.m. and after 5 p.m. during weekdays, company management is concerned with ________.

 

3. A movie theatre that charges a different price for evening and matinee (e.g., afternoon) shows is