UNIT – IV

SERVICE MARKETING MIX

MEANING
The service marketing mix is a combination of the different elements of services
marketing that companies use to communicate their organizational and brand message to
customers. The mix consists of the seven P’s i.e. Product, Pricing, Place, Promotion,
People, Process and Physical Evidence. The service marketing mix, also known as the
extended marketing mix, treats the service that the business offers just as it would treat a
product.
Characteristics of services marketing mix
CHARACTERISTICS OF SERVICES MARKETING MIX
The characteristics of the services differentiate the services from the tangible
goods.
The following are the characteristics of services:
1. Intangibility
Services are intangible and therefore cannot be touched, handled, smelt or tasted
(physical senses). This is because service itself is an activity. A service however, can be
experienced. A service also gives a certain amount of satisfaction to the consumers. On
account of the intangibility, there is no ownership created in case of services. A service
can only be generated and used and can never be owned.
2. Perishability
A service has to be consumed simultaneously with its production. A service cannot
be stored like a tangible commodity. Services are perishable in terms of delivery and time.
An empty seat on a plane never can be utilized and charged after departure. Revenue once
lost is lost forever.
When the service has been completely rendered to the requesting service
consumer, this particular service irreversibly vanishes as it has been consumed by the
service consumer. Example – after the passenger has been transported to the destination,
he cannot be transported again to the previous location at the previous point of time.
3. Inseparability
Commodities once produced can be sold at a later point of time but in case of
services it is not possible. Examples – In the cases of services of a doctor to his patient,
teacher to his student, the simultaneous presence of both-the producer of the service and
the consumer of the service at that point of time is absolutely necessary.

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 The service provider is indispensable for service delivery as he must promptly
generate and render the service to the requesting service consumer. Therefore the service
provider, the service itself and the service consumer are inseparable.
4. Simultaneity
Services are generated and consumed during the same period of time. As soon as
the service consumer has requested the service (delivery), the particular service must be
generated from scratch without any delay. The service consumer instantaneously
consumes the rendered benefits to satisfy his wants. Therefore the production and
consumption of services are always simultaneous.
5. Variability
Each service is unique. Services lack homogeneity. Example – a doctor treats two
patients with similar ailments on the same day. The level of satisfaction in the minds of
these patients after the treatment will never be the same. The difference is caused by
factors such as the mood of the doctor, the fatigue level of the doctor, the way the service
is perceived by the individual patient etc. There will a difference in the service even if the
same doctor treats the same patient on two different occasions.
This is because the moods of the doctor and the patient do not remain the same on
both the occasions. No two units of service are identical even if they are generated by the
same person. Factors like quality control, standardization etc. which can be very
successfully implemented in case of production of tangible goods cannot be applied in
case of services. Services always vary with each other.
6. Ownership
No ownership is created in case of services. At the time of creating a service or
delivering a service, the service provider does not own the service. He only owns the
physical infrastructure necessary to create the service. Similarly at the time of
consumption or after the consumption, the service consumer does not own the service. He
only consumes the service.
After the consumption, the consumer has only the experience but the service itself
would have become non-existent. A service cannot be owned by anybody because it is
basically an intangible product.
ELEMENTS OF SERVICE MARKETING MIX
1. Product:
The service product requires consideration of the range of services provided, the
quality of services provided and the level of services provided. Attention will also need to

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be given to matters like the use of branding, warranties and after-sale service. The service
product mix of such elements can vary considerably and may be seen in comparisons of
service range between a small local building society and one of the largest in the country;
or between a small hotel offering a limited menu range and a four star hotel offering a
wide range of meals.
2. Price:
Price considerations include levels of prices, discounts allowances and
commissions, terms of payment and credit. Price may also pay a part in differentiating one
service from another and therefore the customers perceptions of value obtained from a
service and the interaction of price and quality are important considerations in many
service price sub mixes.
3. Place:
The location of the service providers and their accessibility are important factors in
services marketing. Accessibility relates not just to physical accessibility but to other
means of communication and contact. Thus the types of distribution channels used (e.g.
travel agents) and their coverage is linked to the crucial issue of service accessibility.
4. Promotion:
Promotion includes the various methods of communicating with markets whether
through advertising, personal selling activities, sales promotion activities and other direct
forms of publicity, and indirect forms of communication like public relations.
The extended elements of services marketing mix are
People
People are a defining factor in a service delivery process, since a service is
inseparable from the person providing it. A restaurant is known as much for its food as for
the service provided by its staff. The same is true of banks and department stores.
Consequently, customer service training for staff has become a top priority for many
organizations today.
Process
The process of service delivery is crucial since it ensures that the same standard of
service is repeatedly delivered to the customers. Most companies have a service blue print
which provides the details of the service delivery process, often going down to even
defining the service script and the greeting phrases to be used by the service staff.

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Physical Evidence
Since services are intangible in nature, most service providers strive to incorporate
certain tangible elements into their offering to enhance customer experience. Many hair
salons have well designed waiting areas, often with magazines and plush sofas for patrons
to read and relax while they await their turn. Similarly, restaurants invest heavily in their
interior design and decorations to offer a tangible and unique experience to their guests.
DIFFERENT LEVELS OF PRODUCTS
1. Core Benefit
The core benefit is the fundamental need or wants that the customer satisfies when
they buy the product. For example, the core benefit of a hotel is to provide somewhere to
rest or sleep when away from home.
2. Generic Product
The generic product is a basic version of the product made up of only those
features necessary for it to function. In our hotel example, this could mean a bed, towels, a
bathroom, a mirror, and a wardrobe.
3. Expected Product
The expected product is the set of features that the customers expect when they
buy the product. In our hotel example, this would include clean sheets, some clean towels,
Wi-fi, and a clean bathroom.
4. Augmented Product
The augmented product refers to any product variations, extra features, or services
that help differentiate the product from its competitors. In our hotel example, this could be
the inclusion of a concierge service or a free map of the town in every room.
5. Potential Product
The potential product includes all augmentations and transformations the product
might undergo in the future. In simple language, this means that to continue to surprise
and delight customers the product must be augmented.
Types of Pricing Method
The pricing method is divided into two parts:
Cost Oriented Pricing Method
It is the base for evaluating the price of the finished goods, and most of the
company apply this method to calculate the cost of the product.

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Cost-Plus Pricing
In this pricing, the manufacturer calculates the cost of production sustained and
includes a fixed percentage (also known as mark up) to obtain the selling price. The mark
up of profit is evaluated on the total cost (fixed and variable cost).
Markup Pricing
Here, the fixed number or a percentage of the total cost of a product is added to
the product’s end price to get the selling price of a product.
Target-Returning Pricing
The company or a firm fix the cost of the product to achieve the Rate of Return on
Investment.
Market-Oriented Pricing Method
Under this category, the is determined on the base of market research
Perceived-Value Pricing
In this method, the producer establish the cost taking into consideration the
customer’s approach towards the goods and services, including other elements such as
product quality, advertisement, promotion, distribution, etc. that impacts the customer’s
point of view.
Value pricing
Here, the company produces a product that is high in quality but low in price.
Going-Rate Pricing
In this method, the company reviews the competitor’s rate as a foundation in
deciding the rate of their product. Usually, the cost of the product will be more or less the
same as the competitors.
Auction Type Pricing
With more usage of internet, this contemporary pricing method is blooming day by
day. Many online platforms like OLX, Quickr, eBay, etc. use online sites to buy and sell
the product to the customer.
Differential Pricing
This method is applied when the pricing has to be different for different groups or
customers. Here, the pricing might differ according to the region, area, product, time etc.
FACTORS TO BE CONSIDER WHILE CHOOSING A LOCATION
1. Accessibility
it’s important to consider local transport links, particularly main roads and
motorways. Property rental and purchase prices are often steeper in higher density, more

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commercialized areas, so there are certainly cost benefits to seeking a more out of town
location, providing their daily business operations won’t be hampered by poor transport
links. Equally, if they rely on high customer footfall, then ensuring their location is
accessible by car, bus and even train will all be important considerations. Don’t forget
their employees too, as a good location is often a critical factor in recruiting the right
people into their business, particularly if they have been offered several jobs and need to
evaluate the pros and cons of each.
2. Security
Believe it or not, their location can increase their odds of being affected by crime,
which in turn can influence their insurance premiums, as well as the additional security
measures they made need to take to keep their premises safe. It’s fair to say that in
business, we all make decisions based on information, intuition and probability mixed in
with a little luck. But knowing the chances of crime in the areas they are considering is an
important part of the decision-making process. Looking at UK government crime statistics
can help businesses make an informed decision about where to set up a new shop, office
or warehouse. Knowing the risks of potential criminal activity can help for better prepare
and take adequate precautions.
3. Competition
Establishing which competitors are in the area and their offering could help
guarantee they choose the right location for the business. If there is too much competition
then it may be a warning sign to expand their horizons to a new location. There are
exceptions to this such as car dealerships who want to be near each other as customers
compare and choose the best car deal, hence their close proximity. Likewise, if they have
an element of their offering that is unique or offers some kind of new innovation, then
choosing an area that already has a ripe market could be the ideal way to pick up
customers very quickly and establish a presence in a new area in a relatively short time
frame.
4. Business Rates
It is important to research the average business rates including rent, utility bills and
taxes in the area to ensure they can afford the premises. Simple hidden costs such as
deposits and whether they need to pay to park need to be snuffed out before committing to
a location. Estimating the living cost of the location will prevent a commitment outside
their means.
5. Skill base in the area

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 Employees are often a business’s biggest asset thus choosing a location that’s
lacking in required talent may be the start of their business’s downfall. Some recruitment
agencies will happily send they CVs on spec to gauge the market, only charging if they
subsequently decide to interview and hire someone. Alternatively, posting a free job via an
online job site will quickly show the calibre of employees in a particular area.
6. Potential for growth
Moving premises is a big upheaval and can be time consuming and costly. A
decision needs to be made as to whether the premise they are choosing is a short-term
location or if would like to stay there for the long haul. Consequently, a location’s
flexibility could be a very important factor regarding the premises’ suitability for their
business needs.
METHODS OF DISTRIBUTION SERVICES
Direct Sales Method
Some of the best examples of distribution channels in marketing are direct sales,
which enable they to contact customers and prospects, without using an intermediary.
Direct sales involve personal visits, mail order and online solicitation such as
newsletters and email subscription. It gives they complete control over how they present
their offers and the prices they can offer to their customers. Direct interaction means
direct feedback, which lets they adjust their marketing strategy accordingly.
Virtual Service Distribution
One of the newest examples of distribution channels in marketing is offering
virtual service. For example, a sales consultant could offer his services through a
combination of phone, email, or video conferences that would make use of software
available on cloud platforms. Remote service delivery is also available to artists and
writers who create content on a freelance basis. For example, if they’re a website content
writer, they can create content for clients and deliver them on platforms such as
Basecamp, which enable they to post content and maintain milestones without ever
having to speak to their clients. By exclusively distributing their services online, they
can save the costs of owning an office that requires a monthly rental payment for space.
Agents or Referrals
Using an agent or a referral is one of the best examples that channels of
distribution are different for different products. Let’s say that they make a living as a
marketing guru who attends conferences and training sessions. However, they may not
enjoy the marketing effort it takes to gain profitable clients. They can take advantage of

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professional agents whose job is to find work that matches their talents. These agents
would take a commission off the work they book, and can even keep their name relevant
within the industry through marketing. They can also take advantage of referrals through
industry professionals. For example, if they’re a wedding planner, they could establish a
referral program with a wedding photographer or a wedding gown boutique in which
they offer cross-promotions that benefit both their service businesses.
Distribution Through Publication
Many service customers have become used to the proliferation of publications
that provides them with exactly what they need. In an on-demand world, for example,
they can deliver their service through a blog that amplifies and explains various services
that they offer, a website that not only sells their service but also offers written and
visual content that answers questions and concerns related to their service, or an e-book
that customers can order directly online. Keeping in mind that channels of distribution
are different for different products, they may choose to monetize their publications or
offer them as an incentive for their customers to buy a service. For example, if they own
a customer-relationship management software company, they may choose to offer a
specialized white paper about customer service marketing that prospects can download
off their website. Once they download that white paper, they could offer a discount for
them to purchase software, or offer a free 7-day trials.
PEOPLE
TYPES OF SERVICE PERSONNEL
Employee
An individual appointed or elected to a position in or under the executive,
legislative, or judicial branch of the United States Government, as defined at 5 U.S.C. §
8901 and includes Government-owned or controlled corporations.
Consultant
A “consultant” is someone who “can provide valuable and pertinent advice
generally drawn from a high degree of broad administrative, professional, or technical
knowledge or experience” and may be appointed on a temporary basis (i.e., not to exceed
1 year) or an intermittent basis (i.e., without a regularly scheduled tour of duty).
Detailee
An executive branch employee may be temporarily assigned ("detailed") to a to
another position in the executive branch, to a position in the judicial or legislative branch,

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or to a position in a non-Federal entity, such as a state or local government or an
international organization.

Intern
Internships provide students in high school, college or universities, trade schools,
and other qualifying educational institutions with paid or unpaid opportunities to work in
agencies while completing their education, while recent graduates who, within the
previous two years, graduated from qualifying educational institutions with an associates,
bachelors, masters, professional, doctorate, vocational or technical degree or certificate
from qualifying educational institutions, may receive developmental experience intended
to promote possible careers in the civil service.
Political Appointees
Term "political appointee" refers broadly to any employee who is appointed by the
President, the Vice President, or agency irrespective of whether the position requires
Senate confirmation.
Contractor
A “contractor” is an individual whose private sector employer has entered into a
contractual agreement with the U.S. Government; in this context, for personal services
which creates an employer-employee relationship between the individual and the
Government and which gives individual contract personnel, the appearance of being
government employees.
ELEMENTS OF PHYSICAL EVIDENCE
Services being intangible, customers often rely on tangible cues, or physical
evidence, to evaluate the service before its purchase and to assess their satisfaction with
the service during and after consumption. They include all aspects of the organization’s
physical facility (the services cape) as well as other forms of tangible communication.
Elements of the services cape that affect customers include both exterior attributes
(such as parking, landscape) and interior attributes (such as design, latheyt, equipment,
and decor). It is apparent that some services communicate heavily through physical
evidence (e.g. hospitals, resorts, child care), while others provide limited physical
evidence (e.g. insurance, express mail).