One of the reasons service executives struggle when attempting to grow their businesses is they try to apply product-marketing concepts to service marketing. This is like trying to hammer a square peg into a round hole. The 4 P’s marketing mix is one such concept that works great for products but not for services. It’s based on the theory that the success of a company’s marketing program is based on how well the company manages strategies and tactics related to product (i.e., design, form/factor, etc.), price, promotion (e.g., sales, advertising, etc.), and place (i.e., distribution).
The problem is that these 4 P’s do not apply to services. First, service products are intangible and difficult to describe. This begs the question, how can you promote something that is difficult to describe? Another problem for service marketers is that place has a very fuzzy connotation in service marketing because there are multiple entities involved in service distribution. Sometimes they cooperate, other times they collaborate, and still other times they compete. Services can be offered by one entity, ordered through another, and delivered by a third. Without well-defined product, promotion and place strategies, all that is left is price and that becomes a slippery slope for service marketing. Sales and marketing can never be just about prices because customers will always find a way to negotiate price. In product marketing, the 4 P’s makes it possible for a seller to justify the price.
For the past 20 years, I’ve devoted a great deal of time and resources to understanding this dilemma, in the process developing my own theory about service marketing. I determined that a Successful Service Marketing™ mix is actually based not on 4 but on 7 key principles. These principles are:
- PORTFOLIO: Often described in terms of a service-level commitment, such as 24/7 with a four-hour response time. The more distinctions you can make to define your service portfolio, the more likely you will be to fulfill the needs of prospective customers.
- PROVIDER: Tangible elements of your service infrastructure, such as your call center, self-service portals, enterprise systems and service technology that make it possible to deliver on the promise of your service portfolio.
- PROCESS: The steps your customer must take to request the service, and the tasks that occur to deliver the service. For example, performing front-end call screening and diagnostics before dispatching a field technician.
- PERFORMANCE: Evidence that you can deliver on your promise, such as KPIs, customer satisfaction results and customer testimonials.
- PERCEPTION: Your ability to win business and retain satisfied customers is based on your ability to influence their perception of you. This goes beyond simply promotion through advertising, branding, and communications. It gets to the essence of who you are, what you stand for, and how you portray yourself in the market.
- PLACE: Services distribution channels can be complex. Quite often, consumers can purchase service from one place, order or request it from another place, and have it delivered to them at a third place (e.g., onsite, depot, remote, etc.). Sometimes it’s the same company delivering this service. Other times it’s not. Regardless, the service marketing mix must deal with these complexities.
- PRICE: Of course, there is always the issue of price. The important thing to remember is that price is a function of value in use and perception that consumers have about your company (i.e., expertise, experience, capability).
Many people have asked me why I haven’t included “People” as one of the Ps in my service marketing mix. While people are important to the success of any endeavor, I feel very strongly that their ability to deliver exceptional results is a function of the 7 Ps that I’ve identified above and not the other way around. Ordinary people can achieve extraordinary results when there are great strategies and tools in place.
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