7 Ps of Service & service design

Traditional Marketing Mix
 All elements within the control of the firm that
communicate the firm’s capabilities and image to
customers or that influence customer satisfaction with
the firm’s product and services:
 Product
 Price
 Place
 Promotion

Expanded Mix for Services –
The 7 Ps
 People
All human actors who play a part in service delivery and thus
influence the buyer’s perceptions: namely, the firm’s
personnel, the customer, and other customers in the service
environment.
 Physical Evidence
The environment in which the service is delivered and where the
firm and customer interact, and any tangible components that
facilitate performance or communication of the service.
 Process
The actual procedures, mechanisms, and flow of activities by
which the service is delivered—the service delivery and
operating systems.

Expanded Marketing Mix for
Services

Ways to Use the 7 Ps
Overall Strategic
Assessment
 How effective is a firm’s
services marketing mix?
 Is the mix well-aligned
with overall vision and
strategy?
 What are the strengths
and weaknesses in terms
of the 7 Ps?
Specific Service
Implementation
 Who is the customer?
 What is the service?
 How effectively does the
services marketing mix for a
service communicate its
benefits and quality?
 What changes/
improvements are needed?

Service product or package
 Service product or package can be defined as a
bundle of features and benefits which have relevance
to specific target market and are developed to fulfill
their needs and wants.
 Tourism industry or the education industry can be an
excellent example.

Service product or package
 Product: In case of services, the ‘product’ is
intangible, heterogeneous and perishable
 Production and consumption are inseparable. Hence,
there is scope for customizing the offering as per
customer requirements .
 Too much customization would compromise the
standard delivery of the service and adversely affect its
quality.
 Hence particular care has to be taken in designing the
service offering.

Place
 Place in reference to service means , where the service
or service package is going to be located.
 Ex : the best place for opening a software company
must be in a business hub with a lot of companies
nearby rather then being placed in a rural area.

Place
 Since service delivery is concurrent with its production
and cannot be stored or transported, the location of
the service product assumes importance.
 Service providers have to give special thought to where
the service would be provided.
 Thus, a fine dine restaurant is better located in a busy,
upscale market as against on the outskirts of a city.
 Similarly, a holiday resort is better situated in the
countryside away from the rush and noise of a city.

Promotion
 Promotions have become a critical factor in the service
marketing mix.
 Services are easy to be duplicated and hence it is
generally the brand which sets a service apart from its
counterpart.
 You will find a lot of banks and telecom companies
promoting themselves rigorously. Why is that? It is
because competition in this service sector is generally
high and promotions is necessary to survive.

Pricing
 Pricing of any product or service developed for
customer must be competitive.
 Pricing of offered services or service package should be
based on its features.
 While deciding the price of a service , the market
competition should be considered.

Pricing
 Pricing of services is tougher than pricing of goods.
 While the latter can be priced easily by taking into
account the raw material costs, in case of services
attendant costs - such as labor and overhead costs -
also need to be factored in.
 Thus a restaurant not only has to charge for the cost of
the food served but also has to calculate a price for the
ambience provided.
 The final price for the service is then arrived at by
including a mark up for an adequate profit margin.

Process
 Service process is the way in which a service is
delivered to the end customer.
 Lets take the example of two very good companies –
Mcdonalds and Fedex. Both the companies thrive on
their quick service and the reason they can do that is
their confidence on their processes. On top of it, the
demand of these services is such that they have to
deliver optimally without a loss in quality. Thus the
process of a service company in delivering its product
is of utmost importance.

Process
 The process of service delivery is crucial since it
ensures that the same standard of service is repeatedly
delivered to the customers. Therefore, 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.

People
 People define a service.
 In case of service marketing, people can make or break
an organization.

People
 People are a defining factor in a service delivery process,
since a service is inseparable from the person providing it.
 If you have an IT company, your software engineers define
you.
 Thus, a restaurant is known as much for its food as for the
service provided by its staff.
 The same is true of bank employees in your branch and
their behavior towards customers defines you.
 Consequently, customer service training for staff has
become a top priority for many organizations today, staff
trained in interpersonal skills and customer service with a
focus towards customer satisfaction is always valued.

Physical evidence
 The last element in the service marketing mix is a very
important element.
 As said before, services are intangible in nature. However,
to create a better customer experience tangible elements
are also delivered with the service.
 Take an example of a restaurant which has only chairs and
tables and good food, or a restaurant which has ambient
lighting, nice music along with good seating arrangement
and this also serves good food. Which one will you prefer?
The one with the nice ambience. That’s physical evidence.
Several times, physical evidence is used as a differentiator
in service marketing.

Physical evidence
 Since services are intangible in nature most service
providers strive to incorporate certain tangible
elements into their offering to enhance customer
experience.
 Thus, there are hair salons that 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.

POTENTIAL SERVICES
EXPECTED SERVICES
BASIC SERVICES
CORE BENEFIT

CORE BENEFIT
 The basic core can be defined as bundle of functional
benefits. Basic core includes all main benefits that a
firm promises to deliver.
 Mainly the customer expects core needs to be satisfied
with basic core features of a product and customer
satisfaction greatly depends on the functional benefits.
 If the basic core fails in a product, the product is going
to be a failure as it is the core benefit customers expect
and failure can be resulted in a major dissatisfaction in
the mind of the consumer.

CORE BENEFIT
MOVIE=ENTERTAINMENT
SOFTWARE FIRM = TECHNICAL QUALITY
GYM MEMBERSHIP =HEALTHY HABITS
AIRLINE TICKET = TRAVEL FROM ONE PLACE TO
ANOTHER

Basic services
 The intangible service through which the core benefits
received is called as basic services.
 For eg: an airlines should have aircraft.
 Indigo.

Expected Services
 Customer expects to get certain service quality or
features when they purchase services.
 Airline ticket =good food
 Restaurant= clean washrooms

Augmented services
 The augmented service product consists of the measures
taken to differentiate the services from competitors.
 Augmented services are beyond the expectations of the
customers.
 It always incurs an extra cost.
 Most competition takes place at augmented level.
 A smart marketer finds out whether the target customer
shall be ready to pay the price.
 Augmented products are also easy to copy and become a
basic after some time.
 Eg: TVs in rooms ,theme

American Apparel Turns To
Augmented Reality

Free Vacations with Marriott’s
Virtual Reality Teleporter

Island Hotel is one of Florida’s most famous
Bed and Breakfast Inns.

Potential Products
 Includes all the augmented & the futuristic product
development.
 A smart marketer finds out better ways to delight the
customers.
 Eg: A resort adds sight seeing tours ,cultural events for
its customers making services more enjoyable.
 A educational university may include online
programs ,journals and make their alumni into
brand ambassador.

Line of visibility
Designing the
front office
The Tangibles
External décor of where
the customer can see
touch feel experience .Mc.
Donald’s, ICICI
Designing the
back office
The In-
tangibles
Unhygienic conditions of
restaurant can be masked
by good decor but the
stomach upset of the
customer shall tell the
truth

Service Design- 8 steps
Ramaswamy‘s frame work for Service
Design
1. Defining the design attributes
2. Setting design performance standard
3. Generating & evaluating design
concepts
4. Developing design details

Service Design- 8 steps
The next level the service is actually
delivered ,tested on satisfaction with the
attributes of it could be modified to
improve satisfaction.
5. Implementing the design
6. Measuring the performances
7. Assessing satisfaction
8. Improving performance

SERVICE QUALITY
{PERCEPTION EXPECTATION}

SATISFACTION
{Service Received Service Expected }

Managing Expectations
Service Quality
The Gaps Model

Gap 1
Customer
expectation minus
Company
Understanding
 Gap 2
Customer understanding
minus Setting standard
 Gap 3
Standard set minus
Delivery
 Gap 4
Delivery minus
External
Communication
The Four Individual Gaps
in Service according
to Gaps Model

Gaps Model of Service Quality
 Customer Gap:
 difference between customer expectations and perceptions
 Provider Gap 1 (Knowledge Gap):
 not knowing what customers expect
 Provider Gap 2 (Service Design & Standards Gap):
 not having the right service designs and standards
 Provider Gap 3 (Service Performance Gap):
 not delivering to service standards
 Provider Gap 4 (Communication Gap):
 not matching performance to promises

Service Quality :The Parasuraman,
Berry & Zeithaml Models

 Provider Gap 1: Not knowing what customers expect
 Provider Gap 2: Not selecting the right service designs and standards
 Provider Gap 3: Not delivering to service design and standards
 Provider Gap 4: Not matching performance to promises
Customer
Expectations
Customer
Perceptions
Key Factors Leading
to the Customer Gap
Customer
Gap

Company
Perceptions of
Consumer
Expectations
Expected
Service
CUSTOMER
COMPANY
Gap 1:
The Listening Gap
Provider Gap 1
Perceived
Service

Key Factors Leading to Provider Gap 1

Spiralling expectations
A car dealer at the luxury end of the market has a policy of monitoring its
customers' satisfaction with its services through surveys and focus groups.
This has led to improvements in its services, such as:
offering a 'call and collect' service
booking an exact time for the completion of a service
providing a comfortable lounge area with coffee and tea
contacting customers afterwards to check they are happy with everything.
The dealer claims to have a generally loyal group of customers. However, a
recent experience has shown how customers' expectations are rising. For some
time the last stage of the service has been to put a vehicle through the car
wash. On the customer service questionnaire is the question 'Was your vehicle
returned in a clean condition?'
The Managing Director and his Business Development Manager found that
several customers had responded 'no'. First they checked with the workshop
supervisor that the cars had been cleaned as normal, and he confirmed that
they had.
The customers were then contacted and it transpired that the customers'
definition of 'clean' and the company's had diverged. The customers were
expecting their vehicles to be fully valeted before their return, not just washed.
A few other up-market dealers, it transpired, were already doing this.

CUSTOMER
COMPANY
Gap 2: The Design and Standards
Gap
Customer-Driven
Service Designs and
Standards
Company
Perceptions of
Consumer
Expectations
Provider Gap 2

Travel:
www.yelowstone.net
Sports and Leisure
www.buildabear.com
Unique Retail Experience:
www.buildabear.com
Higher Education:
www.webs.uidaho.edu/vtour

CUSTOMER
COMPANY Service Delivery
Gap 3: The Performance Gap
Customer-Driven
Service Designs and
Standards
Provider Gap 3

CUSTOMER
COMPANY
External
Communications
to Customers
Gap 4: The Communication Gap
Provider Gap 4
Service Delivery

Zone of Tolerance
Customers have two levels of expectation:
•adequate - what they find acceptable
•desired -what they hope to receive.
The zone of tolerance (ZOT) is defined as “the difference
between desired service and the level of service considered
adequate” (Zeithaml et al 1993). As may be noted in this
definition, the ZOT model recognizes that customers enter
service encounters with different expectation levels.

Possible Levels of Customer Expectations

Explicit and Implicit Services
 Explicit services
 The benefits that are
readily observable by the
senses and that consist of
the essential or intrinsic
features of the service.
Examples are the absence
of pain after a tooth is
repaired, a smooth-
running automobile after a
tune-up, and the response
time of a fire department
 Implicit services
 Psychological benefits that
the customer may sense
only vaguely, or the
extrinsic features of the
service. Examples are the
status of a degree from an
Ivy League school, the
privacy of a loan office, and
worry-free auto repair

Ways to Use Gap Analysis
 Overall Strategic Assessment:
 How are we doing overall in meeting or exceeding
customer expectations?
 How are we doing overall in closing the four company
gaps?
 Which gaps represent our strengths and where are our
weaknesses?

Ways to Use Gap Analysis
 Specific Service Implementation
 Who is the customer? What is the service?
 Are we consistently meeting/exceeding customer
expectations with this service?
 If not, where are the gaps and what changes are needed?
(Examine gaps 1-4 for this particular service.)

Reservation
Valet
Parking
Reception
Baggage
Service
Cocktail
Bar
Restaurant
Entertainment/
Sports/ Exercise
Internet
Wake-up
Call
Room
Service
Business
Center
Cashier
A Bed for the Night
in an Elegant Private
Room with a
Bathroom
Core and Supplementary Services at Luxury Hotel
(Offering Much More than Cheap Motel!)

7 Ps of Service & service design

More Related Content

What's hot (20)

Similar to 7 Ps of Service & service design (20)

More from Rajlaxmi Bhosale (16)

Recently uploaded (20)

7 Ps of Service & service design

Editor's Notes