People and Services Marketing

'People' as part of the marketing mix

place
Most consumer goods are purchased from a retailer, who purchase them from a wholesaler/distributor, who purchase
them from the manufacture. If the goods were imported there might be more merchants in this distribution chain.
Sometimes, this distribution chain can be bypassed or leapt over. In the security industry, some manufacturers of
security systems sell their product directly to end users at the same time as selling them to security installation
companies at the same time as selling them to national distributors. The point is that these different distribution
channels can provide different levels of profitability and they can quite happily run alongside each other provided a
well thought through pricing strategy has been decided upon.

For example a consumer is likely to want only one variant of your product and expect to purchase it immediately. A
retailer is likely to want limited stock of a number of variants and not expect to pay for 60 days. A distributor is looking
at large volumes of product in all its variants at greatly discounted rates. Your ditribution policy needs to take account
of these variables. If it does not, then you will find yourself in a very embarassing position with a customer sooner or
later which would result in the loss of a sale.

The complication to this approach however is that you need to consider the fact that your 'customer' might be a
consumer, a retailer or a distributor and that each of these customers will be looking for perhaps different features or
different levels of service.

People
An essential ingredient to any service provision is the use of
appropriate staff and people. Recruiting the right staff and
training them appropriately in the delivery of their service is
essential if the organisation wants to obtain a form of
competitive advantage. Consumers make judgments and deliver
perceptions of the service based on the employees they interact
with. Staff should have the appropriate interpersonal skills,
aptititude, and service knowledge to provide the service that
consumers are paying for. Many British organisations aim to
apply for the Investors In People accreditation, which tells
consumers that staff are taken care off by the company and they
are trained to certain standards.
Process
Refers to the systems used to assist the organisation in
delivering the service. Imagine you walk into Burger King and
you order a Whopper Meal and you get it delivered within 2
minutes. What was the process that allowed you to obtain an
efficient service delivery? Banks that send out Credit Cards
automatically when their customers old one has expired again
require an efficient process to identify expiry dates and renewal.
An efficient service that replaces old credit cards will foster
consumer loyalty and confidence in the company.
Physical Evidence
Where is the service being delivered? Physical Evidence is the
element of the service mix which allows the consumer again to
make judgments on the organisation. If you walk into a
restaurant your expectations are of a clean, friendly
environment. On an aircraft if you travel first class you expect
enough room to be able to lay down! 
Physical evidence is an essential ingredient of the service mix,
consumers will make perceptions based on their sight of the
service provision which will have an impact on the organisations
perceptual plan of the service.

Product – The product in service marketing mix is intangible in nature. Like physical
products such as a soap or a detergent, service products cannot be measured. Tourism
industry or the education industry can be an excellent example. At the same time service
products are heterogenous, perishable and cannot be owned. The service product thus has
to be designed with care. Generally service blue printing is done to define the service
product. For example – a restaurant blue print will be prepared before establishing a
restaurant business. This service blue print defines exactly how the product (in this case the
restaurant) is going to be.
Place - Place in case of services determine where is the service product going to be located.
The best place to open up a petrol pump is on the highway or in the city. A place where
there is minimum traffic is a wrong location to start a petrol pump. Similarly a software
company will be better placed in a business hub with a lot of companies nearby rather than
being placed in a town or rural area.
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. Thus banks, IT companies, and
dotcoms place themselves above the rest by advertising or promotions.
Pricing – Pricing in case of services is rather more difficult than in case of products. If you
were a restaurant owner, you can price people only for the food you are serving. But then
who will pay for the nice ambience you have built up for your customers? Who will pay for
the band you have for music? Thus these elements have to be taken into consideration
while costing. Generally service pricing involves taking into consideration labor, material
cost and overhead costs. By adding a profit mark up you get your final service pricing. You
can also read about pricing strategies.
Here on we start towards the extended service marketing mix.

People – People is one of the elements of service marketing mix. People define a service. If
you have an IT company, your software engineers define you. If you have a restaurant, your
chef and service staff defines you. If you are into banking, employees in your branch and
their behavior towards customers defines you. In case of service marketing, people can
make or break an organization. Thus many companies nowadays are involved into specially
getting their staff trained in interpersonal skills and customer service with a focus towards
customer satisfaction. In fact many companies have to undergo accreditation to show that
their staff is better than the rest. Definitely a USP in case of services.
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. It is also a critical component in the service blueprint,
wherein before establishing the service, the company defines exactly what should be the
process of the service product reaching the end customer.
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.
Imagine a private hospital and a government hospital. A private hospital will have plush
offices and well dressed staff. Same cannot be said for a government hospital. Thus physical
evidence acts as a differentiator.