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IB Business Management: 
4.4 The 7Ps marketing mix
The traditional marketing mix consists of the '4 Ps': Product, Price, Place and Promotion.  The extended marketing mix includes an addition three components: Product, Price, Place, Promotion, People, Processes and Physical evidence – the 7Ps. The extended marketing mix targets a more customer orientated approach to marketing and is now integral in the marketing of services. 

Key learning outcomes:

  • Identify the 7Ps in service-based marketing plans: Product, Price, Place, Promotion, People, Processes and Physical evidence
  • People: Discuss the importance of the customer and employee relationship in the marketing of services. 
  • Examine cultural variation in the employee-customer relationship
  • Processes: Discuss the importance to marketing of the provision and delivery of a service
  • Examine the effect of changes in delivery processes in the marketing of services
  • Physical evidence: Discuss the significance of tangible physical evidence in service marketing.​

The marketing of services

The 7 Ps in a service-based market
​The marketing mix for a product is a major factor in influencing whether a business can sell it profitably. The marketing mix is the key decisions that must be taken in the effective marketing of a product.

The extended marketing mix – the seven Ps model – is made up of seven interrelated decisions − the 7Ps. The four key ones are product, price, promotion (including advertising and packaging) and place (where and how a product will be sold to consumers). The other 3Ps largely relate to marketing services – people, process and physical evidence.
  1. Consumers require the right product. This might be an existing product, an adaptation of an existing product or a newly developed one.
  2. The right price is important too. If set too low, then consumers may lose confidence in the product’s quality; if too high, then many will be unable to afford it.
  3. Promotion must be effective – telling consumers about the product’s availability and convincing them that ‘your brand’ is the one to choose. Packaging is often used to reinforce this image.
  4. Place refers to how the product is distributed to the consumer. If it is not available at the right time in the right place, then even the best product in the world will not be bought in the quantities expected.
  5. Selling services successfully requires people who can interact positively with customers and create the correct impression to encourage them to return. This is particularly relevant in the hotel and restaurant industries.
  6. The processes that a business has in place to satisfy customers’ wants reliably and consistently form an important part of marketing services. For example, banks replacing an out-of-date debit card without the customer having to ask for one.
  7. Physical evidence means allowing customers to see for themselves the quality of the service being provided. This will reduce the element of risk in buying a service as opposed to a tangible product. For example, a clean and well-presented reception area in a hotel would raise appropriate expectations in the mind of the customer.

Not all of the 7Ps have the same degree of significance in every case. It is vital that these elements fit together into a coherent and integrated plan.

An appropriate marketing mix will ensure that these marketing decisions are interrelated. They must be carefully coordinated to make sure that customers are not confused by conflicting messages being given about the good or service being sold.

Coordinated marketing mix: The key marketing decisions complement each other and work together to give customers a consistent message about the product.

The 7Ps of the services marketing mix

An introduction to the 7 Ps

Key terms

​The marketing mix: The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. It is a planned mix of the controllable elements of a product's marketing plan and is commonly termed as the 4Ps: product, price, place, and promotion.

Services: A service is an intangible (unable to be touched; not having physical presence) product supplied by an organisation; examples include:  haircuts, photography, banking, insurance, transport, repairs and maintenance.

The extended marketing mix (the seven Ps model): This applies to the marketing mix associated with services delivery. It encompasses the 4 Ps of the traditional marketing mix (Product, Price, Place and Promotion) and includes an additional three Ps: (People, Processes and Physical Evidence. The additional Ps have been added because today marketing is far more customer oriented than ever before, and because the service sector of the economy has come to dominate economic activity in this country. These 3 extra Ps are particularly relevant to this new extended service mix.

How not to do services marketing!

UK services marketing – 5 peculiar British problems!

“Having my haircut, the barber said 'Is that alright?” I nodded, but it wasn’t.”
“I phoned Netflix customer support which is US based, they were so overly polite I thought they were being sarcastic and hung up.”​
​“Heard an announcement at the train station. “We are sorry.” Just that, nothing else.”
“A man in the supermarket was browsing the food I wanted to browse, so I had to pretend to look at things I didn’t even want until he left.”
“I accidentally rang the bell on the bus at the wrong stop and instead of explaining my predicament to the driver, got off and walked the rest of the way home."

The 7 Ps of services marketing explained

People

Providing a service depends heavily on the goodwill of a business’s employees. Hospitals require doctors and nurses who are caring and committed to helping patients recover. Schools need effective, competent and passionate teachers to provide effective student education. Friendly and helpful hotel staff will ensure that guests have the best possible experience and are likely to be repeat customers and recommend the hotel to family, friends and acquaintances – perhaps even writing a positive online review that will reach and influence thousands of potential customers.

It is essential for service providers to form effective employee-customer service relationships in the marketing of their product. The effectiveness of an organisation’s people in delivering or marketing a service can be measured in four ways:
  • Appearance (including body language)
  • Attitudes and aptitudes (capabilities)
  • Customer feedback
  • Efficiency
There are significant cultural variations on how individuals and organisations interact with customers and potential customers. In Hong Kong, service speed is of the essence. If it cannot be delivered quickly customers will be lost and the service provider will struggle to be competitive and as such service quality may take a back seat. In the UK customer service is most effective if it is conservative and formal, whereas Italian and Spanish customer service is rather more informal, friendly and relaxed. 

Six dimensions of organisational culture

Cultural variation in employee-customer relationships

​Cultural variation plays a significant role in shaping the employee-customer relationship. This relationship is influenced by factors such as cultural norms, values, communication styles, and expectations of both the employees and customers. Here, we will examine some ways in which cultural variation can affect the employee-customer relationship across different countries:
  • Power distance. In countries with high power distance (e.g., China, India, and Mexico), employees may be more deferential and formal towards customers, as they perceive a greater hierarchy in the relationship. Conversely, in low power distance cultures (e.g., Australia, the United States, and Germany), employees and customers may interact more informally and as equals.
  • Individualism vs. collectivism. Individualistic cultures (e.g., the United States, the United Kingdom, and Australia) often prioritise personal goals and self-expression, which may result in employees focusing more on personal achievements and individual customer needs. In collectivist cultures (e.g., Japan, South Korea, and China), employees may emphasize group harmony and maintaining relationships, leading to a focus on the collective well-being of customers.
  • Uncertainty avoidance. Countries with high uncertainty avoidance (e.g., Greece, Portugal, and Japan) tend to have more rules, regulations, and formal procedures in place, which may create more rigid employee-customer interactions. In countries with low uncertainty avoidance (e.g., Singapore, Denmark, and the United States), employees and customers may be more flexible and open to change, leading to more adaptable and innovative service experiences.
  • Communication styles. High-context cultures (e.g., Japan, China, and Saudi Arabia) rely on non-verbal cues and implicit communication, with employees providing indirect feedback and suggestions. In low-context cultures (e.g., Germany, the United States, and Sweden), communication is more explicit and straightforward, with employees providing direct feedback and clearly stating expectations.
  • Masculinity vs. femininity. In masculine cultures (e.g., Japan, the United States, and the United Kingdom), employees may prioritize achievement, assertiveness, and competition, leading to a more aggressive approach to customer service. In feminine cultures (e.g., Sweden, Norway, and the Netherlands), employees may focus on collaboration, empathy, and harmony, resulting in a more nurturing and supportive customer experience.
  • Time orientation. In monochronic cultures (e.g., Germany, Switzerland, and the United States), punctuality and strict scheduling are valued, which may lead to efficient, time-sensitive employee-customer interactions. In polychronic cultures (e.g., India, Mexico, and Brazil), time is viewed more fluidly, with employees and customers more likely to multitask and emphasise relationship-building over strict adherence to schedules.

These examples highlight some of the ways in which cultural variation can impact the employee-customer relationship. Understanding and adapting to these differences is crucial for businesses aiming to provide effective customer service and succeed in diverse global markets.

Processes

Processes refer to the particular methods of delivering or providing a service. Processes will include: customer services practices and procedures, methods of paying, delivery methods, after sales care, wait times, etc. It is far easier to show a potential customer a product when explaining it, whereas explaining different mortgage options or investment vehicles in banking services can be quite complex for a customer to understand.

Processes in services marketing are important because an effective service-orientated business will have significant repeat purchases from their customers. For example, a hair salon that only sees a customer only once is a hair salon that will not be in business very long! Customers who experience excellent customer service and care are those who will both return and provide valuable word-of-mouth promotion to family and friends, as well as increasingly important social networks.

The different processes involved in services marketing include:
  • Payment methods to increase customer convenience – cash, credit and debit cards, credit terms, etc.
  • Wait times (queuing) – physical presence, phone lines, and online chat help. 
  • Customer services – how attentive, polite, caring and competent staff are perceived to be by customers.
  • Delivery – How will the customer receive the service? There are various options to consider including customer pick up, options for expedited delivery and free delivery.
  • After sales care and servicing – After sales services can provide potential customers with peace of mind about a purchase. Installation, technical support, guarantees and maintenance agreements feature here.

More on the 7 Ps of servicing marketing

The 7 Ps – Apple vs. Pound Land

Physical evidence

Physical evidence plays an important role in the extended marketing mix for services. Services as we know are largely intangible when marketing. However customers tend to rely on physical cues to help them evaluate the product before they buy it. Therefore marketers develop what we call physical evidence to replace these physical cues in a service. The role of the marketer is to design and implement such tangible evidence. Physical evidence is the material part of a service and will include aspects such as the physical environment, ambience, spatial layout and corporate branding.
  • The physical environment: The physical environment is the space by which you are surrounded when you consume the service. So for a meal this is the restaurant and for a journey it is the aircraft that you travel inside. The physical environment is made up from its ambient conditions; spatial layout and functionality; and signs, symbols, and artefacts.
  • Ambience: The ambient conditions include temperature, colour, smell and sound, music and noise. The ambience is a package of these elements which consciously or subconsciously helps the customer to experience the service. Ambience can be diverse. The ambience of a health spa is relaxing and calm, and the music and smells underpin this experience. The ambience of a nightclub will be loud noise and bright lights which enhance this customer experience, obviously in a different way. The marketer needs to match the ambience to the service that is being delivered.
  • Spatial layout: The spatial layout and functionality are the way in which furniture is set up or machinery spaced out. Think about the spatial layout of your local cinema, or a church or temple that you have visited and how this affects your experience of the service. Functionality is more about how well suited the environment is to actually accomplish your needs. For example is the seat in the cinema comfortable? Is the bed in the hotel room firm for South-East Asian customers and softer for Americans?
  • Corporate branding (signs, symbols and artefacts): Finally, corporate image and identity are supported by signs, symbols and artefacts of the business itself. Examples of this would be the signage in Starbucks which reassures the consumer through branding. When customers visit an airport there are signs which guide t around the facility smoothly, as well as statues and logos displayed throughout the complex. This is all important to the physical evidence as a fundamental element of the services marketing mix.
There are many examples of physical evidence, including some of the following:
  • The building itself (such as prestigious offices or scenic headquarters). This includes the design of the building itself, signage around the building, and parking at the building, how the building is landscaped and the environment that surrounds the building. The interior of any service environment is important. This includes the interior design of the facility, how well it is equipped, internal signage, how well the internal environment is laid out, and aspects such as temperature and air conditioning.
  • Packaging.
  • Internet/web pages.
  • Paperwork (such as invoices, tickets and dispatch notes).
  • Brochures.
  • Furnishings.
  • Signage (such as those on aircraft and vehicles).
  • Uniforms and employee dress.
  •  Business cards.

The effect of changes in delivery processes in the marketing of services

​Changes in delivery processes have had significant effects on the marketing of services in recent years. Here are some real-world examples to illustrate how these changes have impacted businesses:
  • Amazon Prime and the two-day shipping revolution. Amazon Prime revolutionised the delivery process by offering two-day shipping for a wide range of products. This change in delivery speed has become a major selling point for Amazon, attracting millions of customers to its Prime subscription service. Competitors have been forced to adapt by offering faster shipping options or risk losing customers. The marketing of delivery services now often emphasizes speed and convenience as critical factors.
  • Uber and the ride-sharing industry. The emergence of Uber and other ride-sharing platforms dramatically changed the way people access transportation services. These platforms have streamlined the delivery process, allowing customers to request rides quickly and efficiently through a smartphone app. The marketing of these services emphasises ease of use, affordability, and accessibility, with companies like Uber and Lyft competing for market share.
  • Instacart and online grocery shopping. Instacart and other online grocery shopping platforms have transformed the way people buy groceries. By offering a delivery service that brings groceries directly to customers' homes, these companies have significantly altered the grocery shopping experience. The marketing of these services highlights convenience, time-saving, and the ability to shop from the comfort of one's home, appealing to a wide range of customers.
  • Telemedicine and remote healthcare services. The rise of telemedicine has changed how healthcare services are delivered, allowing patients to consult with healthcare professionals remotely. This change in delivery has led to the marketing of telemedicine services that emphasise convenience, accessibility, and cost savings for both patients and healthcare providers.
  • Online learning platforms and remote education. The growth of online learning platforms, such as Coursera, Udemy, and Khan Academy, has altered the way educational services are delivered. These platforms offer a vast range of courses and learning materials accessible to anyone with an internet connection. The marketing of these services focuses on flexibility, personalisation, and access to quality educational content from leading institutions worldwide.
  • Food delivery apps like DoorDash, Grubhub. and Uber Eats. The rise of food delivery apps has changed the way people order and consume restaurant meals. By offering delivery services from a wide range of restaurants, these apps have expanded customer options beyond traditional takeout and delivery services. The marketing of these services emphasises the variety of available restaurants, convenience, and ease of ordering.

These real-world examples demonstrate how changes in delivery processes have significantly impacted the marketing of services across various industries. Adapting to these changes and incorporating them into marketing strategies has become crucial for businesses to remain competitive and meet customer expectations.

The significance of tangible physical evidence in service marketing

Tangible physical evidence plays a crucial role in service marketing, as it helps customers evaluate and perceive the quality of services being offered. Physical evidence can create a lasting impression and contribute to the overall customer experience. Here are some real-world examples to illustrate the significance of tangible physical evidence in service marketing:
  • Hotel industry. In the hotel industry, tangible physical evidence such as the cleanliness and design of the lobby, guest rooms, and facilities can significantly impact customers' perceptions. For example, luxury hotels like the Ritz-Carlton and the Four Seasons use high-quality furnishings, elegant décor, and exceptional cleanliness to create an atmosphere that showcases their commitment to superior service.
  • Airline industry. Airlines use tangible physical evidence to differentiate their services and enhance customer experience. For example, Singapore Airlines' first-class cabins feature spacious suites, comfortable bedding, and top-notch in-flight entertainment systems, setting them apart from their competitors. These tangible elements contribute to the overall brand image and customer satisfaction.
  • Restaurants. The ambiance, décor, table settings, and overall cleanliness of a restaurant are essential aspects of tangible physical evidence that shape customers' dining experiences. For instance, fast-food chains like McDonald's and Starbucks maintain consistent branding elements (such as interior design, logos, and color schemes) across their outlets to create a recognisable and comfortable environment for customers.
  • Banking industry. Banks use physical evidence to project an image of trustworthiness and professionalism. Well-maintained branches, clean and organised waiting areas, and professional attire worn by employees contribute to the overall customer experience. Banks like JPMorgan Chase and Wells Fargo invest in creating welcoming and functional branch spaces to enhance customer interactions.
  • Fitness centres. Physical evidence is crucial in the fitness industry, as customers assess the quality of services based on the gym's equipment, cleanliness, and layout. Successful fitness centers like Gold's Gym or Equinox maintain state-of-the-art equipment, clean facilities, and modern design to attract and retain members.
  • Theme parks. Theme parks like Disneyland and Universal Studios rely heavily on tangible physical evidence to immerse guests in their unique experiences. Attention to detail in landscaping, architecture, and design elements, along with clean and well-maintained facilities, contribute to creating memorable experiences for visitors.

These examples emphasise the importance of tangible physical evidence in service marketing. By investing in high-quality physical evidence, businesses can create a positive and lasting impression on customers, thereby enhancing customer satisfaction and loyalty.

IB Business Management 4.4e The 7 Ps of the services marketing mix
SUMMARY NOTES

IB Business Management: 4.4e The 7 Ps of the services marketing mix​ teaching and learning PowerPoint notes for HL and SL IB Business Management

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