Extended Marketing Mix

In the late 70’s it was widely acknowledged by Marketers that the Marketing Mix should be updated. This led to the creation of the Extended Marketing Mix in 1981 by Booms & Bitner which added 3 new elements to the 4 Ps Principle. This now allowed the extended Marketing Mix to include products that are services and not just physical things.

This model has gained significant traction over the years as services and their marketing is increasingly being given due importance as an independent field of study.

The traditional marketing mix was designed and gained popularity in an era where most businesses sold products. Any service provision and the role of good customer service was largely ignored and the potential impact on brand development and the user experience was not understood. This was remedied when Booms and Bitner proposed their extension to create the services marketing mix that we see today. The extended model should now be used to create competitive strategies in a more holistic manner.

Defining Services Marketing

Now a recognized offshoot of the traditional field of marketing, services marketing is the design of strategy to address the provision of services, both in a business to consumer context and the business to business scenario. Some examples of core services are telecom services, airlines, accountancy or tax services, the hotel industry and professional services such as hairdressers, dry cleaners or tailoring services. Services marketing may also cover elements in a traditional physical product sales environment such as customer services and tech support.

A service is ‘a type of economic activity that is intangible, it is not stored and does not result in ownership. A service is consumed at the point of sale.’Given these definations, the new Ps added to the model gain new importance. Since the service cannot be owned and is consumed at the point of delivery, the process through which it is delivered, the person who delivers it, and the environment in which it is delivered become an indicator of whether a customer leaves satisfied and if they will want to return.

The extended 7 Ps:

• People – All companies are reliant on the people who run them from front line Sales staff to the Managing Director. Having the right people is essential because they are as much a part of your business offering as the products/services you are offering.

• Processes –The delivery of your service is usually done with the customer present so how the service is delivered is once again part of what the consumer is paying for.

• Physical Evidence – Almost all services include some physical elements even if the bulk of what the consumer is paying for is intangible. For example a hair salon would provide their client with a completed hairdo and an insurance company would give their customers some form of printed material. Even if the material is not physically printed (in the case of PDFs) they are still receiving a “physical product” by this definition.

Though in place since the 1980’s the 7 Ps are still widely taught due to their fundamental logic being sound in the marketing environment and marketers abilities to adapt the Marketing Mix to include changes in communications such as social media, updates in the places which you can sell a product/service or customers expectations in a constantly changing commercial environment.

Important Questions in Designing a 7P Model

When setting out to design or improve a marketing mix for a service provider, the marketer should ask the following questions:

1. How can we develop our ‘product’?
2. How can we price fairly?
3. How can be provide the right place for the customer to access and experience our product?
4. How can be promote our product to create an impact, differentiate from competitors and further brand image?
5. What is the process we will use to deliver our service to the customer?
6. Who are the people who represent us and what are the skills that they need?
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8. Example of 7Ps : McDonald’s

   McDonald’s was created by Richard and Maurice McDonald in 1937. They created food processing and assembly line techniques at a tiny drive-in restaurant near Pasadena, California. In 1954, the restaurant was franchised in the USA. In 1967, the restaurant went global with a foothold in Canada. The key to Mcdonald’s successful global presence has been franchising. Through this activity, the product and its delivery are translated to fit local sensibilities while maintaining an essential McDonald’s experience.

   The McDonald’s Marketing Mix

   

   © Flickr | Rupert Ganzer

   An effective and efficient Marketing Mix has enabled the restaurant to flourish while remaining true to its ‘think global, act local’ philosophy.

   1. Product

   The product offered is a standard set of items that are similar in taste and appearance wherever in the world they are being sold. There is some adaptation according to local tastes and laws. For example, a more vegetarian menu is offered in India, where a majority does not eat meat. In Muslim countries, any pork products are eliminated and halal meat is used. There are also taste adaptations such as beer in Germany, yogurt drinks in Turkey and espresso in Italy. There are also burger variations in different countries. Despite these differences, the menu is structured in the same way which allows for the same experience everywhere.

   2. Price

   The organization attempts to price differently across its operations. This means that the right price is selected for the right market. Pricing decisions are made by setting a pricing objective, determining demand, estimating costs, analyzing competing offers, deciding on a pricing method and then finalizing a price. By following this method and primarily assessing competitors, the company can understand what the customer is willing to pay and what value they attach to the product.

   3. Place

   McDonald’s has presence in 136 countries of the world. The organization believes in strategic expansion that focuses on a location’s long term potential.

   4. Promotion

   By first understanding cultural differences, a localized promotion strategy is employed. The focus is on both the brand’s global image and its local sensitivity.

   5. Process

   In all of the thousand’s of McDonald’s worldwide, the same process is used for making the food. The food specifications for size, weight and content are the same everywhere. All suppliers need to meet these specifications. Kitchen and restaurant layouts are the same. To cater to language differences, the menu displays contain images that help create similarities everywhere. There are also defined processes for service delivery such as all orders need to be filled within 90 seconds in the restaurant while drive-through wait time is 3.5 minutes.

   6. People

   The company staffs Locally and promotes from within. This allows the team managing the operations to understand local cultures as well as the corporate philosophy. The people chosen are trained in both technical skills and customer focus. A Hamburger University in the USA as well as other training centers in different parts of the world teach standard practices that are to be employed in restaurants all over the world. This training helps standardize product and service delivery.

   7. Physical Evidence

   All McDonald’s locations are similarly created with a family friendly environment. There is a play area for children, and service is always provided with a smile. All menus are structured in similar ways with fries and drink combos. The children’s meal always has toys. These are all elements of physical evidence that are standard in all Mcdonald’s locations.

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11. Is there an 8th P?

In some spheres of thinking, there are 8 Ps in the Marketing Mix. The final P is Productivity and Quality. This came from the old Services Marketing Mix and is folded in to the Extended Marketing Mix by some marketers so what does it mean?

The 8th P of the Marketing Mix:

• Productivity & Quality - This P asks “is what you’re offering your customer a good deal?” This is less about you as a business improving your own productivity for cost management, and more about how your company passes this onto its customers.

    

The 15Ps Model

The longest extension to the original model was proposed by Baumgartner in 1991 and includes people, politics, public relations, probe, partition, prioritize position, profit, plan, performance, and positive implementations.

In an attempt to add depth, much complexity has also been added to the model.