service marketing mix

Volume 1, Number 2, October-December 2012 ISSN (P):2279-0934, (O):2279-0942

International Journal of Retailing & Rural Business Perspectives Pezzottaite Journals. 163 | P a g e

THE EXTENDED SERVICES MARKETING MIX USED BY

RESTAURANT AND BANKING INDUSTRY

Akash B. Shah1

ABSTRACT

In the field of marketing, the concept of marketing mix has great importance. There are basic 4 Ps of marketing mix namely - product, price, promotion, and place. Various combinations of this marketing mix are employed by organization to pursued

customers. However, while dealing with services 3 more Ps namely people, process, and physical evidence plays an important role. By utilizing these 7 Ps a service organization can be benefited. Just because of the different nature of service, it should be treated differently than products which are tangible. This difference between product and service makes it more

difficult for marketer to pursued service seeking customers. This paper shows how this service marketing mix is used by

restaurant and banking industry.

This paper has two parts: The first part explain - concept of service, difference between services and goods. And second part

includes - The extended service marketing mix used by restaurant and banking industry.

KEYWORDS

Resturant, Banking, Marketing Mix, Service Marketing, 7Ps, Service Seeking Customer, GDP etc.

INTRODUCTION

Goods and services are the major marketable entities in most commercial activity, though the traditional definition of marketing

has now expanded its scope to include idea, people and so on. Earlier, goods have occupied a lot of space in academic writing, as

there was a growing demand for them in the western, developed countries. As the growth in the market for goods in the developed

world got saturated, their attention has turned toward services. (Source: Nargundkar).

The concept of service marketing was emerging in the early 1970 and had a different field with concept, models and also had a

different characteristic of services.

Source: http://www.iei.liu.se/fek/frist/fek1hel/mafo/forelasningar_2009/1.308975/grnroos1994from4ptorm.pdf

Various reasons for developing the field of service marketing and service management are as follows:

Service marketing concept and service marketing strategies have developed in response to the tremendous growth of service industry.

Second indicator of the economic importance of services is that trade in services is growing worldwide.

There is increasing dominance of services in economies worldwide. In the year 2007, 60.7 % of gross domestic product (GDP) is attributed to services.

Sources: Zeithaml, Gremlar, Bitner and Pandit.

REVIEW OF LITERATURE

Mohammed Rafiq and Pervaiz K. Ahmed (1995) presented a paper on Using the 7 Ps as a generic marketing mix, the results presented here suggest that there is a high degree of dissatisfaction with the 4 Ps framework among European academics. The 4 Ps framework is thought to be most relevant for introductory marketing and consumer marketing. The result also suggests that the 7 Ps framework has already achieved a high degree of acceptance as a generic marketing mix among our sample of respondents. However, although there is general support for 7 Ps mix, there is not uniform support for the three new variables.

Seyed Mohammad Hassan Hosseini (2011) surveyed on, Marketing mix from view point of Zanjan grand restaurant customers, and concluded that, the lowest score in ZGH marketing mix is contributed to promotion, which need significant and more

attention. On the other hand people and process dimensions receive the highest score and other factors are rated in between.

CONCEPT OF SERVICE

In market there are two types of products available, i.e. first tangible goods and second intangible services. A person can buy,

consume and also can feel service but a consumer neither watch nor own services. Restaurant, Banking, Insurance, Tourism,

Telecom are the best example of service industry.

A service can be defined as - Service is a type of economic activity that is intangible, is not stored and does not result in ownership. It also consumed at point of sale Source: http://www.investorwords.com/6664/service.html

1Assistant Professor, Anand Institute of Management, Gujarat, India, [email protected]



Service means any activity or benefit which is offered for sale by one person to another, in which ownership is not transferred, and intangible in nature.

DIFFERENCE BETWEEN SERVICES AND GOODS

To differentiate service and goods we can say that services are perishable while products are non-perishable, i.e. services cannot

be stored while products can be stored for future use; Second difference is that services are intangible while products are tangible,

i.e. we cannot see services, but we can see goods.

Another difference between service and goods is that services are heterogeneous while products are homogeneous in many

respects, i.e. production and delivery of service varies among different person which is not in the case of goods. Production of

goods can be separated from consumption, while in services, production and consumption are simultaneous i.e. production and

consumption of services are done at the same time; and service cannot be owned while product can be owned, i.e. a person cannot

own a service.

Source: Lovelock, Wirtz and Chatterjee.

THE MARKETING MIX CONCEPT

A mixture of several ideas and plans followed by a marketing representative to promote a particular product or brand is called marketing mix. Before the concept of service developed, marketing mix includes 4 Ps (product, pricing, promotions and placement), but now with growing importance of service marketing mix includes 7 Ps (product, pricing, promotions, placement, people, process and physical evidence).

Elements of the Extended Services Marketing Mix Used by Restaurant and Banking Industry: (The 7 Ps)

The service marketing mix is also known as the extended service marketing mix and is an integral part of a service blueprint

design. As said above it consists of 7 Ps as compared to the 4 Ps (product, pricing, promotions and placement) of a product marketing mix. It adds 3 more Ps (people, process & physical evidence) which are required for optimum service delivery.

Figure-1

Sources: http://www.marketing91.com/service-marketing-mix/

Following part of this paper shows how these factors are necessary for delivering services at optimum level with respect to

restaurant and banking industry.

1) Product

Goods produced by manufacturers for the end-users are called products. Products can be of two types - tangible product

and intangible product (services). The product in service marketing mix is intangible in nature. Education industry,

transportation, banking industry, and restaurant can be a best example of service product.

For restaurant, food which they serve is a product. And for banking industry, various deposits and loan schemes which

they offer with different scheme is known as product.

2) Pricing

The money which a buyer has to pay for purchasing a product or service is called as price. Generally service pricing

involves taking into consideration fixed cost (overhead cost) & variable cost (includes both labor and material cost). By

adding a profit markup you get your final service pricing. Pricing also includes discount, commission for channel

partner and credit terms for selling products and services.



For restaurant, raw material cost, labor cost, depreciation cost should consider while calculating cost. On the other hand,

in banking industry they have to consider labor cost, depreciation cost, interest, etc.

3) Promotion

Promotion refers to the various strategies and ideas implemented by the marketers to make the end - users aware of their

brand. Promotion of services is not easy due to intangible nature of services.

There are two ways of promotion

Advertising, Word of mouth.

Services are easy to be copied and hence it is generally the brand which sets a service apart from its rival. There are

number of educational institutes, travelling agency, and banks promoting themselves rigorously. What is the reason for

that? It is because competition in this service sector is generally high and promotions are necessary to beat competition.

For restaurant word of mouth promotion plays an important role at local level. But for banking industry, they should

advertise their service through mass media advertising.

4) Placement

Placement refers to the location where the products and services are available and can be sold or purchased. Buyers can

purchase products and services either from physical markets or from virtual markets. Placement also includes physical

channel and channel partners.

Place is more important to restaurant than banking industry, the reason is that now banks provides online banking

facility, which is not possible in case of restaurant. The simple reason is that - if a person wants to eat, he/she must have

to visit restaurant.

From now onward paper explains the extended service marketing mix:

5) People

There is high level of importance of people in service industry. The simple reason for this is, if they want to purchase

any service they have to encounter service people. People define a service. In service marketing, people can make or

break an organization, because people create first impression in service industry.

For a restaurant, their cook and service people staff defines restaurant. While in banking industry, their employees in

branch and their behavior with respect to customers define bank.

6) Process

Service process is the way in which a service is delivered to the end customer. Service process includes design of

activity flows. It also clarifies about role of technology, i.e. Degree of automation. Process is a vital element in the

service blueprint, in which company defines exactly what should be the process of delivering the service product to the

end customer, before establishing the service.

In restaurant, the service process will be greet customer, sitting, order taking, order delivery, bill payment. But in banking the service process will be enter the bank, meet with receptionist, discuss issue, meet concern person, solve problem.

7) Physical Evidence

The last element in the service marketing mix is a very vital element. Physical evidence includes interior design,

equipment, staff grooming, sounds and smells. As said above, services are intangible in nature. Yet, to create a better

customer experience tangible elements are also delivered with the service.

Take an example of a restaurant which has only furniture, or a restaurant which has ambient lighting, well groomed staff

along with good seating arrangement and this also serves good food & service. Which one will you prefer? Obviously,

second one which has nice physical layout. Thats physical evidence. Many times, physical evidence is used as a differentiator in service marketing.



All 7 Ps can be summarized as following:

Sources: Authors Compilation.

CONCLUSIONS

By this paper, it can be concluded that, as there is growing importance of service, the concept of service marketing mix has come

into existence. The service marketing mix is also known as the extended marketing mix. The extended marketing mix includes 7

Ps (Product, Pricing, Promotion, Placement, People, Process, Physical Evidence) instead of original 4 Ps (Product, Pricing, Promotion, And Placement) of marketing mix.

All 7 Ps are important to restaurant and banking industry. Basic marketing mix (4 Ps) have more importance i.e. basic product, price, place and promotion are the main factor that influence consumer, though new additional marketing mix adds value to basic

product or service i.e. people, process and physical evidence adds value to basic product or service.

REFERENCES

1. Nargundkar, (2011), Services Marketing, Tata McGraw Hill Education Private Limited, 3rd Edition.

2. Zeithaml; Gremlar; Bitner and Pandit, (2008). Services Marketing - Integrating Customer Focus across the Firm, Tata McGraw Hill Publishing Company Limited, 4th Edition.

3. Lovelock; Wirtz and Chatterjee, Service Marketing, Pearson Education, 5th Edition.

4. http://www.iei.liu.se/fek/frist/fek1hel/mafo/forelasningar_2009/1.308975/grnroos1994from4ptorm.pdf

5. http://www.marketing91.com/service-marketing-mix/

6. http://www.achmadyaun.com/marketing/25.pdf

7. http://www.managementstudyguide.com/marketing-mix.htm

8. http://www.sajth.com/vol4issue1/B%20Seyed%20Mohd.pdf

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service marketing mix

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