In the early 1960s, Professor Neil Borden of the Harvard Business School identified a number of company performance actions he believed influenced the consumer decision to purchase goods or services. Borden suggested that these actions represented a "Marketing Mix, which he published in a Harvard Business Review article. Professor E. Jerome McCarthy, a contemporary colleague also at the Harvard Business School, then took Borden's work forward and suggested that the Marketing Mix could be summated into four elements: product, price, place and promotion. Thus was codified the famous four Ps (4Ps) which have gone on to become perhaps the most famous term in marketing to date.
As with any mix the concept is straightforward; it provides a list of basic elements whose proportions can be altered to produce a variety of mix with different outcomes, e.g. cement as opposed to mortar, bread as opposed to cake. In fact to illustrate thislets think about a cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it. So for a sweet cake add more sugar, for a fruitcake add fruit, chocolate cake - add chocolate.
Exactly the same principles apply with the marketing mix. The offer you make to you customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price. For a luxury item you control distribution - Place - optimise the quality - product - and quite probably maximise the price. Co-ordinating the decisions is based on marketing research and results in a marketing plan; a blueprint to optimise the use of the business's resources to maximise the satisfaction to the customers and the gains of the business. This should remind you of our definitions of marketing right back at the start of this chapter.
There are major differences when it comes to services marketing versus the marketing of tangible products. The aim differences include:
- The buyer purchases are intangible, you gain ownership of nothing
- The service may be based on the reputation of a single person or entity, so branding becomes vital
- Its more difficult to compare the quality of similar services, there isn't a list of Features and attributes you can easily compare
- The buyer cannot return the service; the act of purchase is the act of consumption
These differences mean that there are new elements in the marketing mix; in fact there are three new elements so we call this the 7Ps or Extended marketing mix.
Let's think about a service - Car Insurance. In terms of the 4Ps you own a right to compensation if in any sort of accident - that's the product. You know the price and indeed all the other elements of price that might be included, e.g. payment by instalment. The Place was done either indirectly-through the mail as an automatic renewal, or directly by you contacting the insurance company. Promotion could have been via any of the means listed later in this chapter. But does that coverall the elements that went into your decision to buy car insurance?
In fact for services the additional 4Ps of the 7P extended marketing mix consist of People, Physical evidence, and Process. In our car insurance example, you might have spoken to a salesperson in your home or a broker; you might have spoken to a customer service person by phone, or at a branch office. You might have been impressed by industry reports or experts, this could have even been online, or by the quality of the documents you received or even by the way the person you spoke to sounded or were dressed. All of these start to bring Physical evidence into play which often overlaps into the Place and People elements.
Finally and perhaps in a world dominated by distance purchasing via electronic media such as the internet and telecommunications the speed, accuracy responsiveness, and reliability of the processes in respond to you as a customer and also vital. You only have to think about how many times you abandon a web site if its slow to appreciate how vital processes are within the extended marketing mix.