Extended Marketing Mix

EXTENDEDMARKETING MIXThe

© 2014 Berlin Asong. All rights reserved. 2

Learning Objective

I. Analyse the additional elements of the extended marketing mix.


Marketing Mix

Product

Price

Place

Promotion

Process

People

Physical layout

Planet

This presentation focuses on the extended elements of the marketing mix.


Process PeoplePhysical layout

The Extended Marketing Mix refers tothree elements that were later added to

the classical marketing mix, the 4Ps.


To understand how and why “process”, “people” and“physical layout” made their way into the marketing mix family,

we need to understand the history of the marketing mix.


The elements of themarketing mix were originally…

12,…developed by Harvard Business School Professor

Neil H. Borden long before they were published in 1964.Borden, N. H. (1984), “The Concept of the Marketing Mix”. Journal of Advertising Research, vol. 2, p. 9


Marketing Mix: The Originals

1. Product planning.

2. Pricing.

3. Branding.

4. Channels of distribution.

5. Personal selling.

6. Advertising.

7. Promotions.

8. Packaging.

9. Display.

10. Servicing.

11. Physical handling.

12. Fact finding and analysis.

Mohammed Rafiq and Pervaiz K. Ahmed, (1995) "Using the 7Ps as a Generic Marketing Mix: An Exploratory Survey of UK and European Marketing Academics", Journal of Marketing Intelligence & Planning, Vol. 13 Iss: 9, pp.4 - 5


The 12 elements were then condensedto 4 elements, and given the name…

4Ps,…by E. Jerome McCarthy in 1964.

Goi, C. L. (2009), “A Review of the Marketing Mix: 4Ps or More”. International Journal of Marketing Studies, vol. 1, no. 1, p. 2

Place PromotionProduct Price


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However, something was not right with the 4Ps. Can you see the problem? What’s the problem?


It appears the 4Ps framework was meant for product marketing. It largely ignores the

marketing of services. For example…


If you own a hair salon, is the 4Ps usefulin designing and marketing your business?

The person doing your hair is not a product. He/she is rendering a service. You consume the service at the service-making venue. You don’t consume the hairdresser.

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You own a travel agency with a focus on Seychelles as a holiday destination. Is the 4Ps

helpful in marketing the Seychelles?

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Does the 4Ps framework advise on how to market an individual (e.g. expert, presidential

candidate, footballer, music artist, etc.)?Strictly speaking, a person is not a product but a service provider.

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Unlike products that can be touched &even eaten to appreciate their quality…


…a service like banking is largely intangible. Does the 4Ps advise on how the quality of a service be assessed?

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In other words, does the 4Ps help marketers design services in ways that

customers can assess their quality?



There’s a time lag between the manufacturing and consumption of a product like chewing gum.


…services like teaching, nursing, etc. are produced and consumed simultaneously.


In fact, the customer owns some resources (e.g. information, customer presence & behaviour) needed to produce the service.


Does the 4Ps provide a guide on how the relationship and transactions between the customer and firm in service production be managed?


Unlike products (e.g. wine) that can be stocked to meet demand, services cannot be stocked.

Does the 4Ps provide a guide on how to manage the supply of services in line

with market demand?

© 2014 Berlin Asong. All rights reserved.

Ask 10 customers to buy Miss Dior perfume from this shop. The chances are they would be given the same product.

22Picture source: © 2012 Tofu photography


Ask the same 10 individuals to open a bank account from Barclays bank. They would likely have different experiences of the service received from the bank.

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Does the 4Ps advise on how service provision can be standardised? Does it even matter to standardise service provision?


Criticisms of the 4Ps contributed tothe addition of 3 marketing mix elements

by Booms and Bitner in 1981. Booms, B.H. and Bitner, M.J. (1981 ), "Marketing Strategies and Organization Structures for Service Firms", in Donnelly, J.H., George, W.R. (Eds),Marketing of Services, American Marketing Association, Chicago, IL, pp.47-51 .

People

Physical layout

Process


Learning Objective

I. Analyse the additional elements of the extended marketing mix.


Now that we have understood how and why themarketing mix was extended from the 4Ps to 7Ps, it is important

we appreciate the usefulness of “process”, “people” and “physical layout”in the design and delivery of quality services for customers.

We’ll be using Starbucks, a coffeehouse retailer, as ourcase study to analyse the extended marketing mix elements.


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A series of actions performed tomake something or achieve a result.

Process


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Consider a service like coffee-making. You’ve received a guest who has asked you for a coffee drink. What are the steps involved in coffee-making?


Steps in Making a Coffee Drink

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What actions would you take to improvethe coffee-making process for the situation above?

Your guest did not enjoy the coffee. The guest complaintit took too long to receive the coffee drink. The guest also

complaint the coffee drink wasn’t hot enough, and was too strong.


You now begin to understand process-issues that canaffect the quality of a service received by the customer.


More than a 100 processes are behind a coffee drink served to the customer.

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Customers visit Starbucks among other reasons for quality coffee, customised coffee and speedy service.


Let’s focus on two critical processes—order taking and drink making—that affect the customer experience of Starbucks.

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Order taking and drink-making are complex processes given that Starbucks offers 87,000 different drink combinations.

Source: The Wall Street Journal (2006)

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How does Starbucks design its order-taking anddrink-making processes to provide customers quality

coffee, customised coffee and speedy service?

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It all has to do with (among other things):

Order-taking and coffee-making policy,

Staff training, and

Technology.


Order-taking policy

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Drink-making policy


Use of technology to simply and speed up drink-making process.

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Starbucks has introduced mobilepayment to reduce customer wait time.


Hence, the design of a service-process affects the quality of the service received or consumed by the customer.


The abilities, motivation and behaviour of staffaffect the quality of service offered to customers.

People


Employee Competence

Customer Satisfaction/RetentionEmployee Satisfaction

Customer EngagementEmployee Commitment

Service Innovations

Service Quality

The quality of a firm’s human resources and how well they are managedaffect service quality and customer satisfaction and repeat purchase.


Customers expects quality coffee, customised coffee, speedyand friendly service from Starbucks. How does the company manage the people element to meet customer expectations?

10 minutes


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Click slide to watch video. Internet connection is required.

http://www.starbucks.com/careers/working-at-starbucks

http://www.starbucks.com/careers/working-at-starbucks


Happy customerMotivated staff

Service experience: welcoming, warmth, personal, speedy, reliable, customisable and safe .

Picture Source: wordsandpics.co.uk


Physical layout is the environment in which the service is delivered, and any tangible cues that communicate the service or can be used

by customers to assess the quality of service provided.

Physical layoutAlso called physical evidence

Mohammed Rafiq, Pervaiz K. Ahmed, (1995) "Using the 7Ps as a Generic Marketing Mix: An Exploratory Survey of UK and European Marketing Academics", Journal of Marketing Intelligence & Planning, Vol. 13 Iss: 9, p. 7


Components of Physical Layout

Building.

Layout.

Ambience.

Furnishings.

Décor.

Colours.

Pictures.

Staff outfits.

Etc.

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Starbucks store layout, furnishings and décor.

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Comfy seats Ambience


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Artefacts—logo, objects, colours, etc. are used to convey a premium coffeehouse setting.


Clean facilities

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Point-of-sale displays


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Coffee machines, payment terminalsand other facilities are working properly.


Staff pleasantry and outfit

Picture Source: www. wordsandpics.co.uk


Picture Source: crainsnewyork.com

Free wireless broadband


User friendly website


…contribute to deliver a superior coffee experience.

People

Physical layout

Process

Picture Source: www. wordsandpics.co.uk


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Like the 4Ps, the 7Ps framework hasbeen criticised for failing to address social, ethical and environmental concerns in the

marketing products and services.


Hence, the additionof the 'planet' element to the

marketing mix family. Planet


Marketing Mix

Product

Price

Place

Promotion

People

Physical Layout

Process

Planet

Socially Responsible Marketing

The 7Ps should be managed in ways that

provide shared value for the firm and larger society.


Click slide to watch video. Internet connection is required.

Starbucks Offers Workers Free College Tuition

http://www.starbucks.com/careers/college-plan

http://www.starbucks.com/careers/college-plan


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Extended Marketing Mix

Business

Transcript of Extended Marketing Mix