This presentation evaluates the additional elements—process, people and physical layout—of the marketing mix. It begins with a brief historical account of the emergence of the marketing mix. It then examines the weakness of using the traditional marketing mix (4Ps) to market a service. The presentation demonstrates how process, "people", and physical layout could be designed to provide a superior service experience or augment the value of a product for customers and clients.

1. MARKETING MIX
EXTENDED

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

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Physical
layout
Process People
The Extended Marketing Mix refers to three elements that
were later added to the classical marketing mix, the 4Ps.

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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.

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The elements of the
marketing 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

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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 Original Elements of the Marketing Mix

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The 12 elements were then condensed
to 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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10minutes
However, something was not right
with the 4Ps. Can you see the
problem? What’s the problem?

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It appears the 4Ps framework was meant
for product marketing. It largely ignores the
marketing of services. For example…

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For example, if you own a hair salon.
Do the 4Ps provide any clue about
designing or marketing the service?
Picturesource:hairport.wordpress.com

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Picturesource:sunnsandvacation.com
You own a travel agency with a focus on Seychelles
as a holiday destination. Are the 4Ps helpful in
designing a holiday experience for customers?

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Picturesource:foxsportsasia.com
Does the 4Ps framework advise on how to
market a person (e.g. expert, presidential
candidate, footballer, music artist, etc.)?

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A product’s quality can be judged
via touch, taste, sight or smell…
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A service such as banking, broadband, or musical
concert is intangible. Do the 4Ps advise on ways
the customer can appreciate service quality?
Picturesource:realisation.co.uk
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There’s a time lag between
making and consuming a product.
Picturesource:bet.com

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A service such as hairdressing is
produced and consumed simultaneously.
16
Picturesource:nhc.ac.uk

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In fact, the customer owns some resources (e.g.
information, customer presence & behaviour)
needed to produce the service.
17
Picturesource:nhc.ac.uk

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Do the 4Ps provide a clue on how the relationship between
the customer and firm in service production be managed?

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Unlike products (e.g. wine) that can be stocked
to meet demand, services cannot be stocked.
Do the 4Ps provide a guide on how to manage
the supply of services in line with demand?

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Ask 10 customers to buy Miss Dior
perfume from this shop. The chances are
they would be given the same product.
20Picture source: © 2012 Tofu photography

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Ask the same 10 individuals to open a bank account
from Nationwide bank. They would likely have different
experiences of the service received from the bank.
Picturesource:realisation.co.uk

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

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Because the 4Ps failed to address the
problem of service marketing, 3 elements
were then added to the marketing mix
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

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The addition came at a time where product
companies realised how services can be used
to differentiate their offerings, or increase the
value of a product to customers.
24

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

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Now that we have understood how and why the
marketing 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 our
case study to analyse the extended marketing mix elements.

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PictureSource:wikihow.com

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A series of actions performed to
make something or achieve a result.
Process

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10minutes
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?

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Steps in Making a Coffee Drink
30

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10minutes
What actions would you take to improve
the coffee-making process for the situation above?
Your guest did not enjoy the coffee. The guest complaint
it took too long to receive the coffee drink. The guest also
complaint the coffee drink wasn’t hot enough, and was too strong.

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

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More than a 100 processes are behind
a coffee drink served to the customer.
PictureSource:southerncurlsandpearls.com

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

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

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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)
PictureSource:atantrum.wordpress.com

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How does Starbucks design its order-taking and
drink-making processes to provide customers quality
coffee, customised coffee and speedy service?
10minutes

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Itallhas todo with(amongother things):
Order-taking and coffee-making policy,
Staff training, and
Technology.

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Order-taking policy
PictureSource:smakeats.com

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Source: eoinkcostello.wordpress.com

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PictureSource:atantrum.wordpress.com
Drink-making policy

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Use of technology to simply and
speed up drink-making process.
PictureSource:cafe-future.net

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PictureSource:thenextweb.com
Starbucks has introduced mobile
payment to reduce customer wait time.

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

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The abilities, motivation and behaviour of staff
affect the quality of service offered to customers.
People

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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 managed
affect service quality and customer satisfaction and repeat purchase.

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Customers expects quality coffee, customised coffee, speedy
and friendly service from Starbucks. How does the company
manage the people element to meet customer expectations?
10minutes

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PictureSource:wordsandpics.co.uk

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PictureSource:wordsandpics.co.uk

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Click slide to watch video.
Internet connection is required.

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Happy customerMotivated staff
Service experience: welcoming, warmth,
personal, speedy, reliable, customisable and safe .
Picture Source: wordsandpics.co.uk

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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 layout
Also 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

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Components of Physical Layout
Building.
Layout.
Ambience.
Furnishings.
Décor.
Colours.
Pictures.
Staff outfits.
Etc.
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Starbucks store layout,
furnishings and décor.
PictureSource:inc.com

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PictureSource:londoncalling.co
Comfy seats Ambience

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PictureSource:blog.svconline.com
Artefacts—logo, objects, colours, etc. are used
to convey a premium coffeehouse setting.

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Clean facilities
PictureSource:thebiggreen.net

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PictureSource:laughingplace.com
Point-of-sale displays

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PictureSource:atantrum.wordpress.com
Coffee machines, payment terminals
and other facilities are working properly.

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Staff pleasantry and outfit
Picture Source: www. wordsandpics.co.uk

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Picture Source: crainsnewyork.com
Free wireless broadband

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User friendly website

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…contribute to deliver a
superior coffee experience.
People
Physical
layout
Process
Picture Source: www. wordsandpics.co.uk

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NEXT CLASS
Illustrate differences in marketing products and
services to businesses rather than consumers.