Marketing Mix in Service Marketing
– The 7Ps
The traditional marketing mix had 4Ps (Product, Price, Place, Promotion).
In Service Marketing, due to the unique nature of services (intangibility, inseparability,
perishability, heterogeneity), three more Ps were added → People, Physical Evidence,
Process.
Thus, the Service Marketing Mix = 7Ps.
1. Product Decision (Service Product)
In services, the product is intangible (experience, activity, benefit).
The product offering should be designed around customer needs and expectations.
Elements of Service Product:
1. Core Service – The main benefit the customer gets.
Example: Banking = safe money transactions, Hospital = healthcare.
2. Supplementary Services – Add-ons that enhance the core service.
Example: Free Wi-Fi in hotels, Online banking.
3. Augmented Services – Differentiators that create competitive advantage.
Example: Loyalty programs, 24/7 customer support.
, Key Product Decisions in Services:
Service design & innovation.
Standardization vs customization.
Branding of services.
Service guarantees and warranties.
Example: Ola/Uber – Core: transport; Supplementary: app-based booking; Augmented:
rating system, discounts.
2. Pricing Strategies and Tactics
Pricing is more complex in services because:
Services are intangible & perishable.
Difficult to measure cost accurately.
Customer perception of value plays a big role.
Factors Affecting Service Pricing:
Demand & supply fluctuations (hotel rates in peak season).
Cost of providing service.
Competition pricing.
Customer perceived value.
– The 7Ps
The traditional marketing mix had 4Ps (Product, Price, Place, Promotion).
In Service Marketing, due to the unique nature of services (intangibility, inseparability,
perishability, heterogeneity), three more Ps were added → People, Physical Evidence,
Process.
Thus, the Service Marketing Mix = 7Ps.
1. Product Decision (Service Product)
In services, the product is intangible (experience, activity, benefit).
The product offering should be designed around customer needs and expectations.
Elements of Service Product:
1. Core Service – The main benefit the customer gets.
Example: Banking = safe money transactions, Hospital = healthcare.
2. Supplementary Services – Add-ons that enhance the core service.
Example: Free Wi-Fi in hotels, Online banking.
3. Augmented Services – Differentiators that create competitive advantage.
Example: Loyalty programs, 24/7 customer support.
, Key Product Decisions in Services:
Service design & innovation.
Standardization vs customization.
Branding of services.
Service guarantees and warranties.
Example: Ola/Uber – Core: transport; Supplementary: app-based booking; Augmented:
rating system, discounts.
2. Pricing Strategies and Tactics
Pricing is more complex in services because:
Services are intangible & perishable.
Difficult to measure cost accurately.
Customer perception of value plays a big role.
Factors Affecting Service Pricing:
Demand & supply fluctuations (hotel rates in peak season).
Cost of providing service.
Competition pricing.
Customer perceived value.
