Redefining the First P of Marketing: Products + Services = Prodices

Marketing ‘P’s for Product

Neil H Borden defined Marketing Mix through the four ‘P’s – Product, Price, Promotion and Place. These four ‘P’s essentially proposed the marketing tools for reaching the customer. The organization had to focus on these ‘P’s to make a headway with the customer and reach a particular level of success. The strategy that an organization follows by adopting the right marketing mix will help to get a larger market share and revenues. Different organizations may focus on different ‘P’s. Sony uses Product mix as its marketing tool, Coke uses Promotion, Wal-Mart uses price and FedEx uses place as a tool. Organizations do no necessarily use only one among the four. They may use different combination based on their core competencies.

Product (ion) Concept

In earlier days companies sold their products based on the assumption that customers would prefer those products that are available in plenty and inexpensive. Later they moved to concept of selling products that had many features in terms of its quality, performance or innovation. Here the companies rarely get the inputs from the customers on what they need and sell products designed by the engineers. The customers have to make do with what was available. Moreover the functional departments within the company was not integrated in that, after the R & D designed the product, Production would manufacture it, Finance would price it and Marketing would sell it. Thus there was no integrated marketing that received the inputs of the stakeholders involved.

Customer Concept

Globalization has changed the name of the game. Customer is pampered with choices as far as products or services are concerned. This has made Customer the King. Customer decides what he needs which is different from the earlier i.e. marketer decides what customer needs. In such a scenario the right marketing mix is important. The organization must get inputs from the customer and target those segments based on the 4 ‘P’s. The right marketing mix will establish the product in the minds of the customer. The Product has to be designed and marketed based on the customer inputs. If it is priced too high the customer will move to the competitor. It should be made available close where the target customer frequents for purchasing. And the promotion has to be done keeping the target in mind.

Services

Services have been available to the customers from a very long time. One can just go back to the earlier centuries when banks provided financial services to the customers. During the earlier centuries, services were not considered to be as important vis-à-vis the product. Most of the services were expected by the customers – say good food and fast response time at the restaurants. Organizations did not compete in terms of services alone. This is because when we consider the example of banks or restaurants it is a necessity for the customer. He will open account in banks for safekeeping or wants a good food from a restaurant. But this dependability on a few banks based on the necessity has changed. Again Globalization and more intense competition among the service companies has given the customer many options to choose from. He may choose a bank that provides many facilities such as ATM, International Credit / Debit cards, Net banking facility and so on. The customer prefers the service provider that provides the most facilities and the best service. Thus Services has gained prominence even more than Product in the last few decades. This is evident from the fact that countries like US, Service Industry is more than 90% of the GDP. Even in India where Manufacturing and Agriculture used to contribute more to the GDP, now Services is contributing up to 50% of the GDP.

Seven ‘P’s of Services

With the services gaining more popularity the marketing mix had to be restructured. Now three more ‘P’s were added to services along with the earlier 4‘P’s for Products. These include People, Physical Evidence and Process. People play an important role in services because customer interacts with people while receiving services. Since services are Intangible it should have some kind of Physical evidence to bring in some level of tangibility. Marriott Hotels provides the hospitality services and gives it tangibility by providing an attractive lobby and ambience. Companies can also choose different processes for differentiation such as self-service, drive-ins for restaurants.

Service Characteristic

One important characteristic of a service is its Intangibility. It not possible to quantify or qualify what a good service is. Service is not a measurable quantity. In order to overcome this issue, the service provider makes use of a “Physical Evidence” to tangibilize it. Ex: The beautiful setting and ambience inside the lobby of a hotel is one form of “Physical Evidence” to augment the service. In addition to this there are a few more characteristics that are exclusive to the Services- Variability, Inseparability, Perishability. Services being provided by the employee vary from person to person. Services are produced and consumed immediately. It cannot be stored for future sales like a product. Thus it is inseparable. And it is also perishable. These characteristics make Services more difficult to market.

Need for Redefining Marketing in terms of Prodices: Changing Times

The trends are changing with time. Customers no longer want just the Product or Service anymore. They prefer to have both and not one alone. If a customer wants to buy a car from a dealer apart from the features in the car that he is looking for – style, fuel economy, price, safety features; he will also be considering the post sales service after the purchase of the car as a criteria for buying it. The customer gets opinion from Primary and Secondary groups whose suggestions are influential. In this fast paced environment, people want efficient and fast service after they buy a car. Buyers worry about the maintenance and repair costs of the cars after purchase. So it is essential from customers’ point of view to receive an efficient post-sales service after purchasing the car. Similarly in the case of services – if we take the example of Retail services apart from the normal service of fast and efficient response time from the employees and availability of a variety of products, customers are also looking for In-House brand products. They are willing to purchase products such as clothing that are the brands of the store itself. Customer wants the whole range of Products and Services.

The change in trends has prompted the companies to offer their Products and Services under 5 main categories:

Pure good: Here the company would provide the customer with only the good i.e. the product. There is no service involved. These include products such as soaps, perfumes etc.

Good with accompanying service: These are the goods that have an accompanying service associated with it after buying. Ex: Consumer durables like Television with accompanying services such as warranty, repairing and maintenance. 

Hybrid: Here the offering of the good and services are equal in nature. Ex: Food and the service expected at a restaurant.

Major service accompanying with minor goods: Here the provider is mainly giving some services and there is some products accompanying it.  Ex: In-House branded products available at a retail store

Pure service: Here there is primarily only service is involved. There are no accompanying products. Ex: Baby-sitting

Tangibilizing the Intangible

Although Physical Evidence and the Processes can reduce the extent of the problems associated with Intangibility it is not that effective. This is because Physical evidences in the form of ambience and setting is relative. This is where a Product accompanying a service or augmenting it will help. The product will bring in the tangibility for the service and the customer can measure the service with the product. In the Retail service example the stores, the arrangement of racks and items, the ambience all serve as Physical Evidence. But this kind of physical evidence is common to almost all the big retail stores. Now if the retailer markets his brand of products including rice, apparel and others, customers who are already impressed with the services available will now visit the stores to purchase their in-house products as well. In fact this trend is fast catching up in the Retail Industry. The trend is disturbing for Organized brands like Allen Solly, Pepe or others who use the retail as a channel for sales. The retailer would obviously try to sell his own brand of products at his store.

The concept of Exclusive Show rooms on the other hand is case of Pure Product Manufacturers venturing into Services. Earlier products such as shirts and trousers were available at many smaller retail outlets. But these days we’ve exclusive showrooms where the manufacturer himself opens a store to market shirts and trousers. Thus we’ve Pepe opening ‘Pepe 1016’ stores to cater to the needs of the 10 to 16 years olds. Pepe is not only manufacturing jeans, it is also providing service through its showrooms.

Mind Share and Heart Share

The organization would use the marketing tools i.e. the 4 ‘P’s for capturing the Mind Share of the customer. The mind share of the customer can be captured through a durable product, affordable price, advertising and presence in many locations. All these measures would ensure that the customers recall the products in their minds. But merely having a mind share does not necessarily mean that customer will purchase the product. It gives an advantage in that, when the customer intends to buy a product he will consider those products first which have captured his mind share. Thus many companies which spend millions in Advertising and Promotions can capture the mind share. It is not an effective marketing tool to sign up a new customer. In addition to the mind share there is a need to capture the heart share as well. Only if the company captures the heart share, it will ensure that the customers buy the product. The heart share can be captured through the Services augmenting the product. If the customer is satisfied that the services he gets is good, he will definitely go ahead with the buying of the product and retain his loyalty to the product. Capturing mind share is efficient, but capturing heart share is effective.

Customer Retention and Loyalty

Its has been established that it costs 5 times more to acquire a new customer than to retain an existing customer.  This has made it imperative for the organizations to focus more on retaining of the customers than acquiring new ones. Organization have realized that building customer loyalty is more profitable than just blindly trying to increase the number of new customers to try its products. Globalization has increased the competition to new heights. Customers are no longer swayed by only low prices. They want value for their money; they want quality products. The purchasing power of the consumer has increased and he can afford high quality premium products and services. If he feels that the product is not up to the standard he perceived, he will switch to another supplier. But if he feels that he has purchased a high value product and service, he is willing to try out other products from the same company for his future requirements.

The marketing team in an organization can build this customer retention and loyalty through its “Prodices” strategy.  In fact it has become a necessity to adopt this strategy to beat its competitor and increase customer loyalty. In order to retain a customer and build the loyalty, organization has to not only manufacture quality products, it also has to follow it up with an efficient service.  The organization has to continuously keep in touch with the customer after its purchase. It can keep in touch with the customer with its Post-Sales service. This will ensure that customer is guaranteed of lifelong maintenance of the product from the company. His inputs are given importance by the company for improving the quality of products further or even in new product development. If the customer is happy with the service provided by the firm, he is more likely to not only go for repeat purchases of the same product, but also try out other products from the same company. An additional advantage is that the customer would suggest to his peers or friends to try out this product. Thus an effective “Prodices” strategy would not only ensure customer loyalty and retention, it would even be possible to acquire new customers through “word-of-mouth” from existing customers.

Competition

The number of competitors in a particular product category has increased in the past few decades. Globalization has added more intensity and numbers to the competition. The competition is not just between the domestic and local players. The ringside includes MNCs, national, regional and the unorganized in the fray who want to fight it out to get the attention of the potential customer and entice him to buy the product or service. A large number of MNCs from the US has entered the Indian market and trying to woo the customers. They’ve been successful in their efforts too. Chinese are manufacturing a lot of cheap products and they are dumping it to India. This is causing a lot of grievances to the domestic players who find it extremely difficult to compete with the rock bottom prices at which the Chinese goods are sold. Under these circumstances it becomes essential for the local players to redefine their marketing practices. They should realign it into Prodices to overcome the “price effect”. The Indian players are already established in the market for quite some time. They’ve good visibility with their consumers. They can enhance this visibility by following up the selling of products with an efficient service. The obsession for low prices of the Chinese products is a temporary phenomenon. The Chinese just dump their products in other countries. This is not followed up with any kind of post-sales service, as they don’t have any service centers within the country. The domestic players can exploit this chink in their armor by ensuring customer loyalty keeping in touch with the customer and providing a fast and lifetime service.

Global Prodices Strategy

The size of the world is shrinking, not literally but in terms of communication and transportation. Internet has brought the people closer. It has made possible for the customer to get in touch with the company from any part of the globe. The fast Airline services ensure that you can reach any corner of the globe in a very short time. With the advent of globalization there are no boundaries for customers. So it is possible for a customer to buy a product from US and use it in India because of some advantages. Take the case of an Indian software professional spending 3 months as a part of onshore project in US.  He buys a Canon camera from a dealer in US while there. After the completion of the project he returns back to India and continues using the camera. In most case the companies would state that the post-sales service is available only within the company they purchased. Canon is a global company with presence in many countries. Now if Canon can provide the post-sale service in any part of the world for these customers who buy the product they can develop excellent relationships with the customer. The customer will be loyal to Canon because of its global service network and depending upon their service, he will be ready to consider buying other Canon products.

The same logic can be applied to financial services as well. A Global bank such as Citibank that provides financial services also gives its specific products such as Credit / Debit cards. Citibank provides Credit card services at any part of the world. A US citizen can buy any product from India using the same credit card. Thus the “Prodices” strategy is applied in a Global level by a service oriented organization.

Thus it can be seen the re-defining the market strategy through Product plus services at a Global level will pay rich dividends.   

The age of Pure Products or Pure Services has started to fade. This is being replaced with a new hybrid phenomenon – “PRODICES”. The organization has to restructure their existing strategies and redefine it in terms of Prodices. No longer does the customer want a product or a service alone. He has dictated the terms – he wants them both. Organizations have to build resources to realign with this new strategy; because Prodices is the business concept innovation that is going to revolutionalize the world.