Why read this? : We look at how to grow your business by offering digital services. Learn from our examples of online customer needs in areas like information, entertainment and shopping. Read this to learn how digital services help you pull in more customers.
But as per our 4Ps of marketing article, some people argue the 4Ps are no longer relevant in today’s digital-led world.
They remind us the 4Ps are more than 60 years old. That’s ancient in marketing terms, they say. But, this is a terrible argument.
By the same argument, no one would watch TV, use the phone or drive a car. Because those are all over 60 years old too.
The context for the 4Ps
It’s fair to say the world has changed since McCarthy came up with the 4Ps back in 1960. But that only changes the context in which the 4Ps have to work. The original purpose of the 4Ps – to organise and prioritise key actions to grow your brand – still applies.
One of the biggest changes has been how businesses deliver services. Digital and technology have changed how we get services in all sorts of areas. From travel to insurance, from food delivery to how we connect with each other.
As per our marketing planning guide, there are 3 extra Ps in the services marketing mix – people, process and physical evidence. We’ll look at how each one can help you build your competitive advantage. But let’s start with the difference between products and services.
The difference between products and services
Most normal (i.e. non marketing people) understand products and services are different. But some marketers confusingly claim services are products too. Let’s clear that up first.
Products are tangible
A product is what the customer buys. It’s something tangible.
This is important. When you buy a product, you can see it, touch it, maybe even smell, hear or taste it. There’s ownership. You can point to it, and say “That’s mine”. (Though if you’re leasing or renting a product, this ownership may only be temporary).
Products can be something that lasts a long time, like your house. Or, a short time, like a chocolate bar.
But, whatever the product is, it’s easy to recognise and describe. You own it.
Services are intangible
Services, on the other hand, are intangible. You can’t touch them or own them. They’re an experience you get from a person or business. The outcomes of the service can be tangible. A new haircut or an insurance document, for example. But you can’t touch the service itself.
It’s unique to you only for the time it happens, which means it’s perishable. When the service experience is “done”, it goes away. You no longer own it, unless you pay for it again.
This all makes sense to “normal” people.
But some marketers like to argue services like those we’ve mentioned – haircuts and insurance, for example – are products too. But only if you take a broader view of products as “what the customer buys”.
It’s a fair argument. But, it’s only marketers who think that way. Real people think of products as things they can see and touch. So, when you look at services, especially digital services, it helps to have extra ways to clarify the differences.
The 7Ps of Marketing Services
That’s why we like the 7Ps model for planning marketing services. We like it because it doesn’t replace the original 4Ps. It extends it with 3 more Ps – people, process and physical evidence / location. These pull out what’s different about services.
Many businesses struggle to articulate a clear “product” using the original 4Ps definition of product – something tangible that’s owned.
Think about services like banking, travel and insurance, for example. Think about personal services like hairdressing or medical treatments. Their “products” are experiences. These extra 3Ps give those businesses a way to plan the experience in a much clearer way.
For example, let’s say your business involves personal interaction with customers. The people element of the 7Ps helps you clarify what you need people in your business to do for customers.
So, this could be as simple as the staff uniform and the “do you want fries with that?” experience of your average fast-food joint.
But often the interaction is more complex. Think IT consultants, or healthcare services, for example. Those need staff who have the right skills, training and resources.
Think about categories where you need skilled customer-facing sales teams. Car sales or real estate, for example. In those categories, the style, tone and appearance of that team will be a big part of your marketing mix.
Even if you don’t deal with customers face to face (insurance selling by phone or email, for example), there’s still a large people element to winning over customers and building your brand.
And the standard view of “product” from the 4Ps, stuff you make and put in a box, doesn’t make you think “people”, does it?
Similarly, setting standard ways to deliver a service is important. We expect certain ways of working when we try to transfer money through our bank, book plane tickets or shop online.
When we use these digital services, what we click and choose on the screen has to make things happen in the real world.
Our bills need to be paid. Our plane seats need to be booked. And our online shopping needs to land on our doorstep when we need it.
For the delivery of these services to run smoothly, and efficiently, it’s important to set up clear processes. For example, in online shopping, the order to delivery process is critical. You have to plan factors like shipping, packaging and customer service.
Again, the traditional view of “Product” doesn’t prompt you to think about these, which is why this process “P” is so helpful.
Physical evidence / location
The last service “P” is physical evidence / location. This covers where customers experience the service.
So, think about the layout and signage which helps you find products in the supermarket, for example.
Think about the ambience and the way your favourite restaurant is decorated.
Or, consider why you feel the need to have a copy of the insurance policy or travel documents when you know the details are already set up in their system.
These are all physical evidence of the service. But they’re not technically the “product” itself.
Some people argue you should stretch the meaning of the word product to include these experiences of the service. But we believe the extra 3Ps make what you mean by “services” clearer.
We like the 4Ps, but it’s not a “one size fits all” model. Sometimes, you have to adapt it to suit the context. And nowhere, is that more true than services, and in particular digital services.
Let’s now look at the impact “digital” has had on services. There are mixed opinions on what digital means for marketing. We usually think of it as a macro trend. In marketing planning terms, it sits across your PEST analysis – political, economic, social and technology.
So, taking PEST in reverse order, the technology impact of digital changes how people find out about and experience brands.
Digital media gives customers more access to information than they could ever use.
E-Commerce lets them shop any time of day or night, from any place they can get online.
It gives them access to products and services from all over the world.
The social impact changes how we interact with and talk about brands. Twenty years ago, your opinion about a brand would be limited to your friends and family. Now, you can share your opinions with the whole world on social media. Brands are under constant scrutiny. Customers expect instant responses to questions and problems. Brands have to factor this interactivity into their customer experience.
From macro trend to individual customers
But, sometimes, macro trends can feel a bit remote and distant. Like they impact someone else, not you.
So, let’s also consider digital from an individual customer level. Because, if we’re talking about you, and how digital affects you as an individual, that’s going to be of clear interest. At an individual level, everyone has different expectations of what digital services they need and value.
What digital services do customers want?
We covered the 6 main activities people do online; information, entertainment, social connections, communicating with others, shopping, and doing productive things in a previous article. This insight came from the excellent TNS digital life study.
Reading that list, what we see are clear customer needs. Online needs people have which your brand can satisfy with digital services. If you can satisfy customer needs, that’s a clear opportunity to grow your business. You can investigate this opportunity as part of building your e-Commerce strategy.
That might mean developing new service products. Or even diversifying completely. (See our Ansoff matrix article for more on these growth options).
Some digital service areas are easier than others. This article focuses on the most frequently used digital services areas :-
Digital has changed the way people access and use information.
Newspapers, books, libraries and educational and training courses still exist. But, the internet means we access them in very different ways.
Much of publishing has moved online. Newspapers now make more money with advertising or paywalls than from selling printed copies. Printed books survive. However, Amazon’s Kindle has drawn a lot of value away from traditional book sales. For example, the turnover of the newspaper and book industry in Australia dropped from $4.59 bn in 2010 to $2.91 bn in 2018. That’s a massive decline.
And of course, people still value professional qualifications. Universities, colleges and other training are still popular. But, they face increasing competition from the likes of YouTube, Udemy and Udacity.
These sites give students access to instant learning for free, or at a low cost. That’s hard to compete with.
Based on these examples, there are 3 main ways to use information as part of your digital services.
Information that moves customers towards a goal
First, there’s information which helps move customers towards a goal. And this goal is part of a journey which will eventually convert into a sale.
This is information content that’s part of your customer experience plan.
You understand customer information needs at each point of their journey. And you create relevant information-based content to meet that need AND move them to the next step.
There are many ways to do this.
Digital gives you plenty of channels to share information with your customers. For example, you can share information as part of your digital services to customers via your website, your blogs, your social media posts, and your CRM program.
And, as per our digital media guide, YouTube is a great channel to share ”How To” guides which meet information needs.
And when you get close to the point of purchase, then obviously key information sources like your product page information become more relevant.
Information content with attached services
Then, you’ve got information content, to which you can attach additional services that generate their own separate income. This can be as simple as selling advertising space on your information content or getting paid for referrals (affiliate marketing).
To the consumer, the information is still “free”. They don’t directly pay for it. But they’re paying for it indirectly when they buy products and services after seeing adverts or clicking on referral links.
Information as a packaged and paid-for service
And then finally, you’ve got options where you package up the information, so customers pay for the whole package as a bundle of information.
Obvious examples include :-
Information impact on the 7Ps
With those options in mind, let’s look at how you might pull on different levers in the 7Ps marketing mix. Let’s look at how you can market informational digital services.
In all 3 options, you have to make some place decisions. Where and how will customers find and experience this information? This slightly stretches the original definition of place from the 4Ps model, in that the place can now be online.
You also need to plan the people and the process elements. How do you manage the people who’ll create the information, for example? What’s the process where customers find the information? How will they interact with it, and how will it move them on to the next stage of the journey?
In particular, if you’re selling the information as a package, the creator of that information has to be part of your plan. For example, do they have credible and relevant experience? Qualifications? A reputation that’ll convince more people to buy the package?
The physical evidence also matters when the customer “buys” your information. You should plan how you’ll deliver it. For example, written in a downloadable book or pdf, or video content the buyer watches.
These things don’t just happen. They should be part of your digital services marketing plan.
And don't forget the original 4Ps
In the 2 options where information drives customers towards a goal or comes with an attached service, information is essentially a promotional mechanic. It’s a way to communicate with customers.
And because it’s free, your pricing mechanic isn’t visible to customers. In fact, from a business model point of view, you cover the cost of providing this information, by recouping it within your end selling price.
But, in the third option, where you’re selling information packages directly, the information is the product. And you have to work out the best way to price it. How do you make it a credible and valuable transaction for the customer?
This is especially hard if there are other free options available. Your information package has to meet their needs AND be unique enough that they can’t get it elsewhere.
We generally see Kindle publishing, and online training digital services like Udemy doing this the best. Although you need to attract many customers to make this work. The price per sale is usually pretty low. You’d expected to pay $15 – $20 for a course on Udemy for example based on their frequent deep discount sales. And if you’re patient, you can pick up most books on Amazon / Kindle for under $10.
All things to consider as part of your 7Ps marketing mix, if information is part of your customer offer.
As per our brand storytelling guide, the other main communication option if you don’t go down the information / education route, is entertainment.
However, it’s a harder service to provide. A different skill set, and already served by well-established businesses. People think of brands like Netflix and Spotify when they think of entertainment digital services. But again, like information, there are ways to do it.
Entertainment as part of your customer experience
Take last year’s Coke Christmas ad, as we reviewed in another article. It’s entertaining, so you think better of Coke. No information or educational content to see here. It’s just part of Coke’s entertaining digital services to customers. Part of the experience you get when you interact with the Coke brand.
Entertainment with attached services
Again, this can be “free” entertainment that comes with attached paid-for services like advertising or referral marketing. For example, sites like Viva La Dirt League and IFL Science create free entertaining content but make money by selling advertising space. (In fact, IFL Science does an unusual job of being informational and entertaining at the same time).
As another example, check out, the entertaining content of “will it blend?”. You get videos of the guy putting random objects into their blender.
For customers, it’s free, entertaining content. But it creates more interest in the blender product behind the tests, and the company – Blendtec – who make the blenders.
It’s entertainment as part of their digital services.
Entertainment as a paid-for package
Finally, you have the world of paid-for video content. Independent production companies now have access to a wide range of channels with the likes of Netflix, Amazon Prime and Apple TV.
This is too big a topic to cover here. But for bigger businesses, we sometimes wonder if they’re missing a trick with this sort of digital service.
In the early days of TV, production companies worked in partnership with sponsors to create content but also promote products. So, not just product placements, but entire programmes. The term “soap opera”, for example, comes from these types of shows being originally paid for by the likes of Proctor and Gamble.
And here’s the thing. People are happy to pay to be entertained. Compared to information, there’s much more value to customers in content that’s entertaining. You just need some creative thinking, to work out how to do it in a way that suits your brand.
Or what about distilleries and vineyards? They’re usually based in more remote locations. However, setting up an online store gives them access to customers all over the world. Location and even opening times are no longer a block to selling.
Digital services in online shopping like fast delivery and 24-7 shopping help you drive even more e-Commerce growth.
Even those businesses who don’t “make” things can use digital to improve their offer. For example, physical service providers like hairdressers, doctors and dentists can use online appointment systems to remove a possible barrier to a sale. Intangible categories like insurance or banking can use technology to automate tasks like form completion and transaction management.
Business-to-business providers can use digital to extend their offer e.g. to offer services like health and safety checks, insurance and managing tax and legal issues.
All different ways these businesses can grow online, by being creative about digital services they offer.
Conclusion - Digital services
Digital services is a new and exciting area, with many opportunities to grow.
We’ve focussed on different ideas and examples in this article covering online customers’ needs for information, entertainment and online shopping.
You exploit the digital services opportunity by first identifying the need. Then, you build it into your marketing plan. That usually means tapping into your digital marketing, customer experience, and e-Commerce skills.