Essay: Effects of marketing mix on customer perceptions

A CASE OF HELLO MONEY IN MERU COUNTY: A RESEARCH PROPOSAL

CHAPTER 1: INTRODUCTION

In order to introduce new products to customers and increase awareness about existing products, companies need to engage in marketing, which is a process aimed at communicating the value that a company provides for its clients, customers, partners an society at large. In addition to communicating, marketing also enables companies to create, deliver and exchange its products and services with the objective of adding value to its stakeholders (Grönroos, 2004). Through the marketing process, companies are able to create, satisfy and keep customers, whereby marketing is a central part of business management because it enables business entities to put customers at the centre of the business operations. In order for companies to achieve optimal performance, they need to have a framework on which to base their marketing activities, whereby the most common model is the marketing mix (Constantinides, 2006). Focusing on different aspects of the marketing mix model determines the extent to which companies are successful in in introducing new products to the market and increasing the popularity of existing products.

1.1.0 Background of the Study

Depending on organisational factors and market environment factors, companies usually take different approaches in their marketing mix, whereby many companies usually focus on a few of the seven components of the marketing mix (Akroush, 2011; Vrontis, Thrassou, & Lamprianou, 2009). Since it is impossible to appeal to all segments of a market, companies usually identify the aspects of their marketing mix that addresses the needs and expectations of their target market, and implement these components in their marketing activities.

1.1.1 Marketing

In order for companies to optimise their adoption of their products, they need to have the means to anticipate the needs and expectations of their customers, and meet them in a way that outdoes the approaches taken by the competition. The marketing orientation of a company depends on the approach it takes towards marketing its products to its customers, whereby common orientations include product, sales, production and marketing orientations (Langerak, Hultink, & Robben, 2004). In product orientation, the company is usually concerned with the quality of its products; this orientation is based on the assumption that as long as the company produces high quality products and services, then it will always have a market (Morgan, Vorhies, & Mason, 2009). Successful application of product orientation requires that a company apply the findings of research or intuition to come up with products whose qualities are in line with customer needs and expectations. In sales orientation, the focus is usually on how the company can promote and sell its particular product rather than identification of changes in customer needs and preferences (Homburg & Jensen, 2007). In the sales orientation approach, the strategy is usually to focus on selling a company’s already existing products, and using promotion strategies to maximise sales volumes. The only cases in which the sales orientation approach to marketing can be sustainable in the long-term is if a company sells products whose demand will not decline, or in cases where the company has dead stock.

Production orientation is the marketing orientation through which organisations focus on the production of as much as possible of a product or service, which is a strategy that involves the exploitation of economies of scale until the company reaches the minimum efficient scale (Merlo & Auh, 2009). Similar to the sales orientation approach, the product orientation for marketing is usually most effective for products and services that already exist, which is usually coupled with the certainty that the preferences and tastes of customers are unlikely to change in the near future (Jaramillo, Ladik, Marshall, & Mulki, 2007). The most common marketing orientation in modern-day marketing strategy is the marketing orientation in which the marketing plan of a firm is based on the marketing concept that includes supply of products that are in line with emerging customer needs (Sin, Tse, Yau, Lee, & Chow, 2002). For instance, upon doing marketing research, organisations are able to understand the desires of their customers, use their research and development department to come up with products whose qualities are based on the results of the market research, and utilisation of promotion strategies to create customer awareness of the product. According to Sin et al. (2002), the marketing orientation can be either customer orientation, organisational orientation or mutual beneficial exchange depending on the marketing aspect the company choses as its focus.

1.1.2 Marketing Mix

In its earliest form, the marketing mix used to comprise of four components including product, price, place and promotion, which provided a framework for the decision-making in the marketing process. The product component refers to both tangible and intangible products provided by a business entity, and refers to any item whose purpose is to satisfy the needs, wants and expectations of consumers. The price component refers to the amount of money that a customer is willing to pay for a product, but also refers to the sacrifice made by customers in an attempt to acquire the product. The purpose of the place component is to describe the accessibility of the product to customers, whereby the best strategy is to ensure that customers can access the product at their convenience. The promotion component of marketing is about marketing communications, whereby companies usually use public relations, sales promotion, direct marketing and advertising to inform customers about the availability of their products (Goi, 2009). The limitations of the original marketing mix necessitated its expansion by the 1980s because it was observed by theories that there were more variables at play in the marketing process.

With time, in order to account for other aspects of the marketing process, the components of the marketing mix had to be expanded, such that it had seven components that included physical evidence, people and process in addition to the original four components. The physical evidence component describes the environment that is available for service delivery, and describes the space within which service personnel interact with the company’s customers. The physical evidence category also describes tangible components that facilitate the service delivery process like furniture and equipment, as well as any artefacts whose objective is to remind customers of the service performance of the company. The people component of the marketing mix identifies the human actors who play a role in service delivery, and service personnel whose responsibility is representing the values of the company to its customers. The people component also describes the interactions the company’s customers have among themselves, and the interactions that customers have with company employees (Ivy, 2008). Finally, the marketing mix includes the process component, which includes the mechanisms, procedures and flow of activities for service delivery.

1.1.3 Mobile Banking

Mobile banking services are services provided by banks and other financial institutions with the objective of allowing their customers to conduct financial transactions using mobile devices like tablet computers and smartphones. In contrast to internet banking in which customers use a web portal to access banking services, mobile banking usually uses either a smartphone app provided by the banking institution, or other means of accessing the services of the financial institution, like USSD codes. Although mobile banking is usually accessible for 24 hours per day, there are usually limitations, like the types of accounts that can be accessed, as well as per transaction and per day limits on the amount of money
that can be transacted
. Some of the transactions that are usually conducted through mobile banking include checking account balances and lists of recent transactions, paying bills electronically, and fund transfers to accounts within the same bank and to other banks (Ivatury & Mas, 2008; Mallat, Rossi, & Tuunainen, 2004). Apps provided by some banks also enable customers to download and print copies of statements, and some financial institutions mail hardcopies of banking statements to customers at a fee.

From the point of view of banks and other financial institutions, implementation of mobile banking services provides an opportunity for the bank to reduce the costs associated with handling transitions. The cost savings arise from the banks not having to deal directly with customers at a bank branch for transactions that are not cash withdrawal or cash deposit, and can be completed without having to interact with bank representatives. Therefore, in transactions that do not involve handling of cash, mobile banking is implemented, but even a customer with mobile banking needs to visit, an ATM, bank agents or bank branches in order to make cash deposits or withdrawals. As a way of improving the utility of mobile banking, many banks have included a remote deposit option in their apps, which enables customers to use the camera in their devices to transmit digital cheques to the financial institution. Although both services use mobile devices, mobile banking is different from mobile payments because the latter is the use of mobile devices remotely or at point of sales to make payments for goods or services (Burhouse, Homer, Osaki, & Bachman, 2014; Nicoletti, 2014). In this case, while mobile banking is the use of one’s mobile device to access the services of a financial service provider in the same way credit cards and debit cards are used to complete EFTPOS payments.

1.1.4 Global Adoption of Mobile Banking

Since mobile banking does not require a large infrastructural investment, it is popular in many parts of the world that have little to no infrastructure, particularly in rural and remote areas. In addition, the mobile banking aspect of mobile commerce is highly popular in countries in which most of the population have little to no access to banks and other financial institutions. In many of these places, banks only have branches and agents in big cities, and customers need to travel for hundreds of kilometres to access the nearest banking institution. Some of the countries where access to banking services is limited or non-existent include Iran, Somalia, Guatemala, Pakistan, India, Bangladesh and Nepal among other countries in Africa, Asia and south America where banks have few to no outlets in rural and remote areas. In Iran, mobile banking services are provided by multiple banks including Parsian, Pasargad Bank, Tejarat, Mellat, Sepah, Edbi, Saderat and Bankmelli. In Guatemala, mobile banking is provided by Banco Industrial while in México the service is accessed by those who have accounts with Bancomer, Omnilife and MPower Venture (Vahedi, Hosseinzadeh Lotfi, & Esmaeial Najafi, 2016). In Somalia, as is the case with many African countries, mobile banking services are provided by telecommunications service providers, with the most prominent service being ZAAD by Hormuud Telecom.

Although mobile banking services are mostly provided by either a bank or a telecommunications service provider, in some cases people, banks cooperate with telecommunications service providers to offer mobile banking services. For instance, in Pakistan, Telenor collaborated with Tameer Bank to introduce the Easy Paisa mobile banking solution in the country in 2009 (Friedman, 2010). Through mobile banking, Eko Financial Services, which is a joint venture of ICICI Bank and the State Bank of India, provides bank accounts, withdrawals, deposits, remittances, microfinance, micro-insurance and other services to its customers. The customers of Eko Financial Services are mostly the unbanked among the country’s population and migrants, with only 20 per cent being members of the rest of the population. Mobile banking has grown at a rapid rate globally, whereby, according to Cellular News (2011), United States, Brazil, china and Kenya experienced 100, 110, 150 and 200 per cent growth within a year between 2010 and 2011.

In order to increase the utility of mobile banking whose functionality is limited to nonmonetary transactions, banks have had to collaborate with third parties to offer other banking services. For instance, when Dutch-Bangla Bank introduced its mobile banking Service in 2011 in Bangladesh, it introduced network and agent support by Banglalink and Citycell, the mobile network operators in Bangladesh. Although Bangladesh has a population of over 160 million in which only 13 per cent have access bank accounts, the arrangement Dutch-Bangla Bank has with its various partner enables it to reach the unbanked rural population. Since nearly 50 per cent of the unbanked rural population has access to mobile phones, the bank is able to offer banking services to any customer with a mobile subscription with any of the coutnry’s six telecommunications service providers (Islam & Salma, 2016). Rather than take the limited approach usually taken in mobile banking where some bank services are unavailable, Dutch-Bangla Bank has made it possible for mobile banking to be used to complete all the transactions that would be completed with a conventional bank account.

The advantages of mobile banking have appealed to all banking institutions, such that even those that have been unable to establish their own mobile banking system have collaborated with those that have existing systems. An example is how Mobile Khata, which was originally introduced by Laxmi Bank in 2012, has become the mobile banking system of choice for multiple banking institutions in Nepal. Since Mobile Khata operated on Hello Paisa, a third-party platform, it works on all telecom networks in Nepal including NCell, Nepal Telecom, UTL and Smart Tel. In addition, Mobile Khata is interoperable with multiple banks, whereby, after Laxmi Bank, various other banks joined the network including Bank of Kathmandu, Siddhartha Bank, Trust Bank Nepal and Commerz among others (Inclusive Business Hub, 2016). Interoperable mobile banking services are not limited to Nepal or third world countries, as the United Kingdom has Pingit, which is a mobile banking system owned whose owner is a consortium of banks. Barclays uses a version of the service known as Barclays Pingit, in addition to the Hello Money service it offers in Africa. Across the world, mobile payment systems have been introduced including Paym in United Kingdom (Payments UK, 2017) and Pesalink in Kenya (IPSL, 2017) whose objective is to enable customers from different banking institutions to transfer funds at minimal costs.

1.1.5 Mobile Banking in Kenya

In addition to network-independent mobile money transfer services like MobiKash, the country’s mobile money services are dominated by telecommunications service providers including Safaricom, Airtel and Telkom. In Kenya, mobile money services are dominated by Safaricom whose M-pesa service subscribers include nearly half of the country’s population (Safaricom, 2017). Most banks in Kenya have followed suit and implemented their own mobile banking services to varying degrees of success. Due to the convenience offered by mobile banking, and the fact that branches of banks in Kenya are concentrated in towns, there has been a high update of mobile banking services. The format for implementation is that customers register their accounts and they can transact through their phones, as well as conduct cash transactions like deposits and withdrawals through bank-appointed mobile banking agents.

1.2 Problem Statement

The adoption of mobile banking in Kenya depends on the demographic of the bank’s customers, the accessibility of bank branches to its customers, and
the purpose for whic
h customers use their bank accounts among others. In order to achieve widespread adoption, a bank needs to implement an excellent marketing mix for its mobile banking product, whereby the marketing approach taken affects the perceptions and actions of customers. Since the mobile banking market in Kenya is dominated by mobile service providers and banks like Equity Bank and Cooperative Bank, Barclays Kenya needs to evaluate the effectiveness of its current marketing strategy to identify areas that need improvements.

1.3 Purpose of the Study

The purpose of this study is to examine the marketing mix taken by Barclays Bank of Kenya in marketing Hello Money in Meru, and evaluate how this marketing strategy has affected customer perceptions about the product. Customer perceptions will be an indicator of if the marketing mix adopted by Barclays Kenya will result in widespread adoption of Hello Money, or if the strategy will need to be changed in favour of a better strategy. The findings of the study will be beneficial in making recommendations on how Barclays Kenya can improve its strategy for marketing of Hello Money to compete successfully and sustainably with market leaders.

1.4 Objectives of the Study

1.4.1 General Objective

The General objective of this study is to determine the effects the marketing mix adopted by Barclays Kenya for its Hello Money Service has had on customer perceptions about the product.

1.4.2 Specific Objectives

The specific objectives of this study include:

• To determine the effects the product characteristics of Hello Money have had on customer perceptions

• To explore the effects of the pricing strategy adopted for Hello Money have had on customer perceptions

• To identify the effects of convenience and accessibility of Hello Money have had on customer perceptions

• To determine the effects that the promotion strategy implemented by Barclays Kenya in promoting mobile money has had on customer perceptions

1.5 Theoretical Framework

Although the research objectives of this study are focused on four components of the marketing mix, the investigation to be done for this study will address all aspects of marketing mix adopted by Barclays Kenya in marketing its Hello Money Service. Therefore, the research framework is based on the 7Ps marketing mix, as shown in figure 1 below.

Figure 1: Research Framework (Independent Variables and Dependent Variable)

Based on the framework above, this study is done on the assumption that the perception of customers towards a product is dependent on how the company decides to present that product through its marketing mix. Therefore, after collecting data on customer perceptions towards Hello Money, the discussion chapter will include an examination of the Barclays Kenya marketing mix to justify the observed customer perceptions.

1.6 Scope and Limitations of the Study

This study can be done in multiple ways, but in order to ensure that the issue at hand is explored in sufficient depth and in a timely manner, the study will be limited to examination of the marketing mix using the seven parameters identified above. In addition, the study will only be done on Barclays customers who visit the bank on a single day to limit the sample size to just enough to allow for themes and trends in customer perceptions to emerge. Although the findings of this study may be applicable to Barclays Kenya on a national level, the sample size and the study will be limited to the customers in Barclays Meru.

1.6 Chapter Summary

Marketing determines the perceptions that customers have towards a product, which, in turn affects the rate of adoption of the product, and the sustainability of market growth for the product in question. Although Barclays Kenya has introduced Hello Money to its customers, mobile banking services are usually popular among the unbanked, which may limit its adoption by Barclays customers who already have convenient banking and fund transfer tools like online banking, ATMs, and the use of debit and credit cards at POS. The purpose of this study, therefore, will be to examine how the marketing approach has affected customer perceptions towards Hello Money, and what the bank can do to improve the rate of adoption of the product. The investigation to be conducted in this study will be based on the 7Ps marketing mix, whereby each of the components is assumed to have an effect on customer perceptions. The study will be limited to Barclays Kenya customers who visit the Meru branch on a single day, whereby the sample size will be determined by the number of customers it takes for trends and themes to emerge. The chapters that follow in this research proposal include literature review, methodology and conclusion.

CHAPTER 2: LITERATURE REVIEW

2.1 Introduction

The purpose of this chapter is to examine the current knowledge on the topic at hand by reviewing secondary sources that contain findings of research done to investigate the relationship between customer perceptions and marketing mix. The chapter is organised thematically into two sections including customer perceptions and marketing mix, which will be used as a guideline in the discussion of secondary sources containing information on the topic of interest. After a descriptive and analytical discussion of literature, a chapter summary section will synthesise the findings, and link back the findings from secondary research to the objectives of this study.

2.2.0 Customer Perceptions

Customers perceive companies, their businesses, their products, and their competitors in different ways, which primarily depends on the relationship a company has worked to build with its customers and other stakeholders. Since customer perceptions are dependent on a myriad of personal, organisational, socioeconomic, sociocultural and market among other factors, a customer’s perception of a company’s products may even deviate from the company’s original intention when producing and marketing its product (Smith & Colgate, 2007). The dependent of customer perceptions on many underlying factors complicates the marketing process for the company because getting and sustaining the attention of customers is important for the long-term survival of any market player. In the modern-day globalised economy, the success of companies depends on how they can present their products in a way that holds the attention of customers in a sustainable manner. Failure to achieve and maintain the loyalty of customers results in companies losing their customers to competitors who may be offering similar or better products, which makes it a daunting task to recapture a lost market (Kay, 2006). Currently, the availability of internet connectivity means that customers have more information about companies and their products than ever before, which means that they have many alternative products serving the same purpose. The relationship between marketing mix and customer perception is that companies need to be creative in their marketing strategies since the high level of competition may not allow them another chance to impress their potential customers.

2.2.1 Importance of Customer Perception to Businesses

As the economy becomes more and more global, companies are facing increasing and fierce competition from local and global companies, which greatly complicates the process of differentiating products from those offered by competitors. In addition to increasing competition and better access to information by customers, the globalisation of logistics, sourcing and production have also had an effect on the ability of companies to compete successfully. Furthermore, many companies have expanded their product portfolios beyond
their traditional industries and markets, which presents a
risk for companies that cannot adapt in a similar manner. For instance, the banking industry is under threat from telecommunications service providers whose product portfolios have expanded to cloud computing, web hosting and banking among others. In countries where people do not have access to banks, telecommunications service providers have introduced mobile money services that offer alternatives to bank services (Eggert & Ulaga, 2002). In an attempt to differentiate their products from the offerings of other market players, companies are forced to commodify their products in an attempt as winning customers over through price competition strategies.

The logical assumption is that, with reduced prices and minimal differences between products from various providers, customers would buy from the company with the cheapest products. However, based on customer perceptions of different companies, this is not usually the case, whereby, on the one hand, customers spend their time comparing prices and looking for bargains. On the other hand, customers usually prefer luxury and branded products from specific companies, which means that they have to pay prices that are higher than the market average. Traditionally, companies used to differentiate their products using factors like functionality, quality and price, but with the increasing complexities of customer perceptions, modern-day companies need to take a more holistic approach to marketing. This approach involves not only having high quality products at acceptable prices, but also building relationships with customers that extends to multiple aspects of customer relationship management (Lam, Shankar, Erramilli, & Murthy, 2004). Failure to implement a marketing program that will have a long-lasting positive influence on customers would result in companies losing their customers, and probably their market position, to competitors.

2.2.2 Effects of Customer Perception on Customer Loyalty

In the traditional marketing approach, companies used to focus on customer relationship management concepts like targeted marketing activities including direct marketing, advertising and event marketing, as well as customer satisfaction with the quality of products. These aspects of the relationship a company builds with its customers are indispensable, but are not enough to ensure customer loyalty for the long-term survival of the company. The relationship built between the company and its customers is limited because the company only focuses on satisfying the customer without considering that satisfied customers are not always loyal (Yang & Peterson, 2004). Customer satisfaction is a limited goal for companies because customer satisfaction, while important, is only an indicator of the company’s product meeting the needs and expectations of customers. The company needs to establish an emotional bond with its customers by affecting their perception of the company, the company products, and the company brand such that the customer identifies with the company.

Identifying with a company, for a customer, not only means that the customer will buy from the company repeatedly, but also means that the customer is highly likely to recommend the company’s products to others. With an emotional bond established, customers become loyal in such a way that they prefer the company’s products in ways that cannot be explained by rational reasons like durable and better quality products. An example of a company that has managed to achieve a high level of customer loyalty is Apple, which, although it has high quality products, the quality of products or their innovativeness is never a consideration when Apple customers are making a purchase. When a company has achieved such levels of customer loyalty, its future is pretty much assured, even when an industry is suffering or the economy is undergoing a recession (Caruana, 2002). In order to achieve such levels of customer loyalty, companies need to account for emotional values like exclusivity, social status, responsiveness, level of personalisation of product and care, and friendliness in their marketing strategy.

2.2.3 Factors that Determine Customer Perceptions

In addition to the product being able to satisfy the needs and expectations of a customer, customer perception is affected by a variety of factors that companies need to consider in their marketing strategies. The modern-day information-driven economy means that the perception of customers towards a company and its products is dependent on the information available to customers during the process of making a purchase. The first factor that determines customer perception is how other customers who have used the company’s products describe the product, which has resulted in companies seeking the endorsement of influencing groups like sports personalities, musicians and other celebrities to improve the image of their products (Byrne, Whitehead, & Breen, 2003; Wei & Lu, 2013). The effect of the perceptions of others towards a company and its products explains why, in online marketplaces like Amazon and EBay, the most popular brands and products remain popular as more customers provide their feedback. Therefore, companies need to market their products in such a way that more customers have a positive perception towards the company and its products, which should have a positive effect on the perceptions of even more customers.

As indicated above, customer perception is more about perceived value rather than the actual value, which is the reason companies need to appeal to the emotional rather than the rational aspect of their existing and new customers. For instance, the marketing campaign of a company should be aimed at the market segment the company serves because customer perceptions are determined by the degree to which customers feel that the campaign addresses pertinent issues. In this case, if a company serves a market in which customers want the most value at the lowest price possible, the marketing campaign should communicate this message to customers in an unambiguous manner. Another factor that determines customer perceptions is the services quality and the responsiveness of the company and its affiliates including distribution partners and customer services centres (Byrne et al., 2003; Chi, Yeh, & Tsai, 2011). If a customer thinks the quality of service or responsiveness of a company and its partners do not meet expected standards, then it is unlikely that the customer will have a positive perception towards the company and its products.

2.3.0 Marketing Mix

Application of the marketing mix to the marketing plan of the organisation entails the placement of the right product or combination of products in the market at the right price, price and time to maximise the quantity of the product that the organisation can sell to customers. While producing an item or service and placing it in the market seems like a straightforward process, complexity arises if the product is to be adopted by customers in a feasible and sustainable manner. The components of a marketing mix act as a guide on how the company can apply its internal factors in a way that not only keeps up with external market factors, but also satisfies the needs and expectations of its customers. For the process of marketing products, the 4Ps marketing mix is applied, and it includes product, price, place and promotion, which describe the components of presentation of the product to customers. In the marketing mix for services, the 7Ps marketing mix that includes product, price, place, promotion, people, process and physical evidence since the additional components are important to customer perception of services and companies that offer them (Goi, 2009). Since many companies provide a combination of products and services, the 7Ps marketing mix is the most universal approach to planning for the marketing process.

2.3.1 Price

Companies need to establish the amount of money they need customers to pay in exchange for their goods and services, whereby the price should be relative to the real and perceived value of the product to the customer. Through marketing techniques, companies usually increase the perceived value of their products, which can enable them to charge high prices for their products, and increase the profits they make from their products. On the other hand, all companies usually work on improving their manufacturing efficiency and effectiveness, which ensures that as much profit is made from their assets as possible. For instance, when companies can sell high volumes and a wide variety of products, they are able to increase their profits by taking advantage of economies of scale and economies of scope respectively. The pricing policy approach taken by a company depends on its market position, target market and brand value among other organisational, product and market factors (Constantinides, 2006). Companies that are able to leverage factors like brand value and customer loyalty, which enable companies to create an emotional connection with their customers, are able to charge higher prices for their products. On the other hand, companies that are new to the market, or those that have many direct competitors, need to differentiate their products by offering lower prices for better value.

2.3.2 Product

The product of a company is the combination of goods and services it offers to the customers in its target market with the objective of meeting their needs and expectations. Products can be either physical and tangible items, or intangible services, although even companies that specialise in tangible products usually offer accompanying services for their products. When introducing their products to the market, companies need to classify their products into three groups including core products, actual products and augmented products, whereby each class of products is marketed using a different strategy. Products usually go through a four-stage life cycle that is synonymous to the biological lifecycle, whereby the product life cycle has four stages including introduction, growth, maturity and decline (Leonidou, Katsikeas, & Samiee, 2002). The objective of the marketing process is to keep the product in the growth and maturity stages for as long as possible by incorporating incremental innovations into the process of improving the product. By so doing, companies can achieve a sustainable competitive edge for as long as possible, and introduce revolutionary changes to products in order to counter any threat to their market position.

2.3.3 Place

Once a company makes its customers aware of its products, it needs to make these products available for purchase at the customers’ convenience, which can be done by either selling the product directly to customers, or using intermediaries to sell and deliver the products. The place component of the marketing mix defines the mechanism through which products are moved from the service provider or manufacturer to the customer. In the modern-day market, the distribution channels include both brick-and-mortar stores, and any services offered through devices like smartphones and computers using mobile networks and the internet. The presentation of the product done through the supplier website and brick-and-mortar stores, as well as stores belonging to distributors and intermediaries, determines the extent to which customers want to purchase the product from the company (O’Cass & Julian, 2003). Different companies take different approaches in their distribution channels, whereby some companies control every aspect of their distribution channels while other companies let their suppliers decide the best strategy for marketing the products.

2.3.4 Promotion

When a company has a new product to introduce to the market, it usually takes a combination of measures to communicate the availability of this product to its existing and potential customers. The process of communicating to customers in this ways is referred to as promotion, which is done with the objective of not only informing customers of availability of products, but also encouraging them to purchase the products. the promotion component of the marketing mix entails the use of all available tools in marketing communication, with the approach taken by each company differing based on its marketing budget, target market and other factors relating to the company and the market in which it operates. Some of the promotional elements that are usually included in the promotion aspect of the marketing mix include personal selling, sales, sales promotion, advertising, direct marketing, public relations and online communications (Mangold & Faulds, 2009). In order to reach as many potential and existing customers as possible, companies need to communicate with their customers using all the promotional tools that their customers are likely to access. As is the case with all other aspects of the marketing mix, companies need to perform market research in a comprehensive manner in order to understand their customers in terms of their needs and expectations when using the company’s products. Furthermore, the promotional mix should be adjusted on a regular basis to take into account any technological developments, and any changes that occur in its target market.

2.3.5 Physical Evidence

While the place component of the marketing mix describes the distribution channels through which the company delivers its products, physical evidence describes the environment in which representatives of the firm and its customers interact. During this interaction, the service offered by the company is delivered to the customer, which is usually a setting prepared by the company for the purpose of service delivery like a banking hall or similar structures. The physical evidence component of the marketing mix describes the infrastructure and other associated items that facilitate the service delivery process. Some of the examples of physical evidence include brochures, business reports, annual accounts, logos and signs, equipment, buildings, company website and business cards among others. For companies working in the service industry, there is a need to have comprehensive physical evidence of operations because this evidence is useful in creating a relationship with customers. Physical evidence not only enables the company to introduce the company to its products, but also enables the company to offer something tangible for customers in spite of operating in an industry where service delivery leaves little to no evidence (Goi, 2009; Ivy, 2008). This component of the marketing mix explains why service delivery companies go to great lengths to build their brand, create an identity, and offer tangible promotional materials and other items to their customers.

2.3.6 People

In order to deliver its services to its customers, a company needs a human component because service delivery, in most cases, requires direct interaction between a company representative and the customer. The people component of the marketing mix includes all the human actors related to the company that have the capacity to influence the perception of buyers, especially if they play a direct role in delivering the service to customers. Some of the human actors in the people component of the marketing mix include company personnel, the company’s customer, and other customers with whom the customer interacts in the service environment. In companies that operate in the service delivery industry, the people component is the most important element because it not only affects the quality of service delivery, but also the overall experience the customer has in his or her interaction with the company. Since services are always produced and consumed at the same time, there is usually the need to alter the customer experience to address the specific needs of the customer (Pomering, Noble, & Johnson, 2011; Russell, 20
05). In this case, t
he capability and capacity of the company representative to meet the needs of the customer determines the quality of experience, and, by extension, the perception of the customer towards the company and its products.

2.3.7 Process

The process component of the marketing mix describes the mechanisms, procedures and activities through which the company offers its services to the customers in its target market segment. The operating systems and service delivery processes affect how the customers perceive the company and its products, especially based on how the company has standardised its service delivery process. The process component is seen as a means through which companies achieve their outcomes, which include making a profit and satisfying the needs and expectations of customers. In addition, the company marketing process also reflects how the company interfaces with its customers because the service delivery process determines the quality of experience the customer has when interacting with company representatives (Constantinides, 2006; Grönroos, 2004). As part of the process of marketing their services, companies standardise and optimise the quality of their service process, such that customers visiting company or intermediary outlets always know what to expect in terms of quality of service.

2.4 Chapter Summary

The perception of customers towards a company and its products is important for the long-term survival of the company’s business, which explains why companies need to work towards ensuring customer perceptions are favourable. When customers perceive a business and its products in a positive light, they are more likely to use the company’s products in the long-term and give the company the chance to achieve a sustainable competitive edge.