“I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.”
- Maya Angelou (1928 - 2014), American poet and civil rights activist

Goods are physical products, such as handbags, cars, and laptops. Services are intangible products, such as education, haircuts, and train rides. Traditionally, the marketing of physical goods (the 4Ps covered in Unit 4.5) varies from the marketing of intangible services (which have an addition 3 Ps). The marketing mix for goods involves the traditional marketing mix (product, price, promotion, and place). The marketing mix for services, developed by Bernard H. Booms and Mary J. Bitner (1981), includes three additional elements to the marketing mix: people, process, and physical evidence.

• People – the importance of employee-customer relationships in the marketing of a service.

• Processes – the importance of delivery processes in the marketing of a service.

• Physical evidence – the importance of tangible physical evidence in the marketing of a service.

This section of the website examines people in the marketing mix. It explores the importance of employee-customer relationships in marketing a service.

 Teacher only box

Note to teachers

The extended marketing mix is no longer explicitly referred to in the new guide, and all 7 Ps of the marketing mix apply to both SL and HL students.

Please be aware of the above points when referring to or using past IB exam papers and mark schemes.

An organization’s employees are a vital aspect of the marketing mix because they are the people who interact with customers and deliver the service. It is important to hire and train the right workers to deliver good customer service to clients. They are essential in determining the level of customer care. Customer care refers to the attentiveness and courtesy of employees towards meeting the needs of their customers in the delivery of a good or service. This helps to improve the level of customer experience and satisfication, whether it is a lecture at university, a haircut, a meal at a restaurant, a ride of an airline, or a visit to a theme park.

In the context of a hgh school, for example, 'people' is a vitally important element of the extended marketing mix, i.e. the calibre of the teaching staff in terms of their qualifications, skills, and experience (as teachers, examiners, paper setters, principal examiners, deputy chief examiners, authors, teacher trainers, and so forth).

The provision of a superior quality service relies on the goodwill of all employees. It only takes one employee to ruin the reputation for everyone else in the organization. After all, the employee-customer relationship determines whether customers have a positive perception and experience of the business and whether they are likely to come back. According to this article in Forbes magazine (July 2020), ninety-Six per cent of customers would go elsewhere is they experience bad customer service.

Successful service providers focus on the service element of the marketing mix by investing in their employees. This includes training and development as well as ensuring their staff remain highly motivated in the workplace.

 Watch this video clip which features David Holmes, a Southwest Airlines cabin crew member, who seems to really enjoy his job, thus having a positive impact on customers. The video went viral on social media at the time.

By contrast, shortcomings and inadequacies in employee-customer relationships make it more difficult for the organization to market its services. A rude waiter at your favourite restaurant will spoil even the best of meals. As celebrity chef and entrepreneur Gordon Ramsey says, "Unhappy customers can destroy your reputation."

With the power that customers now have with social media, news of poor customer service is quickly spread. Watch this example of United Airlines upsetting the wrong customer – Canadian musician Dave Carroll, who became a YouTube sensation after he wrote a song about United Airlines breaking his guitar and refusing to pay the $1,200 that he paid to get it fixed. It was reported that United Airlines lost 10% of its market value (approx. $180 million) following Carroll's exposure of the incident.

However, as American entrepreneur and author Zig Ziglar once said “Statistics suggest that when customers complain, business owners and managers ought to get excited about it. The complaining customer represents a huge opportunity for more business.”  Businesses will undoubtedly make mistakes from time to time, but it is learning from these mistakes and delivering improved customer service that enables them to survive and thrive.

 Watch this short clip on the secrets behind Apple's great customer service:

 Watch this 4-minute video for a brief insight into how bad customer service is unacceptable:

 Watch this short video clip about how Costco has thrived despite the growing dominance of Amazon in the retail industry. In particular, the video mentions that Costco employees are paid more than the average employee in the industry. How does this benefit Costco and its customers?

However, is there ever a case for rude service to be part of a successful business model? Can providing rude service ever to a recipe for success?! Watch this short video about Karen's Diner, a Tasmanian restaurant chain with outlets in in Australia, New Zealand, the USA, and the UK that thrives on providing customers with rude service.

However, in July 2023, Karen's Diner in Australia and New Zealand went into administration. Even with a unique selling point of being rude to customers, perhaps this case shows just how important "people" is in the marketing mix. After all, poor customer service - be in intentionally or as a gimmick - is not a sustainable business practice. Karen's Diner had accumulated $4.3 million worth of debt by the time of its demise.