Who is credited with extending the marketing mix to seven Ps for services by adding people, process, and physical evidence?
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Hospitality & Tourism · Foundations
Hospitality Marketing
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In 30 seconds
Hospitality marketing is how a hotel, restaurant, or brand attracts and keeps guests. Because the product is an intangible experience, marketers use a services mix of seven Ps, not four. They segment the market, target chosen guests, and position the brand. They also decide how rooms and tables reach buyers: sold direct, or through intermediaries like online travel agencies that charge commission. Digital channels, reviews, and loyalty programs tie it together.
Why this matters
In lodging and food service, marketing decisions move real money. A hotel that sells a room through an online travel agency can lose fifteen to thirty percent of that booking to commission, so where and how you sell matters as much as what you charge. Segmentation and Positioning The distinct place a brand deliberately occupies in target customers' minds relative to competitors. Full entry → decide which guests you chase and how you look beside competitors; branding and loyalty programs decide whether they come back. Reviews now shape demand before a guest ever arrives. Understanding the services marketing mix gives you a shared vocabulary for these choices and prepares you for later courses in revenue management, digital marketing, and brand strategy.
The college version
From four Ps to seven: the services marketing mix
The marketing mix is the set of controllable tools a business uses to shape demand. Its most familiar form is the four Ps, credited to marketing professor E. Jerome McCarthy, who condensed Neil Borden's broader 'marketing mix' idea into four categories. Product is the good or service offered; price is what the customer pays; place is where and how the customer buys; and promotion is the advertising, selling, and communication used to attract customers. The four-P model was built with tangible goods in mind, and hospitality does not fit neatly. A hotel stay or a restaurant meal is largely an intangible experience: you cannot inspect a night's sleep before you buy it, and the service is produced and consumed at the same time, often in front of the guest. To close that gap, Booms and Bitner (1981) proposed an extended mix of seven Ps for service firms, adding people, process, and Physical evidence The tangible cues (lobby, website, uniforms, plating) that signal quality of a service a customer cannot inspect before buying. Full entry →. People are the staff and other guests whose behavior is part of the product. Process is how the service is delivered: the check-in flow, the reservation system, the pace of table service. Physical evidence is the tangible cues that stand in for a product you cannot pre-test: the lobby, the uniforms, the website, the plating. In hospitality these three added Ps often decide whether a guest is satisfied, which is why marketing here is inseparable from operations.
STP: segmentation, targeting, and positioning
No property can profitably serve every traveler, so marketers use the STP Segmentation, targeting, and positioning: dividing a market, choosing which segments to serve, and shaping the brand's place in target customers' minds. Full entry → framework. Segmentation divides the market into groups whose members have similar needs and are likely to respond similarly to an offer. The common consumer bases are geographic (where guests live or travel from), demographic (age, income, family structure), psychographic (lifestyle, values, and personality), and behavioral (usage rate, occasion, and benefits sought, such as business versus leisure). Targeting is choosing which segments to serve, usually the ones the business can serve well and profitably. Positioning is deliberately shaping the place a brand occupies in target customers' minds relative to competitors, so that a limited-service airport hotel, a luxury resort, and a budget hostel each stand for something distinct. Positioning is a promise the rest of the mix must keep: if you position on tranquil luxury, the price, the physical evidence, and the staff all have to line up, or the position collapses. STP comes before the mix because who you are selling to determines every P.
Branding and brand loyalty
A brand is the name, symbol, and set of associations that identify a property or company and separate it from rivals. Strong hospitality brands act as a shortcut for guests: because the product cannot be inspected in advance, a familiar flag reduces the perceived risk of an unknown room in an unfamiliar city. Brand loyalty A guest's tendency to choose the same brand repeatedly and resist switching to competitors. Full entry → is the tendency of guests to choose the same brand repeatedly and to resist switching, even when a competitor is cheaper or closer. Loyalty is valuable because retaining a guest usually costs less than acquiring a new one, loyal guests book more often, and they are more forgiving of the occasional service lapse. Brands build loyalty through consistent quality, recognition, emotional connection, and formal loyalty programs that reward repeat stays. Loyalty is also strategic in distribution: a guest who books direct because they belong to a brand's rewards program is a guest the brand did not have to buy back through an intermediary.
Distribution: direct booking versus intermediaries
Place, in hospitality, is largely a question of distribution channels: the paths by which an available room or table reaches a buyer. A property can sell direct through its own website, app, phone, or front desk, or through intermediaries. The main intermediaries are online travel agencies (OTAs) such as Booking.com and Expedia, which display and sell inventory to consumers; global distribution systems (GDS), the networks travel agents and corporate bookers use to reserve rooms; and wholesalers or tour operators, who buy rooms in bulk and repackage them. Intermediaries extend reach and fill rooms a property could not sell on its own, but they charge for it. As of 2026, OTA commissions typically run about fifteen to thirty percent or more of the booking value, up from roughly ten percent a decade earlier. A Direct booking A reservation made through the property's own channels (website, app, phone, front desk), carrying no intermediary commission. Full entry → carries no OTA commission, only the property's own costs for its website, search and social advertising, and payment processing, which are usually far lower. That gap is the core direct-versus-OTA trade-off: intermediaries bring volume and visibility, but each booking made through them keeps less revenue than the same booking made direct. Most hotels therefore pursue a channel mix, using OTAs for reach while working to convert first-time guests into direct, repeat bookers. (Setting the nightly rate itself and metrics like RevPAR belong to revenue management, a separate discipline.)
Digital, social, reviews, and loyalty programs
Most hospitality demand now begins online, so digital marketing carries much of the promotion P. Content marketing (useful photos, guides, and video), search engine optimization, paid search and metasearch, email, and social media are the everyday tools for attracting and re-engaging guests. Two forces make the digital side distinctive. First, online reviews and ratings are now a major influence on booking decisions: most travelers consult reviews before choosing where to stay, which turns online reputation management, responding to feedback and encouraging satisfied guests to post, into a marketing function rather than an afterthought. Because the product is intangible, the experiences of past guests become the physical evidence future guests rely on. Second, loyalty programs are both a retention tool and a data engine. Points, tier status, and member-only rates give guests a reason to return and to book direct, and the member profile gives the brand first-party data to personalize offers. Together, reviews and loyalty close the marketing loop: acquisition brings a guest in, the on-property experience earns a good review, and the loyalty program brings the guest back through a cheaper, higher-margin direct channel.
Eli explains
The same idea, in plain words
Explain it like I’m 10
Selling a hotel room is not like selling a toy. You can't hold a room or try it before you buy it. So hospitality marketers use extra tools: not just what the room is, what it costs, where you buy it, and the ads, but also the people who serve you, how smooth the visit feels, and the clues you can actually see, like a clean lobby and nice photos. They also decide who to aim at, how the brand should look next to other hotels, and where to sell the room. Selling it on a big travel website reaches more people but the website keeps a slice of the money, so hotels also try to get you to book with them directly and come back.
Picture it like this
Think of a lemonade stand. A plain stand just has lemonade, a price, a corner, and a sign. A great stand also has a friendly kid pouring (people), a no-spill quick-serve routine (process), and a bright clean table with a cute cup (physical evidence). And you could sell through a busy snack cart down the street that takes a cut of every cup (an OTA), or get regulars to walk straight to your stand (direct booking).
Where the picture stops working
The lemonade is a physical thing you can taste, but a hotel stay is mostly an experience you buy before you get it, which is exactly why the extra Ps and online reviews matter so much more for hospitality than for a cup of lemonade. And a snack cart's cut is tiny compared with the fifteen-to-thirty-percent commissions real online travel agencies can charge.
Worked example
A 40-room boutique hotel sells a room for a $200 nightly rate. Booked through an OTA charging a 20% commission, the hotel keeps $200 minus $40, or $160. The same room booked direct through the hotel's own website carries no OTA commission; even after, say, $8 in card processing and advertising cost, the hotel keeps $192. That is $32 more per night on one room, roughly a 20% swing in net revenue on that booking. Over a year, a hotel that moves even a fraction of its bookings from OTA to direct changes its bottom line noticeably, which is why loyalty programs and a good direct website are marketing investments, not just conveniences. (The $200 rate itself would be set by revenue management, a separate topic.)
Key takeaway
Hospitality marketing sells an intangible experience, so it uses a seven-P services mix, applies STP to decide whom to serve and how to be seen, and manages distribution channels so that the reach of intermediaries like OTAs is balanced against the higher margin of direct, loyal, repeat guests.
Quick check
3 questions here, of 5 in this lesson’s practice set. Answers stay hidden until you check.
Which of the following is one of the three extended service Ps rather than one of the original four?
Choose an answer, then check it.
A boutique hotel groups potential guests by lifestyle and values, marketing separately to adventure-seekers and to wellness-focused travelers. Which segmentation base is it using?
Choose an answer, then check it.
Study tools & related lessonsYou’ll learn to · Common mistakes · Easily confused · Key vocabulary · Related
You’ll learn to
- Define the services marketing mix and list the seven Ps.
- Attribute the original four Ps to McCarthy and the three extended service Ps to Booms and Bitner.
- Distinguish segmentation, targeting, and positioning within the STP framework.
- Explain the cost trade-off between direct booking and selling through intermediaries such as OTAs.
- Analyze how branding, loyalty programs, and online reviews build and protect repeat demand.
Common mistakes
Treating hospitality marketing as just the four Ps.
Services add three more Ps: people, process, and physical evidence, from Booms and Bitner (1981). In hospitality those three often decide guest satisfaction.
Confusing the parts of STP, especially targeting and positioning.
Segmentation divides the market, targeting picks which segments to serve, and positioning shapes how the brand is perceived relative to competitors. They are three distinct steps.
Assuming OTAs are bad and direct booking is always better.
OTAs bring reach and fill rooms a property could not sell alone. The point is a deliberate channel mix that manages the commission cost, not avoiding intermediaries entirely.
Thinking marketing ends when the guest books.
Post-stay reviews and loyalty programs are marketing too: reviews shape future demand, and loyalty programs bring guests back through cheaper direct channels.
Confusing hospitality marketing with destination marketing.
This topic markets a business (a hotel, restaurant, or brand). Marketing a whole place or region to visitors is destination marketing, done by destination marketing organizations.
Easily confused
Original 4 Ps (McCarthy) vs. Extended 7 Ps (Booms & Bitner)
The 4 Ps (product, price, place, promotion) were built for tangible goods; the 7 Ps add people, process, and physical evidence to fit intangible services like hospitality.
Direct booking vs. OTA booking
Direct booking reaches fewer new travelers but keeps nearly all the revenue; an OTA booking expands reach but surrenders roughly 15-30% as commission.
Targeting vs. Positioning
Targeting is choosing which market segments to pursue; positioning is shaping how the brand is perceived in those chosen customers' minds relative to competitors.
Key vocabulary
- Services marketing mix (7 Ps)
- The seven controllable tools used to market a service: product, price, place, promotion, people, process, and physical evidence.
- Marketing mix (4 Ps)
- The original four controllable tools, credited to E. Jerome McCarthy: product, price, place, and promotion.
- Extended Ps
- People, process, and physical evidence, added to the four Ps by Booms and Bitner in 1981 to fit service businesses.
- Physical evidence
- The tangible cues (lobby, website, uniforms, plating) that signal quality of a service a customer cannot inspect before buying.
- STP
- Segmentation, targeting, and positioning: dividing a market, choosing which segments to serve, and shaping the brand's place in target customers' minds.
- Positioning
- The distinct place a brand deliberately occupies in target customers' minds relative to competitors.
- Online travel agency (OTA)
- A third-party website, such as Booking.com or Expedia, that sells a property's rooms to consumers in exchange for a commission.
- Global distribution system (GDS)
- A network through which travel agents and corporate bookers access and reserve hotel rooms and other travel inventory.
- Direct booking
- A reservation made through the property's own channels (website, app, phone, front desk), carrying no intermediary commission.
- Brand loyalty
- A guest's tendency to choose the same brand repeatedly and resist switching to competitors.
Sources & references
- Principles of Marketing, Section 1.2: The Marketing Mix and the 4Ps of Marketing — OpenStax (Rice University)
- Principles of Marketing, Chapter 5: Market Segmentation, Targeting, and Positioning (Section 5.1) — OpenStax (Rice University); section read via the Business LibreTexts mirror
- Booms, B. H., & Bitner, M. J. (1981). Marketing Strategies and Organization Structures for Service Firms, in Marketing of Services (Donnelly & George, eds.), pp. 47-51 — American Marketing Association; bibliographic record verified via Semantic Scholar and Scientific Research Publishing reference records
- A Guide to OTA Commission Rates in 2026 — Cloudbeds (hospitality technology vendor)
- Online Reviews Remain a Trusted Source of Information When Booking Trips (research announcement) — Tripadvisor, Inc. (Investor Relations)
- Introduction to Tourism and Hospitality in BC — Chapter 1: History and Overview — Capilano University / BCcampus Open Education
EliExplains lessons are original prose written from the open, credible references above. See Copyright & Licensing.
Researched 2026-08-19
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