Lecture 6

Crafting the Service

Environment

Text Book Chapter 10

 Five Reflections from last week
• The distribution strategy for a service firm is highly influenced
by how much physical contact there is between the firm and
its customer
• Flowcharting is a powerful representation of the service
process
• Service firms typically set the price somewhere between cost
price (the floor) and customer value expectations (the
ceiling). Just where price settles is determined by competitive
pricing (and the firm’s desired positioning!)
• Revenue management seeks to maximise the yield from
each sale by selling the right capacity unit to the right
customer and the right time and the right price
• From the perspective of the customer, the price of a service
is more than just the monetary cost. It includes time, effort
and perceived risk
 Objectives
• Explain the four core purposes of a well-designed service
environment (servicescape)
• Demonstrate an understanding of the theory from
environmental psychology that helps us to understand
customer as well as employee responses to service
environments.
• Demonstrate an understanding of the integrative
servicescape model
• Describe the dimensions of the service environment
• Demonstrate an understanding of the key ambient
conditions and their effects on customers
• Describe the roles of spatial layout and functionality
• Describe the roles of signs, symbols and artefacts
What is a Service Environment?
 A service environment is the physical environment (the
‘servicescape’) that the customer experiences when
evaluating or receiving the service
 The servicescape:
 Shapes the service experience
 Impacts customer satisfaction (positively or negatively)
 Is especially important for high-contact, people-
processing services. (E.g. Hotels, restaurants, medical
practitioners, cinemas, education providers)

 For some services, customers may never visit the

servicescape (e.g. a radio station) or there may not be
one (e.g. online tuition)
 Four core purposes of service
environments (Servicescapes)

1. Engineer customers’ experience and shape their

behaviours
2. Convey the planned image of the firm and support its
positioning and differentiation strategy. Since services are
intangible, servicescapes are a proxy for quality
3. Act as part of the value proposition (E.g. Legoland,
Disneyland, Las Vegas, gold-class cinema)
4. Facilitate the service encounter and enhance both service
quality and productivity
 How servicescapes affect buyers

1. Communicate the nature and quality of the service

experience (message)
2. Offer the potential to stand out from competing firms
(attention)
3. Enhance the desired service experience via the five
senses (effect)
 The theory behind consumer
responses to service environments
• Mehrabian-Russell Stimulus-Response Model:
• Conscious and unconscious perception of an
environment determines how we FEEL (the “Affect”)
• These feelings drive our response to a service
environment and therefore drive our behaviour
• A crowded environment may lead to feelings such as loss
of control and restricted movement. However, during
seasonal festivities, the same crowd may lead us to feel
‘buzz’ and excitement
• It’s not the physical presence of the crowd that drives our
behaviour, rather it’s the feeling that we get from the
crowd’s presence that leads to the behavioural outcomes
such as ‘approach’, ‘avoid’, ‘satisfaction’, ‘spend money’
 The theory behind consumer
responses to service environments
 Russell’s Model of Affect (Feeling)
 Emotional responses to environments can be
described along two primary dimensions –

 pleasure (like or dislike continuum)

 arousal (how stimulated the individual feels)
 Pleasure is highly subjective, based on ‘personal
liking’ E.g. Music, art, colour
 Arousal results from motion, change, novelty, surprise
 Cognition
feeds affect
The Russell Model of Affect
It’s the
restaurant’s fault
It’s under their
control
They couldn’t
care less!

Bungee-jumping Theme park

• High Arousal • High Arousal
• Low Pleasure • High Pleasure

Bank visit Hotel

• Low Arousal • Low Arousal
• Low Pleasure • High pleasure
 Affect, Cognition and Behaviour
• Affect can be caused by perceptions and cognitive
processes of any degree of complexity
• The more complex a cognitive process becomes, the
greater its potential impact on affect
• Arousal acts as an amplifier for the influence of
pleasure on behaviour. When the environment is
unpleasant, don’t increase arousal
• When customers have strong affective expectations, it
is important that the environment is designed to meet
or exceed those expectations
• The majority of service encounters are routine!
Does this fuel opportunity??
The Servicescape Model
 Points to note on the Servicescape model
• The model is generic across all servicescapes. Each
service provider should focus on those elements in the
model that are relevant to their specific environment
• Consider the difference in servicescape requirements
between a dentist’s rooms, a taxi and an accounting practice
• Because people tend to perceive a servicescape holistically,
it’s important that each individual element in the environment
fits together with everything else
• Since beauty is in the eye of the beholder, don’t
underestimate how challenging it is to create the ideal
servicescape!
 Ambient Conditions
• Ambience is the cumulative effect of
those characteristics of the
environment that pertain to your five
senses
• Ambience generates the ‘mood’ in the
servicescape
• Ambient characteristics may be
consciously or unconsciously perceived
• Ambient characteristics are perceived
both separately and holistically
• Ambience includes, lighting, colour,
size, shape, noise, music, temperature,
scent
 Music
 Fast-tempo music:
 Can increase arousal levels
 Can speed up restaurant table turnover
 Slow-tempo music:
 Can increase impulse spending in supermarkets
 Can reduce stress levels in surgery waiting room
 Pleasant music can enhance customer perceptions
of service personnel
 Classical music has been effective in dispersing
unwanted young loiterers around shopping centres
 Scent
 Scent can have strong impact on mood
 Aromatherapists use scents to induce emotional or
physiological responses
 A Las Vegas casino’s slot machine cash take
increased by 45% when a pleasant scent was
released
 Shoppers were more willing to buy Nike and pay
more in a floral-scented room
 Some firms have exclusive signature scents in their
outlets. E.g. Potpourri scent in Victoria’s Secret
stores
 Combining Scent and Music
• Consumers perceive servicescapes holistically
• Therefore, in designing a servicescape, all elements should be
determined in conjunction with one another
• To illustrate, an experiment was conducted in a gift store to determine
the interaction between scent and music in influencing customer
satisfaction and impulse purchases
• Four experimental conditions were monitored:

Low arousal scent High arousal scent

(Lavender) (Grapefruit)

Low arousal Relaxing + Lavender Relaxing + Grapefruit

music (Relaxing)

High arousal Energising + Energising + Grapefruit

music Lavender
(Energising)
Results of the Scent/Music Experiment
 Colour
• Colours are categorized by hue (pigment), value (degree of lightness
or darkness) and chroma (intensity)
• Some colours radiate warmth (e.g. orange, red, yellow), others are
perceived as being cold (e.g. blue, green)

• Warm colours:
• are associated with elated mood states and arousal
• are best suited to low-involvement decisions or impulse buying as
they associate with speeding up decision making

• Cold colours:
• reduce arousal levels and elicit calm / peacefulness
• are favoured when consumers need time to make high-
involvement purchase decisions
Nordic Light Hotel Website
Nordic Light Hotel Website
Spatial layout and functionality
• Spatial layout refers to the floor plan, size and
shape of furnishings, counters, machinery and
equipment and the ways in which they are
arranged
• Functionality refers to the ability of those items
to facilitate the performance of service
transactions
• Spatial layout and functionality determine the
user friendliness and the ability of the outlet to
service customers effectively
• Spatial Layout and Functionality determine the
efficiency of the service operation and they
shape the customer experience
• This includes: Proximity, privacy, comfort,
access, queues, parking etc
Signs, symbols and artefacts
 Signs, symbols and artefacts are used to:
 Label names of departments, counters or facilities
 Give directions
 Communicate the service script (e.g “take a number”)
 Apply behavioural rules (e.g. “turn off mobiles”)
 Signs, symbols of artefacts are particularly important for:
 new (or infrequent) customers
 self-service environments
People and the
Servicescape
 Service personnel can add value to the servicescape by
being consistent with the firm’s positioning, reinforcing a
theme (where applicable) and generally being in-sync with
the service environment
 Are uniforms appropriate? If so, what look, style and colour
will fit/add value to the environment?
 Is scripted speech and scripted movement applicable?
 The appearance and behaviour of patrons who are currently
using the servicescape may entice or deter new customers
from entering
 Design from a Customer’s perspective

• Designers generally take an aesthetic

perspective when designing service
environments
• But, who are they designing it for?

What irritates
shoppers? How can a servicescape
• Store not clean be assessed?
• Too hot • Observation
• Loud music • Staff and customer feedback
• Bad smells • Photo Audit
• No mirror in change rooms • Field experiments
• Poor directions • Blueprinting
• Store too small
Lecture 6

Q&A

The End