5questions about Strategic Services Marketing

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StrategicServicesMarketingServicescape_Lecture_4_VoiceOver1.ppt

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Autumn 2020

Associate Professor Francois Carrillat

Marketing Discipline Group

UTS Business School

24706 Strategic Services Marketing

A Customer Experience Perspective

Lecture 4: Servicescape Ch. 10

(see ‘Program’ in the 24706 Subject Outline)

Sessions 1 and 2

Chapter 1: Introduction to services

Chapter 2: The Gaps model of service quality

Chapter 8: Service innovation and design (blueprinting)

Chapter 9: Customer-defined service standards

Chapter 3: Customer expectations of services

Chapter 4: Customer perceptions of service

Chapter 10: Physical evidence and the servicescape

Chapter 6: Building customer relationships

Chapter 7: Service recovery

Chapter 11: Employees’ roles in service delivery

Chapter 12: Customers’ roles in service delivery

Chapter 13: Managing demand and capacity

Chapter 15: Pricing of services
Chapter 14: Integrated marketing communications

NOTE: Chapters 5 and 16 are not explicitly discussed in lectures

Subject Overview: Textbook Readings & Exams

Sessions 3, 4 and 5

Title: Services Marketing, Integrating
Customer Focus Across the Firm

Authors: Valerie Zeithaml, Mary Jo Bitner, Dwayne Gremler

Publication Details:
2017, 7th Edition, McGraw Hill

What are the Servicescape and Tangible Components (1)

The environment in which the service is delivered and in which the firm and the customer interact, and any tangible commodities that facilitate performance or communication of the service

Design

Employees

Ambiance

Neighbourhood

Exterior Design
and Quality

Accessibility

Depending on
service industry…

e.g. menu

(restaurants),

bedding (hotels),

handouts (university

lectures)

Servicescape

Service
Environment

Service
Materials

How can marketers use servicescape to shape customer experiences?

Supermarket example

How different is this from the IKEA servicescape?

Starbucks example

Other ways: changing the layout so that customers have to update their scropt and do not reach for the sam aisles all the time and are exposed to enough prodiucts.

Baiting: popular products at the end of the typical journey.

Supermarket psychology: https://www.youtube.com/watch?v=RjgkQ6bq7aE&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO&index=85

Emirates: https://www.youtube.com/watch?v=tx0gMidbJvI

Fish your own fish: https://www.youtube.com/watch?v=PTinSeKsacQ&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO&index=94

Starbucks: https://www.youtube.com/watch?v=Be5fCPohYEU&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO&index=96

Plane boarding: https://www.youtube.com/watch?v=ss1S3-Kv6R8&index=125&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO

Audio sonic: http://www.audiobrain.com/

Improving customer experience with the servicescape

Without changing the servicescape?

Emirates

Roles of the Physical Evidence: customer viewpoint

Shape customers’ experience and their behavior = emotional connection

For image, positioning and differentiation = meaning

Part of the value proposition = satisfaction

Facilitate service encounter and enhance productivity = flow

Manufacturer recognize that retail can serve image and positiong purposes as well as communication Niketown, apple Store, etc.

UTS building: all of the above.

The Strategic Roles of the Physical Evidence (3)

Emotional connection

The service setting as a way to convey expected roles, behaviours and relationships

facilitates interaction between:

customers and employees

customers and fellow customers

Roles of the Physical Evidence: management viewpoint (1)

Meaning

Physical surroundings offer an organisation the opportunity to convey the quality of their service offering

conveys expectations

influences perceptions

How is this different from McDonald’s fast food servicescape?

Very true for line extenion; new services; example mcCafe; archetypal of the coffee place in Starbauck and otrhers; armeer darker colorsl open plan; smells, etc.

The Strategic Roles of the Physical Evidence (4)

Meaning

The service setting as a source of competitive advantage

sets provider apart from competition in the mind of the consumer

Point of parity MacDOnals but here point of differentiation; Nike is not a retailer; but this retai oultet has a starategic purpose.mostly funcitons as meaning (wjhat we want to tell the cosnuemr) but not only also a satusfactory experience.

Supermarket psychology: https://www.youtube.com/watch?v=RjgkQ6bq7aE&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO&index=85

Emirates: https://www.youtube.com/watch?v=tx0gMidbJvI

Fish your own fish: https://www.youtube.com/watch?v=PTinSeKsacQ&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO&index=94

Starbucks: https://www.youtube.com/watch?v=Be5fCPohYEU&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO&index=96

Plane boarding: https://www.youtube.com/watch?v=ss1S3-Kv6R8&index=125&list=PLqpBJ9DtSj_4hLeSB8ws0SOD16v8GldUO

Audio sonic: http://www.audiobrain.com/

Nike differentiated because offers a function it does not usually offer (retailing): Nike has very little service but use it to differentiate

Japanese restaurant: service but go to the extreme: immersion customer participation is increased: 4 realms of experience. Entertainment + escapism + eduicaional.

The Strategic Roles of the Physical Evidence (2)

Flow

The service setting as a performance enhancer

facilitates the flow of the service delivery process

provides information
(how am I to act?)

facilitates the ordering process (how does this work?)

facilitates service delivery

IKEA augments customer exposure to products but can be seen as a maze by some; but spend more time in store, linger, and by feare of not finding way back systemtaically put product in cart so no need to go back; (not being a salmon).

PlannogramL: servicescape also impacts at the shelf level.

Facilittaor: also important to use servicescape to nudge xconsumers into making the right choice.

A Consumer Response-Based Model: Bitner’s (1992) Servicescape Model

Difference between environmenta

l dimensions and holistic environmentl: gestaltl the whol is greater than the sum of its parts.

The underlying Theory: Mehrabian-Russell Stimulus-Response Model (1)

Simple yet fundamental model of how people respond to environments

The environment, its conscious and
unconscious perceptions and
interpretation influence how
people feel in that environment

Feelings, rather than
perceptions/thoughts
drive behaviour

Typical outcome variable is
‘approach’ or ‘avoidance’
of an environment, but other
possible outcomes can be
added to model

Emotional responses to environments can be described along two main dimensions:
Pleasure: direct, subjective, depending on how much individual likes or dislikes environment
Arousal: how stimulated individual feels, depends largely on information rate or load of an environment

Advantage: simplicity, allows a direct assessment of how customers feel

Firms can set targets for affective states

What drives affect?

Cognitive processing

Sensemaking

Interpretation

What are the behavioural consequences of affect?

Approach

Avoidance

From S-O-R to the Servicescape Model: Soundscape examples

For a summary of research findings in retail setting, see:

Garlin, Francine V., and Katherine Owen. "Setting the tone with the tune: A meta-analytic review of the effects of background music in retail settings." Journal of Business Research 59.6 (2006): 755-764.

Powerful effect on perceptions and behaviors, even if played at barely audible levels

Structural characteristics of music
(tempo, volume, and harmony)
are perceived holistically
Fast tempo music and high volume
music increase arousal levels

People tend to adjust their pace,
either voluntarily or involuntarily,
to match tempo of music

Careful selection of music
can deter wrong type of
customers (e.g., targeting)

An ambient smell is one that pervades an environment

May or may not be consciously perceived by customers

Not related to any particular product

Scents have distinct characteristics and can be used to obtain emotional, physiological, and behavioral responses

In service settings, research has shown that scents can have significant effect on customer perceptions, attitudes,
and behaviors

Is Servicescape Remodeling Worth it: Evidence from the Retailing Industry (3)

Dagger, Tracey S., and Peter J. Danaher. "Comparing the Effect of Store Remodeling on New and Existing Customers." Journal of Marketing 78.3 (2014): 62-80.

Is Servicescape Remodeling Worth it: Evidence from the Retailing Industry (3)

Dagger, Tracey S., and Peter J. Danaher. "Comparing the Effect of Store Remodeling on New and Existing Customers." Journal of Marketing 78.3 (2014): 62-80.

Remodleing is a large investment 3.5 million all inclusive; plus lost sales during remodeling.

Unique study with a real control store; isolating the efffecty of remodeling (car equipment retailer and servicing).

The original retail environment featured a basic office

design, limited product display, and no customer seating.

The relatively old, worn decor and furniture did not match.

In addition to being unattractive and uninviting, the servicescape

tended to look tired and unprofessional, with gray

colors, ventilation issues, dark display areas, and unattractive

lighting. In contrast, the remodeled environment had an

upmarket professional design and a practical layout, with an

eye-catching product display and seating areas for customers

to wait or consult with staff. The modern furniture

all matched; ornaments, plants, and displays were added to

improve the overall appearance. Thus, the remodeled

atmosphere was warm and inviting, and the servicescape

became fresh and clean, with attractive lighting and a pleasant

color scheme.

This is remodeling rather than updating; this was a very run down, minimalist, gray servicescape that really got a important makeover.

The store remained open during the remodeling data just before, just after and 1 year after;

Results show that benefits are short lived only for existing customers; new customers acquiring during a given period increase their average spemnding as well as their visit frquency.

Data show that remodeling reached brek even after 2 to 3 years hence, the common habit to remdel every 7 ot 10 years seem warranted.

Most advabntes come from new customers; hence to make it worht it.

Previous study in the fast food induystry show declining benefits from remodeling after 6 months; hence profitability of remodeling resides in its capoacoty to attract new customers; due to adaptation theory and anchoring to the old design.

Guidelines for a Physical Evidence Strategy