Chapter 10: Crafting the Service Environment

Ninth Edition SERVICES MARKETING People Technology Strategy Jochen Wirtz Christopher Lovelock World Scientific World Scientific Available on Amazon at a studentfriendly price. Click here to order: Published by World Scientific Publishing Co. Inc. 27 Warren Street, Suite 401-402, Hackensack, NJ 07601, USA Head office: 5 Toh Tuck Link, Singapore 596224 UK office: 57 Shelton Street, Covent Garden, London WC2H 9HE Library of Congress Cataloging-in-Publication Data Names: Lovelock, Christopher H., author. | Wirtz, Jochen, author. Title: Services marketing : people, technology, strategy / Jochen Wirtz, Christopher Lovelock. Description: Ninth edition. | New Jersey : World Scientific, [2022] | Includes bibliographical references and index. Identifiers: LCCN 2021023736 | ISBN 9781944659790 (hardcover) | ISBN 9781944659820 (paperback) | ISBN 9781944659806 (ebook) | ISBN 9781944659813 (ebook other) Subjects: LCSH: Marketing--Management. | Professions--Marketing. | Service industries--Marketing. | Customer services--Marketing. Classification: LCC HF5415.13 .L5883 2022 | DDC 658.8--dc23 LC record available at https://lccn.loc.gov/2021023736 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. Copyright © 2022 by Jochen Wirtz & Christopher Lovelock All rights reserved. For any available supplementary material, please visit https://www.worldscientific.com/worldscibooks/10.1142/Y0024#t=suppl Desk Editors: Jiang Yulin/Lai Ann Design and layout: Loo Chuan Ming Printed in Singapore Services Marketing: People, Technology, Strategy Brief Contents About the Authors Preface Acknowledgments PART I: UNDERSTANDING SERVICE PRODUCTS, MARKETS, AND CUSTOMERS 1. Creating Value in the Service Economy 2. Understanding Service Consumers 3. Positioning Services in Competitive Markets xiii xiv xvi 2 4 40 76 PART II: APPLYING THE 4 PS OF MARKETING TO SERVICES 104 Developing Service Products and Brands Distributing Services Through Physical and Electronic Channels Service Pricing and Revenue Management Service Marketing Communications 106 138 172 210 4. 5. 6. 7. PART III: MANAGING THE CUSTOMER INTERFACE 8. 9. 10. 11. Designing Service Processes Balancing Demand and Capacity Crafting the Service Environment Managing People for Service Advantage 258 260 302 328 358 PART IV: DEVELOPING CUSTOMER RELATIONSHIPS 404 12. Managing Relationships and Building Loyalty 13. Complaint Handling and Service Recovery 406 442 PART V: STRIVING FOR SERVICE EXCELLENCE 476 14. Improving Service Quality and Productivity 15. Building a World-Class Service Organization 478 520 PART VI: CASE STUDIES 546 Name Index Subject Index 640 654 iv Contents PART 3 The Services Marketing Framework Part I Understanding Service Products, Markets, and Customers 1. 2. 3. 4. 5. 6. 7. Creating Value in the Service Economy Understanding Service Consumers Positioning Services in Competitive Markets Part II Part III Part IV Applying the 4 Ps of Marketing to Services Managing the Customer Interface Developing Customer Relationships Developing Service Products and Brands Distributing Services Through Physical and Electronic Channels Service Pricing and Revenue Management Service Marketing Communications 8. Designing Service Processes 9. Balancing Demand and Capacity 10. Crafting the Service Environment 11. Managing People for Service Advantage Part V Striving for Service Excellence 14. Improving Service Quality and Productivity 15. Building a World-Class Service Organization Figure III Organizing framework for services marketing 258 12. Managing Relationships and Building Loyalty 13. Complaint Handling and Service Recovery PART 3 MANAGING THE CUSTOMER INTERFACE Part III focuses on managing the interface between customers and the service organization. It covers the additional 3 Ps (Process, Physical environment, and People) that are unique to services marketing. It consists of the following four chapters: CHAPTER 8 Designing Service Processes Chapter 8 begins with the design of an effective service delivery process, specifying how operating and delivery systems link together to create the promised value proposition. Very often, customers are actively involved in service creation, especially if acting as co-producers, and the process becomes their experience. Furthermore, the increasingly important role of artificial intelligence (AI) and service robots in service processes is discussed. CHAPTER 9 Balancing Demand and Capacity Chapter 9 relates to process management with a focus on widely fluctuating demand and how to balance the level and timing of customer demand against available productive capacity. Well-managed demand and capacity lead to smooth processes with less waiting time for customers. Marketing strategies for managing demand involve smoothing demand fluctuations and inventorying demand through reservation systems and formalized queuing. Understanding customer motivations in different segments is also important for successful demand management. CHAPTER 10 Crafting the Service Environment Chapter 10 focuses on the physical environment also known as the servicescape. It needs to be engineered to create the desired service experience and facilitate the effective delivery of service processes. The servicescape needs to be managed carefully as it can have a profound impact on customers’ impressions, guide their behavior throughout the service process, and provide tangible clues of a firm’s service quality and positioning. CHAPTER 11 Managing People for Service Advantage Chapter 11 introduces people as a defining element of many services. Many services require direct interaction between customers and service employees. The nature of these interactions strongly influences how customers perceive service quality. Hence, service firms devote a significant amount of effort to recruiting, training, and motivating their employees. Satisfied and engaged employees who perform well are often a source of competitive advantage. 259 CHAPTER 10 Crafting the Service Environment Managers… need to develop a better understanding of the interface between the resources they manipulate in atmospherics and the experience they want to create for the customer. Jean-Charles Chebat and Laurette Dubé, Professors of Marketing at HEC Montréal Business School and McGill University, Montréal, respectively Restaurant design has become as compelling an element as menu, food, and wine… in determining a restaurant’s success. Danny Meyer, New York City restaurateur and CEO of Union Square Hospitality Group LEARNING OBJECTIVES (LOs)  LO 2 Know the theoretical foundation from environmental psychology that helps us understand how customers and employees respond to service environments.  LO 3 Be familiar with the integrative servicescape model.  LO 4 Know the three main dimensions of the service environment.  LO 5 Discuss the key ambient conditions and their effects on customers.  LO 6 Determine the roles of spatial layout and functionality.  LO 7 Understand the roles of signs, symbols, and artifacts.  LO 8 Know how service employees and other customers are part of the servicescape.  LO 9 Explain why designing an effective servicescape has to be done holistically and from the customer’s perspective. By the end of this chapter, the reader should be able to:  LO 1 Recognize the four core purposes service environments fulfill. 328 Chapter 10 ▪ Crafting the Service Environment PART 3 Main Purposes of Service Environments • Shape the customer’s service experience and behaviors • Signal quality and position, differentiate, and strengthen the brand • Core component of the value proposition • Facilitate the service encounter and enhance productivity Theories from Environmental Psychology that Explain Consumer Responses to Service Environments Servicescape Model Key Dimensions of Service Environments Ambient conditions (e.g., music, scents, and colors) Spatial layout and functionality (e.g., floor plan, size, and shape of furnishing, counters, and equipment) Signs, symbols, and artifacts Appearance of service employees and other customers Response Moderators Customers (e.g., liking the servicescape, personal tolerance for stimulation through music, noise, and crowding) Employees (moderators as for customers) The Stimulus-Organism-Response (SOR) Model • Perceptions and interpretation of servicescapes influence how consumers feel • These feelings then drive consumer responses to those environments Valence and Intensity Model of Affect • Customer’s feelings (or emotions) can be modeled with two dimensions: pleasure and arousal • Pleasure (i.e., valence) is subjective • Arousal (i.e., intensity) largely depends on the information rate of an environment • Pleasure and arousal interact on response behaviors, whereby arousal generally amplifies the effects of pleasure (or displeasure) Internal Responses Cognitive (e.g., beliefs, perceptions) Emotional (e.g., moods, attitudes) Physiological (e.g., comfort, pain) Behavioral Responses Approach (e.g., explore, spend time, spend money in the environment) Avoidance (e.g., leave the environment) Interaction between customers and service employees Design of Effective Service Environments Design with a holistic view Design from the customer’s perspective Use design tools (ranging from keen observation and customer feedback to photo audits and field experiments) Figure 10.2 Organizational framework for designing service environments Managing the Customer Interface 331 perceptions and beliefs), emotional responses (e.g., feelings and moods), and physiological responses (e.g., pain and comfort). These internal responses lead to overt behavioral responses such as avoiding a crowded supermarket or responding positively to a relaxing environment by staying longer and spending extra money on impulse purchases. It’s important to understand that the behavioral responses of customers and employees must be shaped in ways that aid the production and purchase of high-quality services. Consider how the outcomes of service transactions may differ in situations where both customers and frontline staff feel stressed rather than relaxed and happy. Environmental Dimensions Holistic Environment  LO 4 Know the three main dimensions of the service environment. Service environments are complex and have many design elements. Table 10.1 gives an overview of the design elements that might be encountered in a retail outlet. In this section, we focus on the main dimensions of the service environment in the servicescape model, which are the (1) ambient conditions, (2) space and functionality, and (3) signs, symbols, and artifacts.15 Internal Responses Cognitive • Beliefs • Categorization • Symbolic meaning Ambient Conditions • Temperature • Air quality • Noise • Music • Odor • etc. Space/Function • Layout • Equipment • Furnishings • etc. Moderators DIMENSIONS OF THE SERVICE ENVIRONMENT Employee– Response Moderator Emotional • Mood • Attitude Physiological • Pain • Comfort • Movement • Physical fit Approach • Affiliation • Exploration • Stay longer • Commitment • Carry out plan Avoid (opposites of approach) Employee Responses Social Interactions Between and Among Customers and Employees Perceived Servicescape Signs, Symbols, and Artifacts • Signage • Personal artifacts • Style of decor • etc. Behavior Customer– Response Moderator Cognitive • Beliefs • Categorization • Symbolic meaning Customer Responses Emotional • Mood • Attitude Physiological • Pain • Comfort • Movement • Physical fit Approach • Attraction • Stay/explore • Spend money • Return • Carry out plan Avoid (opposites of approach) Figure 10.10 The servicescape model Source: Reprinted with permission from Mary Jo Bitner, "Servicescapes: The Impact of Physical Surroundings on Customers and Employees," Journal of Marketing, Vol. 56, No. 2, pp. 57–71. 338 Chapter 10 ▪ Crafting the Service Environment PART 3 Table 10.1 Design Elements of a Retail Store Environment Dimensions Design Elements Exterior facilities • • • • • • • • Architectural style Size of building Color of building Exterior walls and exterior signs Storefront Marquee Lawns and gardens Window displays • • • • • • • Entrances Visibility Uniqueness Surrounding stores Surrounding areas Congestion Parking and accessibility General interior • • • • • • • • • • Temperature Flooring and carpeting Color schemes Lighting Odors (e.g., tobacco smoke) Sounds and music Fixtures Wall composition Wall textures (paint, wallpaper) Ceiling composition • • • • • • • • • Cleanliness Width of aisles Dressing facilities Vertical transportation Dead areas Merchandise layout and displays Price levels and displays Cash register placement Technology, modernization Store layout • Allocation of floor space for selling, merchandise, personnel, and customers • Placement of merchandise • Grouping of merchandise • Workstation placement • Placement of equipment • Placement of cash register • • • • • • • Waiting areas Traffic flow Waiting queues Furniture Dead areas Department locations Arrangements within departments Interior displays • • • • • • • • • • • • Racks and cases Product display Price display Cut cases and dump bins Mobiles Ensemble Social dimensions • Personnel characteristics • Employee uniforms • Crowding Point-of-purchase displays Posters, signs, and cards Interactive screens Pictures and artwork Wall decorations Theme setting • Customer characteristics • Privacy • Self-service Source: Adapted from Barry R. Berman, Joel R. Evans, and Patrali M. Chatterjee (2017), Retail Management — A Strategic Approach, 13th edition. Upper Saddle River, NJ: Prentice Hall. The Effect of Ambient Conditions  LO 5 Discuss the key ambient conditions and their effects on customers. Ambient conditions refer to characteristics of the environment that pertain to your five senses. Even when they are not noted consciously, they may still affect a person’s emotional well-being, perceptions, and even attitudes and behaviors. They are composed of literally hundreds of design elements and details that must work together if they are to create the desired service environment. The resulting atmosphere creates a mood that is perceived and interpreted by the customer. Ambient conditions are perceived both separately and holistically, and include music, sounds and noise, scents and smells, color schemes and lighting, and temperature and air movement. Clever design of these conditions can elicit desired behavioral responses among consumers.16 Let’s next discuss a number of important ambient dimensions, beginning with music. Music Music can have powerful effects on perceptions and behaviors in service settings, even if played at barely audible volumes. The various structural characteristics of music such as tempo, volume, and harmony are perceived holistically, and their effect on internal and Managing the Customer Interface 339 Match and Mismatch of Scent and Music in the Servicescape Whether a certain type of background enhances consumer responses depends on the ambient scent of the service environment. A field experiment manipulated two types of pleasant music and scent in a gift store, which differed in their arousing qualities. Consumer impulse purchasing and satisfaction were measured for the various music and scent conditions. The experiment used two compact discs from the Tune Your BrainTM series by Elizabeth Miles, an ethnomusicologist. The low arousal music was the Relaxing Collection featuring slow-tempo music, while the high arousal music from the Energizing Collection featured fast-tempo music. Similarly, scent was manipulated to have high or low arousal quality. Lavender was used for the low arousal scent because of its relaxing and calming properties. Grapefruit was used for the high arousal scent because of its stimulating properties which can refresh, revive, and improve mental clarity and alertness, and can even enhance physical strength and energy. The results of this experiment show that when the arousal qualities of music and ambient scent were matched, consumers responded more favorably. The figures below show these effects clearly. For instance, scenting the store with a low arousal scent (lavender) combined with slow-tempo music led to higher satisfaction and more impulse purchases as compared to using that scent with high arousal music. Playing fast-tempo music had a more positive effect when the store was scented with grapefruit (high arousal scent) as compared to lavender. A later study confirmed that arousal congruency is important also for music and in-store announcements and posters. These studies showed that when environmental stimuli act together to provide a coherent atmosphere, consumers in that environment will respond more positively. Figure 10.14 The effect of scent and music on impulse purchases 5.8 5.5 5.6 5.0 IMPULSE PURCHASES SATISFACTION Figure 10.13 The effect of scent and music on satisfaction 5.4 5.2 5.0 4.8 4.5 4.0 3.5 3.0 2.5 4.6 No Music Low-Arousal Music Key: Scent Conditions: No Scent Low-Arousal Scent High-Arousal Scent Match Conditions: Match Mismatch High-Arousal Music No Music Low-Arousal Music High-Arousal Music *Note: Both charts are on a scale from 1 to 7, with 7 being the extreme positive response. The solid-line circles show the match conditions, where both music and scent are either stimulating or relaxing, and the intermitted-line circles show the mismatch conditions, in which one stimulus is relaxing and the other is stimulating (i.e., relaxing music and stimulating scent or stimulating music and relaxing scent). Sources: Adapted from Anna S. Mattila and Jochen Wirtz (2001), “Congruency of Scent and Music as a Driver of In-Store Evaluations and Behavior,” Journal of Retailing, Vol. 77, No. 2, pp. 273–289; Gopal Das and Henrik Hagtvedt (2015), “Consumer Responses to Combined Arousal-Inducing Stimuli,” International Journal of Research in Marketing, Vol. 33, No. 1, pp. 213–215. Managing the Customer Interface 343 PART 3 SERVICE INSIGHTS 10.2 through the process of service delivery and teach the service script in as intuitive a manner as possible. This task assumes particular importance in situations in which there is a high proportion of new or infrequent customers (e.g., as in airports and hospitals), and/or a high degree of self-service with no or only a few service employees available to guide customers through the process (e.g., a self-service bank branch). Figure 10.18 Changi Airport uses a creative sign to manage visitor behavior in its butterfly garden butterfly garden (Figure 10.18). Figure 10.19 provides an overview of the benefits well-designed signage can provide to customers and service organizations. Customers become disoriented when they cannot derive clear signals from a servicescape, leading to anxiety and uncertainty about how to proceed and how to obtain the desired service. Customers can easily feel lost in a confusing environment and experience anger and frustration as a result. Think about the last time you were in a hurry and tried to find your way through an unfamiliar hospital, shopping center, or a large government office where the signs and other directional cues were not intuitive to you. At many service facilities, customers’ first point of contact is likely to be the car park. As emphasized in Service Insights 10.3, the principles of effective environment design apply even in such a very mundane environment. The challenge for servicescape designers is to use signs, symbols, and artifacts to guide customers clearly Potential Benefits of Well-designed Signage For Customers For the Service Organization • Informs and keeps customers up-to-date and oriented, enables them to freely move about; guides customers along prepared paths • Creates familiarity with the servicescape • Helps to participate with greater ease in the service process • Increases confidence and reassurance while following signage; provides higher levels of perceived control during the service encounter • Reduces tension, confusion, feeling lost, wrong turns, and requests for information • Reduces time to reach the desired goal as efficiently as possible • Encourages other customers to follow service scripts (e.g., on queuing) and enhance rather than detract from the focal customer’s experience • Directs, informs, and manages the flow and behavior of customers • Improves the quality of service provided and increases customer satisfaction • Reduces need for frontline employees to provide information and guide customers • Helps frontline employees to work with fewer interruptions • Strengthens the corporate image • Attracts and excites customers • Differentiates the firm from the competition Figure 10.19 Potential benefits of well-designed signage Source: Adapted from Angelo Bonfanti (2013), “Towards an Approach to Signage Management Quality (SMQ),” Journal of Services Marketing, Vol. 27, No. 4, pp. 312–321. 346 Chapter 10 ▪ Crafting the Service Environment What Could a Visit to Disney Tokyo in 2050 be Like? Yuriko meets her friends at 8:55 a.m. on Sunday, just before the gates open. At 9:00 a.m., they walk through the gates together and receive a schedule of activities that has been tailored to their individual and collective emotional state over the past week, as well as their mutual interest in Japanese manga. They always find available seats, just enough for the group. They never queue at any attraction. Following the schedule they received, they enjoy the morning parade, run into friends from school, chat over shared lunch, and pose for photos with their favorite characters. At the end of the visit day, they bow to each other and turn to leave. Yuriko turns off the 5-D simulator in her house. She does not need to provide feedback to Disney on her visit as her emotional and cognitive responses have already been captured. She also does not have to post on social media as highlights and interesting titbits were already uploaded to her various social channels (all according to her preset preferences on what will be posted where). She receives a notification that the cost for the day at Disneyland Tokyo Virtual has already been deducted from her bank balance as her satisfaction levels had exceeded the company’s minimum guaranteed levels. Yuriko receives an invitation to join her friends again next week. Unfortunately, she has another appointment at that time and will not be able to attend, but that does not have to impact her friends. The system gives her the option of allowing her virtual avatar to participate instead. She agrees and schedules a time to review the highlights after the event. The system learns from her reactions to the highlights and tweaks her virtual profile, making it ever more indistinguishable from the real her. She pauses and wonders whether she should have let her friends know that it was not really her, but then, she notices that one of her friends posted an image on one of her social channels of her at lunch with another group of friends while she was supposed to be at Disneyland Tokyo. She smiles and wonders what her great-grandparents would have thought of how firms operate without operations in 2050. Source: Adapted from Christoph Breidbach, Sunmee Choi, Benjamin Ellway, Byron W. Keating, Katerina Kormusheva, Christian Kowalkowski, Chiehyeon Lim, and Paul Maglio (2018), “Operating Without Operations: How is Technology Changing the Role of the Firm,” Journal of Service Management, Vol. 29, No. 5, p. 810. Managing the Customer Interface 349 PART 3 SERVICE INSIGHTS 10.4      LO 1 Service environments fulfill four core purposes. Specifically, they: • Shape customers’ experiences and behaviors. • Play an important role in determining customer perceptions of the firm, and its image and positioning. Customers often use the service environment as an important quality signal. • Can be a core part of the value proposition (e.g., as for theme parks and resort hotels). • Facilitate the service encounter and enhance productivity. • Color — colors can have strong effects on people’s feelings with warm (e.g., a mix of red and orange) and cold colors (e.g., blue) having different impacts. Warm colors are associated with elated mood states, while cold colors are linked to peacefulness and happiness.  LO 6 Effective spatial layout and functionality are important for efficiency of the service operation and enhancement of its user-friendliness. • Spatial layout refers to the floor plan, size and shape of furnishing, counters, potential machinery and equipment, and the ways in which they are arranged. • Functionality refers to the ability of those items to facilitate service operations.  LO 3 The servicescape model, which builds on the above theories, represents an integrative framework that explains how customers and service staff respond to key environmental dimensions. LO 7 Signs, symbols, and artifacts help customers draw meaning from the environment and guide them through the service process. They can be used to: • Label facilities, counters, or departments. • Show directions (e.g., to entrance, exit, elevator, toilet). • Communicate the service script (e.g., take a number and watch it to be called). • Reinforce behavioral rules (e.g., “please turn your cell phones to silent”).  LO 4 The servicescape model emphasizes three dimensions of the service environment: • Ambient conditions (including music, scents, and colors). • Spatial layout and functionality. • Signs, symbols, and artifacts. LO 8 The appearance and behavior of service employees and other customers in a servicescape can be part of the value proposition and can reinforce (or detract from) the positioning of the firm.  LO 9 Service environments are perceived holistically. Therefore, no individual aspect can be optimized without considering everything else, making designing service environments an art rather than a science. • Because of this challenge, professional designers tend to specialize in specific types of environments such as hotel lobbies, clubs, healthcare facilities, and so on. • Beyond esthetic considerations, the best service environments should be designed with the customer’s perspective in mind, guiding them smoothly through the service process. • Tools that can be used to design and improve servicescapes include careful observation, feedback from employees and customers, photo audits, field experiments, and blueprinting. LO 2 Environmental psychology provides the theoretical underpinning for understanding the effects of service environments on customers and service employees. There are two key models: • The Stimulus–Organism–Response (SOR) model holds that environments influence people’s affective state (or emotions and feelings), which in turn drives their behavior. • The valence and intensity model of affect holds that affect can be modeled with the two interacting dimensions of pleasure and arousal, which together determine whether people approach, spend time and money in an environment, or whether they avoid it. LO 5 Ambient conditions refer to those characteristics of the environment that pertain to our five senses. Even when not consciously perceived, they can still affect people’s internal and behavioral responses. Important ambient dimensions include: • Music — its tempo, volume, harmony, and familiarity shape behavior by affecting emotions and moods. People tend to adjust their pace to match the tempo of the music. • Scent — ambient scent can stir powerful emotions and relax or stimulate customers. Managing the Customer Interface 353 PART 3 CHAPTER SUMMARY REVIEW QUESTIONS 1. What are the four main pur poses ser vice environments fulfill? 2. Describe how the Stimulus–Organism–Response (SOR) model, together with the valence and intensity model of affect, explain consumer responses to a service environment. 3. What is the relationship or link between the valence and intensity model of affect and the servicescape model? 5. Explain the dimensions of ambient conditions and how each can influence customer responses to the service environment. 6. What are the roles of signs, symbols, and artifacts? 7. What are the implications of the fact that environments are perceived holistically? 8. What tools are available for aiding our understanding of customer responses and guiding the design and improvement of service environments? 4. Why can it happen that different customers and service staff respond vastly different to the same service environment? � APPLICATION EXERCISES 1. Identify firms from three different service industries where the service environment is a crucial part of the overall value proposition. Analyze and explain in detail the value that is being delivered by the service environment in each of the three industries. 2. Visit a service environment and have a detailed look around. Experience the environment and try to understand how the various design elements shape what you feel and how you behave in that setting. 3. Select a bad and a good waiting experience and contrast the two situations with respect to the service environment and other people waiting. 354 Chapter 10 ▪ Crafting the Service Environment 4. Visit a self-service environment and analyze how the design dimensions guide you through the service process. What do you find most effective for you, and what seems least effective? How could that environment be improved to further ease the “wayfinding” for self-service customers? 5. Take a camera and conduct a photo audit of a specific servicescape. Photograph examples of excellent and very poor design features. Develop concrete suggestions how this environment could be improved. 1 Beatriz Plaza (September–October 2007), “The Bilbao Effect,” Museum News, pp. 13–15, 68; Denny Lee (23 September 2007), “Bilbao, 10 Years Later,” The New York Times, http://www.nytimes. com/2007/09/23/travel/23bilbao.html?pagewanted=all&_r=0, accessed February 12, 2021; The Economist (December 21, 2013), “The Bilbao Effect: If You Build It, Will They Come?” p. 5. 2 See also Daire Hooper and Joseph Coughlan (2013) who show that the quality of a service environment should be modeled as a separate construct which precedes overall service quality perceptions; Daire Hooper and Joseph Coughlan (2013), “The Servicescape as an Antecedent to Service Quality and Behavioral Intentions,” Journal of Services Marketing, Vol. 27, No. 4, pp. 271–280. 3 The term servicescape was coined by Mary Jo Bitner in her paper (1992), “Servicescapes: The Impact of Physical Surroundings on Customers and Employees,” Journal of Marketing, Vol. 56, No. 2, pp. 57–71. 4 Madeleine E. Pullman and Michael A. Gross (2004), “Ability of Experience Design Elements to Elicit Emotions and Loyalty Behaviors,” Decision Sciences, Vol. 35, No. 1, pp. 551–578. A recent study in a retail context has shown that retail shops were remodeled, sales increased, and continued to outperform shops there were not remodeled. Interestingly, customers acquired in the remodeled shops had a higher spending than customers acquired before the remodeling and had overall more positive attitudes toward the retailer. See: Tracy S. Dagger and Peter J. Danaher (2014), “Comparing the Effect of Store Remodeling on New and Existing Customers,” Journal of Marketing, Vol. 78, No. 3, pp. 62–80. 5 Anja Reimer and Richard Kuehn (2005), “The Impact of Servicescape on Quality Perception,” European Journal of Marketing, Vol. 39, No. 7/8, pp. 785–808. 6 Julie Baker, Dhruv Grewal, and A. Parasuraman (1994), “The Influence of Store Environment on Quality Inferences and Store Image,” Journal of the Academy of Marketing Science, Vol. 22, No. 4, pp. 328–339. 7 MacRumors (12 May 2020), “Keep Track of Apple’s Retail Stores Worldwide,” published on by MacRumors staff, https://www. macrumors.com/roundup/apple-retail-stores, accessed February 13, 2021; Lauren Thomas (29 July 2017), “Bucks from Bricks: These Retailers Make the Most Money per Square Foot on Their Real Estate,” https://www.cnbc.com/2017/07/29/here-are-the-retailersthat-make-the-most-money-per-square-foot-on-their-real-estate. html, accessed February 13, 2021. 8 Adapted from Roger Ulrich, Xiaobo Quan, Craig Zimring, Anjali Joseph, and Ruchi Choudhary (2004), “The Role of the Physical Environment in the Hospital of the 21st Century: A Once-in-aLifetime Opportunity,” Report to the Center for Health Design for the Designing the 21st Century Hospital Project funded by the Robert Wood Johnson Foundation; Leonard L. Berry, Jonathan Crane, Katie A. Deming, and Paul Barach (2020), “Using Evidence to Design Cancer Care Facilities,” American Journal of Medical Quality, Vol. 35, No. 5, pp. 397–404. Even servicescapes that merely mimic nature have positive effects on consumer responses; see: Deepak S. Kumar, Keyoor Purani, and Shyam A. Viswanathan (2020), “The Indirect Experience of Nature: Biomorphic Design Forms in Servicescapes,” Journal of Services Marketing, Vol. 34, No. 6, pp. 847–867. For a review of the literature on hospital design effects on patients, see: Karin Dijkstra, Marcel Pieterse, and Ad Pruyn (2006), “Physical Environmental Stimuli that Turn Healthcare Facilities into Healing Environments Through Psychologically Mediated Effects: Systematic Review,” Journal of Advanced Nursing, Vol. 56, No. 2, pp. 166–181. For a study on the effects of servicescape design in a hospital setting on service workers’ job stress and job satisfaction, and subsequently their commitment to the firm, see: Janet Turner Parish, Leonard L. Berry, and Shun Yin Lam (2008), “The Effect of the Servicescape on Service Workers,” Journal of Service Research, Vol. 10, No. 3, pp. 220–238. See also the painstaking effort the Mayo Clinic extends to lowering noise levels in their hospitals: Leonard L. Berry and Kent D. Seltman (2008), Management Lessons from Mayo Clinic: Inside One of the World’s Most Admired Service Organization. New York, NY: McGraw Hill, pp. 171–172. 9 Robert J. Donovan and John R. Rossiter (1982), “Store Atmosphere: An Environmental Psychology Approach,” Journal of Retailing, Vol. 58, No. 1, pp. 34–57. 10 James A. Russell (1980), “A Circumplex Model of Affect,” Journal of Personality and Social Psychology, Vol. 39, No. 6, pp. 1161–1178. 11 Jochen Wirtz and John E. G. Bateson (1999), “Consumer Satisfaction with Services: Integrating the Environmental Perspective in Services Marketing into the Traditional Disconfirmation Paradigm,” Journal of Business Research, Vol. 44, No. 1, pp. 55–66. 12 Jochen Wirtz, Anna S. Mattila, and Rachel L. P. Tan (2000), “The Moderating Role of Target-Arousal on the Impact of Affect on Satisfaction — An Examination in the Context of Service Experiences,” Journal of Retailing, Vol. 76, No. 3, pp. 347–365; Jochen Wirtz, Anna S. Mattila, and Rachel L. P. Tan (2007), “The Role of Desired Arousal in Influencing Consumers’ Satisfaction Evaluations and In-Store Behaviours,” International Journal of Service Industry Management, Vol. 18, No. 2, pp. 6–24. 13 Mary Jo Bitner (1992), “Servicescapes: The Impact of Physical Surroundings on Customers and Employees,” Journal of Marketing, Vol. 56, No. 2, pp. 57–71. 14 When servicescapes are designed or redesigned, it is important to use cross-functional teams as there are significant perception gaps between managers and frontline employees, and the latter’s perspective is important for servicescapes to facilitate productive and effective service delivery; see: Herman Kok, Mark Moback, and Onno Omta (2015), “Facility Design Consequences of Different Employees’ Quality Perceptions,” The Service Industries Journal, Vol. 35, No. 3, pp. 152–178. 15 For reviews of research on the atmospheric effects, refer to L. W. Turley and Ronald E. Milliman (2000), “Atmospheric Effects on Shopping Behavior: A Review of the Experimental Literature,” Journal of Business Research, Vol. 49, pp. 193–211; Anne L. Roggeveen, Dhruv Grewal, and Elisa B. Schweiger (2020), “The DAST Framework for Retail Atmospherics: The Impact of In- and Out-of-Store Retail Journey Touchpoints on the Customer Experience,” Journal of Retailing, Vol. 96, No. 1, pp. 128–137; Julie Baker, Kara Bentley, and Charles Lamb, Jr (2020), “Service Environment Research Opportunities,” Journal of Services Marketing, Vol. 34, No. 3, pp. 335–346. Interestingly, the effects of the ambient, design, and social factors of the wider surroundings of a servicescape have an impact on Managing the Customer Interface 355 PART 3 Endnotes consumer responses to an individual outlet. The findings of a recent study show that store managers would do well to proactively work with stakeholders of the wider service environment to improve the quality of its dimension (i.e., its ambient conditions, design elements, and social factors). These could include fixing potholes on roads, reducing crime, and helping to sponsor events and activities. See: Xiaojing Sheng, Penny M. Simpson, and Judy A. Siguaw (2017), “Communities as Nested Servicescapes,” Journal of Service Research, Vol. 20, No. 2, pp. 171–187. 16 For a meta-analysis of the impact of ambient conditions, refer to Holger Roschk, Sandra Maria, Correia Loureiro, and Jan Breitsohl (2017), “Calibrating 30 Years of Experimental Research: A MetaAnalysis of the Atmospheric Effects of Music, Scent and Color,” Journal of Retailing, Vol. 93, No. 2, pp. 228–240. 17 Steve Oakes (2000), “The Influence of the Musicscape Within Service Environments,” Journal of Services Marketing, Vol. 14, No. 7, pp. 539–556. 18 Laurette Dubé and Sylvie Morin (2001), “Background Music Pleasure and Store Evaluation Intensity Effects and Psychological Mechanisms,” Journal of Business Research, Vol. 54, No. 2, pp. 107–113; Clare Caldwell and Sally A. Hibbert (2002), “The Influence of Music Tempo and Musical Preference on Restaurant Patrons’ Behavior,” Psychology and Marketing, Vol. 19, No. 11, pp. 895–917. Interestingly, the volume of music and ambient noise affect consumer decision-making. In low-volume environments, customers tend to choose healthier food options in restaurants and supermarkets, and they choose less healthy options in high-volume environments. The implication is that a salad bar wanting to sell more healthy options should keep music and noise levels low, but a bar that wants to sell more finger food and drinks that tend to be less healthy should turn up the volume; see: Dipayan Biswas, Kaisa Lund, and Courtney Szocs (2019), “Sounds Like a Healthy Retail Atmospheric Strategy: Effects of Ambient Music and Background Noise on Food Sales,” Journal of the Academy of Marketing Science, Vol. 47, No. 6, pp. 37–55. 19 For a review of the effects of music on various aspects of consumer responses and evaluations, see: Steve Oakes and Adrian C. North (2008), “Reviewing Congruity Effects in the Service Environment Musicscape,” International Journal of Service Industry Management, Vol. 19, No. 1, pp. 63–82. 20 See www.moodmedia.com for in-store music solutions provided by Mood Media and The Economist (December 14, 2013), “Christmas Music: Dreaming of a Hip-Hop Christmas,” p. 36. 21 This section is based on The Economist (January 8, 2005), “Classical Music and Social Control: Twilight of the Yobs,” p. 48. 22 This section is based on The Economist (January 8, 2005), “Classical Music and Social Control: Twilight of the Yobs,” p. 48. 23 Holger Roschk and Masoumeh Hosseinpour (2020), “Pleasant Ambient Scents: A Meta-Analysis of Customer Responses and Situational Contingencies,” Journal of Marketing, Vol. 84, No. 1, pp. 125–145. The effects of scent can be long-lasting, see: Anna Girard, Marcel Lichters, Marko Sarstedt, and Dipayan Biswas (2019), “Shortand Long-Term Effects of Nonconsciously Processed Ambient Scents in a Servicescape: Findings from Two Field Experiments,” Journal of Service Research, Vol. 22, No 4, pp. 440–455. 356 Chapter 10 ▪ Crafting the Service Environment 24 Alan R. Hirsch (January 1997), Dr. Hirsch’s Guide to Scentsational Weight Loss. UK: Harper Collins, pp. 12–15. http://www.smellandtaste. org/, accessed February 13, 2021. 25 Alan R. Hirsch (1995), “Effects of Ambient Odors on Slot Machine Usage in a Las Vegas Casino,” Psychology and Marketing, Vol. 12, No. 7, pp. 585–594. 26 Alan R. Hirsch and S. E. Gay (1991), “Effect on Ambient Olfactory Stimuli on the Evaluation of a Common Consumer Product,” Chemical Senses, Vol. 16, p. 535. 27 See Ambius and Mood Media’s websites for details of their scent marketing, ambient scenting, and sensory branding services at https://www.ambius.com/scenting and https://us.moodmedia.com/ scent, accessed February 13, 2021. 28 Andreas Herrmann, Manja Zidansek, David E. Sprott, and Eric R. Spangenberg (2013), “The Power of Simplicity: Processing Fluency and the Effects of Olfactory Cues on Retail Sales,” Journal of Retailing, Vol. 89, No. 1, pp. 30–43. 29 Ayn E. Crowley (1993), “The Two-Dimensional Impact of Color on Shopping,” Marketing Letters, Vol. 4, No. 1, pp. 59–69; Iris VilnaiYavetz and Anat Rafaeli (2006), “Aesthetics and Professionalism of Virtual Servicescapes,” Journal of Service Research, Vol. 8, No. 3, pp. 245–259. For an excellent review of color and lighting on consumer responses and a few case studies, see: Emrah Ozkul, Hakan Boz, Bilsen Bilgili, and Erdogan Koc (2020), “What Color and Light Do in Service Atmospherics: A Neuro-Marketing Perspective”, in Michael Volgger and Dieter Pfister, eds. Atmospheric Turn in Culture and Tourism: Place, Design and Process Impacts on Customer Behaviour, Marketing and Branding (Advances in Culture, Tourism and Hospitality Research, Vol. 16). Emerald Publishing. 30 Linda Holtzschuhe (2006), Understanding Color — An Introduction for Designers, 3rd ed. New Jersey: John Wiley, p. 51. 31 Albert Henry Munsell (1996), A Munsell Color Product. New York, NY: Kollmorgen Corporation. 32 Linda Holtzschuhe (2006), Understanding Color — An Introduction for Designers, 3rd ed. New Jersey: John Wiley. 33 Holger Roschk, Sandra Maria, Correia Loureiro, and Jan Breitsohl (2017), “Calibrating 30 Years of Experimental Research: A Meta-Analysis of the Atmospheric Effects of Music, Scent and Color,” Journal of Retailing, Vol. 93, No. 2, pp. 228–240; Julie Baker, Kara Bentley, and Charles Lamb, Jr (2020), “Service Environment Research Opportunities,” Journal of Services Marketing, Vol. 34, No. 3, pp. 335–346. 34 Joseph A. Bellizzi, Ayn E. Crowley, and Ronald W. Hasty (1983), “The Effects of Color in Store Design,” Journal of Retailing, Vol. 59, No. 1, pp. 21–45. 35 Justin Bachman (2015), “Airlines Add Mood Lighting to Chill Passengers Out: New Boeing and Airbus Models Offer Cabin Designers Splashy Ways to Engage Passengers with Light,” Bloomberg Business, http://www.bloomberg.com/news/articles/2015-04-22/ airlines-add-mood-lighting-to-chill-passengers-out, accessed February 14, 2021. 36 Anat Rafaeli and Iris Vilnai-Yavetz (2003), “Discerning Organizational Boundaries Through Physical Artifacts,” in Neil Paulsen and Tor Hernes, eds. Managing Boundaries in Organizations: 37 In addition to impacting functionality, shapes used in a servicescape affect customer satisfaction. For example, round and circular shapes are perceived as warmer, more comfortable, and friendlier, whereas angular cues are perceived as more competent, efficient, and professional; see: Stephanie Q. Liu, Vanja Bogicevic, and Anna S. Mattila (August 2018), “Circular vs. Angular Servicescape: ‘Shaping’ Customer Response to a Fast Service Encounter Pace,” Journal of Business Research, Vol. 89, pp. 47–56. 38 For an excellent review of the quality of signage management, see: Angelo Bonfanti (2013), “Towards an Approach to Signage Management Quality (SMQ),” Journal of Services Marketing, Vol. 27, No. 4, pp. 312–321. See also: Vania Vigolo, Angelo Bonfanti, Rezarta Sallaku, and Jackie Douglas (2020), “The Effect of Signage and Emotions on Satisfaction with the Servicescape: An Empirical Investigation in a Healthcare Service Setting,” Psychology and Marketing, Vol. 37, No. 3, pp. 408–417. With mobile technology and geotagging, personalized signage (e.g., on screens) has become feasible (e.g., signs can tell you where your car is parked or highlight a special offer that might be of interest to you); see: Dhruv Grewal, Stephanie M. Noble, Anne L. Roggeveen, and Jens Nordfalt (2020), “The Future of In-Store Technology,” Journal of the Academy of Marketing Science, Vol. 48, No. 1, pp. 96–113. 43 Ron Kaufman (May 2001), “Service Power: Who Were They Designing It For?” Newsletter, https://ronkaufman.com/ 44 Alan d’Astous (2000), “Irritating Aspects of the Shopping Environment,” Journal of Business Research, Vol. 49, No. 2, pp. 149–156. See also: K. Douglas Hoffman, Scott W. Kelly, and Beth C. Chung (2003), “A CIT Investigation of Servicscape Failures and Associated Recovery Strategies,” Journal of Services Marketing, Vol. 17, No. 4, pp. 322–340. 45 Jörg Pareigis, Per Echeverri, and Bo Edvardsson (2012), “Exploring Internal Mechanisms Forming Customer Servicescape Experiences,” Journal of Service Management, Vol. 23, No. 5, pp. 677–695. 46 Ulrich R. Orth and Jochen Wirtz (2014), “Consumer Processing of Interior Service Environments,” Journal of Service Research, Vol. 17, No. 3, pp. 296–309; Ulrich R. Orth, Jochen Wirtz, and Amelia McKinney (2016), “Shopping Experiences in Visually Complex Environment: A Self-Regulation Account,” Journal of Service Management, Vol. 27, No. 2, pp. 194–217. 47 Audit tools and checklists can be used to determine environmental dimensions that are important to customers; for example, see the auditing tool provided in Mark S. Rosenbaum and Corolyn Massiah (2013), “The Challenge of Managing a Service Context,” in Raymond P. Fisk, Rebekah Russell-Bennett, and Lloyd C. Harris, eds. Serving Customers: Global Services Marketing Perspectives. Melbourne, Australia: Tilde University Press, pp. 287–310. 48 Madeleine E. Pullman and Stephani K. A. Robson (2007), “Visual Methods: Using Photographs to Capture Customers’ Experience with Design,” Cornell Hotel and Restaurant Administration Quarterly, Vol. 48, No. 2, pp. 121–144. 39 Lewis P. Carbone and Stephen H. Haeckel (2003), “Engineering Customer Experiences,” Marketing Management, Vol. 3, No. 3, pp. 9–18; Lewis P. Carbone, Stephen H. Haeckel, and Leonard L. Berry (2003), “How to Lead the Customer Experience,” Marketing Management, Vol. 12, No. 1, pp. 18–23; Leonard L. Berry and Lewis P. Carbone (2007), “Build Loyalty Through Experience Management,” Quality Progress, Vol. 40, No. 9, pp. 26–32. 40 Dennis Nickson, Chris Warhurst, and Eli Dutton (2005), “The Importance of Attitude and Appearance in the Service Encounter in Retail and Hospitality,” Managing Service Quality, Vol. 15, No. 2, pp. 195–208. 41 Christine M. Piotrowski (2016), Designing Commercial Interiors, 3rd ed. New York, NY: John Wiley & Sons; Natali Canas del Del Pozo (2018), The Art of Bar Design. Images Publishing. 42 Christoph Breidbach, Sunmee Choi, Benjamin Ellway, Byron W. Keating, Katerina Kormusheva, Christian Kowalkowski, Chiehyeon Lim, and Paul Maglio (2018), “Operating Without Operations: How is Technology Changing the Role of the Firm,” Journal of Service Management, Vol. 29, No. 5, pp. 809–833; Jonas Holmqvist, Jochen Wirtz, and Martin P. Fritze (December 2020), “Luxury in the Digital Age: A Multi-Actor Service Encounter Perspective,” Journal of Business Research, Vol. 121, pp. 747–756; Jana Gäthke (2020), “The Impact of Augmented Reality on Overall Service Satisfaction in Elaborate Servicescapes,” Journal of Service Management, Vol. 31, No. 2, pp. 227–246. Managing the Customer Interface 357 PART 3 Multiple Perspectives. Basingstoke, Hampshire, UK: Macmillan; Anat Rafaeli and Iris Vilnai-Yavetz (2004), “Emotion as a Connection of Physical Artifacts and Organizations,” Organization Science, Vol. 15, No. 6, pp. 671–686; Anat Rafaeli and Iris Vilnai-Yavetz (2005), “Managing Organizational Artifacts to Avoid Artifact Myopia,” in Anat Rafaeli and Michael Pratt, eds. Artifacts and Organization: Beyond Mere Symbolism. Mahwah, NJ: Lawrence Erlbaum Associates Inc., pp. 9–21. This book is available for a student-friendly price. Price on Amazon: $48 (correct as of August 17, 2021) Click to Connect to Amazon Professor Jochen Wirtz Click below to follow his research & publications