Chapter 10 Planning the Service Environment Slide 2004

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Chapter 10 Planning the Service Environment Slide © 2004 by Christopher Lovelock and Jochen

Chapter 10 Planning the Service Environment Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 1

The Purpose of Service Environments The service environment influences buyer behaviour in 3 ways

The Purpose of Service Environments The service environment influences buyer behaviour in 3 ways § Message-creating Medium: symbolic cues to communicate the distinctive nature and quality of the service experience. § Attention-creating Medium: to make the servicescape stand out from other competing establishments, and to attract customers from target segments. § Effect-creating Medium: colors, textures, sounds, scents and spatial design to enhance the desired service experience, and/or to heighten an appetite for certain goods, services or experiences Helps the firm to create a distinctive image & positioning that is unique. Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 2

Comparison of Hotel Lobbies (Figure 10. 1) The servicescape is part of the value

Comparison of Hotel Lobbies (Figure 10. 1) The servicescape is part of the value proposition! Orbit Hotel and Hostel, Los Angeles Four Seasons Hotel, New York Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 3

The Mehrabian-Russell Stimulus-Response Model (Figure 10. 2) Environmental Stimuli & Cognitive Processes Dimensions of

The Mehrabian-Russell Stimulus-Response Model (Figure 10. 2) Environmental Stimuli & Cognitive Processes Dimensions of Affect: Pleasure and Arousal Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Response Behaviors: Approach/ Avoidance & Cognitive Processes 10 - 4

The Mehrabian-Russell Stimulus-Response Model § Simple and fundamental model of how people respond to

The Mehrabian-Russell Stimulus-Response Model § Simple and fundamental model of how people respond to environments § Peoples’ conscious and unconscious perceptions and interpretation of the environment influence how they feel in that environment § Feelings, rather than perceptions or thoughts drive behavior § Typical outcome variable is ‘approach’ or ‘avoidance’ of an environment, but other possible outcomes can be added to the model as well Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 5

The Russell Model of Affect Arousing Distressing Exciting Unpleasant Pleasant Relaxing Boring Sleepy Slide

The Russell Model of Affect Arousing Distressing Exciting Unpleasant Pleasant Relaxing Boring Sleepy Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 6

The Russell Model of Affect § Emotional responses to environments can be described along

The Russell Model of Affect § Emotional responses to environments can be described along two main dimensions, pleasure and arousal. § Pleasure is subjective depending on how much the individual likes or dislikes the environment § Arousal quality of an environment is dependent on its “information load”, i. e. , its degree of Ø Novelty (unexpected, surprising, new, familiar) and Ø Complexity (number of elements, extent of motion or change) Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 7

Drivers of Affect § Affect can be caused by perceptions and cognitive processes of

Drivers of Affect § Affect can be caused by perceptions and cognitive processes of any degree of complexity. § Simple Cognitive Processes, Perception of Stimuli Ø tangible cues (of service quality) Ø consumer satisfaction § Complex Cognitive Processes Ø affective charged schemata processing Ø attribution processes The more complex a cognitive process becomes, the more powerful its potential impact on affect. However, most service encounters are routine. Simple processes can determine affect. Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 8

Behavioral Consequence of Affect § Basically, pleasant environments result in approach, and unpleasant environments

Behavioral Consequence of Affect § Basically, pleasant environments result in approach, and unpleasant environments result in avoidance § Arousal acts as an amplifier of the basic effect of pleasure on behavior § If the environment is pleasant, increasing arousal can lead to excitement and stronger positive consumer response. If the environment is unpleasant, increasing arousal level will move consumers into the Distressing region § Feelings during the service encounter is also an important driver of customer loyalty Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 9

An Integrated Framework – Bitner’s Service. Scape Model (Figure 10. 4) Environmental Dimensions Ambient

An Integrated Framework – Bitner’s Service. Scape Model (Figure 10. 4) Environmental Dimensions Ambient Conditions Space/ Function Signs, Symbols & Artefacts Moderators Holistic Environment Internal Responses Cognitive Emotional Psychological Employee Response Moderator Employee Responses Perceived Service. Scape Customer Response Moderator Customer Responses Cognitive Emotional Psychological Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Behaviour Approach or Avoid Social Interaction Between Customers & Employees Approach or Avoid 10 - 10

An Integrated Framework – Bitner’s Service. Scape Model(con’t) § Identifies the main dimensions in

An Integrated Framework – Bitner’s Service. Scape Model(con’t) § Identifies the main dimensions in a service environment and views them holistically § Customer and employee responses classified under, cognitive, emotional and psychological which would in turn lead to overt behavior towards the environment § Key to effective design is how well each individual dimension fits together with everything else Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 11

Dimensions of the Service Environment Service environments are complex and have many design elements.

Dimensions of the Service Environment Service environments are complex and have many design elements. The main dimensions in the servicescape model includes: § Ambient Conditions Ø Music (e. g, fast tempo and high volume increase arousal levels) Ø Scent (strong impact on mood, affect and evaluative responses, purchase intention and in-store behavior) Ø Color (e. g, warm colors associated with elated mood states and arousal but also increase anxiety, cool colors reduce arousal but can elicit peacefulness and calm) Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 12

Dimensions of the Service Environment (con’t) § Spatial Layout and Functionality Ø Layout refers

Dimensions of the Service Environment (con’t) § Spatial Layout and Functionality Ø Layout refers to size and shape of furnishings and the ways it is arranged Ø Functionality is the ability of those items to facilitate performance § Signs, Symbols and Artifact Ø Explicit or implicit signals to communicate the firm’s image, help consumers find their way and to convey the rules of behavior Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 13

Impact of Music on Restaurant Diners (Table 10 -2) Restaurant Patron Behavior Fast-beat Slow-beat

Impact of Music on Restaurant Diners (Table 10 -2) Restaurant Patron Behavior Fast-beat Slow-beat Difference between Music Slow and Fast-beat Environments Absolute Difference % Difference Consumer time spent at table 45 min 56 min +11 min +24% Spending on food $55. 12 $55. 81 +$0. 69 +1% Spending on beverages $21. 62 $30. 47 +$8. 85 +41% Total spending $76. 74 $86. 28 +$9. 54 +12% Estimated gross margin $48. 62 $55. 82 +$7. 20 +15% Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 14

The Effects of Scents on the Perceptions of Store Environments (Table 10 -3) Evaluation

The Effects of Scents on the Perceptions of Store Environments (Table 10 -3) Evaluation Unscented Environment Mean Ratings Scented Environment Mean Ratings Difference Store Evaluation Negative/positive 4. 65 5. 24 +0. 59 Outdated/modern 3. 76 4. 72 +0. 96 Unattractive/attracti ve Drab/colorful 4. 12 4. 98 +0. 86 3. 63 4. 72 +1. 09 Boring/Stimulating 3. 75 4. 40 +0. 65 Store Environment Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 15

The Effects of Scents on the Perceptions of Store Environments (Table 10 -3) Evaluation

The Effects of Scents on the Perceptions of Store Environments (Table 10 -3) Evaluation Unscented Environment Mean Ratings Scented Environment Mean Ratings Difference Outdated/up- to-date style 4. 71 5. 43 +0. 72 Inadequate/adequate 3. 80 4. 65 +0. 85 Low/high quality 4. 81 5. 48 +0. 67 Low/high price 5. 20 4. 93 -0. 27 Merchandise Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 16

Aromatherapy: The Effects of Fragrance on People (Table 10 -4) Fragrance Aromather erapy Class

Aromatherapy: The Effects of Fragrance on People (Table 10 -4) Fragrance Aromather erapy Class Tradition Potential Psychological al Use Impact on People Orange Citrus Lavender Herbaceo Calming, us balancing, soothing Calming and relaxing effect esp. for nervous people Relaxing and calming, helps create a homey and comfortable feel Jasmine Floral Soothing agent, astringent Muscle relaxant, soothing agent Emollient soothing agent Skin cleanser Increase attention level and boosts energy Peppermint Minty Calming Uplifting, balancing Energizing, stimulating Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E Helps makes people feel refreshed, joyful, comfortable 10 - 17

Common Associations and Human Responses to Colors (Table 10 -5) Color Degree of Nature

Common Associations and Human Responses to Colors (Table 10 -5) Color Degree of Nature Common Association and Warmth Symbol Human Responses to Color Red Warm Earth High energy and passion; can excite, stimulate, and increase arousal and blood pressures Orange Warmest Sunset Emotions, expressions, and warmth Green Cool Grass and Trees Nurturing, healing and unconditional love Blue Coolest Sky and Relaxation, serenity and loyalty Ocean Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 18

Selection of Environmental Design Elements § There is a multitude of research on the

Selection of Environmental Design Elements § There is a multitude of research on the perception and impact of environmental stimuli on behaviour, including: Ø People density, crowding Ø Lighting Ø Sound/noise Ø Scents and odours Ø Queues § No standard formula to designing the perfect combination of these elements. Ø Design from the customer’s perspective Ø Design with a holistic view! Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 19

Tools to Guide in Servicescape Design § Keen Observation of Customers’ Behavior and Responses

Tools to Guide in Servicescape Design § Keen Observation of Customers’ Behavior and Responses to the service environment by management, supervisors, branch managers, and frontline staff § Feedback and Ideas from Frontline Staff and Customers using a broad array of research tools ranging from suggestion boxes to focus groups and surveys. § Field Experiments can be used to manipulate specific dimensions in an environment and the effects observed. § Blueprinting or Service Mapping - extended to include the physical evidence in the environment. Slide © 2004 by Christopher Lovelock and Jochen Wirtz Services Marketing 5/E 10 - 20