Influence of Servicescape on New and Repeat Customers' Behaviour - Research Paper Example

How does the Servicescape Influence Customer Behaviour? Will the Servicescape Have a Different Effect on New Versus Repeat Customers? Why or Why Not? A Literature Review and Experience Based Field Study Approach Abstract A two way approach is employed to determine the effect of servicescape on customer perception and behavior service experience. The literature review approach has been taken to determine the aspects of servicescape that effect customer behavior. These aspects are then categorized under dimensions which are employed further analysis. Additionally the relationship between servicescape and new and old customer behavior and perception is observed. The second part analyses the personal service experience undergone at Costa Coffee and Starbucks in China, using the identified dimensions from the literature review. The findings provide that servicescape affect both new and repeat customers, but mismanagement for servicescape can result in loss of repeat and loyal customer base. Table of Contents 1.Literature Review 3 1.1. Psychology of Consumer Behaviour 4 1.2.Servicescapes Applied to Services Marketing 4 1.3. Framework for Environment and User Relationship for Services Organizations 6 1.3.1.Physical Environmental Dimensions 6 1.3.2.Holistic Environment 6 1.3.3.Internal Responses 7 1.3.4.Resultant Behaviour 7 1.4. Measuring Perceptions for Servicescape based Services Marketing 7 1.5.Impact on Customer Loyalty 8 1.6.Influence on New and Old Customers 10 2.Apparent Drawbacks 11 3.Field Report 12 3.1. Ambience at Starbucks China 12 3.2. Spatial Layout at Starbucks China 13 3.3. Artefacts at Starbucks China 13 3.4. Ambience at Costa Coffee China 13 3.5. Spatial Layout at Costa Coffee China 14 3.6. Artefacts at Costa Coffee China 14 4.Conclusion 15 5.References 16 Introduction When it comes to products, the consumption objectives and perceptions of the customers differ significantly from their consumption of services. When customers seek out services to consume as products, they look for the intrinsic service and value associated with it as well as the extrinsic factors of service quality and value added proposition. The value added proposition by service providers is largely based on the servicescape dimensions. Much research has been conducted on the aspect of servicescape and the impact it has on the formation of perceptions in the minds of the customer. However the aspects of customer loyalty and differing dimension roles for new and repeat customers are aspects of research that need to be focused upon. The objective of this study is to determine firstly, how the servicescape affect the customer behaviour in the services industry. Secondly the paper seeks to provide basis for possibly differing effect of the servicescape on the new customers for a service provider when compared the same for the repeat customer. A practical study of personal experience specific to Starbucks in outlets in China has been performed to further evaluate the importance of servicescape in this regard. The aspect of customer loyalty is taken into account and possible digression onto strategic management of services marketing is provided. 1. Literature Review 1.1. Psychology of Consumer Behaviour Consumer behaviour is a vast filed of study pertaining to the internal and external influences of psychology and how they influence the behaviour of the consumer. Specifically applied to business and marketing, this field aids in providing significant groundwork for the application of servicescape in the services marketing industry. The consumer behaviour psychology is of significant importance when businesses seek to implement a relationship marketing strategy for targeting new customers and building relationships for long term business and equity from them as a result of managed lifetime relationships (Roberts, Varki and Brodie, 2003). 1.2. Servicescapes Applied to Services Marketing The concept of servicescape was introduced formally by Booms and Bitner (1981) in their compiled work that focused on the effect of intangible and tangible elements on the customer perception specific to services marketing among other factors. The concept as depicted by Bitner and Boom provides that it is possible for the environment surrounding the provision and the consumption of a service to significantly impact customer perceptions of image, perception and overall experience regarding the service. Since formal theoretical framework has been laid out to support servicescape, businesses have increasingly paid attention to manipulation of this attribute to their service in order to foster a proposed experience and perception on to the customers. Servicescape are of particular importance for businesses that provide services to customers or make use of services marketing. Much research pertaining to aspects of servicescape and their application in different industries to influence customer behaviour has been performed. This is particularly true for the hospitality, retail and fast-food/restaurant industry. Specific to servicescape Turley and Milliman (2000) provide that atmospheric elements like scent and temperature can significantly influence the behaviour of the customer in the service setting. This influence can be of both, a positive or a negative nature depending on the service type and the type of atmospheric servicescape employed. Specific to the retailing industry and services marketing employed in the industry, servicescape specific to the store environment have been employed to enhance the experience of shopping for the customer and provide stimuli to increase purchases (Matilla and Wirtz, 2001). These servicescape can take the form of layout of counters and shelves in store, the air conditioning employed, use of plants and natural elements as well as the use scent and music as stimuli for purchase. As observed, while servicescape can take numerous forms and innovations in services marketing regarding this field have created for new components to develop, especially for online service provision (Vilnai-Yavetz and Rafaeli, 2006), some of the main aspects that are covered by servicescape include the environment, the design, the signage, décor, layout, ambiance, and quality of experienced environment. The formal categorization of these components can be performed to arrive at the elements of servicescape as depicted by Bitner and Boom (1981) to include the ambiance, the spatial layout and the artefacts. 1.3. Framework for Environment and User Relationship for Services Organizations The approach of servicescape is provided in by Bitner (1992) as being holistic and composed of the following elements: 1.3.1. Physical Environmental Dimensions The physical environment for servicescape is made up of three main elements. These pertain to the ambiance, the spatial layout and the artefacts. The ambiance here pertains to the environmental conditions, and the general aura and outlook of the place where the service is being provided. This can also be assessed for the point of interactions between the business and the customer. Spatial layout deals with the functional elements of the environment like the physical attributes required for consuming and experiencing the service. The artefacts here include the signs, symbols, and imagery employed as a proposition with the service to induce purchase and positive perception stimulation. 1.3.2. Holistic Environment Bitner (1992) depicted through his work that the environment is perceived by the customers as a whole. This holistic approach encompasses the physical dimensions of the environment as well as any emotional cognitive derivations made based on the environment. These make way for the internal responses and perception determination in the customers. 1.3.3. Internal Responses The internal responses involve the internal responses of both the customers as well as the employees. These responses take into account aspects of cognitive processing, emotional elements as well as those pf physiological nature to develop image based perceptions regarding the service and its image. The responses developed make way for the actionable behaviour of both the employees as well as the customers. 1.3.4. Resultant Behaviour The resultant behaviour as mentioned earlier is based on the internal responses generation and the perceptions formed by the customers and well as the employees. This response depicts the individual behaviour for the customers and the employees of the service organization in a service setting. Aside from this the resultant behaviour can also take the form of interactions between the employees and customers to share the experience and derive perceptions on the responses received from one another during the course of the interactions. 1.4. Measuring Perceptions for Servicescape based Services Marketing Perception is made up of multiple variables that combine together to form an image pertaining to a product and service in the mind of the customer. Services capes work on the principle of influencing the perception of the customers through the environment. Services’ marketing employs services capes to influence customers to have a positive perception about their service and brand making way for a long term productive relationship with the customer, which can spawn new relationships through referrals. Therefore in becomes increasingly important to measure perceptions which are to be influenced through the man agent of servicescape. A holistic approach which fits Bitner’s approach towards servicescape is that of Gestalt. Gestalt approach which was derived through developments in the Gestalt psychology (Schiffman, 2001) provides that humans form perceptions in a holistic manner. These perceptions are stored in the brain in the form of images and referred to when forming verbal and cognitive perceptions. As servicescape based services marketing involves adjusting the environment to stimulate behaviour in the customers, this approach is of particular relevance. Schiffman (2001), with his work on perception measurement provides that with the Gestalt approach, perceptions can be measured in terms of the similarity of the physical attributes and how they work together cohesively, the continuity of the perception, the commonality involved, symmetry specially in terms of aesthetics involved and the closure. This can aid in forming a service quality approach to measure the effects of service marketing attributes like servicescape on the customers perceptions and therefore on the effectiveness of the marketing approach from the management point of view relevant to new customers, and loyalty of old customers. 1.5. Impact on Customer Loyalty Customer loyalty is of considerable importance to businesses and as a result they seek repeat purchase behaviour by trying to build long term relationships with the customers. In terms of services marketing the concept of customer relationship building is highly noted and practiced as depicted by the securities and financials industry and the banking industry trends of relationship marketing. Similarly for a combination of product service providing businesses like restaurants, cafes, and fast food eateries, the concept of servicescape and relationship marketing can also be employed. In this case the repeat purchase based loyal customer behaviour is sought by companies by inducing loyalty through value added service provisions. The value added service provisions are analyzed by the customers in terms of the environmental factors as well as service experienced. The servicescape in this context are applied to achieve the objective. Specific to the restaurant industry, Wall and Berry’s (2007) research provided that while food might be similar across different eateries and restaurants, customers tend to build preferences and ensuring loyalties based on spatial, artefact and ambiance based dimensions as well as interactions with staff to share service experience. Simpeh et.al (2011) employed the servicescape analysis approach for determining the effect on the patronage of the restaurants in the region in terms of their environments and related facto9rs. The findings of the research provided that in the hospitality and hotel industry servicescape are of considerable importance as the customer buys into the provided products and services at the restaurant while also seeking value added attributes that increase the loyalty of the customer with the establishment. The ambiance of the hotels, their spatial layout as well as the artefacts in terms of the signs and symbols were positively associated with the customer loyalty for the hotel establishments. This can be expanded to the concept of service branding and can provide how branded services show trends in customer loyalty which are almost entire based on the servicescape attributes if the service in terms of its image. This can help explain why going to a normal spa and visiting a luxury high end elite spa can have a different impact on the customer loyalty and perception for long term relationship with the company. 1.6. Influence on New and Old Customers As the objective of employing servicescape is to drive a certain stimuli in the customers to influence their service quality perception and satisfaction for repeat purchase, the role of servicescape pertaining to the influence they have on new and old customers is significant. Pareigis et. al., (2011) focused on exploring the influence of servicescape on new and repeat customers in the public transport services. Their findings provided that in terms of the public transport service, customers perceive service quality through service experience in terms of their involvement in the service, their specific placement and the physical artefacts present. This revealed that there are possible two way interactions between the service provided and the customer in terms of the experience that the customer has, and how this experience forms the perceptions for quality and demand for repeat utilization of service. A study was undertaken by Ryu and Han (2011) pertaining to the application of environmental factors influencing customer behaviour and customer loyalty in the restaurant setting. The research provided that customer loyalty for new first time customers as well as for repeat customers is significantly different. While the environment does greatly effect the customer loyalty, it is different for new and repeat customers as the first time customers have to build a perception for the first experience, but repeat customers, tend to analyze the environment stimulants by comparing them to their previous experiences and adjusting their perception for the physical environment associated with the service to come up with an updated or adjusted perception. This process is more complex to plan for the management specific for the repeat customers. Therefore the findings provide that significant relationship building strategies are required to retain loyal repeat customers. These findings were shared by Pantouvakis et. al, (2008) and depicted that the physical elements pertaining to the environment of service provision are generally more important for the customers in terms of their perception of satisfaction from the service. This can spawn loyalty in customers and trend for repeat purchase of service. Therefore it is provided that management should seek to invest in new customers, while making strategic interactive servicescape considerations for the service provision to retain the existing customers as loyal repeat business providers. Situational environmental variables can greatly influence the behaviour of customers, and in order to understand this, the behaviour of the customer pertaining to the environment attributes needs to be observed. However it is not only the physical environmental attributes that can influence the customers, cognitive emotional stimulants form the physical environment act as intangible servicescape and drivers for forming perception. These aspects are not sufficiently explored in the available literature and can be focused on for further study. 2. Apparent Drawbacks Changing perceptions of customers is a very difficult process, more so, than creating a perception in the minds of the customer. This is because creating a new perception requires fresh approach and open mind toward the processing and reception of stimuli. Human nature finds it easier to process new experiences, as compared to processing existing previously encounters experiences due to bias and existing perceptions. Regarding this using servicescape for service marketing purposes can have some drawbacks. These drawbacks take the form of deep rooted distress in the customers who associate a negative perception with the service therefore forgoing repeat purchase or utilization. The simple emotional response in this case is avoidance, and this does not provide a healthy proposition for the business as the business looses its customers who do not want to be associated with the brand, or service nay longer. In terms of new customers, the loss does exist for the businesses, but not as significant as for repeat customers, as the business losses its loyal customer base reducing its overall brand or service based customer equity over their relationship period. 3. Field Report For the purpose of evaluating two differing services personally experienced. The two options of Starbucks and Costa Coffee in china were selected. The purpose for this was that having visited both western coffee houses, the experience made was significant different, one being a positive one, while the other had negative and unfavourable undertones. Therefore they fit the purpose of the evaluation study. Aside from this both services provided are of similar nature, so the comparison between the services was also easier to make. 3.1. Ambience at Starbucks China The ambience in Starbucks was primarily westernized, with a relaxed aura around the coffeehouse. The coffeehouse had popular songs by the local bands running on low tones, which were interspaced with popular western choices as well. The service and lounging area had a pleasant controlled temperature which aided in creating a relaxed atmosphere for the customer. 3.2. Spatial Layout at Starbucks China The layout was slightly congested for personal taste, and resulted in the customer having to wait to be seated, while the other patrons were consuming their coffees. However the wait was made comfortable by the staff that came to aid and helped arrange for new seating near the large window looking out the courtyard. Aside from this the navigation in Starbucks was also easy with a separate line for ordering and purchasing the food and coffee, and a separate flow of patrons to collect their purchases. This made lit easy and quick to be serviced. 3.3. Artefacts at Starbucks China The Starbucks logo and related symbols were everywhere. From memorabilia items to gifts, to napkins to wall fronts and even the main facade of the shop all screamed Starbucks. The green and beige theme was everywhere, even incorporated with the interior of the lounge. However there was significant presence of red, in terms of red couches, and red napkins that clashed with the rest of the interior. 3.4. Ambience at Costa Coffee China The Costa Coffee shop boasted a really pleasant interior with comfortable chairs and couches, mild music, controlled temperature for the satisfaction of us customers, as well as a rather large lounging area for the patrons. The aroma of rich roasting coffee significantly induced hunger pangs, and invited us to check out the traditional coffee offering amongst the innovative tea blends offered on the menu. 3.5. Spatial Layout at Costa Coffee China In terms of layout and functionality, Costa Coffee was a much open and spacious outlet with a bigger lounging area. This apparently made navigation through the store to seem easy, but when customers actually tried to reach from the door to the counter, they had to navigate through numerous wooden tables with sharp edges that had been aesthetically arranged but caused navigational issues. Some of us actually banged out legs against the tables, in an attempt to navigate through. 3.6. Artefacts at Costa Coffee China Akin to Starbucks at Costa Coffee as well, the company colours of red, white and black were everywhere, however the logos and brand images were aesthetically arranged to give the minimal touch. Watermarked logos and light shaded monograms that were not in your face were used throughout the outlet. The things of considerable concern pertain to the reception of the service. The wait for the product/service was considerable, depicted there being not many patrons attending that day. Aside from this the artefacts supporting the service like the cutlery and the cups did not seem clean. In fact the attendant splashed the tea over the top of the cups and onto the trays while serving us the teas and did not even apologize for the incident. This combined with the stained tissues, untidy table top, which had not been properly cleaned after the precious patrons, and the sloshed coffee on utensils made the experience rather unsettling. 4. Conclusion The literature review conducted provided that service quality and customer satisfaction for the service can be determined in terms of the servicescape employed. Dimensions for the servicescape that were extracted from the literature review pertained to ambiance, spatial layout and artefacts. The personal experience study as a result was analysed in terms of these dimensions to depict that the experience in Starbucks was more favourable than in Costa Coffee as amongst the two the latter had significant issues of untidiness and cleanliness apparent through the servicescape dimensions. The issue significantly impacted the decision to not visit Costa Coffee again despite the fact their coffees and teas were better, based on the unsettling experience. This along with the literature review provides that it is easier to get new customers by employing service spaces, but when it comes to keeping customers loyal with repeat experience, it is difficult to match each experience as the same. Also one bad experience based on the service space can deflect a customer. 5. 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