People, Process, Physical evidence

and Servicescape
Service Environment
► Physical
backdrops surrounding the service
(Servicescape)
■Ambience and cleanliness of a cinema hall
■Café near a college
■Elegant décor of a shop to cater to upscale market
Physical Evidence– the sixth ‘P’
► ‘Servicescape’ or ‘Atmospherics’ creates mood,
longing, attraction or desire to visit / recommend
service provider by tangibalisation. It includes
every tangible touch point i.e. brochure, building,
dress of the people, furniture, wall décor etc.
Physical Evidence– the sixth ‘P’
► Service Design is of utmost importance
► People visit expensive restaurants to relish dishes
otherwise available in less costly eating houses
because of better ambience
► Theme parks are developed based on common
cartoon figures
► Luxury buses / better maintained buses are
preferred over lousy staff to traverse same
distance
Service factory designing
► Convenience
► Comfort
► Ambience
► Speed
Service Design (Pre-Delivery)
► Defining design attributes
► Setting design standards
► Generating/ Evaluating design concepts
► Developing design details
Service Design (Post- Delivery)
► Implementing the design
► Measuring Performance
► Assessing Satisfaction
► Improving Performance ( Feedback to Redesign)
Managing the firm’s
physical evidence
Physical Evidence
► The elements of 'marketing mix' which customers
can actually see or experience when they use a
service, and which contribute to the perceived
quality of the service, e.g. the physical evidence
of a bank could include the state of the branch
premises, as well as the delivery of the banking
service itself. 
The role of physical evidence
► Packaging the service
■Conveys expectations
● Physical evidence => quality cues => image development
■Influences perceptions
● Image development => reduces perceived risk => reduces
cognitive dissonance after the purchase
The role of physical evidence
► Facilitates the flow of the service delivery process
■Provides information
● How am i to act?
■Facilitates the ordering process
● How does this work?
■Manages consumers
● Barriers separate different consumer groups or help to isolate
the technical core
The role of physical evidence
► Socializes employees and customers
■Uniforms
● Identify the firm’s personnel
● Physical symbol that embodies the group’s ideals and
attributes
● Implies a coherent group structure
● Facilitates perceptions of consistent performance
● Assists in controlling deviant members
The role of physical evidence
► Provides a means for differentiation
■well-dressed personnel are perceived as:
● more intelligent
● better workers
● more interactive
Components of the physical
environment
► Facility exterior
■Exterior design
■Signage
■Parking
■Landscaping
■Surrounding environment
Components of the physical
environment
► Facility interior
■Interior design (warm colors)
● Red
 Love, romance, sex, courage, danger, fire, sinful, warmth,
excitement, vigor, cheerfulness, enthusiasm, and stop
● Yellow
Sunlight, warmth, cowardice, openness, friendliness, gaiety, glory,
brightness, caution
● Orange
Sunlight, warmth, openness, friendliness, gaiety, glory
Components of the physical
environment
► Facility interior
■Interior design (cool colors)
● Blue
Coolness, aloofness, fidelity, calmness, piety, masculine,
assurance, sadness
● Green
Coolness, restful, peace, freshness, growth, softness, richness, go
● Violet
Coolness, retiring, dignity, rich
Components of the physical
environment
► Facility interior
■Interior design
■Equipment
■Layout
● Grid vs. Free-flow
■Temperature
Components of the physical
environment
► Other tangible evidence
■Business cards
■Stationary
■Billing statements
● CP&L statement
■Reports
■Brochures
■Employee performance
■Employee appearance
Creating service atmospheres
► Sight appeals
■Size, shape, colors, contrast, clash, location, architecture,
signs, entrance, and lighting

► Sound appeals
■Music, announcements, and sound avoidance
Creating service atmospheres
► Scent appeals
■appeals and avoidance
► Touch appeals
► Taste appeals
Examples of Physical Evidence from
the Customer’s Point of View

Service

Insurance
Typology of Service Organizations Based on
Variations in Form and Use of the Servicescape
A Framework for Understanding Environment-user
Relationships in Service Organizations

PHYSICAL HOLISTIC INTERNAL BEHAVIOUR

ENVIRONMENTAL ENVIRONMENT RESPONSES
DIMENSIONS
Cognitive
Emotional
Physiological Individual
Behaviours

Employee Social
Responses Interactions
Ambient
Conditions between and
Perceived among
Space/Function customer and
Signs, Symbols, Servicescape
employees
and Artifacts
Customer
Responses
Individual
Behaviours
Cognitive
Emotional
Physiological
SERVICE DELIVERY
Provider GAP 3

CUSTOMER

Service Delivery
COMPANY
GAP 3
Customer-Driven
Service Designs
and Standards
Process--- the seventh ‘P’
►A critical variable from the point of view of the
customer because he has to know what is needed
to avail of a service
► Process of service delivery can be mapped with a
flow-chart or service ‘Blueprint’
► If average time, step overlaps etc. can be gauged
appropriately, then with current technological
improvement, service delivery /quality could be
upgraded through ‘Business Process Re-
engineering’ ( BPR )
Gap 3: Role of Process in Operational
Design & Delivery
► Service Blueprinting: An Extended Process Map
■Design & Diagnostic Tool
► Effectively Handling Demand
■Impact of Random Arrival Pattern
■Waiting Line (Queue) Configurations
■Waiting Line (Queue) Management
► Matching
Demand to Capacity Through Demand
Management
■Pricing: Yield Management
■Customer Communication
■Alternative Service Delivery Processes
■Complementary Products
Some examples of Process Innovation
► Airlines– no more lost ticket woes
► Internet booking of railway tickets
► Single window concept in HDFC
► Reducing waiting time by pre-process in an
international flight ( like in-flight supply of
immigration and customs clearance forms
► Self service options /Automation ( vending
machines )
Design considerations for high versus
low contact service firms
► Facility location
► Facility layout
► Product design
■tangible and intangible components
■molecular models
► Process design
■evaluations based on outcomes only vs. outcomes and
process
Designing a Service – design considerations
• Design Consideration • operation must be near
• Facility location customer

• Facility layout • should accommodate

customer’s physical and
psychological needs and
expectations
• environment as well as
• Product design
physical products define
nature of service
• Process design • stages of production
process have direct effect
on customer
Designing a Service -
considerations
• Time standards • Service time depends on
customer needs, therefore,
time standards inherently
loose

• Wage payment • Variable output requires

time-based wage systems

• Capacity planning
• To avoid lost sales, capacity
must be set to match peak
demand
• Forecasting • Forecasts are short-term,
time oriented
Designing a Service - design
considerations
• Scheduling • Customer is in the
production schedule and
must be accommodated
• Production Planning
• Orders cannot be stored, so
smoothing production flow
will result in loss of business

• Labour Skills • Direct personnel major part

of service product, so must
interact well with customer
• Quality Control
• Quality standards often in
eye of beholder and hence
variable
Employees’ roles in service
delivery
People- The fifth ‘P’
► Recruiting right people
► Creating right skill set particularly soft skill
► Line jobs demand specific skills
► Service provider’s image / skill--- utmost
important ( Amin Sayani’s voice in Binaca
geetmala, Simi Grewal’s personality in
‘Rendezvous’ talk show
Employees’ Role in Service
Delivery
► The critical importance of service employees in
creating customer satisfaction and service quality
► Demonstrating the challenges inherent in
boundary-spanning roles
► Examples of strategies for creating customer-
oriented service delivery
► How the strategies can support a service culture
where providing excellent service is a way of life
Service Employees
► Who are they?
■“boundary spanners”
► What are these jobs like?
■emotional labor
■many sources of potential conflict
● person/role
● organization/client
● Inter-client
● quality/productivity
Service Employees
► They are the service.
► They are the organization in the customer’s eyes.
► They are the brand.
► They are marketers.
► Their importance is evident in:
■The Services Marketing Mix (People)
■The Service-Profit Chain
■The Services Triangle
The Services Marketing Triangle
Company
(Management)

Internal External
Marketing Marketing

enabling setting
promises promises

Employees Customers
Interactive Marketing
keeping promises
Boundary Spanners Interact with Both
Internal and External Constituents
External Environment

Internal Environment
Sources of Conflict for Boundary-
Spanning Workers
► Person vs. Role

► Organization vs. Client

► Client vs. Client

► Quality vs. Productivity

Employee Motivation- Key to success
► Giving more autonomy
► Job Rotation
► Job enrichment
► Incentivisation for good performance
► Recognition and non-monetary rewards
► A clear career path
► Equity or Fairness
Employee Motivation- Key to success
► ICICI reduces rate of attrition at its call centers by
offering lateral placement in any of its group
companies after 18 months of good track record
► Infosys recreated a ‘campus’ environment in the
office complexes to offer mental sustenance to
campus recruits. It also was first to offer stock
option
Service Productivity measurement
► Broadly the ratio of Quality and Quantity of
output to Quality and Quantity of input
► An employee disposing 10 customers per day is
not necessarily more productive than the one
handling 9 customers
► If Quality rating of the former is say 7.5 and that
of the latter is 9, then the latter (9*9=81) is more
productive than the former (7.5*10=75)
Human Resource Strategies for Closing
GAP 3 Hire for
r Service
fo Competencie Pr Be
te st s and Service E m ef e t h e
p e Be e
m e l Inclination pl rre
Co th eop oy d
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St war and

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ai ic
Customers Se ron d Hire the

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r
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Customer-

Empower
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Retain the
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Treat

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Delivery Quality

w te
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In loy

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es l Se ali
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Equipment
The Service Profit Chain
Customers’ Roles In Service
Delivery
Importance of Other Customers in
Service Delivery
► Other customers can detract from satisfaction
● disruptive behaviors
● excessive crowding
● incompatible needs

► Other customers can enhance satisfaction

● mere presence
● socialization/friendships
● roles: assistants, teachers, supporters
How Customers Widen Gap 3
► Lack of understanding of their roles
► Not being willing or able to perform their roles
► No rewards for “good performance”
► Interfering with other customers
► Incompatible market segments
Customer Roles in Service Delivery

Productive Resources

Contributors to
Quality and
Satisfaction

Competitors
Customers as Productive
Resources
► “Partial employees”
■Contributing effort, time, or other resources to the
production process
► Customer inputs can affect organization’s
productivity
► Key issue:
■Should customers’ roles be expanded? Reduced?
Customers as Contributors to Service
Quality and Satisfaction
► Customers can contribute to
■their own satisfaction with the service
● by performing their role effectively
● by working with the service provider
■the quality of the service they receive
● by asking questions
● by taking responsibility for their own satisfaction
● by complaining when there is a service failure
Customers as Competitors
► Customers may “compete” with the service
provider
► “Internal exchange” vs. “External exchange”
► Internal/external decision often based on:
■Expertise
■Resources
■Time
■Economic rewards
■Psychic rewards
■Trust
■Control
 Technology Spotlight:
Services Production Continuum

Customer Production Joint Production Firm Production

1 2 3 4 5 6

Petrol Station Illustration

1. Customer pumps Petrol and pays at the pump with automation
2. Customer pumps Petrol and goes inside to pay attendant
3. Customer pumps Petrol and attendant takes payment at the pump
4. Attendant pumps Petrol and customer pays at the pump with automation
5. Attendant pumps Petrol and customer goes inside to pay attendant
6. Attendant pumps Petrol and attendant takes payment at the pump
Strategies for Enhancing Customer
Participation

Effective
Define Customer Recruit, Educate,
Customer Participation and Reward
Jobs Customers

Manage the
Customer
Mix
Physical Evidence and the
Servicescape (Exercise)
► Explain the impact on customer perceptions of
physical evidence, particularly the servicescape
► Illustrate differences in types and roles of
Servicescape and their implications for strategy
► Explain why the Servicescape affects employee
and customer behavior
► Analyze four different approaches for
understanding the effects of physical
environment
► Present elements of an effective physical
evidence strategy
Questions