CHAPTER 8: Managing the Firm’s Physical Evidence ▪ FACILITY EXTERIOR - The physical exterior of the

service facility; includes the exterior design,

Managing the Firm’s Physical Evidence
signage, parking, landscaping, and the
▪ Physical evidence provides tangible cues of the surrounding environment.
quality of experience that a company is offering.
▪ FACILITY INTERIOR - The physical interior of the
DINNER IN THE SKY: ASTONISHING VIEWS THE service facility; includes the interior design,
WORLDWIDE equipment used to serve customers, signage,
layout, air quality, and temperature.
▪ Why are people willing to pay thousands of
dollars to dine in? ▪ OTHER TANGIBLES – Other items that are part of
the firm’s physical evidence, such as business
▪ Servicescape makes all the difference
cards, stationery, billing statements, reports,
▪ Not only are customers given the opportunity to employee appearance, uniforms, and brochures.
literally dine among the clouds while suspended
at 150 feet in the air, they are given the chance
to hoist their company logos over the heads of Service firms that often make extensive use of physical
everyone down below evidence:

▪ Dinner in the sky is still a novelty receiving ▪ Hospitals

considerable attention from internal
▪ Hotel and Resorts
publications, the interest each dining experience
attracts from a local press is incredible. ▪ Child-care Facilities

Introduction Service firms that use limited physical evidence:

Managing the firm’s physical evidence includes ▪ Insurance Providers

everything tangible, from the firm’s physical facilities, to
▪ Express mail drop-off location
brochures and business cards, to the firm’s personnel.
PACKAGING
A firm’s physical evidence influences the consumer’s
experience throughout the duration of the service ▪ The firm’s physical evidence plays a major role in
encounter. Consider the average consumer’s restaurant packaging the service. Packaging the service
experience. does send quality cues to consumers and adds
value to the service in terms of image
▪ Is the menu attractive?
development.
▪ Is it readable or crumbled and spotted with food
▪ The firm’s physical facility forms the customer’s
stains from past customers?
initial impression concerning the type and
▪ How are the waitstaff interacting with other quality of service provided.
customers?
FACILITATING THE SERVICE PROCESS
▪ What do the other customers look like?
▪ Physical evidence can provide information to
▪ Is it correct? customers on how the service production
process works. EX. SIGNAGE, MENUS AND
▪ Are charges clearly written?
BROCHURES
▪ Is the bill clean, or is it sopping wet with
▪ Physical structures direct the flow of waiting
spaghetti sauce?
consumers and barriers. COUNTERS
▪ Are the restrooms clean?
SOCIALIZING EMPLOYEES AND CUSTOMERS
▪ Did the wait staff personnel say thank you and
The firm’s physical evidence plays an important part in
really mean it?
the socialization process by conveying expected roles,
THE STRATEGIC ROLE OF PHYSICAL EVIDENCE behaviors, and relationships among employees and
between employees and customers.
PHYSICAL EVIDENCE - This refers to all existing and
potential features, tangible cues of the quality service The use of uniforms,
when customers is engaging with your business.
⮚ Aids in identifying the firm’s personnel.
Physical Evidence is comprised of three broad categories:
 ⮚ Presents a physical symbol that embodies the Consumer approach and avoidance behaviors and
group’s ideals and attributes. outcomes can be demonstrated in any combination of
four ways:
⮚ Implies a coherent group structure;
1. A desire to stay or leave the service
⮚ Facilitates the perceived consistency of establishment.
performance.
2. A desire to further explore and interact with the
⮚ Provides a tangible symbol of an employee’s service environment or a tendency to ignore it.
change in status
3. A desire to communicate with others or to
⮚ Assists in controlling the behavior of errant ignore the attempts of service providers to
employees. communicate with customers.

A MEANS FOR DIFFERENTIATION 4. Feelings of satisfaction or disappointment with

the service experience
• The effective management of the physical
evidence can also be a source of differentiation. THE DEVELOPMENT OF SERVICESCAPES

• Differentiation can also be achieved by utilizing

physical evidence to reposition the service firm
in the eyes of its customers. Upgrading the
firm’s facilities often upgrades the image of the
firm in the minds of consumers and may also
lead to attracting more desirable market
segments, which further aids in differentiating
the firm from its competitors.

THE SOR MODEL

STIMULUS-ORGANISM RESPONSE (SOR) MODEL

WHAT IS SERVICESCAPES?
▪ A model developed by environmental
The use of physical evidence to design service
psychologists to help explain the effects of the
environments.
service environment on consumer behavior;
describes environmental stimuli, emotional THE DEVELOPMENT OF SERVICESCAPES
states, and responses to those states.
Remote, Self-Service, and Interpersonal Services

▪ REMOTE SERVICES - Services in which

employees are physically present while
customer involvement in the service production
process is at arm’s length.
The Three Components of the SOR Model
▪ SELF-SERVICES - Service environments that are
EMOTIONAL STATES dominated by the customer’s physical presence,
▪ PLEASURE-DISPLEASURE - The emotional state such as ATMs or postal kiosks.
that reflects the degree to which consumers ▪ INTERPERSONAL SERVICES – Service
and employees feel satisfied with the service environments in which customers and providers
experience. interact.
▪ AROUSAL-NONAROUSAL - The emotional state
that reflects the degree to which consumers
and employees feel excited and stimulated.

▪ DOMINANCE-SUBMISSIVENESS – The THE DEVELOPMENT OF SERVICESCAPES

emotional state that reflects the degree to Decisions to consider with respect to high-contact versus
which consumers and employees feel in control low-contact service in order to further understand the
and able to act freely within the service co-production role of the end-user with regard to
environment. servicescape design:
THE SOR MODEL
 ▪ FACILITY LOCATION - The choice location for the • APATHETIC CUSTOMERS - Consumers who seek
firm’s service operation depends upon the convenience over price and personal attention.
amount of customer contact that is necessary
• ETHICAL CUSTOMERS - Consumers who support
during the production process.
smaller or local firms as opposed to larger or
▪ FACILITY LAYOUT - In regard to the layout of the national service providers.
service operation, high-contact service firms
STAGE 3
should take the customers’ physical and
psychological needs and expectations into Internal Response Moderators:
consideration.
• INTERNAL RESPONSE MODERATORS - The three
▪ PRODUCT DESIGN - Since the customer is basic emotional states of the SOR model that
involved in the production process of high mediate the reaction between the perceived
contact services, the customer will ultimately servicescape and customers’ and employees’
define the product differently from one responses to the service environment.
produced by a low-contact service.
STAGE 4
▪ PROCESS DESIGN - In contrast, since the
Internal Responses
customer is not involved with many of the
production steps in low contact services, their • COGNITIVE RESPONSES - Cognitive responses
evaluation is based primarily on the outcome are the thought processes of individuals and,
itself. according to the model, include beliefs,
categorization, and symbolic meaning.
Each stage in the process will have a direct and
immediate effect on the customer. • BELIEFS - Consumers’ opinions about the
provider’s ability to perform the service.
STAGE 1
• CATEGORIZATION - The process of categorizing
Physical Environmental Dimensions:
servicescapes based on previous experiences.
• AMBIENT CONDITIONS - The distinctive
• SYMBOLIC MEANING - Meaning inferred from
atmosphere of the service setting that includes
the firm’s use of physical evidence.
lighting, air quality, noise, music, and so on.
• EMOTIONAL RESPONSES - Feelings that are a
• SPACE/FUNCTION - Environmental dimensions
result of the servicescape.
that include the layout of the facility, the
equipment, and the firm’s furnishings. • PHYSIOLOGICAL RESPONSES - Responses to the
firm’s physical environment based on pain or
• SIGNS, SYMBOLS, ARTIFACTS - Environmental
comfort.
physical evidence that includes signage to direct
the flow of the service process, personal artifacts STAGE 5
to personalize the facility, and the style of décor.
Behavioral Responses to the Environment
STAGE 2
• INDIVIDUAL BEHAVIORS - Responses to the
Holistic Environment: servicescape that are typically described as
approach and avoidance behaviors.
• HOLISTIC ENVIRONMENT - Overall perceptions
of the servicescape formed by employees and MANAGING THE SENSES WHEN CREATING
customers based on the physical environmental SERVICESCAPES
dimensions.
The service firm must consider the physical and
• PERCEIVED SERVICESCAPE - A composite of psychological impact of the atmosphere on customers,
mental images of the service firm’s physical employees, and the firm’s operations.
facilities.
Sight Appeals
• ECONOMIC CUSTOMERS - Consumers who make
• Sight appeals can be defined as the process of
purchase decisions based primarily on price.
interpreting stimuli, resulting in perceived visual
• PERSONALIZED CUSTOMERS - Consumers who relationships. HARMONY & CONTRAST
desire to be pampered and attended to and who
On a basic level, the three primary visual stimuli that
are much less price sensitive.
appeal to consumers are size, shape, and colors.
 • SIZE – The actual size of the firm’s facility, signs, SOUND AVOIDANCE – Desirable sounds attract
and departments conveys different meanings to customers, and undesirable sounds distract from the
different markets. firm’s overall atmosphere. Within a restaurant setting,
sounds that should be strategically masked include those
• SHAPE – Studies show that different shapes
emanating from kitchen, dish room, and restroom areas.
arouse different emotions in consumers.
Scent Appeals - Stale, musty, foul odors affect everyone
• COLOR – The color of the firm’s physical
and are sure to create negative impressions.
evidence often makes the first impression.
Touch Appeals - The chances of a product’s selling
MANAGING THE SENSES WHEN CREATING
increases substantially when the consumer handles the
SERVICESCAPES
product.
Size, Shape, And Colors
Taste Appeals - Are the equivalent of providing the
customer with samples. Within the service sector, the
usefulness of taste appeals when developing service
atmospheres depends upon the tangibility of the service.

Touch Appeals

The chances of a product’s selling increases substantially

LOCATION – The firm’s location is dependent upon the when the consumer handles the product. Firms engaged
amount of customer involvement necessary to produce in creating touch appeals are perceived as more caring,
the service. Visible, Compatibility, Convenience closer to their customers, and genuinely concerned and
interested in their customers’ welfare.
ARCHITECTURE – The firm’s architecture conveys a
number of impressions as well as communicating Taste Appeals
information to its customers, such as the nature of the Taste appeals, the final sensory cue, are the equivalent
firm’s business, the firm’s strength and stability, and the of providing the customer with samples. Within the
price of its services. service sector, the usefulness of taste appeals when
SIGNAGE – The firm’s sign has two major purposes: to developing service atmospheres depends upon the
identify the firm and to attract attention. tangibility of the service. Consequently, firms that use
samples should view this process as an opportunity
ENTRANCE – The firm’s entrance and foyer areas can rather than as catering to a bunch of customers who
dramatically influence customer perceptions about the want something for free.
firm’s activities.

LIGHTING – Lighting sets the mood, tone, and pace of the

service encounter CHAPTER 9: PEOPLE AS STRATEGY: MANAGING
SERVICE EMPLOYEES
Sound Appeals
WEGMANS: THE BEST COMPANY TO WORK FOR IN
Have three major roles: mood setter, attention grabber, AMERICA
and informer. Pro-active methods for purposely inserting
sound into the service encounter can be accomplished 01. Who or What is a Wegmans?
through the strategic use of music and announcements. Wegmans is a privately held supermarket chain that
MUSIC – Studies have shown that background music employs over 30,000 employees in its 67 stores located
affects sales in at least two ways. in New York, Pennsylvania, New Jersey and Virginia.

02. Key to Success

Wegmans provides a tremendous example of how a

company can excel through superior operations,
Sound Appeals legendary employee relations, and great customer
ANNOUNCEMENTS – Another common sound in service service.
establishments is the announcements made over THE SERVICE-PROFIT
intercom systems, such as to alert restaurant patrons CHAIN
when their tables are ready, to inform airline passengers
of their current location, and to page specific employees
within the firm.
 ✓ The links in the chain reveal that employee 2. Subordinate service roles - The jobs within service
satisfaction and customer satisfaction are organizations where the customer’s decisions are
directly proportional. entirely discretionary such as waitresses, porters, etc.
✓ Employee satisfaction is linked with increases in
3. Person/role conflict - A bad fit between an individual’s
the firm’s overall productivity and decreases in
self-perception and the specific role the person must
recruitment and training costs
play in an organization.
✓ Customer satisfaction is directly related to
customer loyalty, which is demonstrated 4. Organization/client conflicts - Disagreements that
through repeat purchases and positive word-of arise when a customer requests services that violate the
mouth referrals to other customers. rules of the organization.

THE IMPORTANCE OF SERVICE PERSONNEL 5. Inter-client Conflicts – Disagreements between clients

that arise because of the number of clients who influence
Today, over 40 percent of the U.S. workforce is employed
one another’s experience.
in selling food; selling merchandise in retail stores;
performing clerical work in service industries; cleaning Coping Strategies and Implications For Customers
hospitals, schools, and offices; or providing some other
The consequences of role conflict and stress produce
form of personal service.
dissatisfaction, frustration, and intention in personnel. It
Strategically, service personnel are an important source may even result in service sabotage.
of product differentiation. It is often challenging for a
Service Sabotage – Willful and malicious acts by service
service organization to differentiate itself from other
providers designed to ruin the service.
similar organizations in the benefit bundle it offers or its
delivery system. THE DIRECT IMPACT OF MARKETING ON SERVICE
PROVIDERS’ STRESSES AND STRAINS.
In the book At America’s Service, service personnel
behaviors that irk customers the most mirrored similar Marketing can either cause or reduce role stress.
themes across different industries and organizations. Marketing can, without making major strategic changes,
These unsavory behaviors have been classified into help to reduce service employee stress levels, and it’s in
seven categories including: marketing’s best interest to do so.

1. Apathy: What comedian George Carlin refers to as Reducing Person/Role Conflicts - Marketing can reduce
DILLIGAD—Do I look like I give a damn? the conflict between the individual and the assigned role
by simply being sensitive and actively seeking input from
2. Brush-off: Attempts to get rid of the customer by
employees about the issue. Employers need to clearly
dismissing the customer completely…the “I want you to
communicate with employees as to the goals of a
go away” syndrome.
project. Also, employees should be fully aware of their
3. Coldness: Indifferent service providers who could not role in the group and their responsibilities.
care less what the customer really wants.
Reducing Organization/Client Conflicts - Similarly,
4. Condescension: The “you are the client/patient, so marketing can help reduce conflicts between the
you must be stupid” approach. organization and its clients. It is crucial, for example, that
customer expectations be consistent with the
5. Robotism - Where the customers are treated simply as
capabilities of the service system. Customers should not
inputs into a system that must be processed.
ask for services the system cannot provide. Workplace
6. Rulebook - Providers who live by the rules of the conflict is often the result of poor communication. Use
organization even when those rules do not make good clear communication strategies to resolve workplace
sense. conflict (e.g., set expectations, respect personal
differences, and use active listening skills, neutral terms
7. Runaround - Passing the customer off to another
and open body language).
provider, who will simply pass them off to yet another
provider. Reducing Inter-client Conflicts - between clients can be
avoided if the clients are relatively homogeneous in their
THE NATURAL STRESSES AND STRAINS ON CONTACT
expectations. Due to the inseparability of services,
SERVICE PERSONNEL
customers often share their service experiences with
1. Boundary-Spanning Roles – The Various Parts played other customers.
by contact personnel who perform dual functions of
UNLEASHING SERVICE WITH THE RIGHT CLIMATE
interacting with the firm’s external environment and
internal environment. Creating a Climate for Service
There are three core drivers to create a climate for services there is always a daily crisis, it is improperly
service; given, the simultaneous production, consumption and
people content, to operate the service without failure.
1. Work facilitation
INFORMATION TECHNOLOGY AND THE SERVICE
2. Interdepartmental service support
PROVIDER
3. the service HR wheel
Technology can be a great enabler for front-line staff,
Recruiting the Right People allow for empowerment, and free up time to focus on
customers. However, some technological innovations
• Employer Brand
have been viewed less favorably.
Developing Competent Service Employees
Technology industrialization of large branches of
• Technical training services
• Interpersonal training 1. Automated help lines now require that
• Behavioral modeling customers learn new scripts just to get to the
Controlling, Rewarding and Evaluating Service correct recorded message.
Providers 2. Email enquiries are answered miraculously from
all over the world.
Treating employees poorly and then asking them to treat 3. Call center with its sophisticated call
customers like “Kings” is seldom an effective human management system that has become the visible
resource strategy symbol of the redesign.
In general, effective reward systems pass the seven tests CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
listed below.
01. The process of Identifying, attracting, differentiating,
• Availability and retaining customers.
• Flexibility
• Reversibility 02. Allows the firm to focus its efforts disproportionately
to its most lucrative clients.
• Contingent
• Visibility 03. Based on the old adage that 80% of a company's
• Timeliness profits come from 20% of it's customers.
• Durability
CRM in Action- At the heart of any CRM system is a
LEVELS OF EMPOWERMENT customer database holding background information but
most importantly sales and purchase.
1. Suggestion involvement
STAGES IN ANY CSR SYSTEM
2. Quality circles
1. Coding- categorizing customers based on how
3. Job involvement
profitable their business is .
4. High Involvement
2. Routing- directing incoming customer calls to
RETAINING THE SERVICE PROVIDER customer service representatives where more profitable
customers are more likely to receive faster and better
Retention can be managed directly or indirectly. Direct
customer service
actions include the provision of benefits that are difficult
to replace, or even the payment of retention bonuses. 3. Targeting- offering the firm's most profitable
However, most of the actions designed to engender a customers special deals and incentives.
climate for service will have an indirect, positive effect on
4. Sharing- making accessible key customer information
retention.
to all parts of the organization
THE ROLE OF MANAGEMENT
5. Red-lining- the practice of Identifying and avoiding
Our focus in this chapter is on the first line service staff. unprofitable types of neighborhoods or types of people.

These are they who have to invest in the nuclear

technology that allows the front-line team to do their
work. Many companies formalize it through specific days
when driving the return to the leading roles to
experience the customers again. Through the nature of