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MBM 4th Semester

Service Marketing, MKT 541

Unit-4: Crafting the Service Environment

Meaning of Service Environment

Service environments, also called servicescapes, relate to the style and appearance of the physical
surroundings and other experiential elements encountered by customers at service delivery sites. A
firm’s physical evidence affects the consumer’s experience throughout the duration of the service
encounter. Thus, managing the firm’s physical evidence includes everything tangible, from the
firm’s physical facilities, to brochures and business cards and even the way the organizations
personnel are dressed. Due to the intangibility of services, service quality is difficult for consumers
to objectively evaluate. As a result, consumers rely on tangibles or physical evidence that surrounds
the service to help them from their evaluations. The role of physical evidence, therefore, in the
marketing of intangibles is multifaceted.
Physical evidence can fall into three broad categories:
 Facility exterior (exterior design, signage, parking, landscaping and the surrounding
environment).
 Facility interior (interior design, equipment, signage, layout, air quality, and temperature).
 Other tangibles (business cards, stationery, billing statements, reports, employee
appearance, uniforms and brochures).

All service firms need to recognize that the physical evidence helps to shape the value proposition of
the organization in the mind of the consumer. The physical evidence, therefore:
 Packages the service with tangible clues that communicate an image to the consumer,
 Facilitate, through design, the flow of activities that consumers and employees need to
accomplish,
 Socialize customers and employees alike in terms of their respective roles, behaviors and
relationships, and
 Differentiate the firm from its competitors and communicate this image to the core target
market.

Consumers' Response to Service Environment

Service environment influences the emotions and behaviours of consumers. Therefore, creative use
of the service environment can affect the perceptions and behaviours of individuals. The effect is
reffered to as environmental psychology. Environmental psychology studies how people respond to
specific environments. Two important models help us better understand consumer responses to
service environments:
 Mehrabian-Russell stimulus-response model, and
 Russell’s model of affect.

Mehrabian-Russell Stimulus-Response Model 

The Mehrabian-Russell Stimulus-Response Model is used to help explain the effects the service
environment has on consumer behaviour. The physical environment, consciously or unconsciously,
influences how people feel. The responses of employees and customers to the set of stimuli
are influenced by three basic emotional states: pleasure-displeasure, arousal-non arousal, and
dominance-submissiveness. Consumers and employees respond to the set of environmental stimuli
that are characterized as approach behaviour or avoidance behaviours, such as a desire to stay or
leave the service establishment, desire to explore and interact with then service environment and
service providers or just ignore it, feel satisfaction or disappointment with the service experience.
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Stimulus-Response Model

The Russell Model of Affect

The Russell Model of Affect – is used to help understand feelings in service environments and
suggests that emotional responses to environments can be described along two main dimensions,
pleasure and arousal. Feelings of pleasure/displeasure are subjective responses to the environment,
depending on how much the individual likes or dislikes the environment. States of arousal or and
sleepiness are internal states that occur dependent upon high or low levels of adrenaline in the
bloodstream. Marketers should use the pleasant/unpleasant and arousing/sleepy dimensions when
they decide how to ensure that their environment will stimulate their consumers.
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Dimensions of Service Environment

Service environments are complex and have many design elements. The main dimesions of the
service environment include the ambient conditions, space and functionality, and signs, symbols and
artifacts. Because individuals tend to perceive these dimensions holistically, the key to effective
design is how well each individual dimension fits together with everything else.
Ambient conditions
Ambient conditions refer to those characteristics of the environment that pertain to five senses. They
include lighting and color schemes, size and shape perceptions, sounds such as noise and music,
temperature, and scents or smells.
Music – in service settings, music can have a powerful effect on perceptions and behaviors.
Studies have shown that in addition to creating a positive attitude, music directly influences
consumer buying behaviour. Playing faster tempo music increase the pace of consumer
transactions. Slowing down the tempo of the music encourages customers to stay longer. The
type of music played also enhances the perception of the environment in which it is played.
Moreover, employees tend to be happier and more productive when listening to background
music, which in turn leads to a more positive experience for customers.
Scent – the atmosphere of the firm can be strongly affected by scents. In service settings,
research has shown that scents can have a significant effect on customer perceptions, attitudes,
and behaviors. Pleasant smells such as lavender give consumers a more relaxed mood. On the
other hand grapefruit heightens arousal and is stimulating on the senses. Therefore, pleasurable
scents can often induce customers to make purchases and can affect the perception of products
that don’t naturally have their own scent. Experts in scent creation note that a firm should smell
like it’s supposed to, according to target market expectations.
The Effects of Selected Fragrances on People

Color – the colour of the firm’s physical evidence often makes the first impression, whether
seen in the firm’s brochure, the business cards of its personnel, or the exterior or interior of the
facility itself. Psychological impact of colour upon individuals is the result of three properties:
hue, value and intensity. Hue refers to the actual family of the colour, such as red, blue, yellow,
or green. Value defines the lightness and darkness of the colours. Intensity defines the brightness
or dullness of the hue. In general, warm colours tend to evoke consumer feelings of energy and
informality. In contrast to warm colours, cool colours are perceived as aloof, icy and formal.
Warm colors encourage fast decision making and in service situations are best suited for low-
involvement decisions. Cool colors are favored when consumers need time to make high-
involvement decisions.
Common Associations and Human Responses to Colors
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Space/Functionality
As service environments have to fulfill specific purposes and customer needs, spatial layout and
functionality are particularly important. Spatial layout refers to the floorplan, size and shape of
furnishings, counters, and potential machinery and equipment, and the ways in which they are
arranged. Functionality refers to the ability of those items to facilitate the performance of service
transactions. Spatial layout and functionality create the visual as well as functional servicescape for
delivery and consumption to take place. They determine the user-friendliness and the ability of the
facility to service customers well, and they not only affect the efficiency of service operation, they
also shape the customer experience.
Signs, Symbols, and Artifacts
Many things in the service environment act as signals to communicate the firm’s image, help
customers find their way, and to convey the service script. Examples of signals include signs, which
can be used as labels, for giving directions, for communicating the service script. The challenge for
servicescape designers is to use signs, symbols, and artifacts to guide customers clearly through the
process of service delivery and to teach the service process in as intuitive manner as possible
Servicescapes have to be seen holistically, which means no dimension of the design can be
optimized in isolation, because everything depends on everything else.
Many service environments are built with an emphasis on esthetic values, and designers
sometimes forget the most important factor to consider when designing service environments
– the customers who will be using them.
Beyond esthetic considerations, the best service environments must be designed with the
needs of the customer in mind if they are to achieve the goal of guiding these customers
smoothly through the service process.
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