International Journal of Service Industry Management

Modeling service encounters and customer experiential value in retailing: An empirical

investigation of shopping mall customers in Taiwan
Ching‐Jui Keng, Tseng‐Lung Huang, Li‐Jie Zheng, Maxwell K. Hsu,
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Modeling service
Modeling service encounters encounters
and customer experiential value
in retailing
349
An empirical investigation of shopping
mall customers in Taiwan Received 26 November 2005
Revised 30 November 2006
Ching-Jui Keng Accepted 8 March 2007

Institute of Commerce Automation and Management,

National Taipei University of Technology, Taipei, Taiwan
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Tseng-Lung Huang
Department of Business Administration, National Cheng-Chi University,
Taipei, Taiwan
Li-Jie Zheng
Institute of Commerce Automation and Management,
National Taipei University of Technology, Taipei, Taiwan, and
Maxwell K. Hsu
Department of Marketing, University of Wisconsin-Whitewater,
Whitewater, Wisconsin, USA

Abstract
Purpose – The purpose of this study is to explore the impacts of service encounters on customer
experiential value and subsequently on customer behavioral intentions in a shopping mall context in
Taiwan.
Design/methodology/approach – Data were gathered using mall intercepts at three large
shopping malls in northern Taiwan. Structural equation modeling was employed to assess the
proposed research model empirically.
Findings – The empirical results revealed that: personal interaction encounters positively influenced
perceptions of efficiency and excellence value; physical environment encounters positively affected
perceptions of playfulness and aesthetics; and all dimensions of customer experiential value (i.e. efficiency,
service excellence, playfulness, and aesthetics) positively affected customer behavioral intentions.
Originality/value – Following Bitner’s suggestion in 1990, the present study classified service
encounters into two dimensions – personal interaction encounters and physical environment
encounters. Further, the empirical findings revealed that customer experiential value mediated the
relationship between service encounters and consumer behavioral intentions.
Keywords Customer services quality, Consumer behaviour, Shopping, Shopping centers, Retailing,
Taiwan
Paper type Research paper International Journal of Service
Industry Management
Vol. 18 No. 4, 2007
pp. 349-367
q Emerald Group Publishing Limited
The authors are indebted to Char Anderson, Lois Smith, Scott Swanson, the Editor, and three 0956-4233
reviewers for many helpful comments and suggestions. The usual disclaimer applies. DOI 10.1108/09564230710778137
 IJSIM Introduction
18,4 Recently, traditional brick-and-mortar retailing has been challenged by more
aggressive direct distribution channels such as cable TV, catalogs, and the internet.
One of the main advantages that brick-and-mortar retailers still enjoy over direct
channels is their service offerings. In fact, a European Retail Reports (2000) observed
that over 70 percent of retail customers in the UK identified customer service as “the
350 most important factor” in achieving and maintaining customer trust. If retailers wish
to stimulate behaviors that transform service receivers into loyal customers, they have
to offer customers high-quality services.
Service encounters and service experience are shaped by customer perceptions of
service providers. The service encounter process is the means through which
consumers evaluate the level of service provided by the organizations, service
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personnel, and even the interaction with other consumers during a certain period
(Bitner et al., 1997). Bitner and Brown (2000) proposed that service encounters influence
customer satisfaction, loyalty, repurchase intentions, and word-of-mouth
recommendations. That is, service encounters can be considered a complex process
in which personal service interactions and surrounding environmental factors such as
design, decoration, scent, and music operate in conjunction to shape customer
expectations of service quality (Cox et al., 2003; Coye, 2004). Focusing on the consumer
retail shopping experience, experiential value theory contends that consumers form
their experiential value via the “interactions involving either direct usage or distanced
appreciation of goods and services” (Mathwick et al., 2001, p. 41). If consumers
appreciate a more dynamic interaction with retail service providers, the experiential
value theory provides a broader perspective of the consumption experience in the
marketing literature.
Although service encounters and customer experiential value have been researched
separately in a number of studies, the two have not been examined simultaneously in a
retailing context. The present study aims to fill this gap by examining the relationships
among service encounters, customer experiential value, and customer behavioral
intentions in the context of shopping malls. Specifically, this study applies experiential
value conceptualization developed by Holbrook (1994) and relates it to
personal interaction and physical environment encounters with the shopping malls
as a means of explaining customer behavioral intentions. Hence, this study makes two
main contributions in the service marketing literature. First, it highlights the essence of
service encounters and further classifies service encounters into two dimensions –
personal interaction encounters and physical environment encounters. Second, this
study suggests that customer experiential value mediates the relationship between
service encounters and consumer behavioral intentions.
The structure of the present paper is organized as follows: after exploring the
concepts of service encounters, customer experiential value, and behavioral intentions,
the study proposes hypotheses relating service encounters to customer experiential
value and, in turn, customer behavioral intentions. Subsequently, we outline the data
and measures before we report and discuss the empirical results. Based on the findings,
we point out several practical implications for shopping mall managers and conclude
this paper by proposing directions for future research.
 Nature of service encounters Modeling service
Scholars in service marketing have often focused on personal interaction because encounters
making service encounters more enjoyable can “reduce the perceived risk associated
with purchasing a service and improve the buying experience” (Julian and
Ramaseshan, 1994, p. 30). The influence of the service encounters can be broken
down into two main components: personal interactions with the service provider and
the physical environment of the retailer (Bitner, 1990; Harris et al., 2003). Personal 351
interaction encounters are viewed as a period of time during which a consumer
interacts with service personnel (Bitner, 1990). The quality of personal interaction
encounters can be assessed based on the service provider’s competence, listening skills,
and level of dedications (Chandon et al., 1997). Coye (2004) also found that a service
provider’s behavior at the point of delivery may influence consumer expectations
toward the service offering. Meanwhile, physical environment encounters are defined
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as a period of time during which a consumer interacts with physical facilities and other
tangible elements in the service environment (Bitner, 1990). Crane and Clarke (1988)
noted that customers in four different service industries list the service environment –
the location where service encounters occur – as a consideration in their evaluation of
service quality. Additionally, Wakefield and Blodgett (1999, p. 51) suggested that
“tangible physical environment plays an important role in generating excitement in
leisure settings; excitement, in turn, plays a significant role in determining customer
repatronage intentions and willingness to recommend.” Thus, the investigation of
service encounters in this study considers not only personal interaction encounters, but
also the surrounding service environment encounters that may jointly influence
customer quality expectations (Shostack, 1977; Booms and Bitner, 1982; Baker, 1987).

Customer experiential value

Consumers today are seeking value, choice, and a great customer experience. Current
retailing literature highlights the critical role of service experience and proposes that
retailers should:
.
create a theatrical retailing environment:
.
stress fun, excitement and entertainment; and
.
encourage greater customer participation in the retail service experience
(Baron et al., 2000; Mathwick et al., 2001).

Market trends also show that the role of customer experiential value has attracted
growing attention among practitioners in the retail industry.
Holbrook (1994) broadened the traditional conceptualization of experiential value to
incorporate three spheres:
(1) extrinsic versus intrinsic value;
(2) active versus reactive value; and
(3) self- versus other-oriented value.

In a shopping context, extrinsic value is acquired from satisfying utilitarian

consumption goals such as saving money, whereas intrinsic value is derived from an
enjoyable and playful shopping trip (Babin et al., 1994). On the other hand, reactive
value refers to a situation when customers appreciate the physical shopping
 IJSIM environment or respond positively to service personnel. Active value, in contrast,
18,4 results from customers’ efficient manipulation of the shopping resources to satisfy
their functional or affective needs (Kim, 2002). Since, personal/individual shopping
experience typically is considered a self-oriented activity (Kim, 2002), the present study
focuses on the extrinsic/intrinsic and active/reactive values, which can group
mall-shopping value into four categories (Table I).
352 Mathwick et al. (2001) labeled these four quadrants as follows:
(1) perceived efficiency, or consumer return on investment (CROI) (active-extrinsic);
(2) perceived excellence value (reactive-extrinsic);
(3) perceived aesthetic value (reactive-intrinsic); and
(4) perceived playfulness (active-intrinsic).
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An experiential value scale (EVS) was devised by Mathwick et al. (2001) for measuring
these four sub-dimensions of the customer experiential value. One main contribution of
the present study is to link service encounters with the experiential value theory.
Specifically, we argue that mall shoppers’ responses to two main components of their
service encounters (i.e. personal interaction encounters and physical environment
encounters) are reflected by four dimensions of experiential value: efficiency, service
excellence, aesthetics, and playfulness.
The efficiency value, or CROI, reflects the utilitarian aspects of shopping, and
describes active investment in economic, temporal, behavioral and psychological
resources that may result in a positive return. For example, consumers consider all of
the related input resources, namely time spent queuing, energy spent on finding the
desired products, monetary cost of parking and transportation, and various other

Extrinsic Intrinsic

Active Efficiency Playfulness

Convenience Entertainment
One-stop shopping Appeal to five senses (sight, sound,
smell, touch, and taste)
Comparison shopping Instant gratification
Resources (time, effort, and money) Window shopping
Parking Social interaction:
Transportation to the mall People-watching
Traffic Escaping from the routines
Finding products wanted
Avoid pushy salespeople
Reactive Excellence Aesthetics
Product performance Ambience
Quality Architecture
Selection Interiors
Price Visual display
Customer service
Synchronous human contact
Table I. Safe and secure shopping environment
Consumer experiential
value from mall shopping Note: This table is adapted from Table I in studyKim’s (2002)
 factors only indirectly related to shopping when determining the convenience of Modeling service
visiting a specific shopping mall. encounters
Service excellence and aesthetics as viewed by customers are considered part of the
reactive side of the customer experience. The perceived aesthetic value is a reaction to
the consonance and unity of a physical object, cadency, or performance (Olson, 1981;
Veryzer, 1993). In retailing, aesthetics can be captured in relevant visual elements of
the retail environment (Mathwick et al., 2001). It is noteworthy that, visual appeal is 353
often spurred by the design and physical attractiveness of the shopping environment,
while the entertainment dimension of the aesthetic response results from an
understanding or appreciation of the retail display.
The perceived excellence value reflects the product performance and generalized
consumer appreciation of a service provider who demonstrates his/her expertise and
maintains a reliable service performance. Holbrook (1994) suggested that consumers
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favor particular objects or experiences owing to their ability to accomplish certain

objectives or perform certain expected functions. That is, excellence value involves
ensuring that patronizing shopping malls results in value-added services that exceed
ordinary expectations.
Finally, perceived playfulness, which is created by customers themselves, is an
inner, initiative and self-oriented experience (Holbrook, 1994). According to Mathwick
et al. (2001, p. 44), the major distinction between perceived playfulness and perceived
aesthetics is that the former reflects “the active role the customer adopts as exchange is
elevated to play.” The playful or hedonic shopping value mirrors the potential
amusement and emotional worth of shopping (Bellenger et al., 1976). It is suggested
that a playful exchange experience is reflected in the intrinsic enjoyment associated
with actively engaging in shopping for pleasure or an escape of everyday, mundane
consumption behavior. A recent study by Harris et al. (2001) associated consumer
participation in retail services with audience participation in theater, and the authors
stressed the importance of joyful customer participation in the service experience.
Interestingly, the task-related side of shopping has been more widely studied than the
fun side (Bloch and Richins, 1983; Fischer and Arnold, 1990).

Behavioral intentions
The main interest of retailers in a shopping mall is to produce more profits which, in
turn, are achieved via maintaining loyal patronage, generating positive “word of
mouth” recommendations (i.e. one effective method to recruit new shoppers), and
increasing the time and money consumers spent while shopping. Thus, mall managers
need to understand how to motivate mall shoppers’ spending behavior.
First, Söderlund and Öhman (2005) showed intentions-as-expectations and
intentions-as-wants are positively associated with customer satisfaction as well as
repatronizing behavior. In general, individuals shop to obtain hedonic and/or
utilitarian values (Babin et al., 1994). A shopping mall may turn out to be more
profitable if it could satisfy both types of shoppers. Further, Babin and Darden (1996)
argued that store-induced affect could influence customer expenditures and level of
shopping satisfaction. When a shopping mall is perceived as exciting, consumers may
visit it more frequently and be less likely to visit other shopping malls (Lumpkin et al.,
1986). Thus, it is our contention that increasingly more intensive competition forces
retailers to please today’s mall shoppers or the retailers’ profitability is likely to suffer.
 IJSIM This study now turns to establishing the research model and forming relevant
18,4 hypotheses.

Hypotheses
Personal interaction encounters and extrinsic value
This study posits that personal interaction encounters will affect the extrinsic aspect of
354 experiential value while physical environment encounters will affect the intrinsic
aspect of experiential value. More specifically, the proposed model examines the extent
to which service encounters influence customer experiential value, and consequently
customer behavioral intentions.
The ease of doing business with a service provider is important to both online and
offline brick-and-mortar retail shoppers. Kim (2002) suggested that extrinsic value in a
retail context is typically a result of “achievement of an errand or work” that is
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utilitarian in nature. Consumers appreciate this shopper-friendly utilitarian value or

efficiency when shopping (Holbrook, 1994; Zeithaml, 1988). This viewpoint is
consistent with Baker et al.’s (2002, p. 127) finding that friendly and helpful employees
influence customer perceptions of time/effort cost. Moreover, Stoel et al. (2004) found
that customer satisfaction toward mall attributes positively influences utilitarian
shopping value. The above discussion demonstrates that situationally involved
consumers completing their shopping trips deliberately and efficiently results in
utilitarian value. Consequently, the following hypothesis is proposed:
H1. A positive relationship exists between positive personal interaction
encounters and perceived shopping efficiency (i.e. CROI).
Perceived excellence value corresponds to reactive-extrinsic utilitarian value
(Mathwick et al., 2001). Holbrook (1994) argued that extrinsic value relates to a
means-ends relationship wherein a product/service/event is a means to carrying out
some further purpose. Notably, Zeithaml (1988) suggested that the value derived from
perceived excellence reflects consumer appreciation of a service provider’s ability to
deliver on its promises. Those promises might be realized through demonstrated
expertise and task-related performance. To the extent that consumers make inferences
regarding a retailer’s overall offerings based on informational cues such as
merchandise quality and face-to-face personal encounters with frontline service
personnel, mall shoppers are likely to perceive the retail setting as upscale if
those shoppers are impressed by their in-store experiences. Personal interactions can
be considered an effective component of quality service that would lead customers to
perceive an excellent value in shopping. The following hypothesis is thus formed:
H2. A positive relationship exists between positive personal interaction
encounters and perceptions of excellent value service.

Physical environmental interaction encounters and intrinsic value

In contrast to the extrinsic value, which is generally obtained through a completion of
tasks, intrinsic value is derived from the pleasure and playfulness of an experience
(Babin et al., 1994). This view is consistent with the flow theory, which contends that
flow experiences are those enjoyable experiences in which customers perceive a sense
of control over their actions; they feel “a sense of exhilaration, a deep sense of
enjoyment” (Csikszentmihalyi, 1975, p. 3). Shopping mall managers can create
 attractive physical surroundings through interior design color combinations or Modeling service
through carefully selected music that arouse mall shoppers’ sensory cognitive curiosity encounters
and finally lead them into a “flow state” and a pleasant shopping experience. Indeed,
the physical environmental factors in a shopping mall, including elements such as
layout, interior architecture and décor, lighting, music, aroma and cleanliness (Baker,
1987) have long been considered important determinants of customer patronage
behavior (Bellenger et al., 1977; Bitner, 1992; McGoldrick and Thompson, 1992). 355
Comfortable atmosphere and particularly eye-catching displays associated with
holidays (for example, decorated Christmas trees) can excite customers and stimulate
buying behavior. Furthermore, Baker et al. (2002) suggested that an appropriate
atmosphere such as mood music could ease the nerves of consumers and prolong their
intended shopping time. Recently, Cox et al. (2003) maintained that recreational
browsing or window shopping can provide considerable pleasure to consumers. In sum,
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shopping malls are considered by customers to be not only shopping destinations but
also entertainment centers (Bloch et al., 1994; Cockerham, 1995; Stoltman et al., 1991).
The following two hypotheses reflect the importance of the retail environment:
H3. A positive relationship exists between positive physical environment
encounters and perceived aesthetics.
H4. A positive relationship exists between positive physical environment
encounters and perceived playfulness.
Next, this study explores the likely relationship between customer experiential value
and behavioral intentions. Besides, services, one-stop shopping convenience and price
have been proposed as two key drivers of supercenter patronage (Pollack, 1995). With
the continuing evolution of the concept of one-stop shopping, shopping malls are
moving towards a one-stop shopping marketplace since “shoppers want to be able to
see a movie, grab dinner and pick up a CD all in one location” (Lamb, 2003). As noted
earlier, utilitarian/efficiency value may result not only from the completion of a
shopping chore but also from the gathering of gift ideas and prices on potential future
purchases (Babin et al., 1994). Thus, the following hypothesis is proposed:
H5. A positive relationship exists between perceived shopping efficiency (i.e.,
CROI) and customer behavioral intentions.
Bloch (1995) indicated that a product’s shape could influence consumer thinking and
actions. If shopping mall layout is viewed as one component of service offerings, a
well-designed shopping mall “package” and effective product display can be considered
as sources of customers’ perceived aesthetic value, and thus may positively influence
their shopping activities. For instance, to attract repeat customer visits, the Swedish
furniture retailer IKEA’s flagship store in Manhattan closes every two to three months to
re-open with a brand new look, different goods, lighting, etc. (Harris et al., 2001).
Notably, Mathwick et al. (2001) identified a significant relationship between perceived
aesthetic value and retail preferences in the catalog setting. Given that visual appeal is
often considered an important advantage of shopping malls, a positive and significant
relationship is expected to exist between aesthetic perceptions and customer behavioral
intentions:
 IJSIM H6. A positive relationship exists between perceived aesthetics and customer
18,4 behavioral intentions.
Shopping experience quality significantly impacts shopping intentions (Swinyard,
1993). Finn et al. (1994) proposed that differing patronage motives may determine length
of consumer stay in a mall. Recreational shoppers, who are likely to have a relatively
higher level of involvement with shopping, visit shopping malls more frequently than
356 those who shop strictly for utilitarian reasons (Roy, 1994). Since, “pleasure induced by
store environments appears to be a strong cause of consumers’ spending extra time in
the store and spending more money than intended” (Donovan et al., 1994, p. 291), a
positive relationship is expected to exist between perceived playfulness and customer
behavioral intentions. Stoel et al. (2004) also noted that hedonic shopping value
positively influences re-patronage intention. Thus, the following hypothesis is proposed:
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H7. A positive relationship exists between perceived playfulness and customer

behavioral intentions.
High-service quality as perceived by customers often leads to favorable behavioral
intentions, while low-service quality tends to cause unfavorable behavioral intentions.
Providing quality services enhances organization competitiveness, improves
organization reputation and increases customer repurchase desire. Recently, Burton
et al. (2003) suggested that customer experience is associated with satisfaction as well
as behavioral intentions. Thus, the following hypothesis is presented:
H8. A positive relationship exists between perceived excellence value and
customer behavioral intentions.

Measures
Data were gathered using mall intercepts at three large shopping malls in northern
Taiwan. From the 267 returned questionnaires, 186 usable responses were analyzed. Of
the 186 respondents, 52 percent were male; and half of them were between 20 and 30
years of age. Most respondents had completed college (Table II). This appears to be
comparable to the characteristics of the typical mall shoppers in Taiwan.
Each item related to the studied constructs was rated on a seven-point Likert-type
scale, ranging from “strongly disagree” (1) to “strongly agree” (7). Content validity was
assessed by examining the process used to generate scale items. Notably, modified

Sex
Female 52.4
Male 47.6
Age
^ 18 , 20 18.3
^ 20 , 30 50.0
^ 30 31.7
Education
Junior high school and under 1.9
Table II. Senior high school 26.4
Main characteristics of College 61.5
the sample (N ¼ 186) Graduate school and upward 10.2
 scales of personal interaction encounters, physical environment encounters, and Modeling service
customer experiential value were based on those used in previous studies by Chandon encounters
et al. (1997), Wakefield and Baker (1998), and Mathwick et al. (2001), respectively.
It has been suggested that domain representative parcels result in more stable
parameter estimates and satisfactory solutions of measurement model fit, especially
for constructs with multidimensional structure (Bandalos, 2002; Kishton and
Widaman, 1994). Since, the perceived personal interaction encounters and physical 357
environment encounters are considered multidimensional in nature, domain
representative parcels are used as the indicator variables in the present study.
Following the procedure recommended by Kishton and Widaman (1994), two parcels
for the personal interaction encounters were formed on the basis of an exploratory
factor analysis. Likewise, two additional parcels were created for the physical
environment encounters. Specifically, the first two parcels, namely Personal I and
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Personal II, refer to domain representative parcels related to the personal interaction
encounters while the other two parcels named Physical I and Physical II are domain
representative parcels related to the physical environment encounters (Table III).
These parcels meet minimal standards for internal consistency reliability.

Measurement model
After creating domain representative parcels, the confirmatory factor analysis
employed the domain representative indicators of personal encounters and physical
environment encounters along with the consumer experiential value construct and
customer behavioral intentions. Following Bagozzi and Yi’s (1988) suggestion, two items
whose x 2 critical values are higher than 3.84 were deleted one at a time and the model
was assessed accordingly. The outcome showed an acceptable measurement model fit

Personal I 1. The service provider was very attentive to me

2. The service provider offered good advices
3. I dealt with an honest service provider
4. The service provider tried eagerly to solve my problem
5. At the end of the service encounter, I got exactly what I wanted
Personal II 1. The service provider seemed competent
2. The service provider listened to me carefully
3. The service provider understood what I wanted
4. The service provider genuinely wished to help me
5. In terms of the service provider’s problem solving or question answering help, the
interaction with the service provider was a very positive experience
6. Personal services offered by the service provider were very important
Physical I 1. This mall is decorated in an attractive fashion
2. The mall’s architecture gives it an attractive character
3. The layout makes it easy to get to the restrooms
4. Overall, the layout makes it easy to get around
5. The variety of food offered at the mall is excellent
Physical II 1. The interior wall and floor color schemes are attractive
2. The overall design of this mall is interesting Table III.
3. The layout makes it easy to get to the store(s) I want to shop/visit Parcels for personal
4. The layout makes it easy to get to the food court area interaction and physical
5. This mall has excellent entertainment alternatives environment encounters
 IJSIM with a x 2 value of 288.61 (df ¼ 149), a comparative fit index of 0.90, and an incremental
18,4 fit index of 0.90. These indices demonstrate an acceptable model fit based on
adviceHair et al.’s (1998).
Table IV lists the composite reliability and average variance extracted related to
seven latent constructs. As Table IV shows, the composite reliability of all constructs
exceeds the recommended value of 0.7. The index of average extracted variance
358 describes the extent to which the observed variables measure the latent construct, and
also the extent to which they resemble the validity of the latent construct (Fornell and
Larcker, 1981). More specifically, discriminant validity is said to be satisfied if the
variance shared between measures of two different constructs (the squared correlation)
is less than the amount of variance extracted by the items measuring each construct
(Chaudhuri and Holbrook, 2001; Fornell and Larcker, 1981). The average extracted
variance of all latent constructs equals or exceeds 0.56 (Table IV) while the highest
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LSREL Composite Average variance

Parameter estimate reliability extracted

Items from Mathwick et al. (2001)

Aesthetics 0.77 0.66
Y1: XYZ is aesthetically appealing 0.84 *
Y2: I like the decoration and shopping
environment at XYZ 0.74 *
Playfulness 0.88 0.72
Y3: Shopping at XYZ makes me feel cheerful 0.85 *
Y4: I feel happy when I shop at XYZ 0.90 *
Y5: Shopping at XYZ makes me forget my
troubles 0.77 *
Efficiency value 0.85 0.66
Y6: Shopping from XYZ makes my life easier 0.91 *
Y7: Shopping from XYZ fits my schedule 0.66 *
Y8: The product assortment at XYZ fits my needs 0.84 *
Service excellence 0.89 0.80
Y9: When I think of XYZ, I think of service
excellence 0.81 *
Y10: I think of XYZ as an expert in the
merchandise it offers 0.97 *
Items from Wakefield and Baker (1998) and Bitner (1990)
Behavioral intentions 0.79 0.56
Y11: I have a strong desire to visit or shop at XYZ 0.61 *
Y12: I would recommend XYZ to friends 0.78 *
Y13: I will come back to XYZ 0.85 *
Items from Chandon et al. (1997)
Personal interaction encounters 0.90 0.82
X1: Personal I 0.91 *
X2: Personal II 0.89 *
Items from Wakefield and Baker (1998)
Physical environment encounters 0.93 0.86
X3: Physical I 0.94 *
Table IV. X4: Physical II 0.92 *
Variable reliability and
validity Note: * p , 0.05
 squared correlation value is smaller than 0.5 (Table V), which provides supportive Modeling service
evidence of discriminant validity for all studied constructs in this study. encounters
Path relations
The path coefficients are shown in Figure 1. The construct of personal interaction
encounters is significantly related to the perceived efficiency and service excellence,
providing support for hypotheses H1 and H2. On the other hand, the construct of 359
physical environment encounters is found to be significantly related to perceived
aesthetics and perceived playfulness, which provide strong support for H3 and H4.
H5-H8 investigate the effects of the perceived aesthetics, perceived playfulness,
perceived efficiency, and perceived service excellence on customer behavioral
intentions. Empirical results demonstrate that all dimensions of the customer
experiential value significantly influence behavioral intentions. These findings provide
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strong support for H5-H8.

Notably, when investigating the mediation effect, this study employed the procedure
recommended by Iacobucci (2001) who contended that treating mediation as a yes-no
question leads to the omission of considerable useful information. To illustrate this
concept, a mediation index, (a12 b2)/a1, ranging from 0 (no mediation) to 1 (complete
mediation) can be computed to measure the level of mediation related to variable Y
between variable X and variable Z:

Model A : Z ¼ a0 þ a1 X þ e X ! Z
Model B : Z ¼ b0 þ b1 Y þ b2 X þ e X ! Y ! Z
Our findings support the notion that the impact of personal interaction encounters on
behavioral intention is mediated by the perceived economic value and service excellence

Customer
Perceived Perceived Perceived Perceived behavioral Personal Physical
Variable aesthetics playfulness efficiency excellence intentions encounters environment

Perceived
aesthetics – 0.32 0.14 0.08 0.18 0.05 0.48
Perceived
playfulness 0.57 – 0.28 0.13 0.29 0.14 0.44
Perceived
efficiency 0.37 0.53 – 0.29 0.32 0.08 0.20
Perceived
excellence 0.29 0.36 0.54 – 0.30 0.19 0.11
Customer
behavioral
intentions 0.43 0.54 0.57 0.55 – 0.15 0.30
Personal
encounters 0.23 0.37 0.29 0.44 0.39 – 0.18
Physical
environment 0.69 0.66 0.45 0.33 0.55 0.43 –
Note: Inter-correlations are presented in the lower triangle of the matrix while the squared Table V.
correlations are given in the upper diagonal of the matrix Correlation matrix
 IJSIM
18,4
Efficiency

0.40*
Personal 0.36**
360 Interaction
Encounters Service
0.52**
Excellence 0.37**

Behavioral
Intentions
0.24**
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Aesthetics
0.83** 0.19**
Physical
Environment
Encounters
0.72**
Playfulness

Figure 1.
Path relations and Experiential Value
parameter estimates of the
research model
Notes: *p < 0.1; **p < 0.05

(with a mediation index of 0.67) while the influence of physical environment encounters
on behavioral intention is moderately mediated by the perceived aesthetic and
playfulness values (with a mediation index of 0.45).

Discussions
To yield a broad picture of service encounters and customer experiential value, the
present study presents a potential framework for understanding the relationship
among service encounters, customer experiential value, and customer behavioral
intentions in the shopping mall context. These theoretical propositions are grounded
primarily in the perspective of the customers. The overall empirical results provide
strong support for the importance of service encounters which influence customer
experiential value and, in turn, all four dimensions of customer experiential value
significantly influence customer behavioral intentions.
The significant relationship between personal interaction encounters and the
perceived efficiency value (i.e. H1) indicates that positive personal interaction
encounters provide a competitive advantage for service providers who can deliver
speed, cost, availability, and convenience to shoppers. The positive relationship
between personal interaction encounters and the perceived service excellence (i.e. H2)
indicates that quality merchandise and courteous, knowledgeable, and efficient service
providers can lead to an image of excellent service. These results are consistent with
 previous research findings (Hartline and Jones, 1996; Bitner et al., 1994). On the other Modeling service
hand, the significant relationship between physical environment encounters and encounters
perceived aesthetic value and playfulness (i.e. H3 and H4) demonstrates the
importance of physical assets in a shopping mall environment; these results are
consistent with the findings of Bloch et al. (1994). Overall, these empirical findings
demonstrate the usefulness of service encounter research, since both personal
interaction encounters and physical environmental encounters have been proposed as 361
important dimensions of service encounters (Bitner, 1990, 1992).
A number of studies have examined the relationship between service quality,
satisfaction, and behavioral intentions. Recently, Olorunniwo and Hsu (2006)
investigated the case of retail banking and found that customer satisfaction fully
mediates the impact of service quality on customers’ behavioral intentions. Notably,
their conclusion is in concert with our findings in that customer experiential value
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mediates the impact of personal interaction encounters on behavioral intention. In other

words, experiential value mirrors customer satisfaction with a retailer. At the same
time, experiential value mediates the impact of quality personal service encounters on
customers’ behavioral intentions. These conclusions provide additional implicit
support to our findings that the underlying dimensions of experiential values are
positively related to customer behavioral intentions (H5, H6, H7, and H8).

Managerial implications
Mathwick et al. (2001, p. 40) commented that proactive brick-and-mortar retailers are
“being transformed into ‘retail interactive theater,’ staffed to offer advice, cooking
lessons, beauty makeovers and fashion shows,” thus emphasizing the overall customer
shopping experience. Our proposed model has the potential to help shopping mall
managers better understand how customers assess their shopping experiences.
Essentially, this study proposes a model that addresses the following three basic issues:
(1) what defines service encounters;
(2) what defines customer experiential value; and
(3) how service encounters influence customer experiential value and, in turn,
behavioral intentions.

These three factors require managerial attention to improve customer service in

shopping malls. More recently, Shahin and Jamshidian (2005) proposed a framework
named service encounter selection (SES), which offers a practical roadmap for service
providers to assess the most critical activities in service organizations.
In a developed country, shopping malls are important in the daily life of urban
consumers. Feinberg and Meoli (1991) found that roughly 75 percent of Americans visit
shopping malls at least once a month, and half of all retail sales are conducted in malls.
In Taiwan, around 80 new shopping mall projects were initiated during the 1990s and
these new retailing projects have been fueled by high consumer demand in Taiwan as
well as the lifting of the 32-year ban on foreign firms purchasing real estate (Business
America, 1998). By the early 2000s, 20 percent of total retail sales came from new
shopping malls (Pao, 2001). Therefore, the Taiwanese retailing experience could
provide valuable lessons to international marketers who are interested in entering the
Taiwanese retailing marketplace or even in penetrating the greater Chinese market.
 IJSIM Since, all aspects of customer experiential value have been demonstrated to be
18,4 significant predictors of shopper behavioral intentions, an excellent service experience
should draw the full attention of all involved individuals, from shopping mall
designers to top management and the frontline service workers. For instance, the
“Living Mall” was opened in Taipei in November 2001 and it attracts an average of 36
million visitors annually (www.cpcity.com.tw). This state-of-the-art 19 floor complex
362 includes 1.5 million sq. ft. of shopping space, and features a large anchor department
store, numerous specialty shops, amusement arcades, theme restaurants, a large self-
service food court, a movie theater complex, and an underground parking ramp with a
capacity of 1,508 cars and 1,280 motorcycles. The Living Mall also exploits online
technology by delivering electronic newsletters including information on shopping
facilities, items on sale, scheduled promotional activities, etc. to customers. Timely
newsletters help the Living Mall gain the business of both recreational shoppers and
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time-strapped urban shoppers. These prescriptive tactics are expected to offer

customers unforgettable shopping experiences, improved customer satisfaction, and
higher customer purchase intentions.
From a managerial perspective, the customers’ perceived experiential value can be
improved in at least two ways:
(1) by increasing the quality of personal service encounters; and
(2) by updating the layout and design of the service facility frequently (e.g. every
three months).

Listening to customer demands and resolving problems identified by customers are

critical to retaining current customers and promoting positive word-of-mouth. Managers
should lead from not only the top but also from the front, by showing frontline service
providers how to be responsive and creative in their customer interactions. In some
profitable customer segments, customized services, such as personal shoppers for VIP
clients, can encourage customer shopping activity, and possibly put an image of service
excellence in the minds of customers. Additionally, mall designers should consider not
only customer recreational shopping needs but also efficiency-related needs, including
time constraints. Shopping mall management may consider replacing textual promotional
messages with simple visual cues and signs to improve communication with customers.
Personnel with a highly responsive attitude should be hired and trained to serve on-the-go
shoppers, to increase convenience and solve problems quickly. In-store technology, such
as interactive kiosks, could be used to facilitate customer ordering for low-involvement
services and services whose quality can be easily assessed by customers (for example, soft
drinks and photo prints). Together, an exciting and friendly atmosphere and an integrated
space design with a balanced mix of shop tenants that satisfy the preference of the targeted
customer segments can improve aesthetics and the efficiency of shopping.

Limitations and future research

This study was exploratory in nature and thus has inherent limitations that should be
recognized. For example, some aspects of service personnel that are likely to facilitate
consumer shopping enjoyment such as smiling service personnel and their polite attitudes
were not captured by the measures used in this investigation. That is, the measurement
items related to personal interaction encounters and service excellence do not necessarily
fully reflect the full range of service encounters. Given that this study primarily dealt with
 the association between service encounters and behavioral intentions through customer Modeling service
experiential value, the adoption of previous construct measures was thought to encounters
sufficiently meet its exploratory objectives. Nevertheless, future research should consider
designing more comprehensive measurement items for capturing various types of service
encounters, such as interaction with other shoppers.
This study concentrates exclusively on one small country – Taiwan. Hence,
conclusions that are generally applicable to shopping malls in other countries cannot 363
be easily drawn. Additional studies must be undertaken to validate our findings using
a wider range of retail settings and in other geographical areas (e.g. the Disney World
in France or the Mall of America in Minnesota, USA).
The significant relationship between customer experiential value and behavioral
intentions clearly indicates the usefulness of the experiential value framework. It is
worthy to note that Mathwick et al. (2001) designed the EVS and then applied it in the
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context of catalog and internet shoppers. The present study is the first to apply EVS to
a traditional brick-and-mortar retail setting. The findings of this investigation provide
several directions for future research, and are described below.
Outshopping involves shoppers traveling outside their immediate business area to
purchase goods or services (Dawson and Garland, 1983), and motivations for
outshopping behavior include factors such as better selection and quality of
merchandise, convenient store hours, better prices, and an exciting shopping
environment. Given the growth of outshopping activity (Wakefield and Baker, 1998),
shopping malls may find themselves competing in larger geographical regions than
ever before. Future research on consumer perceptions of shopping malls may examine
the role of service encounters in customer outshopping.
Issues that influence service encounters involve both marketing and operations.
Thus, it is useful to investigate classification schemes that may help clarify the nature
and dimensionality of service encounters. From this perspective, the classification
scheme proposed by Schmenner (1986) appears attractive. Specifically, Schmenner
divided services into four quadrants, with labor intensity on one axis and customer
contact/customization on the other. The present study examines retailing service
encounters which were identified as high-labor intensity and low customization using
the classification scheme of Schmenner (1986, 2004). Future studies can extend the
proposed research model to examine the impact of service encounters on customer
purchase behavior under different degrees of equipment (or labor) intensity commonly
experienced in service delivery systems such as retail banking industry, airline
industry, recreational theme parks, hotels or restaurants. Further, researchers can
conduct longitudinal research on customer experiential value, which could bring
parsimony and order to a research model that describes the service process.

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Corresponding author
Maxwell K. Hsu can be contacted at: hsum@uww.edu
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