In topic 1, we discussed how service organisations create and deliver value through a three step process:
- choose the value
- create the value
- communicate value.
Now that we understand step 1 (identifying segments and positioning), and part of step 2 (we have discussed service products, and we will address other considerations later in the course), let us shift our focus to step 3 – how to communicate value.
Organisations can spend so much time, money and energy in identifying their target market, creating a clearly defined positioning strategy, and developing service offerings that create significant value, but without effective communication, this can all be for nothing. If you cannot clearly tell your customers that you have an optimal service that will fulfil their needs, how will they ever know?
Welcome to Topic 5: Integrated Services, Marketing Communications and Crafting the Service Environment. In this topic, you will learn about:
- Articulating the importance of integrating marketing communications to delivering a strong brand identity
- Describing the challenges of service communications
- Describing the 5 Ws of marketing communications planning
- Explaining the role of the marketing communications mix in service marketing communications
- Explaining the four core purposes of a well-designed service environment (servicescape)
- Demonstrating an understanding of theories from environmental psychology that help us to understand customers as well as employee responses to service environments
- Demonstrating an understanding of an integrative servicescape model
- Demonstrating an understanding of the service environment, including the key ambient conditions and their impact on customers
- Describing the roles of spatial layout and functionality
- Explaining why designing an effective servicescape has to be done holistically and from the customer’s perspective.
In this topic we will explore how integrated marketing communications can help service organisations create synergy, and the extreme importance of employees being part of this consistent, unified communications approach (as they are the ‘face’ of the organisation and the focal point of interaction with customers). The unique attributes of service (in particular intangibility and variability) raise common issues that service organisations need to overcome to effectively communicate with their consumers. Of heightened importance in the service context is the role of servicescape – the physical surroundings within the service environment. We will unpack the various dimensions of servicescape, and how these dimensions can be leveraged to encourage customers to stay longer, have better interactions with service employees, and spend more.
These relate to the Subject Learning Outcomes:
- Discuss the key concepts, principles and unique challenges of services marketing in relation to the extended marketing mix.
Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.
Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.
Read Chapter 8 and Chapter 10 of the prescribed text - Lovelock et al. 2014, Marketing in the service economy, 6th edn., Pearson Australia.
Watch the following video:
TEDx Talks 2013, Prioritising marketing communications, TEDx Talks.
Read the two (2) case studies:
- 'Integrated marketing communications: Gangnam style' on pp. 243-244 of the prescribed text.
- 'Apple retail store' on pp. 299-300 of the prescribed text.
Read and watch the following content.
The importance of integrating marketing communications in services
The extent of a service organisation’s communication strategies and channels used will depend a great deal on the funds they have available. A large national or multinational company will have significant financial resources to run extensive TV campaigns, sponsorship arrangements, employ a public relations team, implement a high-quality website and have a watertight search engine optimisation (SEO) strategy. On the other hand, a newly opened small family business might only have the resources to set up and monitor a Facebook page and do a letterbox flier drop in their local area.
Irrespective of the size or scope of communications, one of the most important things for any service organisation to remember is to have an integrated marketing communications (IMC) strategy. IMC is about consistency – having a clear and consistent message across all communication channels to create a unified voice from the brand to the customer (Lovelock et al. 2014). An effective IMC strategy creates synergy, where the collective efforts of communication produce a greater outcome than the sum of its parts (Harris 2015).
Watch this video on IMC (they call it integrated advertising, but we are talking about the same thing).
For service organisations, IMC extends beyond coordinated communication channels. Interactive communication channels (in other words, interactions with employees) must also be privy to this strategy and contribute to this consistent message (Lovelock et al. 2014). This applies both on a strategic level and at a practical level.
For example;
- An IT consulting company positions themselves as providing a comprehensive service with friendly and knowledgeable staff. Therefore, employees must be recruited and trained on this basis and understand the importance of their overall manner and approach to client interactions as contributing to the organisation’s broader strategy.
- A restaurant has recently joined The Entertainment Group, a membership program where member organisations provide offers and discounts to member customers (The Entertainment Group 2020). On a practical level, service staff need to know that Entertainment vouchers now apply in their restaurant, any exclusions that may apply, and how to implement these discounts in their system to ensure a seamless customer experience.
The Lovelock (2014) text highlights some of the roles marketing communications play specifically in a service context and discusses each in detail, as indicated in the following figure.
Challenges of service communications
There are four (4) communication challenges for service organisations.
Challenge 1: Issues of intangibility
Services are activities, performances, actions; the transfer of value without the transfer of physical ownership of a tangible product (Lovelock et al. 2014). This creates flow-on issues for communication. In describing a product, you can discuss what materials it is made from, what it looks like, or how durable it is. With a service it is not so simple. Lovelock et al. (2014) identify specific implications including generality, abstractness, non-searchability, and mental impalpability. Please refer to page 244 for further information on these implications.
To overcome these issues, service organisations need to find ways to vividly describe these intangible aspects. Organisations could, for example, focus on tangible cues, use metaphors to emphasise meaning, or feature service employees in their communications as the ‘face’ of the organisation. Read the LinkedIn blog post, 5 Ways Digital Can Communicate the Intangible, written by Anvesha Poswalia (2017) for some great examples of how organisations can leverage digital marketing to communicate the intangible.
Challenge 2: Managing promises and expectations
This challenge mainly stems from the fact that sales/marketing/management departments are in charge of positioning and communication strategy, whereby they make promises and establish expectations that they themselves are not in charge of delivering. Instead, service staff are tasked with delivering a standard of service consistent with consumer expectations.
Therefore, the key to overcoming this challenge is to ensure strategic management of these promises and expectations to ensure communications and employee understanding is in sync (Lovelock et al. 2014). This can be achieved through the following four (4) techniques:
- creating a powerful service brand
- coordinating external, controllable company communication
- not over-promising and under-delivering
- creating tiered-value service offerings (Lovelock et al. 2014).
Challenge 3: Educating consumers
One of the key attributes of services is the co-producer role that customers are often required to play, as their active participation is needed to ensure the service is appropriately delivered. This dynamic assumes that the customer understands how to perform their role, which often is not the case (especially in the context of new services). Therefore, communication can be a helpful tool to educate consumers of their roles and how to effectively perform them (Lovelock et al. 2014).
An example of this the COVID-19 check-in requirements through State Government departments. In South Australia, check-ins are managed via the mySA GOV app (Department of the Premier and Cabinet 2021). South Australians are required to check-in when they engage in any public activity, and an extensive communications campaign was required to inform, educate, and remind everyone to engage correctly in this activity. The campaign included a range of communications from how to correctly use the app (you may have seen someone accidently take a photo of a QR code rather than scanning to check-in), to mitigating fears around data privacy, and the general importance of contact tracing. Communications included online information (various websites), public relations/media releases, as well as television, radio, digital, and outdoor advertising.
Challenge 4: Managing internal marketing communication
The final challenge is ensuring extensive communication and understanding within the organisation, both horizontally across departments (marketing, HR, sales and R&D) and vertically between management and frontline employees tasked with delivering the service (Lovelock et al. 2014). Without this, communications can be inconsistent, leading to confusion and the potential for poor consumer experiences.
To overcome this challenge, it is important for service organisations to consider the internal marketing of the brand. Take a company like Qantas for example. The cabin crew are the ‘face’ of the organisation and the main point of contact with customers. Qantas employees go through significant training, not just in emergency protocols and technical aspects, but with customer service. Watch the following video for an example of their approach to customer service from an internal perspective.
The Lovelock et al. (2014) text has an excellent discussion of IMC planning, including the 5 Ws: Who, What, How, Where, and When? (p. 233), and details several key channels within the marketing communications mix. You will have likely heard of each of these channels through an introductory marketing course, as well as just from being a consumer yourself! Please take a look at the online article, 5 Tools for Integrated Marketing Communication 2020, for an overview and some great examples of communication channels in action.
Instead of repeating these channels here, we will instead jump straight in to discuss a communication mechanism of considerable importance for services – crafting the service environment.
Learning task 1: Marketing communication
Share an example of a recent marketing communication that you have seen in Topic 5: Forum Activity 1. It can be a video or print advertisement, or even a Facebook post from a service organisation.
You can also navigate to the forum by clicking on 'MKT102 Subject Forum' in the navigation bar for this subject.
The role of service environments (servicescape)
The physical environment in which a service takes place has a considerable impact on the service experience and subsequent customer satisfaction. The service environment is often referred to as servicescape.
Servicescapes refer to the style, appearance and functionality of the physical surroundings (design, colour, light, air-conditioning, functionality and so on) in a service setting.(Lovelock et al. 2014, p. 280)
There are various purposes of servicescape including to:
- give a significant initial impression of the brand
- facilitative the service encounter
- encourage consumers to stay or use the space in a manner that creates a better service experience (Lovelock et al. 2014).
Bitner’s (1992) servicescape model encapsulates the various environmental dimensions that contribute to the perceived servicescape, as well as how employee and customer responses to the servicescape facilitate service interactions and contribute to either approach or avoidance behaviours. The following figure provides an overview these dimensions.
There are three (3) key environmental dimensions that contribute to the perceived servicescape:
Environmental dimensions
| Ambient conditions | Space/function | Signs, symbols and artifacts |
|---|---|---|
|
|
|
These environmental dimensions contribute to the overall perceived servicescape (a holistic perception from the perspective of the customer).
The internal customer/employee responses can be grouped into the main types:
Internal customer/employee responses
| Cognitive | Emotional | Psychological |
|---|---|---|
|
|
|
The internal responses of the customer and employee to the perceived servicescape facilitate the extent and type of social interactions between them, and also results in two (2) main types of behaviours:
Behaviours
| Staff approach behaviours | Social interactions | Customer approach behaviours |
|---|---|---|
|
Between customers and employees |
|
| Staff / Customer avoidance behaviours are the opposite of the approach behaviours. | ||
The Lovelock et al. (2014) text has a detailed description of each part of this extensive process.
The next time you are in a service environment, take notice of your physical surroundings. How do you think the servicescape has been design to impact you? Does the layout direct you to a particular location or does it encourage you to walk around? What music is playing, how bright or dull is the space, and what smells do you notice? Is there signage that helps you make sense of the space? Do you feel compelled to stay longer in the space or to get out as quickly as possible?
The following are two (2) great examples of servicescape strategy in practice:
The Bund Post Office
The Bund Post Office in Ningbo, China, has been recreated as a community space expanding beyond the traditional post office offering (Fasano, Scott & Buller 2021). This example shows how servicescape can promote approach behaviours, which encouraging consumers to stay longer in the space (rather than the usual avoidance behaviours we often experience in a post office where we want to get out of the space as soon as possible) (Bitner 1992). Read this article from LS:N Global, which describes how the post office became a hangout space for shoppers, for more information and to see some photographs of the space.
Zara
The clothing retailer Zara puts significant effort into curating their in-store experience with the help of architects and visual merchandising specialists, who strategically consider the impact of layout, music, even the colour of lightbulbs in the store. They have a pilot store where these strategies are formulated and then final mock ups are shared with store managers to implement across the world (Hanbury 2018).
Read this article from Business Insider Australia to understand more about Zara’s process. This example demonstrates how ambient conditions of the servicescape (music) and space/function elements (store layout and furnishings) can be used to direct customers to areas of interest within the store, provide a more immersive experience, and encourage approach behaviours (in other words, to spend more time in the space) (Bitner 1992).
Service organisations are advised to give full consideration to the service environment in which their offering occurs. This includes analysis of what elements of the servicescape are promoting consumers to stay and enjoy the service experience, versus what might be causing them to engage in avoidance behaviours (in other words, encouraging them to leave quickly and spend less).
It is also important to place the consumer as centre of these decisions – most of us can think of spaces we have visited where the design/layout was impressive from an architectural perspective, but lacked that much needed consumer-centricity. An example is Lune Croissanterie in Melbourne – it is an architecturally impressive space, but the minimalist warehouse design gives new consumers very little direction of where to order and what to do (and sitting on a cement slab during a Melbourne winter can get a little chilly!). Take a look at their website for an idea of the space.
Knowledge check
Complete the following three (3) tasks. Click the arrows to navigate between the tasks.
Key takeouts
And that is it for Topic 5! Here are some key takeouts:
- Regardless of the size or scope of communications, service organisations are advised to focus on creating synergy through an integrated marketing communications (IMC) strategy – delivering a unified and consistent message to consumers.
- Service organisations are tasked with overcoming four common communication challenges specific to service; intangibility, managing promises and expectations, educating consumers, and managing internal marketing communication.
- Of particular importance to the communication and experience of the service encounter is the service environment or servicescape. Various servicescape elements (from temperature, lighting, music, scent, to layout, signs, symbols and artefacts) contribute to the overall impression of the service and can facilitate great interactions between customers and staff, leading customers to stay longer in the service space and spend more.
Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your seminar.
The following learning tasks will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
In-seminar learning tasks
The in-seminar learning tasks identified below will be completed during the scheduled seminar. Your lecturer will guide you through these tasks. Click on each of the following headings to read more about the requirements for each of your in-seminar learning tasks.
In a breakout room assigned by your lecturer, you will be given one (1) of the following questions to discuss. At the end of the discussion, you will share your responses with the class:
- Why is word of mouth considered to be so important for the marketing of services? How can a service organisation that is the quality leader in its industry induce and manage word of mouth?
- What tools can managers use to find out which elements of the servicescape may potentially irritate customers?
In a breakout room assigned by your lecturer, you will be given one (1) of the following case studies to discuss. At the end of the discussion, you will share your responses with the class:
- Integrated marketing communications: Gangnam Style (pp. 243-244)
- Analyse the Gangnam Style case using the 5 Ws model in the integrated marketing communications planning process.
- Watch the Gangnam Style video. Explain how the communications content adds value to consumers of Psy’s music. What impact does content have on the video’s success?
- Apple retail store (pp. 299-300).
- Use the servicescape model (Figure 10.3 in the textbook) to analyse how the physical environment of the Apple retail store might affect consumers as they move through and experience the servicescape.
- What factors do you think influenced Apple’s choice of in-store music?
In a breakout room assigned by your lecturer, you will discuss the following question. At the end of the discussion, you will share your responses with the class.
- Which elements of the marketing communications mix would you use for each of the following scenarios? Explain your answers.
- A private educational institution such as a high school tutoring service.
- An established restaurant facing declining patronage because of new competitors.
- A large, single-office accounting organisation in a major city that serves primarily small business clients and that wants to grow its client base aggressively.
- Identify three (3) organisations from three (3) different service industries where the service environment is a crucial part of the overall value proposition. Analyse each organisation’s servicescape using the Mehrabian–Russell Stimulus-Response Model.
Welcome to your post-seminar learning tasks for this week. Please ensure you complete these after attending your scheduled seminar with your lecturer. Your lecturer will advise you if any of these are to be completed during your consultation session. Click on each of the following headings to read more about the requirements for each of your post-seminar learning tasks.
In your reflective journal, prepare a list of key terms and concepts from this topic that will be useful for your audit report. Find supporting references relevant to your chosen company in relation to these concepts.
You can access the reflective journal by clicking on ‘Journal’ in the navigation bar for this subject.
Work on your draft presentation – refine your content for maximum impact, conduct an initial rehearsal of your presentation to gauge timing (and refine/reduce as needed).
Each week you will have a consultation session, which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.
Click here to access your consultation session.
Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.
Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)
For those who want to go the extra mile, here are some additional useful resources:
- Bitner, MJ 1992, 'Servicescapes: The impact of physical surroundings on customers and employees', Journal of Marketing, 56(2):57-71.
- Levitt, T 1981, Marketing intangible products and product intangibles, Harvard Business Review.
References
- Bitner, MJ 1992, 'Servicescapes: The impact of physical surroundings on customers and employees', Journal of Marketing, 56(2):57-71.
- Department of the Premier and Cabinet 2021, COVID-safe check-in, https://www.sa.gov.au/mysagov/covid-safe-check-in
- Fasano, L, Scott, S, Buller, A 2021, This post office is a hangout for local shoppers, LS:N Global, https://www.lsnglobal.com/news/article/27444/this-post-office-is-a-hangout-for-local-shoppers
- Harris, B 2015, Synergy is the secret sauce in IMC, Business 2 Community, September 3, https://www.business2community.com/integrated-marketing/synergy-is-the-secret-sauce-in-imc-01317702
- Hanbury, M 2018, Zara has a fleet of secret stores where it masters its shop design and plots how to get you to spend money, Business Insider Australia, https://www.businessinsider.com.au/zara-has-secret-test-stores-photos-2018-9?r=US&IR=T
- Lovelock, C, Patterson, P & Wirtz, J 2014, Services marketing, 6th edn., Pearson Australia.
- Lune Croissanterie n.d., LUNE, https://www.lunecroissanterie.com/
- Preece, D 2015, So what is integrated advertising? (integrated marketing communications), streaming video, YouTube, https://www.youtube.com/watch?v=1ZkSqLK6Q6w
- Poswalia, A 2017, 5 Ways digital can communicate the intangible, LinkedIn.com, https://www.linkedin.com/pulse/5-ways-digital-can-communicate-intangible-anvesha-poswalia/
- Qantas 2013, Customer service – behind the scenes, streaming video, YouTube, https://youtu.be/Fkf8a5OIpLg
- Spark 2020, 5 Tools for integrated marketing communication 2020, Sparkinteract, https://www.sparkinteract.com.au/integrated-marketing-communication/
- The Entertainment Group 2020, Our Story, The Entertainment Group of Australia, https://www.entertainment.com.au/
