CHAPTER 2 LITERATURE REVIEW
2.5 Concluding Remarks
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analyzing the effects of technology spillovers. Hence, how to find an appropriate approach to unfold and measure the technology spillover considering the notion of service science is still an open issue. This study attempts to propose such an approach to unfold and measure the effect of technology spillovers in services.
2.5 Concluding Remarks
In the previous sections we discussed the background notions (i.e. service science and service-dominant logic) and critical factors (namely, service operation, customer expectation, customer emotion, and other factors) of service experience. We require some implications from previous literatures that:
1. Service science discipline provides us with integrative thoughts and guidelines across different fields that this research can follow.
2. Service-dominant logic composes many important concepts (including value co-creation with customers, customer involvement, and operant resources) for service providers and researchers to take into account while designing and managing service experiences.
3. Delivering and design service experiences are necessary for service providers to have competitive positions in the changeable economic environment.
4. Appropriate service operation management can aid service providers to effectively deliver service experiences to customers and also to build atmospheric environments.
5. Managing and realizing customer expectation can lead service providers to provide suitable services with customers in order to achieve customer satisfaction.
6. Capturing customer emotion is a way to understand customer behaviors and
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responses during service experience delivery.
7. The effects of technology spillover in service industry should be evaluated and assessed through a systematical approach based on S-D logic.
Consequently, this research summarizes and portrays a diagram with structural elements of service experience (as shown in Figure 2-7). Based on the notions of service science and service-dominant logic, designing and managing service experiences must consider service operation, customer expectation, customer emotion, and other factors (that is, service quality, atmosphere, or customer patterns). This research is to build a systematical and integrative approach of service experience and operation design and management. We will apply important aforementioned notions to our approach by the synthesis of previous studies.
Figure 2 - 7 The structural elements of service experience
Service-Dominant Logic
Service Science
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CHAPTER 3
THEORETICAL FRAMEWORK
In Chapter 2 we described the notions of service science and service-dominant logic as the research background. Furthermore, we tried to analyze the importance of service experience in the era of experience economy. According to the synthesis of plenty of previous studies, we argued that service operations, customer expectation, and emotions are extreme vital factors to directly influence what customers perceive service experiences. Furthermore, technology spillover was also addressed and discussed.
In this chapter we attempts to establish a conceptual theoretical framework of service experiences based on aforementioned key elements (that is, service operations, customer expectation, emotions and other factors). This conceptual theoretical framework of service experiences can be considered as a foundation for further building a systematical and integrative approach of experience and operation design and management. Meanwhile, we try to combine the expectation theory and emotion theory with our framework, especially for explaining customer behaviors after
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receiving service experiences. Finally, this study proposes a new notion of Exquisite Technology for designing and managing service experiences and operations.
3.1 Theory Groundings
In this section, we would like to propose a conceptual theoretical framework of service experience as a fundamental basis for building the systematical and integrative approach of expectation-based experience and operation design and management.
According to the literature review of Chapter 2, customer expectation and emotion are two critical factors of service experience delivery. This research delineates the expectation theory and emotion theory in detail as follows.
3.1.1 Expectation Theory
In the beginning of a service delivery process, customers are looking forward to service encounters with eager anticipation. In other words, what customers expect to acquire from the service provider can define diverse customer expectations. Moreover, customer expectations are considered as desires or wants of customers, i.e. what they feel a service provider should offer more than what would offer. Parasuraman et al.
(1991) proposed that understanding customer expectations of service played an important role for delivering good services. Previous studies had presented that how customers assess the performance of a service provider was based on the single level of expectation standard, which meant customer felt a service provider should offer.
However, past researchers kept evolving and extending the conceptual model of expectations, putting a lot of effort to pinpoint the critical element within customer expectations. These researchers offered multi-levels of customer expectations (Parasuraman et al., 1991; Zeithaml et al., 1993; Walker and Baker, 2000). According to their propositions, multiple standards would be more likely to completely understand the customer expectations of service.
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Figure 3 - 1 Expected service level
Parasuraman et al. (1991) proposed that customer expectations comprise two levels: desired and adequate (as depicted in Figure 3-1). Desired expectations represented the level of service a customer hopes to receive, defined as the level at which the customer wanted the service to perform. It was a combination of what the customer believed “can be” and “should be”, while adequate expectations, a lower level of expectation, considered to be customer‟s acceptable level of performance. It was relied on the customer‟s assessment of what the service “will be” (Zeithaml et al., 1993). The latter was the basic expectation level for customers to determine the service performance, whereas the former expectation level, which was higher than adequate expectation, could attract the customers, i.e. customers might be surprised and overwhelmed while the service providers were reaching or exceeding customer expectations. These actions directly made the customers tend to think the performance better and be satisfied with the service.
This research adopts the dual levels of expectations and extends their uses in the dynamic service experience contexts in terms of customer expectation management during service experiences delivery. Put differently, the study regards customer expectations as dual-level as well as dynamic. The level of desired and adequate expectations could vary from customers to customers and, potentially, from one situation to the next for the same customer whenever customers acquire relevant
Adequate Desired
low Zone of tolerance high
Expectation
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information (e.g. word-of-mouth, or provider communications) about services (Boulding et al., 1993). Those situations might differ from various industry sectors might even cause different expectation levels, enlarging the complexity of customer expectation.
The zone of tolerance of a customer would be influenced by several complex and multiple factors within service encounters (Zeithaml et al., 1993). Zeithaml et al.
(1993) proposed a comprehensive framework of service expectations and clarified customer expectations by eleven antecedent factors which could affect the desired service level and the adequate service level (as depicted in Figure 3-2). There are five factors about adequate service of the customer expectations: transitory service intensifiers, perceived service alternatives, customer self-perceived service role, situational factors and predicted service.
Transitory service intensifiers are individual, provisional and short-range factors that lead customers with a high sensitivity to be served. For example, a patient could have higher expectations to care about responsiveness of the hospital staff when he is anguished in an emergency. Perceived service alternatives are the levels of customer perceptions which customers can acquire better services from other service providers.
For example, if customers can choose alternative service providers or types of services, their levels of adequate service could get high determinately. Customer self-perceived service role are “the customers‟ perceptions of the degree to which they themselves influence the level of service they receive.” Customers‟ normative expectations are partially influenced by how well they believe that they are performing their own roles. Situational factors are service-performance contingencies in which customers are perceived to be beyond the control of the service provider. For example, when catastrophes happen, such as earthquakes or typhoons, customers
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would recognize that insurers are full of service demand. Customers would decrease their service expectations in this moment. The last factor that affects the level of adequate service expectations is predicted service. For example, when customers could know what service they acquire, their levels of adequate service would be changed by different qualities of services.
Figure 3 - 2 Nature and determinants of customer expectations of service Zeithaml et al. (1993) addressed that desired service expectations are determined by enduring service intensifiers and personal needs. Enduring service intensifiers are stable and individual factors that lead customers with a high sensitivity to be served.
One factor of enduring service intensifiers is the derived service expectations. For example, customer expectations will be affected and thus derived by other parities.
Another factor is the customer‟s personal service philosophy which is the customer‟s attitude about what “perfect” service means and adaptable service during service encounters. Personal needs are conditions or states necessary to customers‟ physical
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and psychological well-beings. For example, a patient with high social or dependency needs could have high expectations concerning assurance and professional capability for the hospital staff.
Furthermore, there are two categories of information searching about product quality which are divided into external and internal searching factors. However, not only the desired service level but the predicted service would be affected by external and internal factors. The external factors include three types which are explicit service promises, implicit service promise and word-of-mouth communications.
Explicit service promises, such as advertisements, personal selling or contracts, are communications about services which are made to customers by providers.
Zeithaml et al. (1993) stated the influence of explicit service promises on service expectations based on the intangibility of services. The second factor is implicit service promises which “lead to inferences about what the service should and will be like.” The important elements of implicit service promises are price and tangibles. For example, a customer wants to buy an insurance form several firms which have different charges. The customer may consider that firms with high prices must provide them perfect service in high-quality. Word-of-mouth communication is another important factor which influences desired service level of customer expectations and predicted service. In addition, word-of-mouth is personal and non-personal statements which proffer customers what the service encounter will be. At last, the internal factor is past experience which refers to customers‟ previous exposure to service encounters.
For example, when a customer wants to buy insurance from insurance firms, he would cogitate and consider about the experiences of insurance services in the past to make a correct decision.
With our extended use of the desired and adequate service levels, service
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providers can change spontaneously because customers have physical and mental vibrations across different services as well as different contexts. Accordingly, the zone of tolerance can become wide or narrow dynamically during service experience delivery. This study also would like to propose an idea that managing customer expectation by utilizing proper expectation determinants for customers in the dynamic and real time environment.
3.1.2 Emotion Theory
As mentioned earlier, customer emotion is also a critical factor to influence service experiences. Even customer expectation management is vital and aid service providers to deliver proper services to customers, actual customer behaviors are still hard to grasp and understand. For example, a service provider may provide friendly frontline employees to serve a customer with many product promises (e.g. price, quality, warranty). However, the customer, even if her/his expectation level is met, is not certain to buy the product. Pullman and Gross (2004) noted that designing service experiences needs to take customer emotion into account. According to Mattila and Enz (2002), customer emotion plays a crucial role within service encounters. Bagozzi et al. (1999) indicated that customer emotion directly affects customer purchase behaviors. Furthermore, customers who are in a pleasurable and exciting environment easily spend more time and money in staying the purchase surroundings (Donovan
Figure 3 - 3 M-R model (Mehrabian and Russell, 1973)
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environment stimulus (e.g. crowd, service quality, frontline etc.) influences customer emotional status, such as pleasure, arousal, and dominance. Hence, customers have different emotional states that can lead to different behaviors. In addition, Roseman (1991) proposed the appraisal theory of emotions to define what circumstances induce the specific emotion. According to the appraisal theory of emotions, services providers would suitably prompt customers to have joyful and exciting emotions.
Building a specific emotional environment (e.g. pleasant or exciting conditions) is important. Consequently, as a result of the viewpoint of service operation design, this study relies on an appropriate environment setting, friendly employee service, and advanced technology to provide the aesthetic atmosphere which enables customers to have positive emotions.
In sum, customer expectation and emotion management are important issues in the marketing and customer behavior field, yet few researches have applied intelligent technology and methods to this issue in practice. This study tries to adopt customer expectation and emotion to build a system and integrative approach for experience and operation design and management.
3.2 Service Operation within Service Experience
As aforementioned in Chapter 2, delivering quality service experiences to customers is necessary but hard for service providers in terms of dynamic environments (Haeckel et al., 2003; Voss et al., 2008). Customer expectation management is a critical factor to influence customer service experiences and the other important matter is service operation which has been discussed for a long time in different disciplines (Chase, 1978; Johnston, 1999; Rust et al., 1999; Roth et al., 2003; Voss et al., 2008). Service operations can be regarded as the real entities of services which customers can directly get in touch with. Consequently, service
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providers always deliver proper services to their customers through service operations.
Service providers, therefore, can successfully manage customer expectations by the supports of good service operation settings. According to Nie et al. (1999), there are ten major service operation management issues around service providers, especially environments, employees and technology. This study tries to analyze three essential issues within service experiences to fulfill customer expectation management based on lots of past research (as depicted is Table 3-1).
3.2.1 Environment issue
Physical environment design has been continuously discussed in previous operation management research. Bitner (1992) proposed three main environment dimensions (e.g. ambient conditions, space/function and signs, symbols & artifacts) which service organizations should take into account while designing their physical purchase surroundings. Thus, environment design can influence not only the performance of service providers (Suleket al., 1995; Bitner, 1990) but also the perception of service quality of customers (Reimer et al., 2005). Furthermore, the major objective of environment design is to build atmospheric purchase surroundings for customers (Kotler, 1973; Donovan et al., 1982), so atmosphere has played an important role in designing environments. There have been many empirical results as the forceful evidences which show customers would like to spend lots of time and money in purchasing and staying in the cordial, warm or comfortable atmosphere surroundings (Donovan et al., 1982; Bitner, 1990; Bitner, 1992; Turley et al., 2000;
Morin et al., 2007; Turley et al., 2002).
Accordingly, service providers should confront the basic service operation issue of environment design first. Although customer expectation management is also a necessary means for service providers to realize what customers actually want according to previous research, service providers still have no idea about real
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customer behaviors (i.e. inquiry, bargain, or purchase) after delivering the appropriate services to their customers. In other words, service providers don‟t make sure that they can gain from managing customer expectations. Environment design, moreover, should be extended the application boundary that the places customers would encounter. For instance, the process of delivering services to customers is a critical circumstance which service providers need to have good environment design.
Consequently, environment design should be regarded as the foundation of implementing customer expectation management. It can increase the probability of customer purchase based on the well environment design when service providers manage their customer expectations during services delivery.
3.2.2 Employee issue
Heskett et al. (1994) described that service providers should establish their own service-profit chain to increase their customers and potential benefits. The initial approach of the service-profit chain is to define the internal service quality of service providers which can represent the importance relationship between the frontline employees and the external customers (Heskett et al., 1994). Accordingly, employees play a critical role for contacting customers directly in service encounters. The external behaviors (such as warm talks, smiles or friendly treatment) of employees can influence the perception of customers (Lewis et al., 1990; Pugh, 2001; Lemmink
& Mattsson, 2000). Besides, service providers also have to take account of employee training, employee empowerment and service cultures in employment strategies (Lewis et al., 1990; Bitner et al., 1994).
Service industries have procured the major economic activities in the twenty-one century, yet either the virtual products (e.g. services) or the physical products of the businesses still need the employees to be in touch with their customers. In other words, employees can be regarded as a service delivery media to closely enable customers to
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understand what value they can receive. In addition, the processes of service experiences delivery are so fickle and uncertain that it needs humans (namely, employees) to handle real time circumstances based on their owned knowledge, experiences or judgments. Hence, this study deems that the employees‟ external behaviors (such as face expressions, tones, or contacting attitudes) will directly affect customers‟ feelings and purchase behaviors. It is necessary for service providers to take employee management into account.
3.2.3 Technology issue
In order to increase the abilities of reposing customer needs, producing services or delivering services, service providers would implement information technology (IT) to enhance their competitive advantage. For instance, service providers can adopt information technologies, wireless positioning systems and handheld devices to provide customers with suitable services and enhance the performance of service operations within the physical or cyber service encounters. Hence, service providers can not only raise and improve service performance (Bitner et al., 2000; Ray et al., 2005; Karwan et al., 2006; Johnson et al, 2008) but also increase the service quality (Bitner et al., 2000; Zhu et al., 2002) through applying IT into service experiences processes. Furthermore, employing IT within service encounters can enable customers to achieve higher satisfaction in order to reach providers‟ business goals (Meuter et al., 2000; Johnson et al, 2008). Some research indicated that it is essential for service providers to consider the reliability and adoption of IT-based services for increasing customers‟ usage and trust (Walker et al. 2002; Lee et al., 2003; Johnson et al, 2008).
Consequently, according to the previous studies, IT is a critical element to perfect the performance of service operations. This research utilizes a cyber-physical system as an IT indispensable to deliver high-quality cyber-physical service experiences to customers. Thus, customers can be served the cyber-physical service experiences by
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interacting and involving with either the cyber space or the physical environment.
Table 3 - 1 Service operation issues Service Operation Issue Author(s)
Environment Bitner (1990)
Bitner (1992)
Donovan & Rossiter (1982) Kotler (1973)
Morin, Dub´ e & Chebat (2007) Reimer & Kuehn (2005)
Sulek, Lind & Marucheck (1995) Turley & Chebat (2002)
Turley & Milliman (2000)
Employee Bitner, Booms, & Mohr (1994)
Heskett et al. (1994) Hartline & Ferrell (1996) Lemmink & Mattsson (2002) Lewis & Entwistle (1990) Pugh (2001)
Technology Bitner, Brown & Meuter (2000) Johnson, Bardhi & Dunn (2008) Karwan & Markland (2006) Lee, Lee & Eastwood (2003)
Meuter, Ostrom, Roundtree & Bitner (2000) Ray, Muhanna & Barney (2005)
Walker, Craig-Lees, Hecker & Francis (2002) Zhu, Wymer & Chen (2002)
The nature of Information Technology is to support service providers to execute
The nature of Information Technology is to support service providers to execute