76 | P a g e

CHAPTER IV

DIMENSIONS OF SERVICESCAPE

4.1. Introduction

The importance of Servicescape elements is indispensable in almost every

organisation. It depends upon the nature and need of the business as to what

extent and which elements of Servicescape should be used. One cannot

suggest music in a bank premises, while in case of a restaurant, overall

service is incomplete without a pleasing music. Servicescape elements not

only enhance the level of customer satisfaction, but also help in competing

with others. No matter how much quality food restaurants offer, consumers’

overall satisfaction depends upon other factors too. There are many

restaurants in India where parking facility does not exist or a proper parking

management system is not adopted. Here, food is not the guarantee of

attracting and retaining customer. Customer seeks hassle free dining

experience that includes safety, security and parking facility etc.

Servicescape elements provide different magnitudes to the service industry.

In hospitality and restaurant service, it provides the infrastructural support in

the form of ambiance, furniture and carpet flooring etc. Servicescape

elements might be used as a competitive tool to gain competitive advantage.

Restaurants which are closely fighting on competitive battle ground can

differentiate their offerings and get a lead in the business by using

Servicescape elements. It is also being noticed that the customers are ready

77 | P a g e

to pay premium for the services which enhance their overall satisfaction.

Parking, safety, space to play for kids and a decent waiting lounge etc. are

some of the elements of Servicescape for which customer can pay a

premium.

Restaurant’s brand image is largely based on an overall service experience

which includes the quality of food it offers (tangible) and the experience

(intangible). Experience can be build through Servicescape. Therefore, in

building a restaurant’s image, Servicescape has its own importance besides

food. A customer, who visits a restaurant for the first time and come across

an average dining experience, is not a guarantee that he or she will visit the

same restaurant again. Research shows that retaining a customer is more

challenging than attracting new ones. Dining experiences can be enhanced

through Servicescape and it may affect customer so positively that they

become passionate for the services. This may help in affecting customer’s

revisit intentions positively. Finally, to attain an overall customer

satisfaction, Servicescape plays a crucial role in designing restaurant service.

In this chapter, a detailed discussion on consumer satisfaction in relation

with Servicescape is presented. Servicescape dimensions in improving

consumer satisfaction, retaining the old consumers and attracting new ones,

gaining competitive advantage and creating brand image and customer

loyalty through Servicescape are also given in detail.

78 | P a g e

4.2. Servicescape vis-à-vis Customer/Consumer satisfaction

“Consumer Satisfaction” is an overall outcome for which consumers avail

services and service providers manage services. It is considered to be a key

element for a firm’s success in the market. It is a leading decisive factor in

determining the quality of service or product to the customers, and also a

key factor for organisational existence. Consumer satisfaction, loyalty and

the image of the business entity have become the most discussed and

relevant topics in research for the service industry, especially for banking,

retail, hospitality and airlines.

The measurement of customer/consumer satisfaction has become an

important and challenging issue for the researchers of service marketing and

hospitality management.

Peter F. Drucker (1973) said that the customer satisfaction is and has always

been “the mission and the purpose of every business” (Drucker, 1973, p.79

cited in Kandampully, J. & Suhartanto, 2003, p. 5). It is known that one of

the important goals of corporate success is to retain and satisfy its customer.

Shoemaker and Lewis (1999) claimed that for many years hospitality

enterprises believed in creating as many new customers as possible as the

goal of marketing, while hoteliers thought it is much more important to

satisfy those customers who are on the property; although “the real goal was

to continue to find new customers” (p. 345).

79 | P a g e

Holmund & Kock, (1996, p.289) cited in Kandampully and Suhartanto,

2003, p.4) stated that the cost of attracting new customers is five times

higher than keeping the existing ones. Therefore retaining the existing

customers is always beneficial and good for the health of business. In a

service industry, retaining an existing customer largely depends upon the

level of satisfaction he/she receives, every time he/she avails the services.

Consumer satisfaction is one of the well derived outcomes of Servicescape.

Servicescape influence the consumer’s perception and also helps in

balancing the expectations. The knowledge of customers’ expectation is

essential for companies because it influences the repetition of purchases and

word of the mouth recommendations. Even if a person does not find the food

tasty, he can still enjoy the ambiance of the restaurant. Sometimes, people

come just to accompany others and not for eating purpose. For them the

service experience will become null if there is inexistence of Servicescape

elements.

Anderson, Fornell, and Rust (1997) emphasized the leading role of

consumer satisfaction and productivity for the company’s success. Their

research stresses that companies need to excel in both-customer satisfaction

and productivity. In other words, firms should consider both the “quality”

and the “quantity” in order to expand the business and positive word of

mouth communication about the company. This results an increase in the

firm’s overall profitability and enhance the image of the firm. Many

researchers have explored and suggested numerous factors for maintaining

80 | P a g e

satisfaction of service. One of the important factors which have been

explored by a majority of researchers is environmental factors.

Environmental factors consist of two major factors i.e. physical surroundings

and price perception (Dube, Johnson and Renaghan, 1999; Knutson and

Patton, 1995; Ryu, 2005; Varki and Colgate, 2001).

Wakefield and Blodgett (1994) in their study on Servicescape suggested that

the perceived quality of Servicescape increased customer satisfaction. The

longer one spends in a facility, the greater the likelihood i.e. the perceived

quality of the Servicescape. They said that quality play an important role in

determining satisfaction with the service. Upscale and Midscale restaurants

are the destination for not only dinning out but also for spending quality time

irrespective of the routine life. Therefore the manager of the restaurant and

hotel must ensure the overall quality of Servicescape. Overall quality means

the factors or the elements, which are an essential part of the Servicescape,

must be designed and managed in such a way that it enhance the overall

service experience that leads to consumer satisfaction positively. The

Servicescape has a direct and an indirect effect on perceived service quality.

Reimer and Kuehn (2005) in their study highlighted the importance of

Servicescape and strongly supported that Servicescape is important in

leaving a good impression of service quality in a consumer’s mind.

Researchers of marketing have suggested that the advantage of increased

customer satisfaction come up in two basic forms: (1). Improved ability or

81 | P a g e

capability of the organization to attract new customers and (2). To retain and

maintain the old customers (Rust, Zahorik, & Keiningham,1995)

Fornell (1992) suggested the following benefits associated with high

customer satisfaction:

1. Increased loyalty: The higher level of customer satisfaction contributes

significantly toward the customer loyalty.

2. Lower costs of future transactions: A firm with high customer

retention need not to spend so much to acquire new customers each

period.

3. Reduced failure costs: High customer satisfaction reduces resources

devoted to handling returns, reworking defective items and processing

complaints.

4. Lower costs of attracting new customers: Satisfied customers are more

likely to engage in positive word of mouth and are less likely to engage

in damaging negative word of mouth.

5. Reduce price elasticity: Satisfied customers are more willing to pay for

the benefits they receive; they are more likely to be tolerant of increase in

price.

6. Enhanced reputation for the firm: This aids in introducing new

products through instant awareness and lowering the buyer’s risk of trial.

Therefore, if managers or administrators working in service-based

organisations are able to identify how components of a product or service

affect satisfaction of their customers, they may be able to provide their

82 | P a g e

customers with a better customer experience to maximize their

satisfaction.

Alegre and Cladera (2009) in their study concluded that different aspects of

a service have a differing effect on overall satisfaction. Sometimes in

restaurant service, consumer could not get the desired level of satisfaction

from the core offering of the restaurant i.e. food but the environment in

which they consume their food satisfies them. In such case, the overall

satisfaction of the customer will be positive. Athanassopoulos, Gounaris and

Stathakopoulos (2001) explored that the satisfaction affects the behavioural

response of customers, customer’s intention to switch, decision to switch

and word of mouth communication are the three behavioural responses

which Athanassopoulos et.al (2001) suggested for a satisfied customer. Later

in their study, they took physical evidence (a subpart of servicescape) as a

major element which affects behavioural responses.

Pizam and Ellis (1999,p 330) pointed out that the hospitality experience is a

sum total of satisfactions with the individual elements or attributes of all the

products and services that make up the experience. How to make this

experience better is a challenge for every restaurateur. Every Individual has

specific needs and these needs largely depend upon their socio-economic

and demographic profile. An individual’s needs and perceptions determine

his satisfaction. In restaurant service, people not only go for food but also for

a change in their routine life. Servicescape may enhance the quality of the

83 | P a g e

attribute called atmoshphere in the restaurant service which may affect the

overall satisfaction level of the consumer.

Yüksel & Rimmington (1998) studied the importance of each attribute of

service and stated that the customers’ satisfaction levels would be related to

the strength of their beliefs regarding each attributes’ importance multiplied

by how well the attributes meet those expectations. This simply means, if a

customer expects an old melody or rock music in restaurant and the quality

of the sound system is of high standard, the impact of environmental

attributes in the overall satisfaction will be high.

84 | P a g e

4.3. Consumer satisfaction and service quality

However, the focus of this study is about measuring the effectiveness of

physical environment or Servicescape on consumer satisfaction but without

knowing the relationship between satisfaction and service quality, this study

will be of no use. In general, restaurant service quality is the sum total of

food quality, its ambiance quality and the service of the employees given to

the consumer. In current study, researcher is measuring the effectiveness of

Servicescape only which is the part of ambiance and employee service.

Since food quality and its impact on satisfaction has been measured and

explored by many researchers, in current study, the researcher has tried to

explore other components (intangible) of service quality. Reports and survey

revealed that in the current economic environment where service sector

contribution is hefty in the GDP, the quality cannot be compromised.

“Service sector has contributed around 55 % to the GDP in Indian economy

during the last two decades. The recently released Economic Survey 2013-

14 noted that "India has the second fastest growing services sector with

CAGR (compound annual growth rate) at 9 %, just below China's 10.9 %

during the last 11-year period from 2001 to 2012 (Chandrasekhar, 2014).”

In this immaculate economic perspective, managing and mainting the quality

of services is of paramount importance. Hotels and restaurant services

contributed around 1.5 % in GDP considering its strong potential because of

85 | P a g e

the large customer base. Mainitaing service quality is the “mool mantra” for

survival in this sector.

Customer now a days are more demanding. They do not want to compromise

on service quality when they are paying for it. Since a large number of

individual restaurants, domestic and global restaurant chains are competing

in the restaurant sector, the nature of competition is global now. Restaurant

industry is customer centric and generates good tax revenue therefore

regualtory and financial burdens in the form of FSSAI (Food Safety and

Standard Authority of India), service tax, value added tax and are some other

challenges which increases the cost of maintaining service quality.

Parasuraman et al. (1985) defined service quality as the extent of differences

between customer expectations of a service and their perceptions of the

service delivered and is perceived and assessed by customers during the

service delivery process.

Oh. H (2001) in his study concluded that, if a customer evaluates a product

or service that has high quality then he may perceive high satisfaction and

this will lead to many outcomes i.e. customer’s willingness to pay premium,

increase in customer loyalty and chance of revisit etc.

Rust, Zahorik and Keiningham (1995) explored the financial aspect of

quality. They considered expenditure on quality as an investment but

suggested that the improved quality must be financially accountable.

Therefore, expenditure on Servicescape or physical environment is justified

86 | P a g e

if it is improving the overall service quality. In addition, service quality is

based on an overall attitude of customer’s encounters with the service

provider. In an Upscale and Midscale restaurant service, customer encounter

is an essential part of service delivery process. Majority of north Indian

Midscale and Upscale restaurants do not offer home delivery services

because customer also prefer dining in restaurant premises if they plan to

dine in Midscale or Upscale restaurant. And, also home delivery service is

not the complete service package of the restaurant. Therefore, Upscale and

Midscale restaurants do not prefer to offer food at home.

Zeithaml and Bitner, (2000) in their study linked service quality and

satisfaction. According to their study, when satisfaction is linked to service

quality, it is generally viewed as a broader concept. Service quality is a

component of satisfaction, therefore, while exploring satisfaction in

restaurant service, the importance of service quality cannot be ignored.

Oliver (1993) suggested expectancy-disconfirmation paradigm for service

quality and satisfaction and concluded that the satisfaction judgment requires

a transaction specific experience with the service while quality can be

perceived without consumption experience or as an overall evaluation.

To justify Oliver’s study, the model is depicted on next page.

87 | P a g e

Fig. 4.1

Oliver’s Model

According to the expectancy-disconfirmation paradigm, a customer judge

satisfaction by comparing previously held expectations with the perceived

product of service performance. In addition, a positive or negative affect

arises from the cognitive process of confirmation/ disconfirmation which

contributes to the corresponding satisfaction or dissatisfaction. Further, he

concluded that an unexpected high level of satisfaction or performance

initiate an arousal i.e. pleasure (positive affect) which leads to delight

sequence. Satisfaction acts as parallel to delight and is strongly related to

88 | P a g e

pleasure and disconfirmation and had a clear effect on behavioural intention

of consumer (Oliver, 1993; Oliver, Rust and Varki, 1997).

In restaurant, it becomes more challenging to determine which part of

Servicescape is important in improving the quality of service as well as in

increasing revenues. Human psychology is very complex in nature and the

influence of color, light, music and design etc. is very difficult to measure

correctly. A detailed and thorough analysis of restaurant environment and

the target segment may give the desired results of investment in service

quality especially in the form of Servicescape.

As service quality and customer satisfaction have been avidly researched

topics for hospitality, tourism and marketing over the past few decades,

various dimensions have been identified. Chang and Chang (2008) took the

example of health care industry and concluded that different individuals

evaluate components of the service independently and differently and it is

thus important to research how different groups view different components.

In hotel and restaurant sector, service is delivered through- (1). Employees,

(2). Machines and or (3). Customers themselves. In all the three aspects,

customer’s evaluation on service delivery mechanism will be different.

Since in all the three modes of service delivery process the quality of the

service vary and therefore the satisfaction. In some Midscale and Upscale

restaurants, all the three mechanism of service delivery exists; while in some

restaurants only the trained staff delivers the service. In India, majority of

the population, especially in upper age bracket do not prefer self service,

89 | P a g e

however this trend is changing rapidly. Therefore to maintain service

quality, the delivery mechanism, which is an important part of service

quality evaluation, should be locally fit. The management must understand

the target market carefully while deciding the delivery mechanism and also

make sure the efficiency and impact of adopted mechanism on other

components of service quality.

Researchers of service quality and satisfaction explored that within the area

of satisfaction, one can classify satisfaction in the categories like service-

encounter satisfaction and overall satisfaction. Before exploring further the

satisfaction through restaurant service quality, we must understand the

difference between them.

Olsen and Johnson (2003) defined Service-encounter or transaction-specific

satisfaction as customer’s evaluation of his or her experience and reaction to

a particular transaction or service encounter. They show that equity plays a

very different role in affecting customer loyalty as one move from

transaction-specific to cumulative evaluations. Whereas equity is an

important driver of transaction-specific satisfaction, equity is more of a post

satisfaction evaluation when modeling cumulative satisfaction. They also

explained the cumulative evaluations towards explaining service loyalty and

providing a balanced view of loyalty drivers in their study.

Parasuraman, Zeithaml and Berry (1994) in their study on reassessment of

expectations suggest that the customer satisfaction involves two levels:

90 | P a g e

transaction- specific satisfaction (TS) and overall satisfaction (OS). Their

study was a serious concern about the gap between customer’s expectations

& perception and about SERVQUAL, a scale to measure service quality.

They conclude that to operationalise the service quality, the gap between

consumers expectations-minus-perception should be considered serious as it

may affect consumer satisfaction.

Bitner and Hubbert (1994) defined transaction specific satisfaction as the

customer’s satisfaction or dissatisfaction with a discrete service encounter.

These individuals’ moments of truth for customers can be aggregated over

time, allowing them to develop an overall picture. When customers spent

substantial time in restaurant premises, they encounter many service

components repeatedly. Every time when customers encounter with service

components, they get the opportunity to re-evaluate it and make a perception

about it. However, single negative transaction specific satisfaction doesn’t

mean that the overall satisfaction will also be negative, but if on every

transaction a consumer finds the transactional satisfaction negative with a

particular component, the overall customer satisfaction may affect.

Johnson, Anderson and Fornell (1995) defined the overall satisfaction as the

customer’s overall evaluation of a product or service provider. Here overall

evaluation means the sum of the evaluation of all transaction specification

satisfaction of different service satisfaction. It can be understood with the

help of an example, suppose a customer visit the restaurant’s wash room and

he finds it unhygienic and filthy, though rest of his experience in this visit

91 | P a g e

was satisfactory, he may not mind the unclean washroom as an issue in his

overall satisfaction at this restaurant. But on his next visit, if he finds the

same picture again, the overall satisfaction will be declined or become

negative.

Bitner and Hubbert (1994) further said that overall satisfaction is based on a

consumers’ overall satisfaction or dissatisfaction as a result of their

encounters with a particular organization. Jones and Suh (2000) concluded

this satisfaction as relatively stable and average. In the above cited example,

if a customer visits the same restaurant frequently and his previous

transaction specific satisfaction is positive then one transaction will not

affect his overall satisfaction much. Thus, the overall satisfaction is a sum of

all previous transaction specific satisfaction being updated after each

encounter. And therefore, the possibility of him revisiting the restaurant will

become high. Patterson, Johnson and Sperng (1997) said that the overall

satisfaction is the strong predictor of behavioural intentions to revisit, which

makes the investigation of customer satisfaction important of service quality

managers.

While describing a dynamic process model of service quality, Boulding,

Kalra, Staelin and Zeithamal (1993) have tried to trace the approach by

which customers form and update their perceptions of service quality and

explicate the relationship between expectations, perceptions and intended

behaviours. This study (Boulding, Kalra, Staelin and Zeithamal, 1993)

provides an empirical support on how firms can best increase customer’s

92 | P a g e

perceptions of their overall service quality. With the help of empirical

support, the study of (Boulding, Kalra, Staelin and Zeithamal, 1993)

elaborated the difference between expectations and perceptions and

suggested managerial implication on various types of expectations.

Hsieh and Yuan (2009) explored customer expectations, which, according to

them, is the kernel that would apparently influence other customer related

issues like customer satisfaction, customer relationship management and

customer loyalty. Service experience may be created by impressive and

efficient operational processes. Actually, the customers experience and

enjoy services through operational processes in practice. Hotel and

restaurant service is one of the finest examples of the service where

customer involvement becomes necessary in service delivery process.

Service operation design attempts to create a good service environment and

a pleasant atmosphere for customers. Building good service operations can

increase the successful opportunity of managing customer expectations

(Hsieh and Yuan, 2009).

93 | P a g e

4.4. Servicescape vis.-a-vis. restaurant image, loyalty and

brand equity

In an Upscale and Midscale restaurant, consumer loyalty and restaurant

image are the determinant factors for consumer retention. Consumer’s

loyalty with the restaurant is related to the level of consumer satisfaction.

And satisfaction is the outcome of service quality. In a highly competitive

restaurant sector, satisfaction does not guarantee the revisit of the consumer

again. Consumers are seeking more than the satisfaction. It is a challenge

against the restaurants’ management to retain its consumer or to make them

loyal. Kandampully and Suhartanto (2000) in their study on the role of

consumer satisfaction and hotel image in building loyalty hypothesized that

the hotel image is positively related to customer loyalty. They stated that the

consumer satisfaction is not the guarantee of his or her revisit. Therefore, the

restaurateurs should think beyond satisfaction. Creating restaurant image and

building loyalty is not a cake walk. Even for building loyalty, customer

satisfaction is a necessary precondition (Reichheld, 1993) and (Churchill and

Surprenant, 1982). In the current study, researcher tried to explore the

relationship between Servicescape and loyalty. Whether Servicescape helps

in enhancing the loyalty or not? is examined in the study. Satisfaction can be

achieved by improving the dining experience, and dining experience can be

improved through Servicescape.

Reichheld (1993) and Churchill and Surprenant (1982) in their study

highlighted the importance of customer loyalty, which they consider a key

94 | P a g e

driver of profitable growth and performance. Hotel and restaurant industry in

India is witnessing a multifaceted competition. Entry of foreign restaurant

chains in India and increase in consumer demands change the competitive

landscape of the entire industry. Consumer Loyalty may solve this problem

to some extent. Another challenge against the restaurant industry is

managing profit.

Reichheld and Sasser’s (1990) in their study said that a profit increase of 25-

28 percent can be produced by 5 percent increase in customer loyalty

(Reichheld & Sasser, 1990 cited in Kandampully &Suhartanto, 2003, p. 4).

Therefore, the management starts focusing on consumer loyalty. To build

the consumer loyalty, restaurants must maintain consistency in their

services. Consistency in services includes the quality food and superior

service experience every time when customer visits the restaurant.

Nam, Ekinci and Whyatt (2011) in a study of consumer satisfaction on the

relationship between consumer-based brand equity and brand loyalty,

explored the effect of consumer satisfaction on brand loyalty. They further

studied that the consumer satisfaction with brand experience has a positive

effect on brand loyalty. Consumer’ satisfaction in a restaurant or hotel is

dependent on both functional and symbolic benefits. In this study, researcher

is focusing on the functional part of restaurant service. Washburn and Plank,

(2002) and Na, Marshall and Keller (1999) in their study used satisfaction as

a measure of brand equity. Therefore, it is clear that consumer satisfaction

and brand equity has a relationship. In the current study, researcher is

95 | P a g e

measuring the effectiveness of Servicescape on consumer satisfaction and

also the outcome of the satisfaction in Upscale and Midscale restaurants.

Since researcher is measuring satisfaction through Servicescape or the

physical environment, the brand equity and brand image are also measured

on the same decisive factor.

Nam, Ekinci and Whyatt (2011) took the attractiveness of décor as the

functional benefits which enhance consumer satisfaction in the hospitality

industry. While studying the U.K restaurant sector, Harris and Ezeh (2008)

enlighten the role of Servicescape in the determination of customers’ loyalty

intentions and suggested the practical efficacy of Servicescape through

which restaurant management can improve tangible and social aspects of

Servicescape. Music, aroma, cleanliness, aesthetic appeal, comfort of

furnishing, staff-customer orientation, staff credibility, staff competence,

staff physical attractiveness and few moderating factors strengthened the

relationship between Servicescape and loyalty intentions (Harris & Ezeh,

2008). Almost a similar study was conducted by Wakefield and Blodgett

(1996) in context of leisure service setting. They emphasized on the effect of

Servicescape on customer’s behavioural intentions. In their model, they took

layout accessibility, facility aesthetics, seating comfort, electronic

equipment/ displays and facility cleanliness as environmental dimensions

which are same as in the restaurant service setting. On these dimensions,

customer perceived the quality of Servicescape (holistic environment) which

results in the internal response (Satisfaction with Servicescape) that leads to

96 | P a g e

their behavioural intentions (Wakefield and Blodgett, The effect of the

Servicescape on customers’ behavioral intentions in leisure service settings,

1996).

Satisfaction is the most important aspect in building restaurants’ brand

equity or in creating an image. Generally, restaurant service is measured on

the parameters such as quality food, quality service and restaurants’

servicescape. In this study, researcher’s main focus is on creating brand

equity and image through servicescape. In the past, various studies has been

conducted on service quality based brand equity. This study is another

milestone in that path. Xu and Chan (2010) in a study on how the hotel

brand equity is developed and how the service performance affects service

quality perception of hotel customers, described that the hotel customer gain

brand knowledge and information through direct and indirect experiences.

Direct experience is what they gain while visiting the restaurant themselves

and indirect experience is what they gain from the experience of others or

through WoM (Word of mouth publicity).

In the last decade, commercial firms including banks, retail stores and

hospitals realized the importance of brand image and brand loyalty and

therefore they have changed their way of delivering services. Companies

which have service as their core business (banking), is now-a-days

redesigning and redefining their business strategy. Consumer is no longer

interested in the traditional way of banking or retailing. One who realizes

this on time will survive and the rest should be ready to shutdown the

97 | P a g e

operation. Besides the core service, what else one can add to make service

industry attractive? Answer to this question is enough to make the difference

and to increase customer loyalty. Time has changed. Consumers are more

demanding now and their expectations are also increasing. Therefore, the

management practices should also be changed according to the change in

consumer demand and expectations. For that purpose, firms are developing

and focusing on customer based brand equity model (Keller, 1993). Through

this model Keller (1993) explained how to build a powerful brand. While

describing the model, Keller (1993) suggests that understanding you and

your consumers is the first step in developing a strong brand. He said that

the firms should ensure that it stands out so that customer can recognize it

easily. Communicating the meaning of the brand to customers and what it

stands for, is another step in building customer based brand equity. Two

building blocks which they discussed in step two are: 'Performance' and

'Imagery.'

'Performance' defines how well the product meets customers' needs.

According to the model, performance consists of five categories: primary

characteristics and features; product reliability, durability and serviceability;

service effectiveness, efficiency and empathy; style and design and price. In

step three of his model, he explained “Brand Response – What Do I Think,

or Feel, About You?” He said that customers' responses to the brand fall into

two categories: 'judgments' and 'feelings.' Customers constantly make

judgments about the brand and these falls into four key categories:

98 | P a g e

Quality: Customers judge a product or brand based on its actual and

perceived quality.

Credibility: Customers judge credibility using three dimensions – expertise

(which includes innovation), trustworthiness and likability.

Consideration: Customers judge how relevant the product is to their unique

needs.

Superiority: Customers assess how superior the brand is, as compared to its

competitor.

Fig. 4.2

Customer based brand equity model

Customers also respond to brand according to how it makes them feel. Brand

can evoke feelings directly but they also respond emotionally to how a brand

99 | P a g e

makes them feel about themselves. According to the model, there are six

positive brand feelings: warmth, fun, excitement, security, social approval

and self-respect.

At last Keller (1993) put brand resonance in the pyramid which means “How

much of a connection would I like to have with you?”

Brand 'resonance' sits at the top of the brand equity pyramid because it is the

most difficult – and the most desirable – level to reach. One has to achieve

brand resonance when customers feel a deep, psychological bond with the

brand.

Keller breaks resonance down into four categories:

1. Behavioural loyalty: This includes regular, repeat purchases.

2. Attitudinal attachment: Customers love the brand or product and

they see it as a special purchase.

3. Sense of community: Customers feel a sense of community with

people associated with the brand including other customers and

company representatives.

4. Active engagement: This is the strongest example of brand loyalty.

Customers are actively engaged with the brand even when they are

not purchasing it or consuming it. This could include joining a club

related to the brand; participating in online chats, marketing rallies or

100 | P a g e

events; following your brand on social media or taking part in other

outside activities. Now a day, sharing dining out status on social

media with the name and location of the restaurant is the example of

active engagement.

Kayaman and Arasli (2007) tested the Keller’s model in hotel industry. In

their research, they support the three‐dimensional model of customer‐based

brand equity in hotel industry. However, brand awareness dimension was

not found significant in the tested model for hotels, although their study

contributes to the understanding of customer‐based brand equity

measurement by examining the dimensionality of this construct. They

concluded that the hotel managers and executives should try to influence;

perceived quality, brand loyalty, brand image and brand awareness in their

organisations and design their service delivery process by considering

relations between customer based brand equity components. Brand equity

and brand image are almost same sort of subject area but understanding both

the subjects separately is important for this study. How the Servicescape

elements help in creating the image of the restaurant is another objective of

the study. Therefore, the researcher explored previous research just to

support the objective of the research.

In a study on “Corporate image in the leisure services sector”, Joanna

Minkiewicz et al. argue that experiential elements of the service offer are

most likely to contribute to customer satisfaction. They study empirically

two key elements of the service offer: (1). Employees and (2). Servicescape

101 | P a g e

They see Servicescape and employees as vehicles through which corporate

image is translated and which can provide a key explanation for the

relationship between corporate image and customer satisfaction. They

further examined that the direct relationship between corporate image and

customer satisfaction strengthens the need for leisure service operators to

priorities the development of a clear, strong corporate image in customer’s

mind. They mentioned that building the corporate image is a costly affair but

it has a long term strategic benefit. According to Han and Ryu (2009),

customer loyalty depends largely on customer satisfaction. This idea is also

shared by Fornell et al. (1996), Ladhari et al. (2008) and McDougall and

Levesque (2000).

From the restaurant service provider’s point of view, the physical

environment and reasonable price are two essential elements that determine

the level of customer satisfaction and besides food, these two things help in

developing restaurant image and enhancing consumer brand loyalty (Bolton

& Lemon, 1999; Nguyen and Leblanc, 2002; Reimer and Kuehn, 2005; Ryu

and Jang, 2007; Varki and Colgate, 2001). Therefore, to develop

restaurant’s brand equity and image, importance of Servicescape cannot be

ignored.

102 | P a g e

4.5. Servicescape as a competitive tool

“When all the marketing tools become less important, it is the environment

that matters”

In today’s cutthroat competitive business environment, competing on a

single dimension of service offering is not a wise decision. The market is

changing and so are the business practices. Consumer’s buying habits,

consumption pattern and occasions, all are transforming rapidly in restaurant

industry. In the last decade, India has witnessed a number of foreign food

chains entering in Indian food retailing. Almost all major food retail chains

and restaurants have their existence in Indian market. Besides the core

product i.e. food, what else can be a differentiating factor for the restaurant,

is a big question for marketers and entrepreneurs.

Sheng, Lin and Liang (2011) concluded that Service environment itself

becomes a fertile opportunity for market differentiation. Service

environment or Servicescape may enhance the quality of service. This

intangible element of restaurant service, directly or indirectly, affect the

overall service quality. People go to restaurants not only for food but for

experience too and therefore it is called a dining experience. Dining

experience depends on the dining quality and dining quality consists of not

only the quality of food but it also includes the dining environment or

Servicescape.

103 | P a g e

Consumers strongly get influenced with the environment when they dine

out. When people consume food outside the premise of their home or any

location out of their routine place, the environment of the new place

influence them. The first and important element which affects the overall

perception of the dining experience is the environment of the new place

where the food is being served or consumed. The success of a restaurant,

either a theme restaurant, quick service restaurant, Dhaba, or a multi cuisine

mid/ Upscale restaurant, primarily depends upon its environment because

food comes after the customers rendezvous with the environment. One

cannot ignore the quality and variety of food but the expectations of target

consumers may also be fulfilled by the environment of the entity maintain at

the time of dining.

Kotler (1973) in his study on atmospherics emphasized the importance of

aesthetic factor of product and suggested that for many businesses,

atmospherics may work as a successful marketing tool. He considered

atmosphere as a “silent language”. In the context of restaurant business, he

termed restaurant atmosphere in the categories of “good” atmosphere,

“busy” atmosphere or “depressing” atmosphere. Kotler (1973), atmosphere

is always present as a quality of surrounding space and this surrounding is

very important in restaurant service.

Lovelock and Wirtz (2007, pp. 288-289) states that physical environment

communicate and decide the positioning of the service provider, influence

the employee and consumer productivity, act as an aid for consumer through

104 | P a g e

the delivery system and can function as a tool for competitive advantage.

Barista (A coffee retail chain) has a distinguish color and design of its coffee

outlets which makes it different from others and also communicate a clear

message about the brand and its offering.

Literature available on Servicescape, physical environment, ambiance and

atmospherics concluded that the environment, directly or indirectly,

influences consumer satisfaction. Raza, Siddiquei, Awan and Bukhari (2012)

in their study on hotel industry stated that customer satisfaction is one

important tool to capture competitive advantage. They have taken product/

service quality and perceived value (customer value) which affect customer

satisfaction. Satisfaction and servicescape are closely co-related and has

been examined by the researcher in various context. However, very less

study has covered the relationship between servicescape as a competitive

tool. In a study conducted by Heidea, Lærdala and Grønhaug (2007) on the

ambiance setting in hotel, highlighting the importance of various ambience-

enhancing factors (antecedents) and the benefits and risks associated with

investing in ambience (consequences).

Heidea, Lærdala and Grønhaug (2007) have explored the expectations of

managers and outside experts, e.g. designers and architects who are involved

in ambiance setting of the hotels. They also tried to gain the deeper insights

of management and designer about the role and importance of ambiance. In

their research Heidea, Lærdala and Grønhaug (2007) stated that the

architects and designers perceive the ambiance as a competitive advantage.

105 | P a g e

The study on environment management as a tool for facilities management.

Penny (2007) clearly stated that the environemental performance contributes

in enhancing the effectiveness and competitiveness of the hotel. However

the main theme of the study was the green environment and and its

implementaion. Penny (2007) explored that due to low customer demand,

poor environmental knowledge and the lack of governmental regulations,

enforcing environmental practices are the reasons obstructing hoteliers in

Macao from practicing green. He concluded that another hurdle is that the

hotel managers do not recognize the importance of environmental

management to hotel effectiveness and competitiveness. Hotel management

is either interested in improving the area where direct financial reward exists

or where there is a financial or legislative requirement exist.

Highlighting the importance of design (Ransley and Ingram, 2001) have

concluded that a well designed hotel can be a source of profitable operation.

While exploring the design (Ransley and Ingram, 2001) have discussed the

space utilization (missing something) the design efficiency factor which

includes tables, drawings and plans that demonstrate how these techniques

can work in practice. In their study they concluded that the design is now

being used as a competitive tool. Also there is a contradictory study

conducted in the Indian retail context by (Rajaguru, Matanda and Uni, 2006)

concluded that store appearance may not be used as a competitive tool in

supermarket. The study of Rajaguru, Matanda and Uni (2006) is in retail

context and it was conducted in 2006 when Indian consumers were not

106 | P a g e

aware about the organized retailing practices but in the context of

restaurants, the results may vary for atmoshpherics as a competitive tool.

Restaurant and retail, both are the product dominating service industry

where service enhances the quality of product consumed or shopped. One of

the important element which makes a difference between restaurant and

retail is the time cosnumer spend in the physical environement which

facilitates these services. Restaurant environement makes restaurant service

complete and it directly affect consumers service experience which decides

their satisfaction level. On the other hand, in retail environment the music,

display of merchandise, lighting, spacing and flooring are the prominent

elements of atmospherics which are very much new for a traditional Indian

consumer to judge.

Design is the integral part of the physical environment or servicescape and

study revealed the fact that design is a significat competitive tool (Doyle and

Broadbridge, 1999). Design influence consumer perception and satisfaction

and create an image in the mind of consumer for future reference

107 | P a g e

4.6. Servicescape vis-à-vis consumers’ willingness to pay

premium

In a highly competitive hospitality industry, managing profit is a challenge

for restaurateur. Competition and opportunity are equally increasing in

restaurant and hospitality industry. To be in the mainstream business, the

service offering should be of high standard and also superior from its

competitors. But all this increases the cost of the service. Customers will not

be ready to pay extra if they do not get the additional value against what they

are paying extra. In Indian restaurant industry, customers consider

Servicescape elements as an additional but inherent offering for which they

wouldn’t pay willingly. To manage the cost-price imbalance due to

Servicescape, restaurateur must price the service strategically.

Customers visiting an Upscale and Midscale Indian restaurant belong to a

top and middle class of the socio economic pyramid. Due to the economic

boom in the country, people of these classes are blessed with high disposable

income and are spending more on food and hospitality. Use of plastic

money, easy availability of credit cards and opening of international chains

has contributed significantly to the sudden change in the life style of Indian

people. Dining out has become a trend as well as the part of routine life

style.

Why customer pay premium for restaurant service? The answer of this

question can be understood by the concept of customer value and perceived

benefits. Kanuk, Kumar, Schiffman and Wisenblit (2010) defined the

108 | P a g e

Customer value as the ratio between the customers’ perceived benefits

(economic, functional and psychological) and the resources (monetary, time,

effort, psychological) used to obtain those benefits. They took the example

of restaurant service and said that the perceived value is relative and

subjective. Customers pay premium for Upscale and Midscale restaurants

because of restaurant’s credibility, to maintain their social status and class

and for a unique dining experience. The dining experience which the

customers get at these restaurants is the actual derived value for which they

pay premium. What are the additional elements of restaurant service (except

food), for which consumers show their willingness to pay premium, are

some of the questions answered by Drucker, 2009 (Originally published

in1993) in his article “The Five Deadly Business Sins.” Drucker (2009)

defined premium pricing as “offering more features and then charging more

to increase profit margins”.

In restaurant service, food is the common element (tangible part of the

service) and it has enormous scope of differentiating restaurant service. Food

quality and variety are the prominent factors of differentiation in food items.

But as the economic and social values are changing, consumer’s

expectations from restaurant services are high. Consumers go to restaurant

not for food only but for gaining a different experience. The difference can

be in terms of food or the environment. In this section of the study, the

concept of premium pricing, dimension of premium pricing, customer

willingness to pay premium are explained.

109 | P a g e

4.6.1. Stapling a premium price tag menu

The food quality, taste and varieties in food are some of the basis of

differentiation. Customers accept variation in taste and quality if it suits

them. Besides food, Servicescape is another important part of restaurant

service which creates differentiation among restaurant of same segment.

Increasing food item’s price beyond a limit is not justified in normal

business circumstances. By enhancing the restaurant environment,

restaurateur is just enhancing customer experience so that they can charge

premium for the experience if not for food. Restaurateur environment is the

element (intangible part) which has a scope of customization as well as of

differentiation. A high level of consumer satisfaction in Upscale and

Midscale restaurant largely depends on the physical environment of the

restaurant. Homburg, Koschate, and Hoyer (2005) in their study stated that

companies could potentially charge a premium price for their product or

service if they have a high level of customer satisfaction. Fortunately the

study of Homburg et.al (2005) was on restaurant and they have taken three

attributes- quality of food, ambience and service of restaurant for measuring

satisfaction. The dimensions for ambience were the interior designs,

loudness and temperature. However they haven’t took more dimension of

ambience or Servicescape but the results of their study was positive and it

has been proven that in restaurant services customer satisfaction has a

positive relationship with willingness to pay (WTP). In restaurant services,

prices vary depending on the quality of restaurant service and the level of the

110 | P a g e

satisfaction which majority of the customer finds in a particular restaurant.

Servicescape enhances the quality of restaurant service but it also increases

the cost of delivering the services. Homburg, Koschate and Hoyer (2005)

suggested that companies can charge higher prices in marketing of

customized products or professional service. Restaurant doesn’t come in the

category of professional service but by customizing the environment and

offering (like customization in music, special seating arrangement) of

restaurant service, it may be a customized service for which customer may

pay premium.

4.6.2. Relationship between premium price, brand equity and

brand image

Premium pricing has been considered the important measure of brand equity

(Aaker, 1996; Sethuraman, 2001; Blackston, 1995), each dimension of brand

equity has an impact on the price that the consumers are willing to pay for

the brand, if any dimension has no impact on the price premium then it will

not have any relevance of brand equity indicator. Brand equity dimensions

(loyalty, purchase intention and satisfaction) have been explored by

researchers. Some have explored it individually while others have studied it

by summarizing the strength in each dimension to an average brand equity

measure.

Price premium is defined as the sum which the consumers are willing to pay

for a brand, compared to other relevant brands and can be either negative or

111 | P a g e

positive (Aaker, 1996). Since there are no sufficient evidences available that

the premium price is fully correlated with actual consumer prices, therefore,

actual consumer prices are not a right satisfactory measure of brand equity.

An empirical study of Ailawadi et al. (2003) confirms that price premium is

an excellent global measure as it is relatively stable over time but yet

captures variations in the brand’s health, and in addition correlates with

other global measures of brand equity. In another study by Agarwal and Rao

(1996) brand equity confirmed that price premium was the measure that best

could explain choice of brand at individual level as well as aggregated

market shares.

In an Upscale and Midscale restaurant industry, comparing two restaurants

in terms of brand equity is still not the best way to measure customer

willingness to pay premium. Two different Upscale restaurants may have

different brand equity but every time it is not the guarantee that customers

are paying premium for their brand value or brand equity. IRCTC’s

restaurant chain “Comesum” has its presence at the stations of cities like

Delhi and Lucknow. Obviously, these restaurants don’t provide the luxury

services than what their counterparts, outside the stations in Delhi and

Lucknow, are offering. But customer is still paying a premium price for the

services of these restaurants because of their distinct location and non

existence of relevant competitors.

Chernatony and McDonald, (2003) prominently supported that brand equity

is a relative measure that needs to be compared to relevant competitors.

112 | P a g e

Comparison within the category of restaurant and within the Upscale and

Midscale class of restaurants will be constructive and rationale for the

purpose of the study and also for measuring consumer’s willingness to pay

premium.

Lassar, Mittal and Sharma (1995) confirmed that comparing brands of

different product category or from different product class or brands which

are targeting a different segment of consumer is not justified. Therefore,

researcher has tried his best in selecting the sample for the study. A general

discussion regarding the exposure of Midscale and Upscale restaurants is

done before giving the questionnaire to each respondent.

113 | P a g e

4.7. Servicescape vis.-a-vis. satisfaction and behavioural

outcomes

Restaurateurs always try to maintain consumer satisfaction level positive,

not because of instant profit but also for long run profit which depends upon

the behavioural outcome of satisfaction. Study concluded that the consumer

satisfaction leads to an attitudinal and behavioral change in consumer which

means the decision to revisit or to recommend the restaurant to others will

largely depend upon the behavioural and attitudinal outcome. Servicescape

affect the cognitive and emotional part of consumer mind which is

responsible for satisfaction and behavioural changes. Behavioural outcomes

may be in the form of consumers’ revisit intention or word of mouth

communication. In this study these two behavioral outcomes are measured

against Servicescape.

Attracting new customers is easy than retaining them for repurchase or

revisit. People visit the restaurants more often with friends, family or office

colleagues. But when a customer visits any restaurant for the first time,

he/she do not have any prior opinion about the restaurant services. He/she

either visit restaurant randomly or come on the recommendations of those

who have a positive opinion about the restaurant. People who recommend or

advise about a restaurant are the loyal customers who regularly visit the

restaurants or those who experienced the restaurant services prior and have a

positive feedback about the service. Therefore, these customers start WoM

(word of mouth) publicity for the restaurants. But, for the first time

114 | P a g e

restaurant customer, satisfaction is the decisive factor for the next visit or for

the recommending it to others. Visiting a restaurant once is not a guarantee

that the customer will revisit again but the chances can be increased by

offering superior customer value on every time and on every visit.

The level of satisfaction in each visit should be either constant or

progressive in nature to increase the number of visits or the revisit

intentions. It is obvious that the revisit intention of a satisfied customer will

be high than a dissatisfied customer. Kivela, Inbakaran and Reece (1999)

designed the model of dining satisfaction and they took atmoshphere as a

restaurant attribute and answered the question, Does satisfaction with

restaurant attributes increases the probability of return?An individual or a

group of customers will always prefer the restaurant which gives them

satisfaction. But the attributes of satisfaction may vary from individual to

individual. For some people food, service quality, ambience, convenient

location of the restaurant may be the important attributes for satisfaction

while for some other food quality, parking and price may be the important

attributes to measure satisfaction. However in an Upscale and Midscale

restaurant, food and servicescape are the important attributes of customer

satisfaction.

Assael (p. 47; 1987) described the impact of satisfaction and dissatisfaction

on next visit or on next purchase possibility. According to Assael,

satisfaction strengthen the positive feelings towards the brand, leads the

chances that the same brand will be purchased again while dissatisfaction

115 | P a g e

leads to negative feelings towards the brand and reduce the chances of

buying the same brand again

Berkman and Gilson, (1986) explained the concept of word of mouth

communication and discuss how it builds up. They said that many a time, a

new customer visits a new service provider through word of mouth (WoM)

recommendations and the chances of repeat purchase and revisit also

depends on the experience of last visit or last purchase.

Pizam and Ellis (1999) said that Customer satisfaction is essential for

corporate survival but how should it be maintained is a tough job for

managers and enterprenuars. In restaurant service industry, maintaining

service in long run becomes more challenging. When the popularity of the

restaurant and the customer footfall increases, the only thing which gets

sacrificed is the service quality. On finding the service quality lower than

their expectations; the regular customer will think twice before visiting the

same restaurant again.

Nauman and Giel (1995) and several other studies have found that it costs

about five times as much in time, money and resource to attract a new

customer as it does to retain an existing customer. To be a successful

restaurateur, one must maintain his service standard every time customer

visits the restaurant. Service standard means the overall experience from the

entry in the restaurant premises till the exit from the restaurant should be

uniform in nature and of Upscale and Midscale level.

116 | P a g e

4.8. Consumer satisfaction and service quality gap

Parasuraman, Zeithaml and Berry (1985) proposed a model on service

quality and gap which was based on exploratory studies of services such as

executive interviews and focus groups. This model of service quality

indicates that consumers’ perception towards a service quality depends on

the four gaps existing in organisation – consumer environments. In the

current study, researcher is measuring the effect of Servicescape which is

also a part of service quality. Therefore, to understand different gaps in the

restaurant service quality and whether Servicescape is able to fill those gaps

or not, understanding of gaps model is important.

4.8.1. Theory of the gaps model

According to the gaps model, perceived service quality can be defined as the

difference between consumers’ expectations and perceptions which

eventually depends on the size and the direction of the four gaps concerning

the delivery of service quality on the company’s side (restaurant in the case

of current study).

Customer Gap = f (Gap 1, Gap 2, Gap 3, Gap 4)

The magnitude and the direction of each gap will affect the service quality.

For instance, Gap 3 will be favourable if the total time taken in delivering

the food to the consumer decreases from its standard time and will be

unfavourable if this time exceeds from the prescribed time. Consumer feels

117 | P a g e

happy if they find their dinner before the expected delivery time and get

irritated if the delivery time exceeds from the standard time.

The gaps models can be explained as follows:

Customer gap: The difference between customer expectations and

perceptions- the service quality gap.

Gap 1: The difference between what customers expected and what

management perceived about the expectation of customers.

Gap 2: The difference between management’s perceptions of customer

expectations and the translation of those perceptions into service quality

specifications and designs.

Gap 3: The difference between specifications or standards of service

quality and the actual service delivered to customers.

Gap 4: The difference between the services delivered to customers and

the promise of the firm to customers about its service quality

118 | P a g e

Fig. 4.3

The Integrated Gaps Model of Service Quality

(Parasuraman, Zeithaml, Berry 1985)

119 | P a g e

4.8.2. Servicescape and gaps model

Gaps model establishes the two different types of gaps in service marketing,

namely the customer gap and the provider gap. Service providers’ gap is

considered as internal gap within a service firm. Servicescape helps in

closing the customer gap at some extent which means the gap between

customer expectation and perceptions. In the fine dining Upscale and

Midscale restaurant industry, consumer expectation is naturally high in

terms of ambiance, layout, employee’s appearance and cleanliness etc.

Servicescape constitutes all the elements which enhance the overall dining

experience. Ten determinants of service quality discussed in the gaps model

are access, communication, competence, courtesy, credibility, reliability,

responsiveness, securities, tangibles and understanding or knowing the

customer. These determinants can be served well, if an appropriate

Servicescape model is designed for the restaurant service.

120 | P a g e

4.9. Chapter summary

This chapter was intended towards the application of Servicescape in

Upscale and Midscale restaurants. The chapter starts with an introduction of

application and usage of Servicescape elements and covers all the important

aspects of Servicescape. This chapter explores the previous research on

different dimensions of Servicescape and explained each objective of the

research in brief. What are the various outcomes of Servicescape including

consumer satisfaction is discussed in detail. How consumer satisfaction

helps in creating brand equity and brand image, is discussed in the middle of

the chapter. Why a consumer pay premium for the service and how

consumer satisfaction affects behavioral intentions and enhances the chances

of repurchase or revisit is also discussed in detail. Whether Servicescape

work as a competitive tool for Upscale and Midscale restaurants and is it

helpful in bridging the customer gap of the gaps model are discussed at the

end of this chapter. This chapter is also the part of literature review and

explains each aspect of the research in detail.