1. OPSM 405 Service Management Class 11: Service Experiences Koç University Zeynep Aksin zaksin@ku.edu.tr

2. Chapters covered from the book  Introduction  Strategic positioning  New Service Development (focused on tools: blueprinting, conjoint analysis)  Managing Service Experiences: Starbucks  Service Quality (tools: Poke Yoke, service guarantees)

3. From lecture notes  Value proposition, focus strategy, strategic service vision, service profit chain: Shouldice, Southwest  Service encounters: Zipcar  Service guarantees  Customer relationship management: Starbucks

4. Economic Progression (Pine & Gilmore, 1999)

5. Example: coffee  Coffee beans are a commodity (3-4 cents a cup)  Manufacturers grind and package it to transform coffee into a good (25 cents a cup)  Brew and serve coffee in a café and it becomes a service ($1 a cup)  Serve it in an ambience like at Starbucks and it becomes an experience ($2-$5 a cup)  At Fouquet’s on Champs-Elysee in Paris ($15- $20)

6. Pine and Gilmore (WSJ, 1997)  “Goods are tangible and services intangible. But both are decidedly uneventful, while experiences are memorable”  “Goods are inventoried and services delivered on demand, while experiences unfold over a period of time”  “Goods are standardized and service customized (created in response to individual demand). But both remain at arms length: outside the customer. Experiences on the other hand are inherently personal.”

7. Examples from the world  The American Girl Place: toymaker’s “park” where girls can have tea, dine, have their doll’s hair made, have their photos taken and put on magazine cover, watch a theater, etc.  Heineken-become a beer bottle in the factory and drink some too  Legoland  Starbucks  Paris Miki-computer system for selecting eyeglasses  Parking lot in Chicago airport: theme and signature song  Hippo-Citroen: car gallery-restaurant

8. Examples from Turkey  Turkish coffee and fortune telling  Nike- in store basketball tournament  Maras ice cream: food and show  Ara café, Dulcinea: gallery and café  Ciya: restaurant and exploration  Miniaturk (see detailed analysis at the end)

9. Relational Model of Managed Customer Service Process Service Provider Customer Context Engagement Time Outcome Memory Loyalty

10. Engagement  Personal level –Active: customers affect the performance or event (skiing, Popstar on TV) –Passive: customers do not influence the performance (Regular shows on TV, lecture in large auditorium)  Environment –Immersion: customer “goes into” the experience (Mist computer game or some children’s theatre, reality shows) –Absorption: Experience “goes into” the customer (watching TV)

11. Realms of Experience Sweet Spot Immersion Passive Participation Absorption Active Participation Picasso exhibit Laboratory Chat rooms Theater

12. Context  Where customers consume the service and everything they interact with in that setting. Starbucks “contemporary bohemian” context Fransiz sokagi “french lifestyle” context Anadolu mutfagi “anatolian village” context  Relational elements  Physical elements

13. Relational Context  Theme: unifying story or metaphor  Learnable and Usable  Mutable: flexibility for customers to create their own use environment or personal experience Shopertainement example: Metro City themes

14. Theme Generation  Joie de Vivre: 18 themed Boutique Hotels in Bay Area  Method: Take a magazine and generate 5 adjectives to describe it and the people that would read it. Design hotel experience around those words.  Example: Hotel Rex = New Yorker –Worldly, sophisticated, literate, artistic, & clever –Designed like an arts and literary salon of 1930s. Clubby lobby with period furnishings, paintings, and old books. Rooms have local artists paintings and contemporary amenities.

15. Theme: Rolling Stone  Funky, hip, young-at-heart, irreverent, and adventurous  The Phoenix Hotel has been popular with the entertainment industry for over a decade. This funky, urban retreat is an unexpected oasis, featuring a landmark pool, original 50s architecture, and island-inspired guestrooms. Backflip, the hotel's poolside cocktail lounge, offers music by the City's most progressive DJ's.

16. Theme: Movie Line  Dramatic, nostalgic, fun-loving, classic, and informal  Each light and comfortable guestroom is named for a motion picture shot in San Francisco, with original movie stills as decorative room accents

17. Physical  Layout: Physical layout and arrangement of objects (should encourage active participation) and reinforce theme (Ciya restaurant: you have to look at selection and choose from it)  Sensory: Sensory elements increase immersion and support theme (Medieval music concert at Aya Irini)  Social Interaction: Interaction between guest and service provider and/or fellow guests. Increases identification with service (Club Med, Meyhane Refik)

18. Time  Memorabilia –Is a physical reminder of experience, extends memory of it long after –Generates dialogue about experience –Provides additional revenue  Continuity –Time aspects of experience as it relates to the individual (bonding and moving through stages)  Dynamic –A desirable pattern for experiences revealed over a specific time frame Long or short term vs. intensity A script or music score

19. Example: Ian Schrager’s Hotels  “A theatrical experience”  “The design is just one part of the formula, but it’s the way the whole thing gets put together that touches you in some visceral way”  “You can bring freshness and thinking outside the box to every single industry”  “I think you can have a hotel with originality and creativity and distinction and innovativeness in every city in the world, adjusted for the particular market it is in.”

20. Example: CRUNCH (www.crunch.com)  “hip, irreverent brand and fitness concept”  “CRUNCH is not competitive, it is non-judgemental, it is not elitist, it does not represent a kind of person.”  “exercise could be more than just the same sweaty grind, and fitness could be more than bulging biceps and flat bellies”  “Our teachers were not only experts, but showmen: drag queens, rappers, dancers, actors and professional athletes”

21. Turkish Bath (Cagaloglu Hamami)  Engagement: active and immersion –“washertainement” –Special events like weddings, kina gecesi, Bienal exposition  Context: –Physical: building, appearance of “tellak”s –Theme: historical, traditional Turkish,relaxing –Sensory: Hot, steamy, wet –Social: Interaction with others and “Tellak” s  Time: –Dynamic and continuity: Massage, “kese”, washing, relaxing, coffee, etc. –Can buy souvenirs etc.

22. Example: Miniaturk  Engagement –Esthetic: passive-immersion  Context –“showcase of Turkey” –Theme: Turkish construction –Easy to learn and use: roads, brochures, instructions –Mutability: restaurant, train, playground, etc. –Layout: open air museum –Sensory elements: vehicles on bridge, sound explanations  Time –Memorobilia: brochures, objects etc. –Continuity and dynamic

23. Example: Go Mongo  Engagement: active-immersion  Context –Mongol lifestyle given in a mystic decoration –Theme: Mongolian lifestyle and taste –Easy to learn and use: Waiter directs you through the choosing process –Layout: Restaurant that has an unique ambiance –Sensory: Delicious –Social: Interaction with waiter and also with other customers  Time –Continuity and dynamic: Unique taste, special ambiance, high variety

24. Nargilem @ Tophane  Engagement : passive-immersion –Special events like Digiturk  Context: ( Ottoman Architecture ) –Physical: Ottoman Pictures and Sultan’s Signature –Theme: Historical Times –Layout: Small store –Sensory elements: Old music –Social: Interaction with older people and listening about Ottomans  Time –No Memorabilia –Dynamic and Continuity: Water Pipe

25. Creating the Process of Customer Experience Increase COMMITMENT & LOYALTY Memorabilia ContinuityDynamic TIME CONTEXT RELATIONAL Learnable – Usable – Mutable Social – Interaction Increase Emotion & Cognition PHYSICAL Theme – Layout – Sensory Increase Physical Interaction & Cognition EntertainmentEsthetic EducationalEscapist ABSORBTIONIMMERSION PASSIVE ACTIVE ENGAGEMENT

26. ContextEngagementTime Service Design What is the theme and how does it address market segments? Is the theme reflected in all context with which the customer interacts? Is the service easy to learn and use? How effective are navigational materials and guides for different users? In what ways has flexibility been incorporated into the design? How can different users customize the services to maximize their experience? How does the layout and tools encourage active participation ? How have the five sensory elements been incorporated? Fit theme? How do sensory elements help shift customer’s reality? How can sensory elements create transitional areas? Are there different opportunities for social interaction between employees and guests? Is there a way to get customers actively engaged (physically, emotionally, or intellectually)? How can the customers immerse in the design? How is there a sense that customers have moved to another reality? In what ways can customers emotionally connect with the services? Are there opportunities for play, fun, or enjoyment? Are there opportunities for customers to learn, to create, to increase their depth and breadth of knowledge over time? Is the context esthetically pleasing? What will make guests come in and spend time in your setting (virtual or physical)? How has memorabilia been incorporated? How does the memorabilia match the theme? How can the experience be extended or built upon? How can the experience unfold over time? How many encounters does it take for the customer to bond with the service? If the bond is broken, are there opportunities to repair the link? Are there opportunities for membership clubs, chat rooms, or long term social groups? What is the duration of the encounter? How is the experience orchestrated or designed for building emotional commitment during the given time span? How does the guest see a beginning, middle, and end of the experience in live and virtual environments? Is there an intended narrative and how is that conveyed to customers? Employees Do employee behaviors and costume reflect the theme? How can employees help customers learn the service? Are employees trained to act as guides? Are employees trained to read body language and customer intentions for the service and react accordingly? How are employees trained for interactions with guests? How do employees help to actively engage the customers? How do employees help customer immerse in the experience? How do employees play a role in creating another reality? How do employees help the guests into the experience and participate in getting them to stay? Have employees been trained to help orchestrate the experience? How do employees help deliver the beginning, middle, and end of the experience? How do employees contribute to the intended narrative? Are employees empowered to create a customized experience for each customer?

27. For next class  Read the Starbucks case  Complete your assignement and hand it in at the beginning of class