UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Phan Thi Tuyen THE IMPACT OF SERVICESCAPE ON CUSTOMER BEHAVIORAL INTENTION: A STUDY OF APARTMENT LEASING SERVICE IN HCMC MASTER OF BUSINESS (Honors) Ho Chi Minh City – Year 2016 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Phan Thi Tuyen THE IMPACT OF SERVICESCAPE ON CUSTOMER BEHAVIORAL INTENTION: A STUDY OF APARTMENT LEASING SERVICE IN HCMC ID: 22140062 MASTER OF BUSINESS (Honors) SUPERVISOR: Dr. PHAM NGOC THUY Ho Chi Minh City – Year 2016 TIEU LUAN MOI download : skknchat@gmail.com 1 Acknowledgement I would like to express my deepest gratitude to ISB’s committee members, to my supervisor, Dr. Pham Ngoc Thuy who have been supportive every step of this research. Pham Ngoc Thuy helped me pursue the route and the topics of my interests and made the whole process enjoyable.
She gave me guidance with details when I encountered problems. She gave words of encouragement and showed tremendous understanding when I couldn’t break through. Her knowledge and experience helped me set the course and made it possible for me to continue my research. I also would like to send many thanks to my family who motivate me a lot during research period, to my clients, my friends and colleagues who participated in the interview and survey for this research.
They also gave me useful thoughts and comments on my research. Their contributions make my research possible. TIEU LUAN MOI download : skknchat@gmail.com 2 Abstract This study examines the relationship between every aspect of servicescape, service experience evaluation, and customer behavioral intentions. Based on data derived from 304 customers who have leased apartments in Ho Chi Minh City (HCMC), a link was found between both the substantive and communicative aspects of the servicescape reliably predicted customers’ evaluations.
This research also found that a more favorable service experience evaluation positively related to behavioral intentions. Theoretical contributions of this research are elucidated. Moreover, managerial implications related to servicescape design, promotion strategies and service experience enhancement are discussed. Keywords Servicescape, substantive staging of servicescape, communicative staging of servicescape, customer behavioral intentions, leasing service, service experience evaluation.
TIEU LUAN MOI download : skknchat@gmail.com 3 TABLE OF CONTENTS ACKNOWLEDGEMENT ABSTRACT TABLE OF CONTENTS LIST OF FIGURES LIST OF TABLES 1. Apartment Leasing Service in condominiums. Substantive Staging of Servicescape. Communicative Staging of Servicescape.
Service experience evaluation. Procedure and sampling. Data analysis and results. Confirmatory Factor Analysis (CFA).
Structural equation model (SEM) results. 33 TIEU LUAN MOI download : skknchat@gmail. Limitations and recommendations for future research. Result of pilot research.
40 REFERENCES APPENDIX TIEU LUAN MOI download : skknchat@gmail.com 5 LIST OF FIGURES Figure 1: Conceptual model. 17 Figure 2: CFA result. 27 Figure 3: SEM result. 32 LIST OF TABLES Table 1: Descriptive statistics of sample.
20 Table 2: Measurement scales. 22 Table 3: Comparison between CFA threshold values and CFA results. 26 Table 4: Measurement scale validity and reliability testing result. 29 Table 5: Means, standard deviations, and standardized CFA loadings of items.
29 Table 6: Structural paths in the model. 31 Table 7: Findings of pilot research. 37 Table 8: The respondent’s nationality. 40 Table 9: The name of condominiums.
41 TIEU LUAN MOI download : skknchat@gmail. Introduction Bitner (1992) introduced the concept of "servicescape" as combination of service and landscape that denotes the physical and mental environment in which customer experiences are created. Servicescape is where a service provider provide services to its customers. Servicescape is not only a cue for the expected service quality, but also influences customers' evaluations of other factors determining perceived service quality (Reimer & Kuehn, 2005).
Nilsson and Ballantyne, 2014 stated that a servicescape does not simply impact customer perceptions of service functions and service quality, but more subtly, also impacts on the meanings a customer draws from a lot of intangible, contextual and symbolic elements of a service. Servicescape or atmospherics have the means of providing the evidence that assists consumers in making subjective evaluations of service products (Hoffman & Turley, 2002). Therefore, servicescape has a direct and an indirect effect on perceived service quality, but different from service quality, servicescape has a high overall effect. Servicescape has well developed theory which have been successfully tested in many service contexts such as leisure service setting (Wakefield & Blodgett, 1996), hotel industry (Countryman & Jang, 2006), retail service (Hooper et al, 2013), theme park service (Dong & Siu, 2013), etc.
Moreover, numerous studies have highlighted various aspects of servicescape, such as color and light, background music, as well as odors (Reimer & Kuehn, 2005). In Vietnam, some master theses studied about the effect of servicescape to customer loyalty in restaurants or in coffee shop. However, servicescape of apartment leasing service in condominiums has not been paid adequate attention. TIEU LUAN MOI download : skknchat@gmail.com 7 Leasing service is a common service in condominiums or residential buildings requiring a large amount of capital of investors.
It is not a high risk investment but it can be a high return investment if the investors buy the right properties. In the world, roundly 40% of population lives in rental housing (Malpezzi, as cited in Amenyah & Fletcher, 2013). In Ho Chi Minh City (HCMC), recently, a large number of condominiums came into the market. In 2015, the total supply was approximately 4,370 apartments from 83 projects, increasing 6% year-on-year (YoY).
From 2016 to 2018, more than 67,000 units are expected to enter the market which providing around 2,200 apartments for leasing (Savills, Ho Chi Minh City Market Brief Q1 2016). With a high gross domestic product (GDP) growth rate and being considered as the most dynamic city in Viet Nam, in 2015, Ho Chi Minh City attracted US$3 billion in foreign direct investment (FDI), up 129% (YoY). Increasing FDI inflow has positively affected the demand for leasing apartments. The increasing of supply and demand is a phenomenon creating a dynamic leasing apartment market.
Nevertheless, the rapid increasing in supply of leasing apartment service in the coming years pushes the competition among investors, developers more and more intense. The lessees nowadays have strong bargaining position due to many choices of leasing apartments. Furthermore, the requirements of the lessees to have a stable residence is more and more stringent. They do not only require to have a nice interior decoration, high quality home appliances and furniture, etc.
which are provided inside the apartment, they also require to have a beautiful view, peaceful and clean area, good facilities, fresh air, or how people manage the condominium, how safe and security it is, etc. which are related to the landscape of service or the physical and TIEU LUAN MOI download : skknchat@gmail.com 8 mental environment. Generally, location, surrounding development and scenic beauty are common determinants of the demand for condominium properties (Zarin & Bujang, 1999). The lessees normally prefers leasing apartment in condominiums to other types of property due to the rental, convenience, safety, environment, location, etc.
The lessors who invest for leasing service normally look for long term lease contracts and premium rentals leading to profitable investments. Accordingly, to meet those requirements and encourage lessees to continue using service, the developers as well as lessors need to build their properties with attractive servicescape to have more competitive advantages. Servicescape is considered as future’s form of intense competition in service environment (Ishaq, Bhutta, Hamayun, Danish & Hussain, 1995). Miles, Miles and Cannon (2012) state that servicescape is a part of competitive approach that should be promoted and emphasized.
For those reasons, this paper contributes to the literature on servicescape by examining the impact of Servicescape on behavioral intentions of leasing service in HCMC. To be more specific, this paper is armed to examine: - The relationships between substantive staging and communicative staging of servicescape and service experience evaluation of customers leasing apartments in HCMC - The relationship between customers’ service experience evaluation and their behavioral intention to continue using apartment leasing service TIEU LUAN MOI download : skknchat@gmail. Overview of apartment leasing service in condominiums A condominium is a building or a structure which has two or more stories consisting of parcels, owned and/or used separately by individuals and remaining portion of the property being owned by the owners of individual unit in common (Gajanayake, as cited in Ariyawansa & Udayanthika, 2012). There are low-rise condominium with below five stories, medium-rise condominium with between six- to twelve-stories and high-rise condominium including cluster of buildings over thirteen stories or above (Ngai-ming Yip, Chin-oh & Tzu-ying Hung, 2007).
The servicescape in condominium refers to exterior attributes (such as building exterior, signage, parking, waiting areas, admission office, and landscape), interior attributes (such as design, layout, equipment and decoration), ambient conditions (such as the music and temperature) and the people who work for providing the service (such as administrators, receptionists, security guard, cleaners…). Over the years, researchers focused more on lessees’ satisfaction in specific settings. Some studied property specific characteristics such as high-rise, multifamily, or owner-occupied and others focused on characteristics of neighborhood and environment, e. schools, climate, or transportation (Brouwer, 2015).
Brouwer (2015) also mentioned that the constructs of leasing service is quite different from other services, services in leasing apartment may be better expressed using variables related to maintenance and cleanliness. Servicescape Although the term “servicescape” is probably the most popular term to refer to the influence of tangible and intangible cues on consumers, the other terms TIEU LUAN MOI download : skknchat@gmail.com 10 “atmospherics”, “environmental psychology”, “store environments” and “physical environment” also describe the same concept (Hooper et al, 2013). Significance of servicescape depends on length of time customer spend for service and the purpose of service consumption (hedonic or utilitarian) (Wakefield & Blodgett, 1994). The physical environment may be an important determinant of customer satisfaction and subsequent behavior when services are consumed primarily for hedonic purposes.
The relationship between the environmental stimuli (servicescape) and customer behavioral intentions was first established by the environmental psychologists (Russell & Mehrabian, 1974). Kotler (1973) used the term “atmospherics” to test if the physical environment had an effect on human behavior. Psychologists have determined that the physical environment has an effect on human behavior and this branch of psychology has been known as environmental psychology. Kotler (1973) pointed out that the physical environment in which a product is purchased is an important part of the total consumption package.
In 1974, Mehrabian and Russell described environmental psychology as “the direct impact of physical stimuli on human emotions and the effect of physical stimuli on a variety of behaviors, such as work performance or social interaction”. In 1992, Bitner developed atmospherics further by creating a conceptual framework for service settings and began using the term servicescape to describe the physical environment in which services occur. Bitner’s conceptual framework which is used in numerous researches is comprised of the three environmental dimensions: 1. weather, temperature, air quality, noise, music, odors); TIEU LUAN MOI download : skknchat@gmail.
spatial layout and functionality (i. the way in which equipment and furnishings are arranged, and the ability of those items to facilitate consumers' enjoyment); and 3. Signs, symbols and artefacts (i. signage and decor used to communicate and enhance a certain image or mood, or to direct customers to desired destinations).
Arnould, Price and Tierney (1998) states a more comprehensive definition of servicescape. According to Arnould et al., servicescape is like nested product of managerial strategies and customer inputs. It was produced through substantive and communicative staging, and can have high or low level of substantive staging combined with either high or low levels of communicative staging. The substantive staging of servicescape refers to the physical creation of contrived environment which was stressed in most of previous related researches.
The communicative staging of servicescape refers to the ways in which environment is presented or interpreted. This paper adopts the definition of Arnould et al.