Abstract
It is no longer tenable for businesses to focus on only providing customers with core services; they need to provide value-added services if their survival or competitiveness is important for their operations. Based on the need to remain competitive and relevant in today’s fast-paced business environment, this paper explores how value addition and customer satisfaction can be realized from elevator utilities. Based on a study of six five star hotels in Hong Kong, this paper proposes that added value can be realized from service innovation and technology. Additionally, this paper demonstrates that the use of innovative technology creates value addition, increases customer satisfaction and improves hotel value.
These views are developed after analyzing how elevator utilities can be used as a form of servicescape in Hong Kong hotels. Here, the general perception is that elevator utilities are part of the physical environment that defines the first interaction point between hotels and their customers. Therefore, through this understanding, this paper proposes that utilities installed within the elevator system can add value to a hotel’s service offing and subsequently increase customer satisfaction. This paper also draws a strong relationship between service innovation and organizational competitiveness because service innovation is perceived to increase customer satisfaction, and through word-of-mouth recommendations, customer satisfaction increases organizational competitiveness.
Introduction
“Satisfied customers are good customers” (James 1999, p. 5). This statement largely defines the perception of many businesses in the service sector have regarding customer satisfaction. Indeed, this conviction is widely held because good customers increase revenue and ultimately, businesses can thrive in such an environment. The relationship between customer satisfaction and business profitability has prompted many organizations to invest in customer satisfaction programs. Michel (2001) explains that businesses that operate in the service sector have one main goal – to satisfy their customers. The quality of services offered to the customers should be valued by the customers, such that, they can be enticed to come back (repeatedly). Having the ability to create good customer satisfaction is, therefore, an important component for any service business.
In striving to improve customer satisfaction, many businesses have invested in customer-centred programs and initiatives like improving customers-business communication, training call-centre workers, and even redesigning company products (James 1999). However, in today’s highly competitive business environment, merely meeting the customer’s basic requirements does not guarantee a business that it will be able to enjoy a loyal customer pool. Herstein (2010) explains that personalizing services and creating an aura of understanding that a business truly strives to uphold excellent customer service quality is a step towards creating a loyal customer pool.
That said, while the above initiatives may prove to be extremely successful in creating a loyal customer pool, they do not play an important role in attracting new customers. In fact, Woodruff (2003) points out that some customer-centred programs do not entice customers to pay a premium for the services offered. Concisely, incremental changes (which are meant to improve customer satisfaction) have a limited impact on customer purchasing behaviours because today’s customers are highly sophisticated and want something more than what has been traditionally offered. Hieronimus (2011) explains that “in times of product proliferation and more than 3,000 advertising messages a day, it is no longer enough to merely satisfy expectations” (p. 1).
Technology has been used by many organizations to satisfy and excite their customers. Precisely, technology has not only served the purposes of improving the quality of life and increasing the efficiency of operations; it has also served the purpose of enhancing customer experience (Bruggen et al. 2011). Notably, it is important to accredit technology by revolutionizing the provision of customer service through service innovation. Many researchers such as Chao (2008) and Bitner et al. (2008) have affirmed this fact by explaining that the empathy of service quality and service innovation has a profound impact in influencing customer perception (and ultimately, the customer experience in the hospitality or service sector). The following flow chart shows that product design and innovation (coupled with effective communication and services) increases a product’s differential attributes and ultimately, the value as perceived by the customer.
The focus on elevator utilities is one aspect of technology that plays a vital role in improving customer experience in the service sector. More importantly, many stakeholders in this sector find it more important (now) to create a wider array of customer products in elevator services to boost customer satisfaction. This push to improve the service offing has mainly come from organizations or corporations that rely on customer satisfaction to maintain their profitability. Indeed, like other sectors of the economy, manufacturing companies are mainly driven by market needs and therefore, they strive to improve their products to respond to market changes. Hotels are a primary group of companies in the service sector that consistently want to improve their customer service offing by taking advantage of the opportunities existing in the creation of additional value and customer satisfaction through elevator utilities.
Service innovation and value addition do not have a very open relationship (Tidd 2003). In fact, a few kinds of literature can specifically identify how the two concepts are directly related. Perhaps, the most complicating factor to this analysis is the changing business dynamics in service provision which have been spearheaded by technological innovation and the changing nature of consumer service demands. This paper aims to fill this gap by explaining how service innovation (elevator utilities) may lead to value addition for five-star hotels in Hong Kong as a way to address the changing needs of the marketplace, increased competition and changing consumer service demands. Based on the above explanations, the objectives of this paper are as follows:
- To demonstrate how added value can be delivered through service innovation and technology.
- To demonstrate that the use of innovation technology in hotel settings increases customer satisfaction as well as value of the hotel.
- To critically evaluate if the utilities installed within the elevator system can be used as a form of servicescape, with the view to add value to service settings and increase customer satisfaction.
- To demonstrate the relationship between service innovation and competitiveness in hotel settings.
Literature Review
Introduction
There are different concepts of service provision that will be consistently referred to in this paper. Some of these concepts are service innovation, service quality, value addition, servicescaping, and customer satisfaction. Because of the importance of these concepts in the understanding of this paper, it is crucial to explain the ramifications and contexts of these concepts. The concept of innovation is common for most organizations. Indeed, innovation refers to different and creative ways that can be introduced into an organization to solve customer problems (Tidd 2003). Innovative strategies may be known to customers but sometimes, the customers may be oblivious to their existence. The process of developing new and innovative strategies may be complex because of the need to introduce different elements for value addition to be realized. For example, Michael et al. (2008, p. 50) points out that it is important to realize a change in customer perception, thinking and capabilities to truly realize the goals of innovative strategies. Precisely, if customers are to truly realize a new experience in customer satisfaction, they need to consult different methodologies of having their personal needs taken care of.
Apart from service innovation, the concept of service quality is also consistently used this paper. Ryu & Jang (2008) explain that the difference between what the organization is offering and what is expected by the customers defines the entire concept of service quality. Chang (2008) acknowledges that “…a value is an enduring belief that a specific mode of conduct or end-state of existence is personally or socially preferable to an opposite or converse mode of conduct or end-state of existence” (p. 85). The concept of value has created increased interest in business because it not only defines the stability of businesses through customer purchases and spending behaviors, it also determines how loyal the customers can be through establishing the level of customer satisfaction that the customers experience from the entire process of value addition (Chang 2008). Conveniently, Hu et al (2009) posited that “…buyers’ perceptions of value represent a trade-off between the quality or benefits they perceive in products, relative to the sacrifice they perceive by paying the price” (p. 114).
When we analyze the concept of customer satisfaction, we can easily point out that sustainable competitiveness in today’s fast-paced business environment basically refers to an organization’s capability to provide high quality goods and services because it is only through the provision of quality goods and services that, customers can be truly satisfied (Chang 2008). Satisfied customers also form a loyal customer pool and they are equally able to provide effective word-of-mouth recommendations about an organization’s activities (to other people) (Bitner 1992).
Since it is already established that among the objectives of this paper is to evaluate if elevator utilities can be used as a form of servicescape, the concept (servicescape) is conveniently used to refer to the physical environment that customers and service providers interact (Ezeh and Harris 2007). This environment also denotes the physical premise where different tools of service are used to communicate the organization’s value preposition (Paninchukunnath 2009, p. 92). Research into the interaction between customer and service providers in the physical environment is ongoing but researchers such as Simpeh et al. (2011) propose that the physical environment is important in influencing customer perception because it not only influences customer perception, it distinguishes one company from the other, influences customer objectives and determines the quality or extent of the customer experience.
The importance of the physical environment is also emphasized because the physical environment always influences the customers’ interaction with the business throughout their entire visit. Indeed, it is through the physical environment that customer perceptions are built and destroyed (if at all they will) (Simpeh et al. 2011). Researchers who have bothered to dig deep into the impact of the physical environment on customer experience suggest that it has a negative and positive experience (Simpeh et al. 2011). These influences are mainly determined by the influence of the physical environment on customer behaviors like approach or avoidance. This influence is also extended to the impression created by the customers of the quality of services offered by the service provider. However, for the critical comprehension of how elevator utilities influence servicescape, it is vital to understand how value addition is created because there is a direct relation between the improvement of elevator utilities and value-addition.
Value-Addition
Chang (2008) explains that it is no longer tenable for businesses to focus on only providing customers with core services, they need to provide value-added services if their survival or competitiveness is important for their operations. Different researchers have had different views regarding what aspects of value addition that needs to be focused on. Hu et al (2009) however suggests that it is important to focus on unique aspects of value-addition such as perceived service quality, customer satisfaction and image building. Sye (2010) explains that the concept of value addition may take different forms, but in her opinion, it is important for businesses to put themselves in their customer’s shoes and determine what aspects of service provision will create value for their customers. Indeed, Sye (2010) explains that a customer may need “a problem to be solved, a new idea or simply a perspective on something” (p. 15).
However she also determines that the most important piece of information needed in value-addition is the availability of timely information for customers to make the right decisions regarding their interaction with specific businesses. Largely, the information referred by Sye (2010) borders on effective communication between businesses and customers. For example, if a sales person was intending to sell a product to a customer, the customer would appreciate being told the relevant information about the products as opposed to being given information that is not relevant to their needs. Here, the customer would appreciate the fact that the sales person did not waste their time and also, the fact that, they can make informed decisions about their purchasing choices. However, providing customers with the right information regarding available products and services is not the only way that businesses can create value for their customers.
Countryman and Jang (2006) have insinuated that the process of value addition is also complemented by the processes of service quality and service innovation. The quest to remain competitive and profitable has also fanned the quest to create more value addition in the long run.
Value addition has been embraced by different organizations. Not only are big hotels and organizations acknowledging its importance, even small to medium sized companies are acknowledging its usefulness in improving their competitiveness (Countryman and Jang 2006). For example, Kahle (2011) narrates the experience of a fast food restaurant in the United Kingdom (UK) which had a banner at its entrance stating – Five minutes or its Free. There were more than a dozen fast food restaurants operating within the vicinity of this particular restaurant but the restaurant decided to focus on its most unique strength – speed, to create value addition to its customers. In other words, this message could be interpreted to mean – “buy food from us because we guarantee fast delivery” (Kahle 2011). Not only is this message effective for the restaurant, a notable strength for the company (ability to provide goods quickly) was seamlessly used to create a benefit to the customers.
From the above example, it is easy to point out that value added prepositions can easily consolidate a company’s strength and turn them to viable benefits for the customers. Ideally, this preposition is also a platform that invites customers to be involved in the entire process of value creation. From the example above, customers can be simply involved in the entire process of value creation by confirming whether the restaurant will be able to deliver the food within five minutes (or not) (Kahle 2011). Eichentopf (2011) explains that the context of value addition basically communicates the message that customers should consider the organization because of their unique competencies. Most importantly, it is crucial to explain that the value addition process clearly defines what the organization intends to do and who it really is (amid all the competition) (Eichentopf 2011). Again, referring to the restaurant example, it is possible to assume that the restaurant had to make specific changes to its menu and staff to support its new value proposition. For example some of the meals which required more than five minutes to prepare had to be eliminated from the menu and slow cooks who could not prepare meals within the allocated time had to be given another job. From this example, we can therefore see that the process of value creation clearly makes an organization what it intends to be (Kahle 2011). However, an organization must also back up its image.
In an article written by Piercy (1995) it is explained that the process to transform organizations to be customer driven requires absolute detail. The first step in achieving this objective is explained to be the understanding of all organizational relationships that a business may have with their customers. Focus here is given to appraising these relationships and determining the value of each relationship. Relationships with the highest value should be strengthened (Piercy 1995). However, Corelli (2012) argues that businesses should not focus on improving the most notable (big) aspects of their businesses.
Instead, he proposes that the process of value creation should be centered on improving small things in the business. He gives the example that hotels nowadays have small bottled waters in hotel rooms for their guests to use at all times as a depiction of value additional products/services (Corelli 2012). Corelli (2012) observes that guests usually appreciate such small gestures of service quality and consequently, they add value to the service providers. Corelli (2012) gives another example of a banner in a hotel written “We want you to enjoy your stay. Please accept the following contents in the honor bar with our compliments: bottled water, orange juice, and soda” (p. 6). Corelli (2012) explains that the additional services offered in such messages or service offings are normally added to the room rate but customers fail to see this additional cost for what it is. Instead, they perceive hotels which offer such services to be ‘worth their salt’.
The provision of free Wi-Fi services has also been embraced by many hotels and other establishments in the service sector. Corelli (2012) observes that the provision of free Wi-Fi services is probably among the most common value-additional service that many establishments offer today. In fact, it is almost impossible to find any hotel charging for Wi-Fi services these days. Some hotels however still lag behind in this regard but the prediction is that in the coming few years, the provision of Wi-Fi services will be completely free (Corelli 2012). Because of the competitive business environment, some hotels have gone a notch higher to embrace other value additional services. For example, some hotels provide complimentary breakfast, bottled water, a muffin and an apple for early bird watchers because they want to stand out from their competition and offer value additional services that are not very common in the industry.
Piercy (1995) reaffirms the importance of strengthening a firm’s relationships with its customers as a critical component of value addition in the service sector. Here, he demystifies the commonly held ideology that businesses do business because he stresses the importance of people understanding that people actually do business and not the opposite, where businesses do business. However, Corelli (2012) affirms the fact that value addition is all engrained in business relationships. Furthermore, he adds that this fact is not only true for service-oriented businesses but all businesses in general. However, the most critical underpinning of all successful business relationships is the relationship between buyers and sellers (Piercy 1995). This observation is normally true for most business relationships between buyers and sellers because remote business relationships (between buyers and sellers) and more personal relationships (face-to-face) all emphasize the same thing.
Indeed, loyal customers are always loyal because they share a common trust with the business. Based on the importance of this fact, the importance of trust in business should be perceived to be as important as the concept of ‘price’. Corelli (2012) adds that value-added sales people normally put in more wok towards improving their relationships with their customers than organizations which do not bother about value addition at all. In fact, certain fields of business (like sales) are perceived to be more sensitive to value-addition processes because sales people are advised to be more attentive to their customers than their competitors (Piercy 1995). Ideally, sales people are advised to put more effort in gaining more knowledge, expertise and level of service than their competitors (because these elements are the ultimate deal breaker for successful sales people).
In closely related terms, Corelli (2012) advises many businesses to position themselves as “go-to” enterprises from existing and potential customers. The main argument here is that such businesses should be willing to help potential and existing customers even if there is nothing in it for them. Corelli (2012) perceives this effort to be a move towards increasing value-addition for their customers. Ultimately, he suggests that through the effort to add value, businesses can build long-term relationships and increase their probability to receive quality referrals from the customers they have dealt with (and any other future customer).
Based on global practices, the need to create value addition services (products) is no longer optional. As mentioned in earlier sections of this paper, the main factor of change that has led to this realization is the stiffening competition in the service industry. Through this realization, Corelli (2012) advises that,
“Develop an obsession to deliver the highest level of service with every customer, every day and when it comes to relationships, they will see you through the inevitable cycle of hard times. Now is the time to communicate your value-added offerings and not lower your price where you barely make a profit. Instead, “partner” with your customers and work with them so that the price is fair and affordable to both. The advantages are many and there is absolutely no downside. Most important is the opportunity to sustain a competitive advantage in the most competitive situation we have ever experienced” (p. 20).
Competitive Advantage theory
The competitive advantage theory has been used to explain the importance of staying on edge in today’s turbulent economic times. This theory proposes that organizations are better off if they pay close attention to the importance of sustaining their competitive advantage in all spheres of operation, including the national, corporate, local and individual levels (Goel 2009). Globalization has also been closely associated with this theory because many researchers associate competitive advantage with efficiency and efficiency has often been used synonymously with globalization (Goel 2009). Basically, the competitive advantage theory proposes the operation of businesses as if the world was borderless. However, the operation of businesses in a borderless environment is not practical because there are territorial borders and politicians who guard such territories with much zeal. Moreover, the policy environments in different territories are similarly diverse and this hurdle also poses a challenge to the practicalities of a global society (Goel 2009).
Ideally, it makes sense if a firm that has a competitive advantage over another organization is left to do a specific project as opposed to the less competitive organization but this does not mean that resources and capital can be equitably distributed across the world. However, the impression created by proponents of globalization is that the concept is a zero-sum game where everyone gets paid equally (Goel 2009). Nonetheless, if market forces were left to operate freely as if we lived in a perfect economy, equal resource distribution would be truly achieved. The hindrances to the perfect operation of market forces are explained by history dependency, causal ambiguity and social complexity in the diagram below. Otherwise, as explained in the diagram below, a firm’s resource heterogeneity and resource immobility should automatically amount to sustained competitive advantage.
Seeing the link between globalization, other tenets of the competitive advantage theory and value addition can be ambiguous but it is important to acknowledge the fact that the competitive advantage theory forms the framework for the execution of value-addition principles. In other words, through the principles of the competitive advantage theory (quest to always remain competitive), an environment of service innovation is effectively created because the world is not an ideal place (as explained under criticisms of globalization and why it is not perfect) (Goel 2009).
The underlying principle of the competitive advantage theory is based on the fact that opportunities exist for those companies which are willing to take the initiative of reinventing themselves and investing in service innovation for the betterment of their customers’ experiences (Shaw 2005, p. 206). This initiative is only a way to optimize an organization’s potential in service provision. Similarly, such an initiative seeks to help struggling organizations to move up the chain of quality service provision because they can overcome their capabilities-constraint and take up new and innovative opportunities to improve their service offing. Another underlying assumption of the competitive advantage theory is the fact that resources will always move to areas where there are opportunities (irrespective of socio-economic differences). Figuratively, this principle can be equated to the fact that “water will find its level if there’s no man-made obstruction” (Goel 2009, p. 7). Evidently, it is not always true that resources will always flow to areas where there are new opportunities for growth but undoubtedly, this philosophy is not entirely untrue either. Goel (2009) elaborates that
“What we observe is that, at a macro level, those forces will be at play – people will redeploy themselves to the best possible opportunities available and relocate if necessary. However, at an individual level, there may be adjustment pains due to lack of societal support, capability gaps and personal financial situations” (p. 5).
Even though the above assertion may largely hold true at the micro level, the same cannot be said for the macro-level. The competitive advantage theory assumes that artificial obstacles can delay the flow of resources to areas where new opportunities are realized but they cannot reverse the trend. Hence, the main conclusion arrived at here is that, investments in service innovation creates many opportunities for organizations and albeit artificial barriers can delay the flow of rewards, they cannot reverse the gains of service innovation (Goel 2009). That said, the competitive advantage theory proposes that businesses are better off embracing service innovation as opposed to preventing them or standing in their way.
Practically, if we were to apply the principles of the competitive advantage theory in the context of this study, we would arrive at the conclusion that hotels (or other service-oriented) companies which bother to embrace service innovation (through elevator utilities) will easily steal business from organizations that do not (Zoephel 2011). This is the core premise that competition seeks to uphold. Therefore, businesses that embrace service innovation are likely to have a stronger competitive advantage than businesses which do not.
Improving Elevator Utilities
Nonetheless, the creation of value addition (through elevator utilities) has not been explored by many researchers. Mainly, most literatures explain the importance of value addition in the hospitality sector without being specific about which areas to add value. Nonetheless, there are some specific areas which have been highlighted by researchers such as King (2012) as constituting areas for value addition. For example, King (2012) points out that improving the elevator speech is one notable area where value addition can be done. Many people have different interpretations of an elevator speech. However, elevator speeches are normally used to define the product and services that an organization offers. Occasionally, the elevator speech defines the value proposition for the organization (King 2012, p. 1).
The entire concept of an elevator speech is built on the premise that an organization will be able to communicate a summary of its products and services within a short timeframe, which is defined by the time it takes for a customer to get on an elevator ride and alight. Often, this time frame is between thirty seconds to two minutes. Ideally, Bate (2005) explains that an effective elevator speech should be able to excite the customer such that they should be looking forward to enjoying the services of the organization or come back again once they have had their stay in the hotel. King (2012) explains that because of the sheer importance and effectiveness of elevator speeches, many people often rehearse their speeches so that they are able to communicate their messages within the short time they have. There are different ways of conveying the elevator speech but the most common are video, audio, or written formats.
From a different perspective of value addition through elevator utilities, Tyni (2006) explains that adding value through elevator utilities should be understood from the time the elevator is purchased to its end-life. In detail, Tyni (2006) suggests the importance of purchasing efficient elevators from reliable companies. He also notes that the failure to purchase well-functioning machines poses a new problem that most marketers do not care to understand (Tyni 2006). Indeed, occasions where elevators have failed are properly documented. There are more than a few occasions where customers have been stuck in elevators because of mechanical failures or other instances of elevator failure. Apart from the common reason where elevators get stuck because of power failure, customers have had to endure painstaking experiences where elevators have jammed, failed to open or even failed to have proper ventilation. The reasons for discomfort are as many as the reasons why such elevators fail. Part of the reason identified for the poor service of certain elevators is attributed to poor manufacturing specifications (Tyni 2006). Precisely, some companies which manufacture these elevators do not give proper attention to the manufacturing process and thereafter produce faulty elevators, or elevators which cannot run their full lifespan.
Tyni (2006) points out that it may be difficult to identify the relationship between the purchase of faulty elevators and customer satisfaction but through the efficiency created by using well-functioning machines, we can easily point out that properly functioning machines are more likely to improve the usability of the machines. Customers can therefore be satisfied in this regard (Shaw 2004). However, the functionality of elevator systems has little to do with added value, but technical quality and freedom of deficiency.
Another critical issue about elevator usability is the size of the elevators. Tyni (2006) explains that most organizations often overlook the importance of having a properly-sized elevator, albeit it is useful in improving the user comfort. Failing to have a properly-sized elevator can have far-reaching implications on customer comfort because it creates a poor ambience for the customers. Customers can easily complain of poor ventilation, lack of comfort and other symptoms of congestion that may arise because of improperly-sized elevators. Regarding this concern, Tyni (2006) points out that hotels should be aware of the comfort of their elevators, and more importantly, they should know how the elevators serve their customer traffic. For example, a hotel that has many patrons needs large elevators to accommodate many people (or multiple elevators). The growth of customer numbers should also be factored when making the decision to install elevators in a hotel building because a hotel may experience a surge in customer numbers but their elevator systems may not accommodate this rise. Having properly-sized and properly-maintained elevators is therefore a value-addition opportunity that Tyni (2006) perceives to be very crucial for organizations that intend to increase customer satisfaction through elevator utilities.
Apart from purchasing and maintenance concerns, Tyni (2006) proposes that there are more positive ways that hotels can design their elevator systems to improve the customer experience. One common strategy that is used by most modern hotels today is to strategically design the elevator system ‘external’ to the building, such that, elevators ‘hang’ out of the buildings. The impression created here is that customers can feel attached to the building through a vertical elevator system which may seem dangerous or create a thrill as they move up or down the building. Often, such elevator systems are designed to overlook the city’s skyline, thereby creating a magnificent view for the customers to see.
For example, if we were to analyze this system in the context of this study, customers who use “attached “elevator systems can have a perfect view of Hong Kong’s sky line from dozens of floors atop a building’s floors. Obviously, it is important to mention that elevators which are designed in such a manner have transparent walls so that customers have an ‘almost’ unlimited view of the city from high above the building. This innovation is a modern design that is perceived to greatly add value to the customers’ experience as they use the building. Therefore, instead of just accessing the top floors of a building, customers can have a thrill by scaling up the walls of the hotels through their elevators and still get to see the magnificent view created as a result.
Other innovative suggestions for introducing value addition through elevator utilities have been centered on improving the comfort of elevator users. A notable invention that has been introduced (and has been in use for a considerable time) is the installation of cooling or heating systems in the elevators. Depending on the weather, an elevator can be set to a comfortable temperature so that the users feel comfortable. Notably, this service innovation provides a welcoming environment for the users and it improves their customer experience (Tyni 2006). Customers are highly likely to appreciate an organization’s effort to make their stay comfortable by regulating the environment in a way that suits the occasion. For example, in extremely hot surroundings, customers are likely to appreciate ‘cooled’ elevators so that they have a more pleasant experience. Alternatively, in extremely cold environments, customers are likely to appreciate ‘warm’ elevators. This is an added advantage of elevator systems that customers do not have to necessarily pay for directly. Concisely, customers are likely to feel better appreciated and equally likely to reciprocate the favor through better purchases and better word-of-mouth recommendations.
Another traditional innovation that has not only been used in hotels and elevator systems but also other service sectors is the installation of music systems. There are many studies which have been done to explain the relationship between music and shopping. More studies have been done to explain the relationship between music and enriched customer experience. Indeed, most research studies show that music has a strong impact on product preference and consumer spending. Moreover, several research studies also show that music has a potentially strong effect on enriching the customer experience (Copley 2008). Copley (2008) affirms that “researchers have found that loudness, tempo, and genre of music have significant effects on how long consumers spend in shops and restaurants, how much they purchase or consume, and whether they view brands or individual products favourably or unfavourably” (p. 3).
There are three tenets of consumer behavior that are established to be directly affected by music. One notable aspect of consumer behavior is time perception and the overall time spent on shopping. Copley (2008) shows that music volume share a negatively correlated relationship with the shopping time taken by customers when they visit a business establishment. However, studies which have been done to investigate the effect of loud music in shopping centers and supermarkets show that even though loud music may have a negative correlation with shopping time, customers tend to shop a lot (quantity) when loud music is being played (Copley 2008). The argument here is that sales per minute are greater when loud music is played as opposed to when low-volume music is played. Music has also been found to have a unique effect on different age groups of shoppers. For example, in a study done to establish the effect of music on department stores, it was established that when top 40 music was played, shoppers above the age of 25 years felt that they had spent more than the required time in the shop but if instrumental (or easy-flowing music) was played in the shop, shoppers below the age of 25 years felt that they had spent more time in the shop. From this study, it was established that the type of music played in the departmental stores had an effect on consumer behavior (Copley 2008).
Another aspect of music that is established to affect consumer behavior is the music tempo. From studies done in the 80s to establish the effect of music tempo on shoppers, it was established that slower music creates a slower traffic flow (Milliman, 1982). This realization has a profound effect on shopping behavior because it implies that when slow music is played in a shopping center, consumers are likely to spend more time in the restaurant. In a hotel set-up, this realization could imply that customers are likely to spend more time eating and drinking. However, this effect does not surprise anyone at all because it is only logical to say that slow-moving customers are more likely to see more items to shop and therefore, they are equally likely to spend more time in the shopping area. To complement the above findings, Copley (2008) explains that “Restaurants playing slow music had longer waits for tables and much higher customer bar bills as well. Interestingly, although restaurant patrons didn’t eat more in the slow music condition, they drank far more” (p. 5). A more interesting observation was that classical music had a far better response on impulse shoppers than any other type of music (Copley 2008).
Finally, another interesting observation made from the above studies is that music also has a strong impact on the customers’ product evaluation process. The observation made here is that people tend to have a more positive evaluation of products which have been advertised in conjunction with music. The opposite observation is true because it is observed that people tend to have a much negative perception of products that have not been advertised with any music at all (or products that have been advertised with bad music) (Copley 2008). More importantly, research shows that people tend to have a better perception of music which has been advertised with complementary music pieces. The observation here is that music tends to work well for both individual brands and group brands.
Copley (2008) explains that when considering the decision to introduce music as a value addition service, it is important to see that there is strong congruity between the music played and the product offered. The main ideology that has been used to support the installation of music systems on elevators (especially those serving commercial establishments) has been based on the above insights. Considering the additional value created from improving elevator utilities in hotels, it is implicitly important to acknowledge that the installation of music systems introduces a “spending” mood to the customers. In detail, because of the psychological effect of music on consumer spending, it is right to say that installing music systems on elevators prepares customers (psychologically) to spend more time in the hotel and possibly spend more money.
Interpretation
Through the above insights (showing how elevator utilities can be improved to create additional value for customers), we see that the process of value addition is closely related to profitability and competitiveness. However, there is a more direct link between the improvement of elevator utilities and service innovation. Indeed, we can categorize the value-addition proposals described above into three distinct components. These three distinct components also manifest the true characteristics and effects of value addition processes. The first component is technological leadership, the second component is efficient marketeering and the last component is cost leadership. Focusing on the concept of technological leadership we can easily see that value addition has a distinct product/process development potential which is enshrined within the framework of service innovation and the improvement of existing services through innovative techniques. For example, the introduction of elevator speeches is one innovative technique that manifests additional innovation that can be introduced to an existing service (elevator services). Therefore, through service innovation, hotels can introduce elevator speeches (or even music) to provide value addition services (Bettencourt 2010).
Focusing on the concept of efficient marketeering, we can see that value addition develops distinctive value addition competencies that surpass the production and distribution of products; instead, value addition provides innovative solutions and services to existing customers at no additional cost. When we critically analyze the concept of effective marketeering we see that value addition provides a more unconventional form of marketeering which is basically defined by word-of-mouth recommendations. This form of marketing is very efficient because it has a very high efficacy while it is almost inexpensive to execute.
Finally, focusing on the concept of cost leadership, we can see that the process of value-addition is a process that conveniently works towards making the service provider a leader among its peers. For example, outsourcing and the modification product categories provides economies of scale which facilitate better provision of services and increased innovation. These elements improve a company’s profile. Nonetheless, what is apparently clear from the above insights is the need for value addition on a more general context. Furthermore, there is only some scarce mentions of how elevator services can be improved but there is no direct link to value addition. Moreover, there is very little reference to how value addition can be created from elevator utilities. However, this gap in research is only one side to the entire analysis. The most important deficit of the existing literature is its failure to capture what value addition methodologies can be adopted in today’s fast paced world and what meaningful methodology can be used to conceptualize divergent consumer tastes and preferences.
Methodology
As mentioned in earlier sections of this paper, the methodology for this paper will mainly entail the collection of data from Hong Kong’s five star hotels. In detail, there will be a keen focus to establish how the hotels sampled in this study use their elevator utilities to create value addition, say through physical design, scent, mirrors, elevator speeches, keycard recognition and other tools of value addition. Regarding these tools, Bhardwaj et al (2008) argued that such aspects within the servicescape domain are “…associated with more positive cognition toward the physical environment, wider consumption spans, shorter time perceptions, less negative emotional and behavioral reactions to waiting, and more favorable purchase intentions, behavior and service assessment” (p. 38). This statement largely defines the rationale for conducting this study.
Research Design
This study will employ the quantitative research design. This research design will not only be useful in collecting new research information to sufficiently answer the research questions but it will also employ this research design to establish the relationship between the dependent and independent relationships established in the study (Hopkins 2000). In detail, the qualitative research design is expected to be descriptive in nature because of the fact that participants will be interviewed only once. Another reason for using the descriptive qualitative research design is the fact that this study will analyze elevators utilities on one hand and its ability to create additional value and customer satisfaction on the other hand. The firm’s competitiveness will also be understood to constitute part of the dependent variables. Based on this understanding, it is correct to point out that the independent variable will be elevator utilities while the dependent variable will be customer satisfaction, elevator utilities and firm competitiveness.
Since most researchers who employ the quantitative research design do not only rely on empirical data as their sole source of information, this paper will include post-positive assertions to come up with a more comprehensive body of knowledge. This knowledge will be used to understand some of the most important relationships in this study including the determination of the cause and effect paradigm, the reduction of precise variables, or phenomena of interest, hypothesis testing, employment of measurement and observation, and the assessment of theories. Through the above analysis, not only will the investigator be able to determine which variables to separate, it will also be easy to establish which variables relate in what way and to what associations. Similarly, it will also be easy to establish which instruments to use in this analysis so that we can be able to establish accurate scores of analysis.
Data Collection
It is important to point out that that the quantitative study will involve the collection of numeric data through online questionnaires. For ease of administration, the online questionnaires will be gathered by means of two standardized questionnaires which will be designed through accurate online protocols (Creswell 2003). The identification of the conceptual domain and a review of the existent literature (for the rationale of guaranteeing the content validity of the questionnaire schedule) will be crucial aspects of importance to be included in the development of the questionnaires. To justify this methodology for designing the questionnaires, it is important to point out that research affirms that questionnaires schedules are effective methodologies for gathering information online (because of their adaptability and easy application) (Bradburn et al 2004).
Two sets of standardized questionnaire schedules will be included in the process of developing the questionnaire. These schedules will contain items of divergent layouts, including: multiple choice questions, asking either for a single choice or all that apply; dichotomous responses such as “Yes” and “No”; self-evaluation items, evaluated on the 5-point Likert-type scale (strongly agree, agree, neutral, disagree, and strongly disagree), and; a few open-ended questions intended to elicit responses that cannot be possibly captured by closed-ended questions.
Sample Population
As mentioned in earlier sections of this study, the information obtained will be sourced from five star hotels in Hong Kong. Mainly, customers and management personnel will constitute the body of individuals to be consulted. To select the sample of customers, the convenience sampling technique will be used. Cumulatively, there will be 120 respondents sampled (from six five star hotels). The 120 customers will be evenly sourced to comprise of 20 customers from each hotel. The purposive sampling technique will also be used to select 12 managers from the sampled hotels. There is a difference between the convenience sampling technique and the purposive sampling technique because the convenience sampling technique will sample respondents by virtue of their availability while the purposive sampling technique will sample respondents by virtue of their understanding or knowledge regarding a particular issue (Cohen et al. 2007). All the respondents sampled must be adults (above 18 years) so that they are fully aware of the implications of the study. Regarding the respondents sampled from the managerial level, they must have worked for more than three years in their respective fields.
Ethical Considerations
It is important to address all ethical concerns that arise from the collection of research information and the dissemination and data analysis of all the research information obtained. The ethical concerns arising from this study cut across different aspects of the research methodology. Sequentially, this paper analyzes ethical issues associated with consent, deception, debriefing, withdrawal from investigations, confidentiality, withdrawal of participants, protection of participants, giving advice and data protection. These ethical issues are most relevant in the context of this study.
Consent
Before collecting data from any respondent in this study, it will be important to get the consent to do so. Based on the context for this study, consent will be sought from the management of all the five star hotels sampled. In detail, a letter of consent will be dispatched to all relevant officials (plus a copy of the questionnaire) to detail the respondents’ rights. Many issues will be analyzed from this letter including the right to informed consent, participation rights, privacy rights, confidentiality rights and the right to withdraw from the research at their discretion.
Deception
There is no intention to use any deceptive information in this study. To ensure the reliability of information obtained, the purpose for this study (academic) will be clearly communicated to all participants in the study and therefore, it is not expected that any deceptive information will be included in the study.
Debriefing
It will not be possible to undertake a debriefing exercise in this study because the information obtained from the participants does not pass the test of sensitivity.
Withdrawal from the Investigations
As mentioned in earlier sections of this paper, the right to withdraw from the research will be at the participant’s discretion. Any participant who withdraws from the study will not be required to give the reasons for doing so. However, to reduce the probability of participants withdrawing from the research, the importance of the study will be carefully explained to all the participants involved.
Confidentiality
It is very important to uphold the virtue of confidentiality in research undertakings. However, in the context of this study, privacy and confidentiality will be explained properly in the cover letter. It is expected that through the careful explanation of confidentiality, the participants will be able to make careful and informed decisions while the validity and reliability of the information obtained will be enhanced. Bradburn et al. (2004) demonstrates that when participants are often aware that their confidentiality rights will be well respected, they are likely to give accurate and truthful information. The assurance that the right to confidentiality will be respected will be drafted in a signed document. The document will stipulate that the information obtained will solely be used for academic purposes and not for any commercial or personal use.
Protection of Participants
Albeit the usefulness of the information obtained, the sensitivity of the information is not high enough to warrant the protection of participants.
Giving Advice
To remain objective to the purpose of the study, the participants will not be given any advice; instead, the participants will only be given the right instructions to enable them provide accurate information regarding the research.
Data protection
Data protection will be undertaken through the introduction of security passwords (in the course of data analysis). However, after the completion of the research process, this data will be destroyed.
Analysis
As explained in earlier sections of this paper, data was collected through online interviews as the primary source of information while secondary data was also collected as complementary material. The data obtained is presented in graphs and tables to show the distinction and underlying differences in the findings obtained. Comprehensively, the set of questionnaires presented to the managers differed from the set of questionnaires given to the customers. Notably, the set of questionnaires give to the customers did not contain issues regarding servicescape because it was assumed that most customers would not know what the term meant.
Explaining this term would also be time-consuming. The design of the customers’ questionnaire was also relatively simple and direct because the customers would be randomly sampled and there was a need to minimize the time taken to complete the questionnaires. However, the biggest reason for designing two types of questionnaires (for the customers and managers) is that the two respondents stand at two different extremes of the service sector pendulum. Indeed, managers work to please customers and customers often demand unique services from the managers. The managers are therefore the service providers while the customers are the service recipients. From this understanding, managers and customers are likely to have two diverging sets of views. It was important to capture this dynamic through the questionnaires.
The initial research was meant to administer 12 questionnaires for the managers and 120 questionnaires for the customers but upon completing the survey, 12 questionnaires were completed by the managers but only 100 questionnaires were completed by the customers. The reasons for non-completion are however unknown. All sets of questionnaires were self-administered interviews. The self-administered methodology was preferred because it offered several advantages to the credibility and convenience of the study. For example, self-administered questionnaires can be answered at the convenience of the respondents, do not need prior interview appointments, are unbiased, and very economical. The two sets of questionnaires (given to the managers and customers) were qualitative.
The first question posed to the managers was whether they believed service innovation creates added value and if ‘yes’ what ways did they believe could provide value addition services. The second question was aimed at investigating whether innovation technologies had a positive impact on customer satisfaction. This question was posed to the managers only because of its relative complexity. The third question posed to the managers was meant to investigate if service utilities in the elevator systems provided a form of servicescape and if so, did it add value to the hotel’s service offing or did it increase customer satisfaction. Finally, the last question was centered on investigating the effects of service innovation on the hotel’s competitiveness. This question was also posed to the customers indirectly. In detail, the managers were asked if the service innovation strategies employed in the hotels increased their competitive standing in the hotel industry while the customers were asked whether they would prefer to stay in a hotel that had better elevator utilities. These questions were designed to reflect the objectives of the study.
Both managers and customers answered the above questions articulately and when they were asked if service innovation creates value addition, all the respondents answered affirmatively. However, there was a slight difference in the direction of suggestions regarding what service innovation strategies could be adopted to improve value addition services between the views expressed by the managers and the customers sampled. It is assumed that the difference in views was mainly informed by the different skills and competencies between the two respondent groups. Moreover, their different positions in the service delivery process gave the two groups a different platform for comprehending the organization’s activities. The managers had a better oversight of the business activities because they mainly stood to offer the services while the customers gave their opinion from the perception of service recipients.
Nonetheless, eight managers suggested the seamless integration of technology to improve existing service innovation strategies. Their main argument centered on perceiving service innovation as a complementary process that would facilitate existing hotel procedures (traditional activities). The remaining four managers identified the improvement in the design and delivery of services to the customers as another viable strategy for value addition. Introducing more innovation in the service delivery system emerged as the most popular suggestion among the four managers who proposed the improvement in the design and production of services. These respondents also proposed the improvement of the service delivery system as opposed to product innovation. However, all the 12 managers sampled agreed that technological innovation should spearhead these improvements.
Notably, 90 customers sampled polled that they were satisfied with the elevator services offered in the hotel. Only ten respondents polled that they were not satisfied with the hotel’s elevator services. Seven of these dissatisfied customers were from one hotel. However, the responses gathered from 20 respondents differed with the suggestion by the hotel mangers that the best service innovation techniques would have to be based on technological inputs. These 20 respondents suggested that improved customer service and increased space would still achieve the desirable result of value addition. The main assumption here was that the customers were more concerned about their comfort while using the hotel elevators. Nonetheless, there was no identifiable explanation regarding which techniques about the hotel’s operations should be changed. Interestingly, there was another group of respondents (17 respondents) who proposed that expertise-based improvements could also achieve the same result of value addition. The main argument here was that expert services were more satisfactory to the customers. In light of this suggestion, Liebowitz (1997) explains that separating work/services between professionals and paraprofessionals is a noble way of improving an organization’s service offing.
When we analyze the disparity of responses between the managers and customers, we can re-emphasize Sye (2010) assertions (from the literature review) that it is important for managers to put themselves in their customer’s shoes if they are truly willing to improve their value-addition services. Therefore, according to Sye’s assertions, the customers’ recommendation that expert-based improvements provided enough grounds for value-addition is superior to the managers’ view that service innovation (or improved technological input) improves value addition.
When the respondents were asked whether they would prefer to stay in hotels that had better elevator utilities, the response was overwhelmingly positive. All the respondents ticked ‘yes’. The managers sampled also admitted that innovative technology had a positive impact on a hotel’s competitiveness but 10% of the customers sampled said that some innovative technologies were annoying to the customers. They explained that there were some innovative technologies that complicated simple processes, thereby making them ‘annoying’. Here, there was a strong emphasis on developing facilitative and simple-to-use technology as opposed to complicated and highly sophisticated technologies. The rest of the respondents however agreed that innovative technologies largely improved customer satisfaction.
The responses given by the customers and managers highlight previously mentioned insights regarding the competitive advantage theory. The competitive advantage theory stated that organizations which try to improve their products and services tend to attract the highest growth because customers tend to be more attracted to them. Indeed, when the customers were asked to state whether they would prefer to stay in hotels that had better service utilities, their response affirmed the insights of the competitive advantage theory. Therefore, the improvement of elevator utilities is an important competitive tool that can be used by the hotels to gain competitive advantage.
When the managers were asked whether service innovation through elevator utilities provided a form of servicescape, ten managers agreed that elevator utilities provided a form of servicescape. There was also a general consensus regarding the fact that elevator utilities increased customer satisfaction and added more value to the hotel’s service offing. It is perceived that most respondents agreed to the fact that elevator utilities provided a form of servicescape because it was the first physical environment that the service provider and the customers interacted. Indeed, even before the customers arrived at the reception, they already have a significant degree of interaction with the hotel through their elevator utilities.
Finally, when the managers and customers were asked if service innovation increased a hotel’s competitiveness, the respondents sampled answered positively. The reason given by the managers was based on the fact that service innovation had a profound impact on a hotel’s level of competitiveness. These results did not come as a surprise because the question was rather direct and it was almost logical that service innovation increased the level of competitiveness because it created additional value to a hotel’s service offing. Moreover, this response was complementary to earlier assertions where the respondents stated that innovation technology increased customer satisfaction. Indeed, satisfied customers increase a hotel’s level of competitiveness.
Comprehensively, from the responses gathered, there was a general consensus among the customers and managers that improved elevator utilities and service innovation improved a hotel’s value addition process (and ultimately, its competitiveness). Even though there was a small sample of managers who were more critical about the kind of innovative technology that were to be introduced in the organization, the customers agreed that hotels which had better elevator utilities were more appealing than those that did not. Regarding different types of service innovation strategies that could be adopted by hotels, the responses gathered seemed very dynamic because there were divergent views regarding what hotels could do to improve their service innovation strategies.
The introduction of the latest technologies seemed to be the popular view among most managers but it was interesting to hear responses bordering on the introduction of expert-service (to a company’s service strategy) as a viable service innovation proposal by the customers. Nonetheless, service innovation was identified to significantly increase customer satisfaction and organizational competitiveness. In addition, from the respondents sampled, most of the suggestions given were largely sourced from hotel customers and hotel managers. Based on the responses, in opinion, it would have been more interesting to get the view of lower-level employees regarding what they thought about service innovation, innovation technologies and their impact on customer satisfaction and organizational competitiveness. This is a future suggestion that needs to be included in the research design.
Conclusion
After weighing the findings of this study, we can see that value addition services are important ingredients to executing a successful competitive strategy. Indeed, from the responses sampled, we can affirm that customers appreciate progressive service innovation initiatives. Their appreciation can be easily seen through increased customer satisfaction. From these outcomes, we can also easily see the link between increased customer satisfaction and increased competitiveness. This relationship has been explained by many researchers sampled in this paper who point out that increased customer satisfaction increases sales through word-of-mouth recommendations. A satisfied customer is likely to relay the same contentment to other people who would also be interested to enjoy these services in the same facilities. There is no better marketing tool than word-of-mouth recommendations because it is honest and personal. Through the positive recommendations that satisfied customers are likely to relay to other people, we can easily draw the link with increased competitiveness because the impact of word-of-mouth recommendations is seen through increased competitiveness.
However, focusing on elevator utilities, this paper shows that the importance of developing progressive service innovation strategies cannot be underrated because elevators are practically the first point of contact between hotels and their customers. Since it is important to make a good impression to customers (especially first-time customers), hotels need to develop facilitative elevator utilities that are likely to increase customer satisfaction. Their competitiveness will subsequently increase through the sustainability of these progressive elevator utilities. The importance of technology in building sustainable elevator utilities has been highlighted as an important component of service innovation because it is through such technologies that customer needs can be met.
However, based on the responses of the customers, we can see that it is important for hotels to introduce simple technologies that improve the customers’ experience as opposed to those that complicate it. Therefore, there needs to be a lot of attention directed towards research and development because service innovation should be directed towards solving or addressing customer needs. There needs to be a thorough analysis regarding what customer needs exist and which ones are not properly addressed. This process needs to be the first step towards developing effective service innovation strategies and improving the overall effectiveness of elevator utilities.
If we analyze the findings of this research with previously held views by other researchers (in the literature review), we can see that creating value through elevator utilities is not a multi-faceted concept as previous researchers have explained. For example, from the literature review, we have seen that value creation is mainly driven by technological leadership, efficient marketeering and cost leadership. However, from the responses obtained, there is little reference of cost elements or the need for efficient marketing. Perhaps, this distinction is attributed to the fact that elevator utilities are part of a company’s service provision and therefore, the value creation model to be adopted for a product or a different type of service would not necessarily apply in elevator utilities. However, the main basis of similarity between this paper’s findings and other findings is the importance of technological innovation in value creation. This element was specifically emphasized by the managers.
Comprehensively, this paper demonstrates that in today’s globally competitive market, there needs to be a keen focus on two issues: The first issue is the need to adopt more technologically viable strategies in value addition. The second issue is focusing more on consumer variables to inform future value-addition strategies. Comprehensively, service innovation becomes the main change agent in the organization because it is the main bridge between the fast-changing marketplace and organizational inputs.
Validity and Suggestions for Future Research
Going forward, there needs to be a deeper analysis on the role of technology in improving customer satisfaction and organizational competitiveness. Furthermore, there needs to be a deeper analysis of the effectiveness of service innovation across different cultures. This recommendation is informed by the divergent opinions regarding the effectiveness of service innovation in improving customer satisfaction. Indeed, some respondents seemed to have a general positive perception regarding the introduction of innovation technology in value addition while others seemed to be more reserved about the kind of innovation technology to be adopted in hotel services. Since the customers sampled were sourced through convenient sampling, it was difficult to establish the profile of such customers. Therefore, it is important further analyze the effect of culture on the perception of technology because different genders and cultures are known to have different perceptions regarding innovation technology.
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