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Physical evidence comprises service environment, people (participants) involved in the services production, procedures and flow of activities that contribute to the delivery of services. Managing firm’s physical evidence includes everything tangible-from the physical facilities to brochures and business cards as well and organizations’ personnel dress code. Physical evidence can fall into different categories such as facility exterior (exterior design, insignia, parking, landscaping and environment), facility interior (interior design, equipment, insignia, layout, air quality and temperature, colors, music, scents and other tangibles).The aim of the empirical research conducted in Dubrovnik was to determine the importance of music and effects of music on consumer behavior in service industry. Data were collected in 2016 by testing a sample of 350 respondents, using method of personal interview. The consumers' attitudes were explored in certain types of service industry (mostly food shops, cloth shops, souvenir shops, restaurants, cafe bars). Data were analyzed by descriptive and inferential statistic based on chi-square testing. The aim of this paper is to show the strategic role and the dimensions of physical evidence in service industry and describe stimulus-response model commonly used to help explain the effects that services environment has on consumer behavior.

MANAGING THE PHYSICAL EVIDENCE IN SERVICES ORGANIZATIONS