Achieving customer satisfaction by the use of Experiential Marketing - My Master's Thesis

This is my thesis' draft. You can help me by sending sources about experiential marketing and customer satisfaction to
Achieving customer satisfaction by the use of
Experiential marketing

Thesis Adviser: A. Müge Yalçıner

Department of Marketing
Marmara University, 2007

• Objective of the study
• Importance of the study
• Scope of the study

1. Experiential Marketing
1.1 Definition of Experiential Marketing
1.2 Steps of Experiential Marketing
1.2.1 Gather initial customer data
1.2.2 Plan an event
1.2.3 Optimize the audience
1.2.4 Optimize the event
1.2.5 Follow up

1.3 Dimensions of Experiential Marketing
1.3.1 Communications as an Experiential Element
1.3.2 Visual/Verbal Identity
1.3.3 Product Presence
1.3.4 Exhibition space atmosphere

1.4 Experiential Marketing versus Traditional Marketing
1.4.1 Focus on Customer Experiences
1.4.2 Examining the Consumption Situation
1.4.3 Customers are Rational and Emotional Animals
1.4.4 Methods and Tools are Eclectic

2. Consumer Decision Process
2.1 Definition of Consumer Decision Process

2.2 Types of Consumer Decision Process
2.2.1 Extended Consumer Decision Process
2.2.2 Limited Consumer Decision Process
2.2.3 Routine Consumer Decision Process

2.3 The link between experiential marketing and consumer decision process
2.3.1 Event Marketing
2.3.2 Public Relations
2.3.3 Communication Strategies

Experiential marketing has emerged as a new and exciting way of connecting brands with their customers. Companies focus on their target customers by the help of emotional appeals (excitement, happiness, affection) in order to emotionally connect their customers with the brand. In experiential marketing, customers are given a chance to experience products while having fun at the same time.

Also, companies lose their customers who are dissatisfied with the company, products or their services. The main reason for this is that companies do not know how to treat their customers. In addition, companies attempt to gain new customers instead of aiming to keep the current customers. This is a big problem since it is more effective and less costly for a company to keep current customers than to obtain new customers (Bergman, B., Klefjsö, B., 1994). However, most of those companies consider themselves as customer oriented, which means that all of their activities aim to fulfill the needs and wants of their customers (Bruhn, M., 2003).

Besides, although those companies believe that customer orientation is a key factor that provides competitive advantage, they face difficulties in building a relationship with the customer (Bruhn, M., 2003). In order to operate in a customer focused way, companies need to learn how to put their knowledge about consumers from marketing research into practice. The correct processing of research data helps to identify what the customer really needs and wants. By this way, marketers can better discover the consumer’s desires, which results in customer satisfaction. Customer satisfaction is one of the first successful effects of a customer oriented marketing strategy that aims to build and improve profitable connections with customer (Grönroos, C., 1994).

But achieving customer satisfaction is not as easy as it once was. Nowadays, products and services are mostly identical and customers are unable to feel differences between brands (Whelan S, Wohlfeil, M., 2006). In addition, all products in the maturity stage already fulfill the standard of quality, this is the reason why all the products and services become interchangeable and cannot be differentiated from each other anymore. The increased saturation of the markets results in a tough competition of companies for getting the market shares of their rivals (Levermann, T., 1998). This battle is also an enormous challenge for marketers since the demand for their goods is decreasing and it is simultaneously becoming more difficult to arouse the customer’s attention. By advertising all the products and services in the markets, which are constantly growing in number, the consumer is overloaded with marketing information so that in the end customers are not able to perceive every marketing message.

As a result of this information overload people have developed a low involvement with advertising and marketing information in general, which means that people have started to select certain information before perceiving it. Involvement is defined as “the level of perceived personal importance and/or interest evoked by a stimulus within a specific situation” (Blackwell, R. D., Miniard, P. W., 2001). Therefore, instead of having price competition in the markets, marketers should search for other ways to communicate effectively with their potential customers. Fırthermore, the companies need to find new ways to differentiate their products from their competitors.

Companies realized experiential marketing as a solution to create differentiation and build emotional bonds with customers. The applications of event marketing and product sampling have evidently been around for a long time. But lately companies have begun to use experiential marketing because differentiation has become an inevitable fact for companies to make customers pay attention to their products.

A successful approach for marketers and companies to achieve customer satisfaction is by concentrating on what the consumer needs and wants. Due to the changes in values in society there is a high demand for engaging experiences which give people the feeling that they are truly experiencing life (Opaschowski, H. W., 1998). “… Experiences have emerged as the next step in what we call the progression of economic value.”. Consequently, there is a need for goods that have this experiential value.

The same demand also occurs on marketing, which needs to enrich people’s lives through experiences that appeal to their needs and wants. A new way of thinking of marketing, which has been given the name ‘experiential marketing’ by Bernd Schmitt (Schmitt, B. 1999) provides a method to achieve this. Experiential marketers can combine individual experiences with their brands, which will differentiate them from rival products. As the first step to a good relationship with a customer to have a satisfied customer, the following chapters will describe how experiential marketing is able to achieve customer satisfaction.

The objective of the study
As already mentioned, this study aims to underline the ways in experiential marketers have opportunities to affect customer satisfaction and how these marketers comprehend them. In order to find these favourable chances, the definition of experiential marketing will be made and then its advantages to traditional marketing will be shown.

The importance of the study
The steps and elements of experiential marketing will be clearly defined. The feature and benefit based traditional mass marketing will be compared with experiential marketing which offers more than a product and a physical benefit to consumers.

The scope of the study
This paper will deal with the experiential marketing, and its comparison with traditional mass marketing. The sense, feels, think, act, and relate appeals of experiential marketing will be discussed.

1. Experiential Marketing and Customer Satisfaction
In this section, firstly the definition and objectives of experiential marketing will be explained. Then customer satisfaction and its outcomes for consumers and companies will be underlined.

1.1 Experiential Marketing
In the term “experiential marketing” the first thing that catches people’s attention is not the word “marketing” but the word “experiential”. “Experiential” is the adjective of the noun” experience”, which builds the basis of a new way of marketing products and services, which will be described in the following section.

1.1.1 Definition of Experiential Marketing
Experiences are defined as touching and engaging events that are naturally personal, as it is the customer who has control over what happens. “Experiences…involve the emotional, intellectual, spiritual and physical spheres” (Bassi, F. Parpagiola, L., 2005), that is why it is impossible that two individuals will experience an event in the same way. The creation of customer experiences is a phenomenon that appears in current marketing trends with names such as emotional marketing, ambient marketing, sensual marketing… which are basically all the same.

Experiential marketing is often confused with event marketing, although experiential events are different from ordinary events since they communicate the essence of the brand and customers (Gautier, A., 2003). According to Weinberg/Diehl, it is actually the brand of a product, which enables marketers to realize an experience as it helps to differentiate the good from the competitors. Branded goods are products or services which are labeled with name, image and/or symbol and which distinguish from other goods by certain characteristics (Weinberg, P., Diehl, S., 2001).

By experiencing the brand’s character, consumers have the chance to actively get to know what the brand is about. In contrast to ordinary events, which only get the name of the brand attached to them, experiential events are created for and owned by the brand they market. Anyhow, according to Gautier, many brand owners fail in identifying and expressing the brand’s essence so that they try to compensate their lack of clarity by increasing their expenses on advertisements and other communication vehicles (Gautier, A., 2003).

In order to create a successful experience that involves direct observation and/or participation in events, the senses, the emotions, the soul and the mind of the consumer must be appealed to by the brand. So it is the mission of the marketer to provide the right stimuli and environment to actualize an effective brand experience that will result in a positive judgement of their brand. When a customer is emotionally attached to a brand he feels as if he is special and as if the brand’s company really cares about his needs and wants. Before an experience can arouse emotions within the individual, it needs to match customer’s values, lifestyle, behaviour, and attitude. People must be able to connect and identify themselves with the brand’s essence. In this way, they will have a strong memory of the experience and the feelings aroused by it and not just of the event itself (Zarem, J. E., 2000).

The major determinant behind the experiential approach is the e-factor, which refers to emotion, entertainment, and engagement (Zarem, J. E., 2000). Pine and Gilmore also define four experience fields: entertainment, education, escape, and aesthetic experience. While the entertainment experience is passively absorbed by the senses, like when watching a film or listening to music, education is an active experience as the individual is involved in participating with his mind and/or body, like students. The escapist experience is characterized by an increase in active participation in comparison with education. Here, the individual has an experience as in the visit of an amusement park or chat rooms. In an aesthetic experience, the person is intensively participating but remains in a passive role as it occurs as, for example, when visiting a museum (Pine, B. J., Gilmore, J. H., 1999). Many experiences involve only one of these fields although they are richer and more influential when they engage all four fields (Bassi, F. Parpagiola, L., 2005).

Due to the information overload and the lack of time that customers suffer from, individuals are more selective while they are spending time (Zarem, J. E., 2000). In addition, their increased demands concerning the characteristics of products make them less attentive to marketing messages.

Furthermore, the information acquired from an experience is more permanent and affective than information obtained in any other way. This is because an experience involves all the human’s senses, which makes it easier for them to remember the message (Hoyer, W., MacInnis, D., 2001). Therefore experiential information has a stronger influence on consumer behavior by arousing more attention than information received from listening to, watching or seeing any advertisement or other marketing communication tools.

Hence, there is a need for a new way of communication that appeals to the individuals’ emotions, and entertains or engages people in something they care about in order to effectively arouse their attention and attraction (Zarem, J. E., 2000). In other words, marketers must create a brand experience that suits and improves the customer’s lifestyle.

We find experiential marketing all around us, as it is becoming increasingly popular and accepted. It is applied by global conglomerates as well as by small local brands. According to Jack Morton’s research about the impact of experiential marketing, experiential marketing is mostly effective with women and the younger audience between 19 and 24 who also represent the part of the population that has a strong influence on most purchases (Shuler, L., 2004). In general, the experiential approach can be applied everywhere and to any kind of good. According to Gautier, the more emotional product is, the more suitable it is for an experiential marketing campaign (Gautier, A., 2003). By the way, it is especially challenging for marketers to apply customer experiences for low-involvement products. Nonetheless, Jack Morton’s research found out that when experiential marketing is used effectively, it can strengthen the impact of other marketing tools, and vice versa, so that it can increase the impact on the overall brand perception (Bigham, J., 2005).

1.1.2 Experiential marketing versus Traditional Marketing
Since US and European marketing experts consider experiential marketing as a serious competitor of traditional marketing methods, it is important to point out the main aspects that differentiate traditional from experiential marketing. The following key characteristics of both types of marketing are mainly based on Bernd Schmitt’s book about ‘Experiential Marketing”.

“The principles and concepts of traditional marketing describe the nature of products, the behaviour of consumers, and competitive activity in the marketplace. They are used to develop new products, plan product lines and brands, design communications, and respond to competitive activities.” (Schmitt, B., 1999). This basic set of strategic concepts, including the ones about objective setting, market segmentation and strategic positioning, can also be applied to other types of marketing.

According to Schmitt, traditional marketing concentrates on the features and benefits of a good. The features are the characteristics that go hand in hand with the essential function of a good. Traditional marketers consider them as a tool for differentiation. The benefits are the additional performance attributes that people seek from products, such as the bronzening effect of body lotion. In contrast, experiential marketing focus on customer experiences that provide sensory, emotional, cognitive, behavioral, and relational values at the same time. These values replace the functional values traditional marketers concentrate on.

Moreover, while traditional marketers narrowly define product categories and their competitors, for example, consider Burger King as the only competitor of Mc Donald’s, while excluding Pizza Hut, experiential marketers additionally analyze the complete consumption situation in order to find out what kind of products fit into and how these products, their packaging, and advertising etc. can affect the consumption experience of a customer. That’s why experiential marketers consider the consumption as a holistic experience by regarding consumption in its entirety.

The origin of this problem lies in the fact that traditional marketers neglect the post purchase situation as they think that their only task is to sell products and services. Experiential marketers understand that on the side they sell experiential events that have to be as pleasurable as possible. These experiential attributes of the products are thought of as irrelevant by traditional marketers. But in fact traditional marketers overlook that it is these attributes that distinguish a certain product from other products and that persuade consumers to buy a product even though it is more expensive than its competitors’.

According to Schmitt, the branding development of the last decade also did not have any influence on traditional marketing. These marketers still view brands simply as identifiers that tells buyers the quality and originality of a product. Whereas experiential marketers additionally consider brands as a tool that can provide experiences. In this way, experiential marketers benefit from communicating the brand’s essence, which is especially important for building a strong connection with customers. The essence of a brand also becomes essential as today’s consumers take the functional features, the benefits, the quality, and the positive brand image of a product as a given.

The main reason why traditional marketers ignore the experiential attributes of a product lies in their definition of consumer behaviour. While experiential marketers view customers as rationally and emotionally driven, traditional marketers neglect the emotional side of their consumers. In their opinion, customers are rational human beings whose purchase decision results only from the processing of cognitive information consisting of the following steps: need recognition, information search and evaluation of alternatives. They totally ignore the affective component of the decision process, and they simultaneously neglect psychology-based theories about consumer behaviour. When it is considered that today’s customers’ increasing demand for entertainment, emotional affection, creative challenge and stimulation in general, this is an enormous mistake. Holbrook and Hirschman have already emphasized that “…Consumption experiences are directed toward the pursuit of fantasies, feelings, and fun” (Holbrook, M. N., Hirschmann, E. C., 1982). That is why the affective and emotional side of the consumer should be taken into account more.

Furthermore, experiential marketers consider the post-purchase period as the condition to influence a consumer whereas traditional marketers do not take into account what happens during consumption. In this way, they miss a good opportunity to use brand experiences during consumption as that period offers the best chances to achieve customer satisfaction and brand loyalty. Traditional marketing communication tools, such as television and other media, are effective in creating awareness but experiential marketing is better in establishing a relationship with the customer (Gautier, A., 2003). The reason for this will be explained in further examinations.

1.1.3 The Objectives of Experiential Marketing

The goals of experiential marketing are not really different from traditional marketing. The main difference between them is the way that they follow to reach their aims. Experiential marketers try to build an emotional connection between the customer and the brands, in order to stay in people’s minds for a long time (Gautier, A., 2003). Companies using this kind of marketing have learned that customer experiences can help building a connection between its brand and consumer’s lifestyle.

Furthermore, the experiential marketing is used as a new way of differentiation. Since nowadays the products in the market become increasingly similar, differentiating them has become a marketing goal. Marketers look for new ways to create original products that are completely perceived differently from the products of the competitors. Experiential marketing psychologically result in a subjective differentiation in people’s minds by providing them memorable and specific brand experiences. ZAREM. In this way, experiential marketing can also serve as a great competitive advantage since experiential marketers have a real understanding of their customers, and their needs and wants. Indeed, experiential marketers know how to create customer satisfaction and what kinds of experiences they have to provide them in order to relate to their lifestyle and values. SCHMITT B

According to Schmitt, another advantage of experiential marketing is its capability to save regressing brands, to invent an image and identity for brands, to promote innovations, and to affect trial, purchase, and, especially repurchase (Schmitt, B., 1999). Another goal of experiential marketing is to enrich and improve the quality of people’s lives and to provide enjoyment. The sum of its advantageous effects results in a meaningful experience for the customer, which adds an additional experiential value to the brand and makes it unique in the mind of consumer. All of these are prerequisites for creating a successful relationship with the satisfied and loyal customer. The decision about using experiential marketing alone or complementary to traditional marketing depends on determinants such as product category, the industry, the customer target and the management.

1.2 Customer Satisfaction
In this section, customer satisfaction will be defined.

1.2.1 Definition of Customer Satisfaction
There are various definitions of the word ‘satisfaction’ and there is not a consensus among researchers about the definition of ‘satisfaction’. In the literature it is not clear whether satisfaction is an outcome or a process Yİ.

Since the nature of satisfaction is complex and context specific, it is impossible to find a global definition. Moreover, the definition of satisfaction must be adapted to the subject. Giese and Cote developed a framework based on common definitions in literature and the opinions of consumers for developing context-specific definitions GİESE. The common elements of all the definitions are stated below:

1) consumer satisfaction is a response, either emotional or cognitive.
2) satisfaction is related to a particular focus (expectations, product, consumption, experience, etc.)
3) the response occurs at a particular time (after consumption, after choice, based on accumulated experience etc.); the time of determination varies by situation.

These three elements have to be defined by the researcher to make use of the definition of satisfaction in a specific study.

For a long time, customer satisfaction was considered as either a cognitive or an affective phenomenon. Since last decade, the affective component has been added to the cognitive component DUBE MORGAN. According to Kroeber-Riel/Weinberg, the consumer decision process is influenced by the affective and the cognitive component of the process Kroeber-Riel/Weinberg. Since satisfaction is the outcome of an evaluation process, which is also a kind of decision, customer satisfaction is also affected by both of the components. Therefore, it is not helpful for this study to simply use the cognitive or affective-based definitions.

As this study will explain how experiential marketing appeals to the feelings and senses of the consumer, this work will put more emphasis on customer satisfaction as an affective response. Therefore, the definition of satisfaction in this study is based on Richard Oliver’s Richard Oliver widespread and recognized disconfirmation paradigm (see figure 1). The disconfirmation paradigm is a model that explains consumer satisfaction as the positive outcome of an emotional and cognitive comparison between the product’s performance and the consumer’s expectations. However, satisfaction can also be the result of the impact of the emotions OLİVER, expectations or/and the product’s performance individually, independently of the evaluation process. OLİVER

In general, customer satisfaction is considered to be a post-purchase phenomenon, but opinions can be different. As a purchase decision can be made after choice, but before the actual purchase of a good, satisfaction may occur prior to choice or even in the absence of purchase or choice. It has been argued that none of these time frames is appropriate since satisfaction can change over time and is only determined at the time the evaluation occurs. In this way, satisfaction differs from an attitude, which is relatively lasting and less related to a specific situation OLİVER

Nevertheless, as this work examines the effects of a brand experience on consumer satisfaction, which may occur before, during and after purchase, this investigation needs to consider all of the possible time frames mentioned above.

1.2.2 The effects of customer satisfaction
Market-oriented management views customer satisfaction as one of the main objectives of their marketing policy. It regards satisfaction as the foundation for success on a long-term basis. This success can be put down to the fact that customer satisfaction has a vital impact on future consumer behaviour, which will be explained in the following paragraphs GİERİNG

According to Fornell, customer satisfaction has a strong effect on customer loyalty. As he discovered in his investigation, products and services that satisfy customers result in high proportion of repeat purchase, which shows loyal customers FORNELL. Repeat purchases, recommendations and complaints are important indicators of future consumer behaviour Homburg Stock. As customer satisfaction can influence whether consumers will purchase from the same company again, it is increasingly becoming the centre of a company’s interest. After all, it is less expensive and more profitable to keep existing customers than to try to gain new ones (Bergman, B., Klefjsö, B., 1994).

On the other hand, satisfaction can be considered as the positive outcome that leads to repeat purchase and beyond that, to customer loyalty HOYER. Nonetheless, a satisfactory customer experience does not automatically lead to customer loyalty since the likelihood that people will become loyal also relies on the intensity of satisfaction JONES. In other words, a completely satisfied customer is more likely to repurchase a certain good than a simply satisfied customer.

Furthermore, customer satisfaction can result in positive word-of-mouth communication. This refers to the fact that when people have a pleasurable consumption experience they will tell other people about it and thus they influence others’ perception of the brand in advance RİCHİNS. The strong impact of word-of-mouth communication on individuals has become even more important with the internet providing people with an effective tool to spread information in the form of either bad or good word-of-mouth.

2 Opportunities for Experiential Marketing to Affect Customer Satisfaction

In this section, the opportunities of experiential marketing that affects customer satisfaction will be explained. Firstly, the disconfirmation paradigm will be explained since this model shows how customer satisfaction exactly occur, also it shows how experiential marketers can positively influence the result of the disconfirmation paradigm.

2.1 The Disconfirmation Paradigm
The dominant framework for explaining consumer satisfaction is Oliver’s disconfirmation paradigm OLVER (figure 1). This paradigm defines consumer satisfaction as a possible outcome of three different processes, which includes both the cognitive and the affective part of the evaluation process OLİVER.

Figure 1
The Disconfirmation Paradigm

The first process that is shown with blue arrows makes the comparison of the consumers’ expectations about a product/service’s performance with the actual performance of the product/service. A disconfirmation occurs when there is a difference in the evaluation process, which can be either positive or negative. It is positive when the performance is higher than the expectations, which results in satisfaction. And it is negative when the performance is lower than the expectations, which causes dissatisfaction. Furthermore, when the performance completely meets the expectations, it means that confirmation level is reached. The outcome is satisfaction as there is no difference between two variables. For example, if consumers expect a detergent that cleans the dirty colourful clothes and they perceive that it actually cleans the dirty colourful clothes than these customers are satisfied. In contrast, if the detergent has not met their expectations by e.g. changing the original colour of the clothes, than these customers would be dissatisfied.

On the other hand, expectations can also directly affect satisfaction HOMBURG. This is shown in the second process, which is explained in the figure with violet arrows (see figure 1). Moreover, emotions can also directly result in satisfaction, which is shown with a red arrow in the figure OLİVER. These three processes are three different approaches that experiential marketing may use to influence customer satisfaction. The three determinants in these approaches are the following: the customer’s expectations, their emotions and the product/service’s performance.

2.1 The influence of experiential marketing on customer’s expectations
The expectation is not only one determinant of the disconfirmation paradigm but it is also a determinant in consumer decision process. The consumer decision process model includes certain steps that a consumer follows while making a decision. Marketers use this model to form their marketing strategies. Yet, Oliver tells that satisfaction is a balanced mixture of cognitive and affective elements OLİVER.

The consumer decision starts when the consumer realizes a consumption problem which should be solved. This problem refers to the difference between an ideal and an actual state. This stage in the model is called problem recognition. The ideal state means the expectations of what consumers wish a product/service to be or how it should perform and the actual state tells the perceived performance of how the product/service really are HOYER

In the disconfirmation paradigm, the determinant expectation means a certain level of quality that a buyer expects from a product HERRMAN. Because of that, this determinant is also used as a standard by the consumer to judge the quality of a performance. The buyer forms his anticipation about the level of performance on his older consumption experiences with the same or a similar good (Cadotte, E. R., Woodruff, R. B., Jenkins, R. L., 1987) and when he buys a certain product for the first time; he also considers its prices as an indicator of the level of performance of the product.

As mentioned before, the determinant expectation can also influence customer satisfaction independently of the disconfirmation process. This is because expectations have the capability to change the people’s perception about an experience itself (Blackwell, R. D., Miniard, P. W., 2001).

A special case is positive expectations about the product’s performance, since positive expectations can also increase the possibility of satisfaction. The reason for this is the selective perception which means that consumers see only what they want to see Hoyer, W., MacInnis, D., 2004). In other words, if the consumer has positive expectations about a brand, he will probably perceive that brand’s performance in a positive way.



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