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Journal of Hospitality & Tourism Research, Vol. 32, No. 3, August 2008, 387-410DOI: 10.1177/1096348008317392© 2008 International Council on Hotel, Restaurant and Institutional Education

RELATIONSHIPS AMONG EXPERIENTIALMARKETING, EXPERIENTIAL VALUE,

AND CUSTOMER SATISFACTION

Yi-Hua “Erin”YuanChihkang “Kenny” Wu

Texas Tech University

Although experience is recognized as a major benefit the hospitality and tourism indus-try offers, the use of experiential marketing in this industry is not well documented.Therefore, this study aims to examine experiential marketing in regard to hospitality andtourism operations. Ten hypotheses were developed to examine relationships amongexperiential marketing, experiential value, and customer satisfaction. Self-reported ques-tionnaires were distributed at four Starbucks in different districts in Taipei, Taiwan, inJanuary 2003. Results of the linear structural relation analyses (LISREL 8.5) indicatethat both the measurement and structural equation models have good overall model fit.Moreover, the overall outcome suggests that experiential marketing should induce cus-tomer satisfaction through emotional and functional values provided by feel perception,think perception, and service quality. Hospitality managers can use the outcome of thisstudy to gain in-depth understanding of customer experiences, develop effective market-ing strategies, and further stage the operational environment that can maximize cus-tomers’ perceived experiential value.

KEYWORDS: customer satisfaction; experiential marketing; experiential value;structural equation modeling

What did consumers bring back from several days of total relaxation andenjoyment of the wonderful views, great facilities, and delicious food on a pres-tigious cruise line to the Caribbean? Besides a few souvenirs, “experience”would be the most important benefit of the vacation.

Although consumers’ needs and wants differ, gaining some positive or nega-tive experiences is an inevitable result of consuming the products/services theypurchase. Experience, or more specifically consumption experience, refers to“the total outcome to the customer from the combination of environment, goods,and services purchased” (Lewis & Chambers, 2000, p. 46) . The nature of theseexperiences is critical for the hospitality and tourism industry because intangi-ble experience is the core of the products/services offered by businesses. Inother words, the products of this industry are always experiential (Williams,2006) and can be classified as a total experience (Lewis & Chambers, 2000).

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Moreover, Schmitt (1999) suggested that the experiences a company delivers toits customers are vital to success of the company. Creating memorable experienceis critical to retaining old customers and attracting new ones (Yelkur, 2000).

Experiential marketing can be seen as a marketing tactic designed by a busi-ness to stage the entire physical environment and the operational processes forits customers to experience. Schmitt (1999) further defined experiential market-ing from the customers’ perspective as customers developing recognition andpurchasing goods or services of a company or a brand after they get experiencesfrom attending activities and perceiving stimulations. Experiential marketing,an emerging form of marketing, focuses not only on a product or a service butalso on an entire experience that a company creates for its customers. Comparedwith traditional marketing, experiential marketing is focused more on the cus-tomers’ experience creation processes, including pre-purchase, moment-of-truth,and post-purchase (Schmitt, 1999).

Experience is the main component of experiential marketing. Businesses usu-ally create special stages for customers to experience through different stimula-tions, including environments, atmospheres, and layouts. As a result ofexperiencing, customers have different perceptions and react to these stimulations.When they walk into these stores, or even close to them, they develop varied per-ceptions about them. Customers’ perceptions should be the outcome of marketingefforts that businesses have made. Therefore, in this study, the performance ofexperiential marketing was examined by measuring customers’ perceptions.

Customers define experiential value from different kinds of experiencesobtained through encountering service providers. This value is important toinduce customer satisfaction (Cronin, Brady, & Hult, 2000; Ennew & Binks,1999; Kristensen, Martensen, & Gronholdt, 2000). In addition, creating andretaining satisfied customers is essential for the success of businesses. Fonvielle(1997) argued that high customer satisfaction is a competitive advantage forbusinesses because it contributes to repetitive purchasing. Researchers havepointed out that the higher customer satisfaction is, the higher will be customerloyalty, intention of repetitive purchasing, positive word of mouth, and marketshare (Bearden & Teel, 1983; Fornell, 1992; Fornell, Johnson, Anderson, Cha,& Bryant, 1996). In this regard, a study connecting experiential marketing,experiential value, and customer satisfaction and further discussing the rela-tionship among these factors by developing a model, would be beneficial tomarketing practitioners.

The concept of experiential marketing has been applied to many areas, suchas retailing, branding, and event marketing. Managers and scholars in the hos-pitality and tourism industry have not, however, paid it much attention(Williams, 2006). Indeed, because experiential marketing is a relatively newconcept in the marketing field, about which little research has been conducted,it is important that empirical studies be designed and implemented to verify thisnew concept and to provide a solid foundation for further research.

The main purpose of this study was to empirically test the congruency of thetheory that experiential marketing can induce customer satisfaction through

388 JOURNAL OF HOSPITALITY & TOURISM RESEARCH




experiential value in the hospitality and tourism industry. Based on the researchpurpose, three general research questions were posed: (1) Can experiential mar-keting induce experiential value? (2) Can experiential value induce customersatisfaction? (3) Can experiential marketing induce customer satisfactionthrough experiential value?

The outcomes of this research can advance the body of knowledge of expe-rience and experiential marketing, as a tool to modernize the hospitality indus-try. These outcomes will also benefit both managers and customers. Results willhelp managers improve their understanding of customer experiences and furtherdevelop effective marketing strategies, as well as allowing for managers andbusinesses to better realize what experiences customers actually desire.Businesses can stage environment and processes to maximize customers’ per-ceived experiential value.

LITERATURE REVIEW

Experience Economy and Experiential Marketing

Economic offerings have continuously evolved over time. Pine and Gilmore(1998) provided a classification to explain the evolution of economic offerings.According to this classification, requiring commodities is the first stage. Next,companies make these commodities into goods by further processing, whichconstitutes the second stage, the product stage. Tangible goods and intangibleservices are combined during the service stage. The final stage, the experiencestage, occurs following the evolution of services. In the end, society moves intothe “experience economy” as a result of this evolution. On entering the age ofexperience economy, customers do not always focus on products. Rather, theypay more attention to experiences; therefore, creating valuable experiences forcustomers becomes a vital challenge for businesses.

Classification and evolution of economic offerings range from commoditiesand goods to services and experiences. The economic benefit is increased by theprogress of this evolution. Businesses create values by charging their customersfor special experiences. Thus, companies sell not just products but, more impor-tantly, good memories and experiences. The profit they obtain is significantlyimproved in the experiences stage compared with the commodity stage. Forexample, one pound of coffee beans is worth only one dollar at a plantation, buta cup of coffee sells for a couple of dollars at Starbucks (Pine & Gilmore, 1998).To develop marketing strategies to focus on creation of valuable experiences isbecoming a key point for businesses’ success in the experience economy.

Pine and Gilmore (1998) divided experiences into four types according totheir positions related to two axes: passive/active and absorption/immersion.These experiences are entertainment (passive/absorption), educational (active/absorption), escapist (active/immersion), and esthetic (passive/immersion). Thedegree to which customers influence performance of activities decides whetherthey are engaging in passive or active participation, whereas absorption and

Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 389




immersion refer to the desire with which they engage in experiences. At oneextreme, absorption refers only to customers receiving some information orstimulation; at the other, immersion means customers being completelyinvolved in an experience.

Examples of the entertainment experience are watching television and goingto a show. In these experiences, customers passively receive different stimula-tion through their senses. The escapist experience is opposite to the entertain-ment experience; for example, an escapist experience would be to act in a showor play in an orchestra. On the other hand, taking a swimming lesson is anexample of the educational experience by which students can learn only byactively participating. In the esthetic experience, individuals totally immerse inthe environment. For example, art lovers appreciate art exhibits in a gallery; theyare completely immersed but do not influence the environment. Customers cre-ate new identities and realities by these experiences (Williams, 2006). Generallyspeaking, the most beautiful experience, the sweet spot, contains qualities of allfour types of experiences (Pine & Gilmore, 1998). For example, visitingDisneyland can be considered a sweet spot experience because it includes all theaspects of these experiences.

Successful businesses create repeat and loyal customers by providing unfor-gettable experiences. These are memorable activities created by a businessthrough its products and services to customers (Pine & Gilmore, 1998). Schmitt(1999) argued that experiences are formed from the interaction among differentevents and mental states; Prahalad and Ramaswany (2000) further argued that cre-ating personal experience would be the future competitive edge for companies.

Experiential marketing is critical for businesses, especially in the hospitalityand tourism industry. Williams (2006) argued that products of this industry arealways experiential. In addition to products/services, people get experiencesfrom staying at a hotel, dining in a restaurant, or visiting a travel destination.Instead of buying new products that they do not have, people desire experiencesthat they have never had. Driver and Toucher (1970) separated experience intofive different phases: planning, leaving for the destination, experiencing the des-tination, returning, and remembering. Customers’ experiences in these phasesare subject to change, especially in the third phase because customers’ experi-ences are complex and affected by many factors (Ittelson, 1978), including con-trollable and noncontrollable factors by businesses. Therefore, creatingunforgettable experiences is critical to the success of businesses in the hospitalityindustry.

Traditional marketing provided useable strategies, tools, and concepts thathelped businesses succeed in an earlier age. Responding to today’s much morecomplicated society and consumers, a features-and-benefits approach of tradi-tional marketing may not, however, be the most appropriate. Williams (2006)argued that experiential marketing is one of the approaches providing a solutionto respond to society and customers. Experiential marketing differs from tradi-tional marketing in four major ways—marketing focus, product categories andcompetition, customer characteristics, and research method (Schmitt, 1999).





Schmitt (1999) defined experiential marketing as customers’ developingrecognition of and purchasing goods or services from a company or brand afterthey experience activities and perceive stimulations. These experiences enhancethe value of a product, a brand, or a company. Nevertheless, experiential mar-keting does not overlook the quality and functions of products and services;rather, it enhances customers’ emotions and sense stimulation. The main pointof experiential marketing is extracting the essence of products and then apply-ing it to intangible, physical, and interactive experiences that increase the valueof products or services and helps customers make their purchasing decisions(Williams, 2006).

Experiential marketing will become a main concept and tool in the market-ing field in the future as the world adopts a more experiential economy(McNickel, 2004); as a strategy, it may be the future direction of marketing(Craig, 2002). Experiential marketing can also be applied to different businessesin different industries, from Ford Motor Company to the North HawaiiCommunity Hospital (Hill, 2001). Experiential marketing motivates customersto make faster and more positive purchasing decisions (Williams, 2006).

In the hospitality and tourism industry, from providers’ points of view, theyuse products and services to create a stage for customers (experiential market-ing); from customers’ points of view, they have their own expectations and per-ceptions. The process of experiencing connects experiential marketing andcustomers’ perceptions. Simply put, the process can be formed as a procedureof staging, experiencing, and perceiving. During or after experiencing, cus-tomers’ perception can be considered the outcome of experiential marketing.Therefore, the performance of experiential marketing was examined by mea-suring customers’ perception in this study.

Customer Value and Experiential Value

Blattberg (1998) pointed out that customers are the most critical asset forbusinesses, so businesses should focus on long-term management of customervalue and attract, develop, and maintain their relationships with their customers.Understanding what factors create customer value is an obviously importantconcern in the marketing field.

To maintain a competitive advantage, creating special and innovative cus-tomer value is necessary (Kotler & Armstrong, 2000). Customer value has beendefined divergently. Monroe (1991) defined it as the comparison between rec-ognized benefits and sacrifices; whereas, Strauss and Frost (2002) suggestedthat it is a combination of customers’ belief, attitude, and experience of a prod-uct. Regardless of different perspectives, the main concepts of customer valueare that it is subjective to customers, perceived after an evaluation process, anddeveloped by a balance between benefits and sacrifices.

Experiential value refers to customers’ perceptions of products or servicesthrough direct use or indirect observation (Mathwick, Malhotra, & Rigdon, 2001).





This value gives customers internal and external benefits (intrinsic/extrinsic values)(Babin & Darden, 1995; Batra & Ahtola, 1991; Mano & Oliver, 1993). Theinternal benefit is that of starting and finishing a task or a job, whereas the exter-nal benefit comprises the pleasure and happiness of completing a process(Babin, Darden, & Griffin, 1994).

In addition to the intrinsic/extrinsic dimension, Holbrook (1994) added adimension, active/reactive, to experiential value. The active value comes fromthe increasing collaboration between customers and businesses; the reactivevalue derives from customers’ evaluations, responses, and understanding of theservices or products they want to purchase. Interactions between perceptions(intrinsic/extrinsic) and the active dimension (active/reactive) further classifyexperiential value into four different categories: consumer return on investment(extrinsic/active), service excellence (extrinsic/reactive), aesthetics (intrinsic/reactive), and playfulness (intrinsic/reactive).

Consumer return on investment includes customers’ assertive input of finances,time, and emotion. When service providers accomplish their commitments, theycreate the value of service excellence (Zeithaml, 1988). Aesthetics mainlyreflects two aspects: visual characteristics and wonderful service, which bothprovide pleasure and help customers to finish their jobs (Deighton & Grayson,1995). Playfulness is the feeling that attracts customers. It is also a way toachieve escapism, temporarily escaping from real life (Huizinga & Ludens,1955; Unger & Kernan, 1983).

Customers can get experiential value from different kinds of experiences.Compared with customer value, experiential value focuses on the value that cus-tomers retain from these experiences. There are many similarities between cus-tomer value and experiential value; however, the research on experiential valueis limited. Measurement of experiential value developed in this study was basedon the literature of customer value (Table 1) because most scholars have agreedthat emotional and functional features are the main components of customervalue. Consequently, the measurement of experiential value in this article isconstituted by these two concepts.

In general, functional value can be considered a basic value delivered to cus-tomers (Berry, Carbone, & Haeckel, 2002; Schmitt, 1999). Does the coffee tastegood? Does the hotel provide a clean room and comfortable bed? On the otherhand, emotional value refers to the feeling or emotional reaction that customersgain during and after experiencing (Berry et al., 2002; Schmitt, 1999). Forexample, does the waiter or server of the restaurant really care about customers?Does the tour guide have a passion to help people learn something? To summa-rize the aforementioned definitions on value, the operational definitions of emo-tional and functional values in this article are presented in Table 3.

Service Quality

Parasuraman, Zeithaml, and Berry (1985) developed a widely accepted con-ceptual model of service quality. They argued that customer satisfaction comesfrom the differences between customers’ perceptions and their expectations of





the service. Expectations are established from word of mouth, personal needs,past experiences, and external communication; whereas the perceived servicequality is created through the moment of truth. When the perceived service isbeyond a customer’s expectations, the customer is satisfied; when the service isbelow expectations, the customer is dissatisfied.

Service quality has been defined in different ways. Garvin (1984) believedthat service quality derives not from customers’ objective evaluation but fromsubjective recognition of service. It is also considered an attitude about an over-all evaluation of service. Bitner, Booms, & Mohr (1994) proposed that servicequality comes from customers’ subjective decisions. Adapted from these con-cepts, service quality in this research is defined as a subjective perception refer-ring to the evaluation of the service that customers encountered, and focusingespecially on interactions with the service provider.

Customer Satisfaction

Pursuing customer satisfaction is a critical goal for organizations, especiallyfor the highly competitive hospitality and tourism industry. There are manyalternatives consumers can choose from, and the cost of switching from one ser-vice provider to another is modest (Sandvik & Grønhaug, 2007). Kotler (1991)argued that satisfying customers’ needs and desires is the only constant princi-ple in organizations. Customer satisfaction, furthermore, plays an important rolein achieving customer loyalty and profitability (Barsky & Nash, 2003).Therefore, learning how to define and measure customer satisfaction are themajor tasks for managers in the hospitality and tourism industry.

Scholars define customer satisfaction from two different perspectives: trans-action-specific and cumulative aspects (Johnson, Herrmann, & Gustafsson,2002). The transaction-specific aspect refers to customers’ assessment of thevalue they obtain after they finish one specific transaction (Howard & Sheth,1969; Engel, Blackwell, & Miniard, 1995; Oliver, 1980). The cumulative aspect


Table 1Summary of the Literature Findings on the Integration

of Customer Value Measurement

Emotional Functional Sociable Scholar Value Value Value

Sheth, Newman, & Gross (1991)Burns (1993)Holbrook (1994)Lai (1995)Naylor (1996)Lapierre (2000)Overby (2000)Mathwick, Malhotra, & Rigdon (2001)Sweeney & Soutar (2001)




is the customers’ overall measurement of all their purchasing and consumingexperiences related to an organization’s past, present, and future performance(Churchill & Surprenant, 1982; Fornell, 1992; Patterson & Spreng, 1997).

Before experiencing products and services, customers have their expecta-tions and/or past experiences. These components are part of the whole experi-ence and also affect the level of customer satisfaction during and after theprocess of experiencing (Berry et al., 2002; Oliver, 1997). Therefore, the cumu-lative aspect is more consistent with the concept of experiential marketing.According to literature of the cumulative aspect, customer satisfaction is definedin this study as after purchase, the evaluation and emotional recognition of thecompletely purchasing process.

THEORETICAL FRAMEWORK AND HYPOTHESES

Based on above discussions, experiential marketing induces experiential valueand customer satisfaction. The theoretical framework of this study (Figure 1) wasdeveloped according to relevant literature to examine this argument. Conceptsof experiential marketing and experiential value were further divided into sev-eral areas to be effectively measured. Experiential marketing is measured bysense perception, feel perception, think perception, and service quality; experi-ential value is measured by emotional value and functional value. The definitionand measurements of each construct are presented in Table 3.

Constructs of Experiential Marketing

Experiential marketing is further separated into five concepts: sense, feel,think, act, and relate marketing (Schmitt, 1999). Sense refers to how customersget perception and information from sight, sound, scent, taste, and touch. Feelmeans customers get emotional perception and information about company andbrand via experience. Think can be described as engaging in creative thinkingthat may result in a reevaluation of the company and its products. Act means tocreate experiences related to the customers’ physical body, longer-term patternsof behavior, and lifestyles. Finally, relate, beyond the individual level, refers tothe connection with other people, groups, or society, which often leads to sense,feel, think, and act experiences.

Based on the definitions above, three of these five concepts (sense, feel, andthink) were selected to constitute the theoretical framework. The respondentsselected in this research were the current customers of Starbucks who haveadopted Starbucks as part of their lifestyles. This adaptation can be consideredthe outcome that customers responded to Starbucks’ act strategies. Because themajor portion of the Starbucks experience focuses on the individual level, it ishard to measure relate experience in this specific subject. Act and relate werenot included, therefore, in the experiential marketing construct in this study.Consequently, sense, feel, and think were emphasized in this research becausethey match the characteristics of the research subjective and help to achieveresearch purposes.





In addition to these three constructs, perceived service quality was added tothe framework because it is one of the important components of experience(Lewis & Chambers, 2000) and supports the overall congruency of the theory ofexperiential marketing. It also significantly affects experiential value and cus-tomer satisfaction (Brand, Cronin, & Routledge, 1997; Cronin et al., 2000;Ennew & Binks, 1999; Fornell et al., 1996; Gooding, 1995; Sweeney, Soutar, &Johnson, 1999). Thus, a theoretical model consisting of four constructs—senseperception, feel perception, think perception, and service quality—was devel-oped to represent experiential marketing in this research.

Experiential Marketing and Experiential Value

Schmitt (1999) suggested that experiential marketing should deliver emo-tional and functional value and positive customer satisfaction. This argumentalso applied to each component of experiential marketing. Customers can alsoobtain positive values through special experience. Berry et al. (2002) mentionedthat an experience can bring emotional and functional values to customers.Many researchers have asserted, moreover, that different environmental factorscreate different customers’ responses. These factors include music (Areni &Kim, 1993; Hui, Dube, & Chebat, 1997; Milliman, 1982), color (Bellizzi,Crowley, & Hasty, 1983), smell (Spangenberg, Crowley, & Henderson, 1996),


Sense

perception

Feel

perception

Emotional

value

Functional

value

Service

quality

Customer

Satisfaction

Think

perception

H1

H2

H3

H4

H5

H6

H7

H8

H9

H10

Experiential Marketing Experiential Value Customer Satisfaction

Figure 1Theoretical Framework of Experiential Marketing,

Experiential Value, and Customer Satisfaction




and level of crowding (Eroglu & Machleit, 1990; Hui & Bateson, 1991). Inaddition, Li (2001) found that color, brightness, music volume, and customers’emotions affect customer satisfaction and time perception. Therefore, sixhypotheses were developed to test the relationships among experiential market-ing and experiential value.

H1: Sense perception induces positive emotional value.H2: Sense perception induces positive functional value.H3: Feel perception induces positive emotional value.H4: Feel perception induces positive functional value.H5: Think perception induces positive emotional value.H6: Think perception induces positive functional value.

Many researchers have suggested that service quality affects customer value.In other words, different service quality leads to different evaluations(Andreassen & Lindestad, 1998; Cronin et al., 2000; Fornell et al., 1996;Hartline & Jones, 1996). Service quality is also an important factor in influenc-ing the value customers place on services (Brand et al., 1997; Gooding, 1995;Sweeney et al., 1999). Therefore, two hypotheses (H7 and H8) were proposedto test the relationship between service quality and experiential value.

H7: Service quality induces positive emotional value.H8: Service quality induces positive functional value.

Experiential Value and Customer Satisfaction

A number of research findings have supported the relationship between valuesand customer satisfaction (Cronin et al., 2000; Ennew & Binks, 1999; Fornellet al., 1996; Kristensen et al., 2000; Patterson & Spreng, 1997). Two hypothesesrelating to experiential value and customer satisfaction were developed to test therelationship between experiential value and customer satisfaction.

H9: Emotional value induces positive customer satisfaction.H10: Functional value induces positive customer satisfaction.

METHODOLOGY

Survey Instrument

Survey development. A self-reported questionnaire was developed to testrelationships among the three main concepts: experiential marketing, experien-tial value, and customer satisfaction as shown on the theoretical model (Figure1). A set of 10 questions regarding experiential marketing was adapted fromSchmitt (1999) and translated into Chinese. Sixteen questions were translatedfrom Brady and Cronin (2001) on service quality, Sweeney and Soutar (2001) onemotional values, Mathwick et al. (2001) on functional value, and Parasuraman,Zeithaml, and Berry (1988) on customer satisfaction. Respondents were askedto indicate their levels of agreement with a five-point Likert-type scale, where





1 = extremely disagree and 5 = extremely agree. Five demographic questionswere also included in this questionnaire.

Content validity. The original questionnaire was examined by a panel ofexperts to evaluate validity of the questions and appropriateness of translationfurther tested by a small group of customers to verify the effectiveness of mea-suring customer’s attitudes.

Data Collection

Starbucks was selected as the research site in this project. Starbucks is aninternational company that has focused its marketing strategy on applying theconcept of experiential marketing (Fan, 2003; Williams, 2006). The “Starbucksexperience” is distinct from others in two ways: unique corporate culture andpassing value to its partners (Michelli, 2007). The company emphasizes deliv-erance of a positive and pleasurable experience to its customers from Seattle,Washington, to all over the world, including Taiwan.

Starbucks is also the most successful chain of coffee shops in Taiwan(Chuang, 2001). The first Starbucks coffee store was established in 1998 inTaipei. As of this writing, there are more than 170 stores in Taiwan (StarbucksCoffee Company, n.d.). “More emotional, less rational” is the main marketingmessage promoted by Starbucks in Taiwan; this message is further communi-cated through employees, for example, by hosting coffee-tasting sessions everymorning to build the strong relationship between the brand and employees. Asa result, employees are willing to spread the message to customers. ForTaiwanese, Starbucks brings not only good coffee but also a new idea of coffeeexperience (Chuang, 2001). An increasing number of Taiwanese go to Starbucksand enjoy the experience, including the atmosphere, music, smell, good coffee,and sense of community. It has become an excellent venue for testing the out-comes of experiential marketing. The purpose of experiential marketing is todesign a stage for customers to experience through different stimulations. Thestimulations of each component of experiential marketing in Starbucks inTaiwan are shown in Table 2.

Field workers. Four fieldworkers were trained to participate in the process ofcollecting data and were separated into two groups. Each group was in chargeof two stores. The training focused on the understanding of all items in the ques-tionnaire and the consistency of asking participants to respond.

Data collection. Questionnaires were distributed at four Starbucks in fourdifferent districts of Taipei, Taiwan, in January 2003. Convenient samples werecollected. The survey was distributed to customers walking out of Starbucksstores and collected by those fieldworkers on site. Respondents were usuallystanding outside these stores while responding to the survey and spent about threeminutes to complete the survey. A total of 420 questionnaires were collected;





46 were uncompleted or unusable and excluded from data entry. Therefore, 374questionnaires were used for the data analysis. The usable rate was 89%.

Statistical Analysis

Variable Definition. The definition and measurements of each construct areshown in Table 3.

Hypotheses testing. The model and the hypotheses were simultaneouslytested by the linear structural relation analyses (LISREL 8.5). The LISRELmodel consists of a measurement model and a structural model. According toDiamantopoulos and Siguaw (2000), the measurement model specifies how thelatent variables are measured in terms of the observed variable and describesmeasurement properties of the observed variable; the structural equation modelspecifies causal relationships among the latent variables and describes thecausal effects and amount of unexplained variances (Diamantopoulos &Siguaw, 2000; Jöreskog & Sörbom, 2001). Three steps were developed to testthe hypotheses. First, internal consistency reliability, convergent validity, anddiscriminant validity were examined. Second, a measurement model with con-firmatory factor analysis was used to validate the proposed measurementindexes. Third, the structural equation model was estimated with LISREL 8.5.

RESULTS

Profile of Participants

The profile of participants’ gender, age, occupation, income, and education arereported (Table 4). As shown in the table, there were more female respondents(55%) than males (45%). The majority of respondents were ages 20- to30-years-old (77%). Most of the respondents were research assistants, sales rep-resentatives, managers, supervisors, professionals, or students. The respondents’


Table 2Characteristics of Starbucks in Taiwan

Sense perception stimulations Visual (e.g., building, product, uniform, interior design,publication); Auditory(e.g., music); Smell(e.g., coffee); Taste (e.g., coffee, dessert);Touch (e.g., product, furniture)

Feel perception stimulations Atmosphere (e.g. brand, interior design, product,people)

Think perception stimulations e.g., coffee seminars, events, community service,social responsibility, surprise events

Service Product making and check-out serviceProducts Mainly unique products / intangiblePrice Relatively high




incomes were in the middle range; almost half of them (48%) earned US$7,500to US$15,000 in a year (compared with 2003 annual per-capita income ofUS$14,821). This income range combined with the no fixed income (29%) rangeaccounted for the largest category. The probable reason for the high percentage


Table 3Definition and Measurements of Each Concept

Construct Definition Measurement Reference

Sense Perception Messages that • visual attention Schmitt (1999), customers get from • auditory attention Parasuraman et al.businesses through • taste attention (1988)visual, auditory, • smell attention smell, and touch • easy usestimulations

Feel Perception Emotional and inner • certain mood Schmitt (1999), messages • emotional mood Parasuraman businesses delver • care et al. (1988)to customers, suchas sincerity andcare

Think Perception Different ways that • thinking Schmitt (1999)businesses make • curiositytheir customersthink and feelcurious

Service Quality A subjective • reliability Brady & Cronin perception referring • timely response (2001)to the evaluation of • attire the service that • need and wantcustomers encounter,especially focusing on the interactions with service people

Emotional Value Customers’ feelings • enjoyment Sweeney & Soutar and attitude toward • return (2001)some products, • relaxation businesses, and • good feeling brands • satisfaction

Functional Value Some financial or • effectiveness Mathwick, Malhotra, mental rewards • convenience & Rigdon (2001), that customers get • shopping Sweeney & from their input desirability Soutar (2001)

• satisfactory price

Customer After purchasing, • good choice Parasuraman et al.Satisfaction the evaluation • satisfactory (1988)

and emotional product recognition of • satisfactory whole purchasing serviceprocesses




of the no fixed income group is that a number of the respondents were students.Finally, the majority of respondents had college degrees (77%).

Demographic characteristics of respondents of this research are in accordwith research of several Starbucks in Taiwan (W. L. Chen, 2002; Y. H. Chen,2001; Chi, 2004). All indicated that Starbucks’ customers are young and well-educated and, furthermore, a high percentage of them are students. However,because the researchers of this study found no reference regarding the uniquecustomer characteristics of Starbucks in Taiwan, they inferred the following rea-sons to explain the results. First, because Taipei is the largest city in Taiwan, alarge number of universities are located there. Second, students usually havemore free time and higher purchasing ability than other people do (Starbucks’price is relatively high in Taiwan). Finally, because drinking coffee is a relatively


Table 4Demographic Profile of Respondents

Variable Frequency %

GenderMale 168 45Female 206 55

Age19 years and younger 28 720~25 167 4526~30 121 3231~35 39 1036~40 14 441~45 4 145 years and older 1 0.3

OccupationManager / Supervisor 16 4.2Assistant / Professional 144 39Student 151 40Unemployed / Housewife 2 0.5Service sector 23 6Others 38 10

IncomeNo fixed income 108 29Less than $7,500 53 14$7,500~$11,250 95 25$11,250~$15,000 85 23$15,000~$18,750 24 6$18,750~$37,500 6 2More than $37,500 3 0.8

EducationHigh school / General equivalency diploma 27 7Certificate of graduation 60 16College degree 216 58Postgraduate degree 71 19




new trend in Taiwan, it is easier for young people to accept the trend than it isfor older people. Not surprisingly, students and professionals are major cus-tomers of Starbucks in Taipei.

Reliability and Validity Analyses

Before testing the overall measurement model, internal consistency reliabil-ity, convergent validity, and discriminant validity were examined. Cronbach’salpha for each construct was calculated to assess reliability. Each value shouldbe above 0.7 for the construct to be reliable (Hair, Anderson, Tatham, & Black,1998). If Cronbach’s alpha of a construct is below the standard, it should bedropped. Results of this assessment are shown in Table 5. The Cronbach’s alphaof each construct is between 0.71 and 0.88. The results show high reliability.

Exploratory factor analysis was used to structure measurements of each con-cept. Factor loadings should be greater than 0.5 (Nunnally, 1978). All factorloadings of these measurements were greater than 0.55 and less than 0.86 excepteasy use and care. Therefore, easy use of sense perception and care of feel per-ception were eliminated from the original questionnaire. All measurementswere constructed alike as the theoretical model developed through in-depth lit-erature review. The average variance extracted (AVE) was also used to examineconvergent validity of each construct. The AVE was checked to see if constructsaccounted for more than 50% of the corresponding items (Fornell & Larcker,1981). Results of the AVE fell between 0.5 and 0.6 (Table 5). The results sug-gested convergent validity.

Discriminant validity is the trait difference between constructs. To test thevalidity in LISREL, the difference between a limited model and an unlimitedmodel was checked in which the larger the difference, the higher the discrimi-nant validity. The constructs were compared with each other. Among the 21pairs of constructs tested, the differences between each pair were statisticallysignificant. The results suggested good discriminant validity.


Table 5Results of Reliability and Convergent Validity on Experiential Marketing,

Experiential Value, and Customer Satisfaction

Cronbach Average Variance Concept Sub concept alpha Extract (AVE)

Experiential Marketing Sense perception 0.7111 0.50Feel perception 0.7478 0.60Think perception 0.7412 0.58Service quality 0.8153 0.53

Experiential Value Emotional value 0.8807 0.59Functional value 0.7586 0.60

Customer Satisfaction Customer satisfaction 0.8074 0.58




The Measurement Model

Results of the measurement model were derived from the confirmatory factoranalysis (CFA) using LISREL. Several indices describe overall model fit of a modelin LISREL to assess the fitting level between observed data and a model, includingchi-square (χ2), goodness-of-fit index (GFI), adjusted goodness-of-fit index (AGFI),root mean square residual (RMR), χ2 ratio, and incremental fit index (IFI).

Squared multiple correlations (SMC) can determine the reliability of eachindicator in LISREL. This value is between 0 and 1. Bagozzi and Yi (1988) sug-gested that SMC should be beyond 0.5. Because SMC of taste attention andsmell attention of sense perception, effectiveness, and convenience of functionalvalue did not achieve the standard, and deleting these measurements did notaffect the overall model, the four indicators were dropped. Therefore, 20 mea-surements and 7 latent variables were entered into the LISREL analysis.

Results of the measurement model evaluation are displayed in Table 6. In thismodel, most of these indices were beyond the recommended standard,GFI=0.93, AGFI=0.91, RMR=0.018, χ2 ratio= 1.86, and IFI=0.96; these out-comes suggested a good measurement model. The model’s chi-square value wasnot significant at the 0.05 significance level (χ2 =272.23, p = 0.00). However, thechi-square value is strongly affected by a sample size. If a sample size is large,the chi-square value is often significant. Instead of chi-square value, χ2 ratio andother fit indices may be more representative.

The Structural Equation Model

Generally, the structural equation model had good evaluation results in over-all model fit (Table 6) because the results of indices were beyond the recom-mendation level, GFI=0.93, AGFI=0.90, RMR=0.020, χ2 ratio=1.80, andIFI=0.96. The model’s chi-square value was significant at the 0.05 significancelevel (χ2 =284.24, p = 0.00). However, χ2 ratio and other indices exhibited goodmodel fitting results.


Table 6Results of Overall Model Fit on Experiential Marketing, Experiential

Value, and Customer Satisfaction

Results of Results of Recommended Measurement Structural

Index level model equation model

Chi-square (χ2) p > .05 p = 0.00 p = 0.00Goodness-of-Fit Index (GFI) More than 0.9 0.93 0.93Adjusted Goodness of Fit More than 0.9 0.91 0.90

Index (AGFI)Root Mean Square The less, the better 0.018 0.020

Residual (RMR)χ2 ratio Less than 3 1.86 1.80Incremental Fit Index (IFI) More than 0.9 0.96 0.96




Among the model’s 10 hypotheses, seven hypotheses are supported (Figure 2),including H3 (t = 5.01, p < 0.01), H5 (t = 1.96, p < 0.05), H6 (t = 2.00, p < 0.05),H7 (t = 6.88, p < 0.01), H8 (t = 4.31, p < 0.01), H9 (t = 10.43, p < 0.01), andH10 (t = 9.12, p < 0.01); three hypotheses were not supported, including H1 (t =−1.46, p > 0.05), H2 (t = −1.32, p > 0.05), and H4 (t = 0.42, p > 0.05).

From the results of hypothesis testing, several paths of this model were sup-ported: feel perception affects customer satisfaction by means of emotionalvalue; service quality affects customer satisfaction by means of functional andemotional values; and think perception affects customer satisfaction throughemotional and functional values.

The results also showed that think perception and service quality havestronger effects than sense perception and feel perception because of the largercoefficients of think perception and service quality in the model. In addition, theresults demonstrated that think perception and service quality are very impor-tant factors when a company attempts to implement experiential marketing.

CONCLUSIONS AND IMPLICATIONS

A theoretical model was proposed to explore the relationship between expe-riential marketing and customer satisfaction in a hospitality setting in Taiwan.Performance of experiential marketing was examined by measuring customers’perception because the process of experiencing connects experiential marketingand customers’ perception. Results of this article show that 7 of the 10 hypothe-ses were supported. Generally, this study concludes that experiential marketingcould partially induce customer satisfaction because Hypotheses 3, 5, 6, 7, 8, 9,and 10 were supported. More specifically, experiential marketing can inducecustomer satisfaction through emotional and functional value provided by feelperception, think perception, and service quality. Based on these results, severalsuggestions were constructed for further research.

Outcomes on sense perception differ from the results reported by otherresearchers (Areni & Kim, 1993; Bellizzi et al., 1983) who argued that senseperception should play an important role in experiential marketing. Hypothesesrelated to sense perception were not supported in this research. Consequently,investigating the possible reasons behind this incongruence in the theoreticalmodel will be appropriate for future research.

The researchers propose several possible explanations regarding the incon-gruence in the hypotheses related to sense perception. First, repeat customersmay not pay too much attention to the decoration, music, or layout of the storebecause they are familiar with the establishment. Second, the threshold of senseperception may be another cause. When an environment achieves a certainthreshold, customers will not perceive minor differences. Third, other measure-ment tools might be more appropriate to assess the perception of sense thanquestionnaires, for example, interviews or focus groups. Fourth, because of asurplus of information at the time of data collection, respondents may haveomitted less important sense information. Finally, sense stimulation may be a





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hygiene factor that may not lead to satisfaction but is necessary to attract cus-tomers, similar to the two-factor theory proposed by Herzberg, Mausner, andSnyderman (1959), which has been widely accepted to explain employees’ jobsatisfaction within an organization.

One practical implication based on the results of sense perception in thisstudy is that hospitality operators should be advised to reallocate their monetaryinvestment on decoration and other facilities, which had been thought to providecustomers with strong stimulation that could overcome the intangible character-istics of service products. If indeed sense perception can be verified to be not asimportant as previously thought, hospitality businesses could allocate moremoney to the core operations, such as design and higher-quality products, or hireand train better personnel to deliver better services. In this sense, they could usetheir capital more efficiently and the return on investment would be higher.

No doubt Starbucks has invested in a considerable effort to create a goodenvironment for its customers regarding the experiential marketing concept.Based on results of this research, Starbucks should consider the role of senseperception in its business. As mentioned above, sense perception may not be animportant factor for attracting customers to Starbucks. Although Starbucks waschosen to be the research site, the researchers believe that the results of thisresearch may be applied to other hospitality operations.

Experience audit and experience motif proposed by Berry et al. (2002) may begood tools for operations to improve the management of its total customer expe-rience. That is, managers can use videotape or in-depth interviews to increaseunderstanding of customers or potential customers’ perception of their experi-ences, especially on sense perception. Based on results of the experience audit,businesses could develop an experience motif reflecting their core values. Theycould further examine whether every clue or element of their customers’ experi-ences matches the motif to help modify or improve customers’ experiences.

This study empirically supports the theory that experiential marketinginduces customer satisfaction through experiential value. In addition, the syner-getic effects of experiential marketing and experiential value simultaneouslycontributing to customer satisfaction have not been reported by other researchers.Therefore, this study can serve as the basis for future study regarding experientialmarketing and customer satisfaction.

This article can provide managers with a new look at marketing, especially inthe hospitality industry. Most managers have not considered experiential market-ing because they assume their customers are rational and make decisions based onfunctional product features, for example, price and quality. This assumption is notentirely valid today; managers should, therefore, take account of “excellent andunique experiences” for customers. The outcome of this research also providesempirical supports for managers to implement experiential marketing strategies.In conclusion, the outcomes of this article should help marketing managersdevelop appropriate strategies to design and stage operational processes and phys-ical environments to satisfy their customers. On the other hand, customers alsobenefit from the unforgettable experiences they desire.





RECOMMENDATIONS FOR FUTURE RESEARCH

Several suggestions have been drawn for future study. First, the researchmodel can be applied to other hospitality settings such as lodging and/or food-service operations. New results can be compared with the outcomes suggested inthis study to examine any differences between industries. Second, future researchcan focus on sense perception to discover the possible reasons why the twohypotheses related to sense perception were not supported. Third, Williams(2006) argued that getting feedback beyond questionnaires would be more cre-ative and innovative solutions when businesses deal with the issue of customerexperiences. Thus, using qualitative methods to conduct a research about experi-ential marketing may be another good direction. Finally, the research model canalso be connected with other important concepts in the marketing field, such ascustomer loyalty. Therefore, the relationship among experiential marketing, cus-tomer satisfaction, and customer loyalty can be developed and may be supported.

RESEARCH LIMITATIONS

Data used in this research were collected from four Starbucks in Taipei,Taiwan. Because of the specific target customers of Starbucks in Taiwan (W. L.Chen, 2002; Y. H. Chen, 2001; Chi, 2004), it is inevitable that characteristics ofrespondents in this study were not normally distributed; for example, many ofthe customers were students and young people. Moreover, this research focuseson the scope of the hospitality and tourism industry. Consequently, it may bedifficult to transfer the findings to other industries or countries.

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Submitted October 20, 2006Final Revision Submitted March 1, 2007Accepted May 15, 2007Refereed Anonymously

Yi-Hua “Erin” Yuan (e-mail: [email protected]), is a doctoral student in theDepartment of Nutrition, Hospitality, and Retailing at Texas Tech University, Box 41162,Lubbock, Texas 79409-1162.

Chihkang “Kenny” Wu (e-mail: [email protected]), is an assistant professor in theDepartment of Nutrition, Hospitality, and Retailing at Texas Tech University, Lubbock,Texas 79409-1162.


Documents

Relationships Among Experiential Marketing, Experiential Value, and Customer Satisfaction