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EXPERIENTIAL MARKETING, EXPERIENTIAL VALUE, PURCHASE BEHAVIOUR AND
CUSTOMER LOYALTY IN THE TELECOMS INDUSTRY
By
MOSES OBONYO
2006/HD10/6171/U
(PLAN A)
A RESEARCH DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE IN MARKETING
MAKERERE UNIVERSITY
NOVEMBER, 2011
i
DECLARATION
I, Moses Obonyo declare that this research dissertation is my own original work, and it has never
been presented to any university or institution for the award of any academic qualification.
Signature..
MOSES OBONYO
2006/HD10/6171/U
ii
APPROVAL
This is to certify that this research dissertation has been submitted for examination with our
approval as university supervisor.
Signed : .
Dr. Joseph Ntayi
Supervisor
Signed : .
Mrs. Sarah Eyaa Bulaamu
Supervisor
iii
DEDICATION
This piece of work is dedicated to my late dad, Mr. Eugenio Okori, my Mother, Mrs. Florence
Atai Okori and the entire Olaka clan.
iv
ACKNOWLEDGEMENT
I am specifically delighted to mention the following; my wife Susan Juliet and my daughter
Gabrielle who have been my rock through the times. My family and friends who have patiently
endured the challenging times and borne with all the times we have gone through together, with
a constant cheer; all of you have always encouraged me greatly. Participating respondents, who
always warmly welcomed me and made my interviews very fruitful.
My special thanks also go to my supervisor, Dr. Joseph Ntayi and Mrs. Sarah Eyaa for their
encouragement, patience, good will and professional guidance. I would also like to thank, my
classmates and my lecturers at the University, who have been a source of continuous
encouragement and growth.
I am also indebted to all the people whose guidance made this study a success. I would like to
thank them here as I will not be able to mention all of them by name. Their contributions will
always be in my memory. May all of you out there consider this to be a token of my
appreciation to you.
v
TABLE OF CONTENTS
DECLARATION ..........................................................................................................................................................i
APPROVAL ................................................................................................................................................................ ii
DEDICATION ........................................................................................................................................................... iii
ACKNOWLEDGEMENT ....................................................................................................................................... iv
LIST OF TABLES .................................................................................................................................................. viii
ABSTRACT ............................................................................................................................................................... ix
CHAPTER ONE ......................................................................................................................................................... 1
INTRODUCTION ...................................................................................................................................................... 1
1.1 Background to the Study ............................................................................................................................... 1
1.2 Statement of the Problem .............................................................................................................................. 4
1.3 Purpose of the Study ...................................................................................................................................... 4
1.4 Research Objectives ....................................................................................................................................... 4
1.5 Research Questions ........................................................................................................................................ 5
1.6 Scope of the Study .......................................................................................................................................... 5
1.6.1 Subject scope ................................................................................................................................................... 5
1.6.2 Geographical scope ........................................................................................................................................ 5
1.6.3 Time Scope ...................................................................................................................................................... 5
1.7 Significance of the Study ............................................................................................................................... 6
1.8 Conceptual Framework .................................................................................................................................. 6
CHAPTER TWO ....................................................................................................................................................... 8
LITERATURE REVIEW ........................................................................................................................................ 8
2.1 Introduction ..................................................................................................................................................... 8
2.2 Experiential Marketing .................................................................................................................................. 8
2.3 Experiential Marketing and Customer Loyalty .......................................................................................... 9
2.4 Experiential Marketing and Experiential Value .......................................................................................10
2.5 Experiential Value and Purchase Behaviour ............................................................................................12
2.6 Experiential Marketing, Experiential Value and Customer Loyalty .....................................................14
2.7 Experiential Marketing, Purchase Behaviour and Customer Loyalty ...................................................16
CHAPTER THREE .................................................................................................................................................19
RESEARCH METHODOLOGY .........................................................................................................................19
3.1 Introduction ...................................................................................................................................................19
3.2 Research Design ..........................................................................................................................................19
3.3 Study Population and Area ..........................................................................................................................19
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3.4 Sample Size and Sampling Technique ......................................................................................................20
3.5 Data Sources and Data Collection Instruments ........................................................................................20
3.6 Measurement of variables............................................................................................................................21
3.7 Validity and Reliability Instrument ............................................................................................................22
3.8 Data Processing and Analysis .....................................................................................................................23
3.9 Limitations to the Study ...............................................................................................................................23
CHAPTER FOUR ....................................................................................................................................................25
PRESENTATION AND INTERPRETATION OF RESULTS ....................................................................25
4.1 Introduction ...................................................................................................................................................25
4.2 Response Rate ...............................................................................................................................................25
4.3 Sample Characteristics .................................................................................................................................25
4.3.1 Gender distribution .......................................................................................................................................26
4.3.2 Level of Education distribution ..................................................................................................................26
4.3.3 Period worked with the company ...............................................................................................................27
4.3.4 Age Group of respondent ............................................................................................................................28
4.4 The Relationship between the Study Variables ........................................................................................29
4.4.1 Experiential Marketing and Customer Loyalty ........................................................................................29
4.4.2 Experiential Marketing and Purchase Behaviour .....................................................................................30
4.4.3 Experiential Marketing and Experiential Value .......................................................................................30
4.4.4 Experiential Marketing, Experiential Value and Customer Loyalty .....................................................30
4.5 Regression Analysis .....................................................................................................................................31
4.5.1 Regression Model for the study variables .................................................................................................31
4.6 Analysis of Variance (ANOVA) ................................................................................................................32
4.6.1 ANOVA results for Gender by Variable. ..................................................................................................32
4.6.2 ANOVA results for Level of Education by Variable ..............................................................................33
4.6.3 ANOVA results for Age Group by Variable ............................................................................................35
CHAPTER FIVE .....................................................................................................................................................37
DISCUSSION, CONCLUSION AND RECOMMENDATIONS..................................................................37
5.1 Introduction ...................................................................................................................................................37
5.1.1 Experiential Marketing and Customer Loyalty ........................................................................................37
5.1.2 Experiential Marketing and Purchase Behaviour .....................................................................................37
5.1.3 Experiential Marketing and Experiential Value .......................................................................................39
5.1.4 Experiential Marketing, Experiential Value and Customer Loyalty .....................................................40
5.2 Conclusions ....................................................................................................................................................41
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5.3 Recommendations ..........................................................................................................................................41
5.4 Areas for further study .................................................................................................................................43
Reference .....................................................................................................................................................................44
APPENDIX I ................................................................................................................................................................48
viii
LIST OF TABLES
Table 3.1: Sample Size .............................................................................................................................. 20
Table 3.2: Reliability ................................................................................................................................. 22
Table 4.1: Respondent Category by Gender ........................................................................................... 26
Table 4.2: Respondent Category by Level of Education ...................................................................... 27
Table 4.3: Period worked with the company .......................................................................................... 27
Table 4.4: Age Group of respondent ....................................................................................................... 28
Table 4.5: Relationships between Variables/Zero Order Matrix ......................................................... 29
Table 4.6: Prediction Model for the study variables ............................................................................. 31
Table 4.7: ANOVA results for Gender by Variable .............................................................................. 32
Table 4.8: ANOVA results for Level of Education by Variable .............................................................. 34
Table 4.9: ANOVA results for Age Group by Variable ....................................................................... 35
ix
ABSTRACT
The study examined the relationship between experiential marketing, experiential value,
purchase behaviour and customer loyalty in UTL. The study undertook a cross sectional
survey design with a population of 1,090 respondents from which a sample of 381 was
drawn. Self-administered questionnaires were used to collect responses. Measurement of the
relationships of the study (experiential marketing, experiential value, purchase behaviour and
customer loyalty) was done and subjected to rigorous data processing and analysis using the
relevant statistical computer software packages.
From the findings, the relationships between experiential marketing, experiential value,
purchase behaviour, experiential value and customer loyalty were found to be positive and
significant. Results from regression analysis showed experiential marketing, experiential
value and purchase behaviour were significant predictors of customer loyalty. The study
recommends therefore, that since the model could only explain 45.8% in variance of the
customer loyalty of UTL products and services, a study be carried out comprising of other
factors which were not part of the model. Likewise, to study the true nature and quality of
experiential marketing, experiential value and customer loyalty, a longitudinal study is more
appropriate.
1
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Consumers are not just willing to buy products, but are ready to experience them and some will
go so far that they will help companies build them. Therefore, experience is a central element
of the life of todays consumer (Schmitt, 2003). Experience occurs as a result of encountering
through things and thus, experience is the stimulation of a single event, for example, marketing
before and after purchasing (McLuhan, 2008). Experience includes the whole living element,
and usually is caused by directly observing or participating in events, no matter if the events
were real, dream-like or virtual. Experience usually is not unprompted but induced.
Experiential marketing is the operator standing on consumer's point of view of consumers to
experience the concept of the purchase, process of the purchase, thoughts of purchase and
driving force of the purchase, that is, from a consumer's senses, feelings, thinking, action and
connection these five aspects define and design the way of thinking about marketing (Schmitt,
2001). It advocates the experience, enables customers to experience and become directly
involved as the main body, creating a kind of "feeling that will not forget" satisfy their needs
mentally to the greatest extent in order to win customer trust and loyalty so that to promote
product sales (Liu, 2006).
Therefore, a well designed experience engages the consumer, becomes memorable and allows
for a free interpretation as it is non-partisan (McLuhan, 2008). McLuhan, (2008) attests that the
growth of quality, intensity, meaning and value are outcomes of an experience. Positive
2
experiences need to become institutionalized within the system so that all touch points deliver
the brand essence (Shaw and Ivens, 2005). This ensures that there is no gap between the brand
promise and the brand delivery and attempts to connect consumers with brands in personally
relevant and memorable ways and also gives customers an opportunity to engage and interact
with brands, products, and services in sensory ways(Ponsonby-Mccabe and Boyle, 2006).
Personal experiences help people connect with a brand and make intelligent and informed
purchasing decisions. When done right, it is the most powerful tool to win customer loyalty
(Smith and Wheeler, 2002). Kotler and Keller, (2006) stated that emotion, based on
consumption, impacts a consumers satisfaction judgment. In essence, an outstanding customer
experience will certainly lead to customer satisfaction which normally will result in building
brand loyalty. Intuitively, brand loyal consumers may be willing to pay more for brand because
they perceive some unique value in the brand that no alternative can provide (Xiao, 2004).
Uganda Telecom Limited (UTL), previously a government parastatal and the only
telecommunications provider in the country offering landline services, until the introduction of
the liberalization policy, which brought other entrants into the telecommunications industry. To
date, subscriber estimates for the four major operators: MTN, Uganda Telecom, Warid and
Zain Uganda show that the number of active mobile subscribers in Uganda has risen to more
than 7.7 million up from 5.7 million in March, 2009 (Reports from Business Power, 2008). In
February, 2009, the UTL operator hit the one million mark, UTL Public Relations Manager,
Mr. Mark Kaheru, said the number was achieved, due to its aggressive $150 million network
and expansion plan. UTL commands a share of 17.5% of the customers loyal to its network
(company profile, 2008) leaving 82.5% of which MTN enjoys a 66% market share and the rest
is shared between Zain and Warid. Despite UTLs long existence in the telecom industry, the
3
market share of the company has remained below averaged compared to competitor
companies. According to the UCC Report (2006), UTL has a wide range of products and
services offered, although meeting customers expectations is still somewhat challenging for
the company. For example, the companys telephone network coverage is limited to particular
regions with regular experiences of poor connectivity of the telephone lines, delays in repairs
of damaged telephones and installation of new lines. The telecom statistics show that the
companys products and services market share had reduced from 18.3% to 14.8 %.
The presence and visibility of the companys products and adverts on the markets was being
constrained by dealers having to travel to the company headquarters to stock products contrary
to competitor companies which deliver the products to their dealers. Likewise, the Business
Development Coordinators were failing to effectively monitor product inventories and
merchandising of the company products hence causing stock outs of the company products and
limited promotional materials respectively. Since customer intentions are predetermined by
experiences, it is important that consumers experience the concept of the purchase, process of
the purchase, thoughts of purchase and driving force of the purchase. UTL continues to use
traditional marketing methods of print and radio advertisement, which seem not to be yielding
the expected results of enhancing customer loyalty. Although UTL prides it is self of having
realized growth in clientele base, but there was no planned improvements in network coverage
and databases to meet the growth. This resulted into network congestions, dropped calls and
delayed SMS deliveries which resulted into phone churning (The New Vision 2/8/2007, The
Daily Monitor 8/31/07, Sunday Monitor 8/25/7007) which compromised the value of
customers experiences. The shortcomings in the delivery of the services to the customers
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explain why the service centres/ departments are always congested with long queues of
customer complaints.
1.2 Statement of the Problem
The market share of UTL has continued to stagnate in comparison to other major players such
as MTN Uganda in the Ugandan telecom sector (UTL Quarterly Report, 2008). The companys
continued use of traditional marketing methods to communicate company products and
services and delivery of poor services has led to network congestions, dropped calls and
delayed SMS deliveries, phone churning, limited network coverage and lack of presence and
visibility of the company products and communication materials, a situation that has greatly
damaged the image of UTL (Telecommunications Report, 2007). The continuous use of
traditional marketing methods, the lack of customers experiencing value during the
consumption of the products and services with little attention on customer loyalty by the
company may attribute to the low levels of market share, profitability and low capacity
utilization in the telecom sector in Uganda.
1.3 Purpose of the Study
The study examined the relationship between experiential marketing, experiential value,
purchase behaviour and customer loyalty in UTL.
1.4 Research Objectives
i) To examine the relationship between experiential marketing and customer loyalty.
ii) To establish the relationship between experiential marketing and purchase behaviour.
iii) To determine the relationship between experiential marketing and experiential value.
5
iv) To determine the relationship between experiential marketing, experiential value and
customer loyalty.
1.5 Research Questions
i) What is the relationship between experiential marketing and customer loyalty?
ii) What is the relationship between experiential marketing and purchase behavior?
iii) What is the relationship between experiential marketing and experiential value?
iv) What is the relationship between experiential marketing, experiential value and
customer loyalty?
1.6 Scope of the Study
1.6.1 Subject scope
The study was confined to the relationship between experiential marketing, experiential value,
purchase behaviour and customer loyalty in UTL.
1.6.2 Geographical scope
The study comprised of corporate customers, dealers, Small & Medium Enterprises and UTL
staff in central region. In the region focus was on Kampala Outer one of UTLs Regional
Territories covering Wakiso, Mpigi and Mukono. The focus was put on Kampala Outer one
because this is where most of the UTLs corporate customers and SMEs are located.
1.6.3 Time Scope
The study considered clients of UTL who have been consuming the products of the company
for a period of 5 years starting 2004 to 2009. Also, the company records within the same period
were used for the study.
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1.7 Significance of the Study
i) The results of the study will help the management of UTL realize the effect of
experiential marketing on customer loyalty so as to develop the necessary strategies to
strengthen loyalty through relaying emphasis on experiential marketing.
ii) For the academicians, the study will bring out the relationship between experiential
marketing, experiential value, purchase behaviour and customer loyalty. The results
will contribute to the existing pool of knowledge and debate on experiential marketing,
customer quality perception, customer satisfaction and loyalty, which in turn will be
used as a future reference for other researchers by drawing examples from the Ugandan
setting.
iii) For the policy makers such as the Ministry of Information Communication Technology
and the Uganda Communications Commission, the findings and recommendations will
be useful in the development and strengthening of the existing policies and regulations
in the telecommunication sector.
iv) The study will identify problems in the telecommunications sector and suggest
recommendations on how the telecommunication companies can develop strategies that
can enable them overcome the challenges in the sector.
1.8 Conceptual Framework
The framework shows the different determinants of customer loyalty. The model shown in the
figure below examines the relationship between experiential marketing, experiential value,
purchase behaviour and customer loyalty. Experiential marketing plays a big role in
communicating the product/service to the consumer in such a way that loyalty is attained.
7
According to Fulbright, Troche, Skudlarski, Gore & Wexler (2001) experiential marketing is
positively related to experiential value. The same was observed by Schmitt (2001) for the
relationship between experiential marketing and purchase behaviour. McLuhan (2008)
recognizes experiential value as independent contributors to customer loyalty.
Fig. 1.1: Conceptual Framework
Source: Literature review (Williams, 2006, McCole, 2004, Andrews et al, 2007 and Gentile et al, 2007)
Experiential Marketing Sensorial Emotional Cognitive Life style Relational
Purchase Behavior
Customer Loyalty Attitudinal loyalty Behavioral loyalty Cognitive loyalty
Experiential Value Entertainment Visual appeal Interaction Value Return on investment
8
CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This section presents a review of the relevant literature on the study variables of experiential
marketing, experiential value, purchase behaviour and customer loyalty.
2.2 Experiential Marketing
Schmitt (1999) is primarily responsible for the rise of experiential marketing. He stated that: . .
. traditional marketing and business concepts offer hardly any guidance to capitalize on the
emerging experiential economy (LaSalle & Britton, 2003). Experiential marketing is
essentially concerned with the six senses: smell, vision, taste, hearing, touch and balance.
Experiential marketing has grown in importance because traditional marketing has largely
ignored the notion of act experiences. Experiential marketing is not a fad. It is being
implemented in practice, yet is not accounted for in the various philosophies (concepts) of
marketing. According to US and European marketing experts, experiential marketing is set to
turn most of traditional marketing on its head.
A study conducted by Marketing Week (Newzealand Marketing Magazine, 2003) forwarded
that 71 per cent of senior executives in the US and UK agreed that the customer experience is
the next big battleground. Experiential marketing will rise in importance because marketing in
the twenty-first century is more challenging than ever due to fragmented media, clever and
articulated consumers, and the rise of the free-thinking consumer. Experiential marketing is
9
about more than a one-off experience. Its a totally new way of thinking about marketing
(Xiangyi, 2006). The crux of experiential marketing is that a marketer should not only be
concerned with customer satisfaction. He or she should be (more) concerned with making the
consumer emotionally attached to the product/service.
2.3 Experiential Marketing and Customer Loyalty
Customer loyalty is defined by Bowen & Chen, 2001 as the degree to which a customer
exhibits repeat purchasing behavior from a service provider, possesses a positive attitudinal
disposition towards the provider and considers using only this provider when a need for this
service arises. Whereas, Oliver, (1999) defines loyalty as: a deeply held commitment to rebuy
or repatronize a preferred product/service consistently in the future, thereby causing repetitive
same-brand or same-brand set purchasing, despite situational influences and marketing efforts
having the potential to cause switching behaviors. There are three dimensions of loyalty which
include behavioral, attitudinal and cognitive where behavior loyalty is measured by
determining the purchase frequency of the products and services of the company, attitudinal
loyalty is determined by measuring the intention to repeat purchase and cognitive loyalty
determined by measuring top of mind (how easily a consumer can recall the brand) (Milligan
& Smith, 2002).
Experiential marketing represents a fundamental shift from the traditional marketing concept
with regards to segmentation. Newzealand Marketing Magazine (2003) reported that
traditional marketing is no longer as effective as it once was . . . in this new world,
experiential marketing creates relationships. Again, experiential marketing represents a
divergence from the traditional teachings and once again provides evidence that it is time to re-
10
vitalise, re-think, re-align and refocus both the concept and the function to reflect
contemporary practices. Traditional marketing thinking fights against embracing experiential
marketing yet pioneers are making it work. One of our criticisms in the past has been that
marketing lacks imagination and that current research methods are not producing new insights
into customers behaviour because they are encumbered by traditional segmentation, which is
not as powerful as revealing attitudes and value sets. The experiential approach seeks to
identify behaviours (or attitudes and value sets) held in common across an audience whose
demographic characteristics (traditional basis of segmentation) might be quite diverse. The
idea is that once you resonate with that value set, it becomes emotional and the customer is far
likely to be loyal. Arguably, of course, the more emotional the product, the more it lends itself
to an experiential marketing campaign (Newzealand Marketing Magazine, 2003).
2.4 Experiential Marketing and Experiential Value
Experiential creative is all about providing a shopping atmosphere that is relevant to the
customer, one that includes them in the process. Experiential Marketing is the operator
standing on consumer's point of view of consumers to experience the concept of the purchase,
process of the purchase, thoughts of purchase and driving force of the purchase, that is, from a
consumer's senses, feelings, thinking, action and connection this five aspects to define and
design of the way of thinking about marketing (Forlizzi & Ford, 2000). Experiential Marketing
has changed the past concept that only stressing "clients" or "customer service" manner. It
advocates the experience, enables customers to experience and become directly involved as the
main body, creating a kind of "feeling that will not forget" satisfy there needs mentally to the
greatest extent in order to win customer trust and loyalty so that to promote product sales
(Farinet & Ploncher, 2002). Experiential Marketing breaking the assumption of the "rational
11
consumer" and believe that the consumer have both sense and sensibility, and consumers
experience in the pre-sale, sale, after-sale are the key to study the behavior of consumers and
how to manage the brand of a competation.
Consumers today are seeking value, choice, and a great customer experience. Current retailing
literature highlights the critical role of service experience and proposes that retailers should:
create a theatrical retailing environment, stress fun, excitement and entertainment; and
encourage greater customer participation in the retail service experience (Mathwick et al.,
2001). Market trends also show that the role of customer experiential value has attracted
growing attention among practitioners in the retail industry. Douglas & Craig (2000)
broadened the traditional conceptualization of experiential value to incorporate three spheres:
extrinsic versus intrinsic value; active versus reactive value; and self- versus other-oriented
value. In a shopping context, extrinsic value is acquired from satisfying utilitarian consumption
goals such as saving money, whereas intrinsic value is derived from an enjoyable and playful
shopping trip (Caru & Cova, 2007). On the other hand, reactive value refers to a situation when
customers appreciate the physical shopping environment or respond positively to service
personnel. Active value, in contrast, results from customers efficient manipulation of the
shopping resources to satisfy their functional or affective needs (Kim, 2002). An experiential
value scale (EVS) was devised by Mathwick et al., (2001) for measuring these four sub-
dimensions of the customer experiential value. One main contribution of the present study is to
link service encounters with the experiential value theory.
The perceived excellence value reflects the product performance and generalized consumer
appreciation of a service provider who demonstrates his/her expertise and maintains a reliable
12
service performance. Peppers & Rogers (2000) suggested that consumers favor particular
objects or experiences owing to their ability to accomplish certain objectives or perform certain
expected functions. That is, excellence value involves ensuring that patronizing shopping malls
results in value-added services that exceed ordinary expectations. Finally, perceived
playfulness, which is created by customers themselves, is an inner, initiative and self-oriented
experience (Caru & Cova, 2003). According to Mathwick et al. (2001), the major distinction
between perceived playfulness and perceived aesthetics is that the former reflects the active
role the customer adopts as exchange is elevated to play. The playful or hedonic shopping
value mirrors the potential amusement and emotional worth of shopping (Calder & Malthouse,
2006). It is suggested that a playful exchange experience is reflected in the intrinsic enjoyment
associated with actively engaging in shopping for pleasure or an escape of everyday, mundane
consumption behavior. A recent study by Pine & Gilmore, (1999) associated consumer
participation in retail services with audience participation in theater, and the authors stressed
the importance of joyful customer participation in the service experience. Interestingly, the
task-related side of shopping has been more widely studied than the fun side (Prahalad &
Ramaswamy, 2004).
2.5 Experiential Value and Purchase Behaviour
The value that motivates consumption behavior has been attributed to functional, conditional,
social, emotional and epistemic utility (Lee & Overby 2004). Despite this broad
conceptualization, empirical researchers have traditionally interpreted value more narrowly as
the tradeoff between quality and price (Szymanski & Hise 2000). In investigating the price
dimension, value researchers have come to recognize that the "price" customers pay can extend
far beyond money to include investments of time and effort (Lee & Overby 2004). The
13
consumption experience itself can also be rich in value. Experiential value perceptions are
based upon interactions involving either direct usage or distanced appreciation of goods and
services. These interactions provide the basis for the relativistic preferences held by the
individuals involved. Experiential value has been said to offer both extrinsic and intrinsic
benefit.
In a retail context, extrinsic benefit is typically derived from shopping trips that are utilitarian
in nature, often initiated as "an errand" or "work" (Reardon & McCorkle 2002). An
extrinsically oriented shopper is often happy to simply get through this type of exchange
encounter. Intrinsic value, by contrast, derives from the "appreciation of an experience for its
own sake, apart from any other consequence that may result". Reardon & McCorkle (2002)
note the subjective and personal nature of intrinsic value perceptions that result from the "fun
and playfulness (of an experience), rather than from task completion." Holbrook (1994)
broadens the traditional extrinsic-intrinsic conceptualization of experiential value by including
an activity dimension.
Reactive or passive value derives from the consumer's comprehension of, appreciation for, or
response to a consumption object or experience. Active or participative value, on the other
hand, implies a heightened collaboration between the consumer and the marketing entity.
Deighton and Grayson (1995) cite consumer collaboration as a necessary prerequisite to
creating a playful, game like exchange experience. In their view, the marketer "lures the buyer
across a threshold" from distanced appreciation to active collaboration, and in the process,
opens the door to a broad range of value sources. Collaboration can come in the form of
cognitive, behavioral or financial investment on the part of the consumer. The activity
14
dimension is used in this study as a means of bringing economic and experiential sources of
value under one conceptual umbrella.
The typology of experiential value proposed by Holbrook (1994) suggests a value landscape
divided into four quadrants framed by intrinsic/extrinsic sources of value on one axis and
active/reactive value on the other. Drawing upon prior research, we label these four dimensions
of experiential value: consumer return on investment, service excellence, playfulness, and
aesthetic appeal. Consumer return on investment (CROI) comprises the active investment of
financial, temporal, behavioral and psychological resources that potentially yield a return. The
consumer may experience this return in terms of economic utility--the perception of affordable
quality (Reardon & McCorkle, 2002) as well as utility derived from the efficiency of an
exchange encounter (Lee & Overby, 2004). In this study, therefore, these two aspects are
conceptualized as indicators of the higher order dimension, CROI. Service excellence reflects
an inherently reactive response in which the consumer comes to admire a marketing entity for
its capacity to serve as a means to a self-oriented end.
2.6 Experiential Marketing, Experiential Value and Customer Loyalty
Experiential marketing is one specific marketing tool. It's an idea. A mindset. A focus on
creating fresh connections between brands and consumers out in the world where things
happen. Connections in the form of experiences that are personally relevant, memorable,
interactive and emotional. Connections that lead to increased sales and brand loyalty.
Experiential marketing is a brand strengthening strategy (Robertson & Wilson, 2008). How it
is presented creatively is critical, since it needs to be immediately understood and relevant to
the customer to have impact. When used effectively and across channels, it can be awfully
15
powerful, since experiential marketing can create memorable, relevant and often valuable
experiences. Engaging a customer through an experience is a way of giving dimension, feel
and smell to a brand. It can generate strong feelings that the customer takes away and
internalizes for years to come (Schmitt, 1999). Experiential marketing is really a fancy way of
saying your catalog, store. Website and email have developed a method of engaging customers
on a higher level with an "experience" that resonates with them and creates brand perception
and action. Doing this also requires an investment of both time and money.
It is argued that mall shoppers responsed to two main components of their service encounters
(i.e. personal interaction encounters and physical environment encounters) are reflected by four
dimensions of experiential value: efficiency, service excellence, aesthetics, and playfulness.
The efficiency value, or CROI, reflects the utilitarian aspects of shopping, and describes active
investment in economic, temporal, behavioral and psychological resources that may result in a
positive return (Schmitt, 2003). For example, consumers consider all of the related input
resources, namely time spent queuing, energy spent on finding the desired products, monetary
cost of parking and transportation, and various other factors only indirectly related to shopping
when determining the convenience of visiting a specific shopping mall. Service excellence and
aesthetics as viewed by customers are considered part of the reactive side of the customer
experience. The perceived aesthetic value is a reaction to the consonance and unity of a
physical object, cadency, or performance (Battarbee & Koskinen, 2005). In retailing, aesthetics
can be captured in relevant visual elements of the retail environment (Mathwick et al., 2001). It
is noteworthy that, visual appeal is often spurred by the design and physical attractiveness of
the shopping environment, while the entertainment dimension of the aesthetic response results
from an understanding or appreciation of the retail display.
16
2.7 Experiential Marketing, Purchase Behaviour and Customer Loyalty
Specifically, this study applies experiential value conceptualization developed by Addis and
Holbrook (2001) and relates it to personal interaction and physical environment encounters
with the shopping malls as a means of explaining customer behavioral intentions. Dick &
Basu, (1994) suggest an attitudinal theoretical framework that also envisages the loyalty
construct as being composed of relative attitude and patronage behaviour. Recent research
have added cognitive aspect to loyalty, this involves the consumers conscious decision making
process in the evaluation of alternative brands before purchase is effected. Companies that
engage in experiential marketing take a brand essence and bring it to life in the form of an
event, experience, or interaction. The company must be active rather than passive in relation to
the brand. Experiential marketing offers new and exciting challenges to marketing academics
(and practitioners). It demands that the marketing department must know their (products)
brand essence (Arhippainem, 2004).
Brand essence has two dimensions: a functional one and an emotional one. A functional
essence asks the question what is it that we do? An emotional essence is more concerned with
customer perceptions, that is, how do you feel about it? For example, the functional element of
Red Bull is that it is an energy boosting drink, whereas the emotional essence is one gives you
enhanced ability or gives you wings. It is the latter essence that demands the greatest effort
from marketers (Newzealand Marketing Magazine, 2003). The main interest of retailers in a
shopping mall is to produce more profits which, in turn, are achieved via maintaining loyal
patronage, generating positive word of mouth recommendations, and increasing the time and
money consumers spent while shopping. Thus, mall managers need to understand how to
motivate mall shoppers spending behavior. First, Soderlund & O hman (2005) showed
17
intentions-as-expectations and intentions-as-wants are positively associated with customer
satisfaction as well as re-patronizing behavior. In general, individuals shop to obtain hedonic
and/or utilitarian values (Xiao, 2004). A shopping mall may turn out to be more profitable if it
could satisfy both types of shoppers. Further, Babin & Darden (1996) argued that store-induced
affect could influence customer expenditures and level of shopping satisfaction. When a
shopping mall is perceived as exciting, consumers may visit it more frequently and be less
likely to visit other shopping malls (Tavassoli, 1998). Thus, it is our contention that
increasingly more intensive competition forces retailers to please todays mall shoppers or the
retailers profitability is likely to suffer.
Experiential marketing and purchase behavior in particularly the process of devising a
companys strategy, has gained growing attention on the customer resulted in an increased
focus on Customer Relationship Management philosophies. More recently, as the number of
contact points between a company and its customers increased, such attention to the customer
revealed the fundamental importance of monitoring the many experiences that originate from
those contact points. In this perspective, the central idea is to expand the transaction-based
notion of customer relationship to the continuous concept of customer experience.
Consequently, it becomes necessary to consider aspects that refer to the emotional and
irrational side of customer behavior (Yao, 2007) and which, more than the only rational ones,
account for the whole experience coming from the set of interactions between a company and
its customers. Such experience plays a fundamental role in determining the customers
preferences, which then influence their purchase decisions.
18
In fact, whilst the classical economic theory regards the consumer as a logical thinker whose
purchasing decisions are based on rational problem solving, the recent developments on the
literature on economics and marketing, and particularly the new stream of the experiential
marketing, advocates for the exploitation of intangible elements linked to the emotional value
perceived by customers. In addition, a similar position can be found in the managerial field; in
fact, 85% of senior business managers believe that differentiating solely on the traditional
elements, such as price, product and quality, is no longer a sustainable competitive advantage
and even more senior managers hold the Customer Experience as the next competitive
battleground (Shaw and Ivens, 2005).
19
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
This chapter depicts the methodological aspects that were used in conducting the study on
experiential marketing, purchase behaviour, experiential value and customer loyalty: A case
of Uganda Telecom (UTL). It describes the research design, target population, sampling
design and size, data collection instruments, data analysis and interpretation tools and
limitations of the study.
3.2 Research Design
A cross sectional survey was used with the aim of establishing the relationships between
experiential marketing, experiential value, purchase behaviour and customer loyalty. The
survey was descriptive and analytical in nature.
3.3 Study Population and Area
The population of the study was 1,090 comprising of 7 top management, 119 corporate clients,
4 dealers, 950 SMEs, 6 staff in the marketing department, 2 sales staff and 2 staff in the
channel. For purposes of this study the population consisted of customers who for the last five
consecutive years have been consuming the products of UTL and the staff who have been in
constant contact with the clients. The corporate clients comprised of customers who consume a
wide range of the products of the company such as those using 10 or more connected post paid
lines, an intercom with more than 20 extension lines on the PBAX and subscription to UTL
internet. The SMEs comprised of companies with subscription to less than 10 post paid lines
20
and operating an intercom with less than five extension lines. Only corporate companies and
SMEs in the Kampala Outer one were considered for the study because the majority of the
registered companies are located in the area. The population also considered senior staff in the
area who provide reports to management.
3.4 Sample Size and Sampling Technique
The sample size was determined scientifically using the table for determining sample size
developed by Kreijcie and Morgan, (1970) as indicated in the table below:
Table 3.1: Sample Size
Category Population Sample Sampling Method Top Management 7 7 Purposive sampling Marketing Staff 6 6 Purposive sampling Dealers 4 4 Purposive sampling Corporate clients 119 86 Simple random sampling SMEs 950 274 Simple random sampling Sales Representatives 2 2 Purposive sampling Channel Department 2 2 Purposive sampling Total 1090 381
Sourced from the Small and Medium Enterprises Report, 2007
Simple random sampling was employed for the study and for the different strata responses
was collected purposively.
3.5 Data Sources and Data Collection Instruments
Primary data was the main source. Data from the field was obtained through the use of self-
administered questionnaires to the respondents following systematic and established academic
21
procedures. The responses in the questionnaire were anchored on a 5-Likert scale with
responses ranging from 1= Strongly Disagree to 5= Strongly Agree.
3.6 Measurement of variables
Measurement scales from earlier studies were adopted to be used in the study.
Experiential marketing was measured by a string of authors among which include Bernd &
Schmitt, (2001); Fornerino et al. (2006) and Schmitt (1999). Moving from the basic idea of
engagement at different levels Schmitt (1999) proposed a modular conceptualization of
the concept of customer experience. Specifically, Schmitt identifies five Strategic
experiential modules: sensory experiences (sense); affective experiences (feel); creative
cognitive experiences (think); physical experiences, behaviors and lifestyle (act); and
social-identity experiences that result from relating to a reference group or culture (relate).
Therefore, the scales developed by Schmitt (1999) were adopted and modifications were
made on the scales to suit the study.
Experiential value was measured using scales adapted from Addis and Holbrook (2001).
According to Addis and Holbrook (2001), experiential value was conceptualized as
entertainment, visual appeal, interaction, value and consumer return on investment. The
study adopted the scales developed by Addis and Holbrook (2001). The scales were
anchored on a 5 point likert scale ranging from; 5- strongly agree, 4- agree, 3 not sure, 2
disagree and 1- strongly disagree.
Customer loyalty was measured using scales adapted from Dick & Basu, (1994). According
to Dick & Basu, (1994) loyalty is made-up of three dimensions which include behavioral,
attitudinal and cognitive where behavior loyalty is measured by determining the purchase
frequency of the products and services of the bank, attitudinal loyalty is determined by
22
measuring the intention to repeat purchase and cognitive loyalty determined by measuring
top of mind. The scales were anchored on a 5 point likert scale ranging from; 5- strongly
agree, 4- agree, 3 not sure, 2 disagree and 1- strongly disagree.
Purchase behaviour was measured using scales adapted from Juster (1960). The scales were
anchored on a 5 point likert scale ranging from; 5- strongly agree, 4- agree, 3 not sure, 2
disagree and 1- strongly disagree.
3.7 Validity and Reliability Instrument
Validity of the instrument was measured through seeking for views from experts both
academicians and practitioners in the area of marketing who assisted on the relevance of the
scales in the instrument. The reliability of the questionnaires was enhanced through pre-testing
of pilot samples from the field which enabled the re-phrasing of some questions. Additionally,
reliability of the items was done with the application of the Cronbach Coefficient Alpha for the
computations so as to check for the internal consistency of the items. The Cronbach Coefficient
Alpha on internal consistency test was used with the following results.
Table 3.2: Reliability
Variable No of Items Cronbach Alpha Value Experiential Marketing 22 .900 Experiential Value 24 .892 Purchase Behaviour 22 .883 Customer Loyalty 24 .873
Source: primary data
The table above displays the reliability indices/coefficients for all constructs used in the study.
All alpha reliabilities () for all scales were above 0.6, ranging from 0.873 to 0.900 therefore
meeting acceptance standards for research (Nunnally, 1978).
23
3.8 Data Processing and Analysis
Data from the field was compiled, sorted, edited and coded to have the required quality,
accuracy and completeness. Then entered into the computer using the Statistical Package for
Social Sciences (SPSS) for analysis. The data was analyzed according to the research
questions. Frequency tabulations was used to describe sample characteristics, Pearson
Correlation coefficient was used to establish the relationship between the study variables. The
regression analysis was used to establish the effect of experiential marketing, purchase
behaviour and experiential value on customer loyalty.
3.9 Limitations to the Study
a) Bias from the respondents to simply fill the questionnaires to please the researcher. The
researcher conducted a face to face interaction to clarify the purpose and objective of
the study.
b) On looking at the limited time which the researcher had to conduct the study,
respondents may suspect that the research findings are to be used for other purposes
while others are likely to delay the questionnaires because of busy schedules. Here the
researcher used covered letter from the Graduate and Research Centre to mitigate the
out come.
c) The scales in the questionnaire were adopted from other studies conducted in different
environments from that of Uganda, which is likely to cause bias. The researcher
indulged experts in the fields of experiential marketing, purchase behaviour and
experiential value on customer loyalty to moderate the scales adapted to fit the local
environment.
24
d) Fear of giving confidential information as viewed by the organization they work for.
Here the researcher assured them of at most good faith with supporting documents for
undertaking the study.
e) The way the questionnaire was designed might limit additional response. This was
however mitigated through prompting the respondents to give more information.
25
CHAPTER FOUR
PRESENTATION AND INTERPRETATION OF RESULTS
4.1 Introduction
This chapter presents the results of the study and interpretation of findings. The chapter
comprised of three sections. Section one presents the sample characteristics showing, gender,
level of education, tenure of employment, age group and level of management. The
presentation begins with a description of the sample characteristics using frequency
tabulation. The second section of the chapter presents statistics on the relationship between
the study variables using the correlation matrix. Section three presents the results of the
impact of the independent variable on the dependent variable using the regression analysis.
4.2 Response Rate
Out of the 381 questionnaires distributed, three hundred and seventy two (372) usable ones
were collected, giving a response rate of 97.6%.
4.3 Sample Characteristics
To present sample characteristics, frequency tabulations were used to indicate variations of
respondents based on gender, level of education, tenure of employment, age group and level
of management. The sample characteristics were presented basing on the responses from the
respondents. The sample characteristics were presented basing on the responses in tables 4.1
to 4.4.
26
4.3.1 Gender distribution
Frequency tabulation was used by the researcher to present gender respondent category
distribution. Table 4.1 below presented the results:
Table 4.1: Respondent Category by Gender
Frequency Valid Percent Cumulative Percent
Valid Male 200 53.8 53.8
Female 172 46.2 100.0 Total 372 100.0
Source: primary data
From the results, 53.8% of the respondents were male whereas 46.2% were female as shown
in the table above.
4.3.2 Level of Education distribution
Frequency tabulation was used by the researcher to present the level of education respondent
category distribution. Table 4.2 below presented the results:
27
Table 4.2: Respondent Category by Level of Education
Frequency Valid Percent Cumulative Percent
Valid
Certificate 35 9.4 9.4 Diploma 59 15.9 25.3 Bachelors degree 180 48.4 73.7 Masters 54 14.5 88.2 Professional 28 7.5 95.7 PhD 16 4.3 100.0 Total 372 100.0
Source: primary data
From the results above, over 78% of the respondents were degree holders (48.4%), diploma
holders (15.9%) and masters holders (14.5%) whereas, less than 30% were certificate,
professional and PhD holders.
4.3.3 Period worked with the company
Frequency tabulation was used by the researcher to present the period worked with the
company respondent category distribution. Table 4.3 below presented the results:
Table 4.3: Period worked with the company
Frequency Valid Percent Cumulative Percent
Valid
0-3yrs 135 36.3 36.3 3-6 yrs 100 26.9 63.2
6-9 yrs 92 24.7 87.9
Over 9 yrs 45 12.1 100.0 Total 372 100.0
Source: primary data
28
From the results in table 4.3 above, over 60% of the respondents had worked for the
company for 6 years and below with the least serving being in the category of over 9
years (12.1%). This is implication that the majority of the staff had served the
company short period of time.
4.3.4 Age Group of respondent
Frequency tabulation was used by the researcher to present the age group respondent
category distribution. Table 4.4 below presented the results:
Table 4.4: Age Group of respondent
Frequency Valid Percent Cumulative Percent
Valid
18-24 72 19.4 19.4
25-29 124 33.3 52.7 30-34 90 24.2 76.9
34-39 48 12.9 89.8 40+ 38 10.2 100.0
Total 372 100.0
Source: primary data
According to the results in table 4.4 above, over 55% of the respondents were in the 25-29
age group (33.3%) and in the 30-34 age group (24.2%) with those in the 40 years and above
registering the least (10.2%). This is implication that the majority of the consumers of UTL
product were young adults.
29
4.4 The Relationship between the Study Variables
In this section, the results that address the research objectives are presented and Pearsons
Correlation Test was used to answer the research questions of the study. To investigate the
relationship among the constructs a Zero-order correlation table was generated. The Pearson
correlation coefficient (r) was employed to establish the relationship between experiential
marketing, purchase behaviour, experiential value and customer loyalty.
Table 4.5: Relationships between Variables/Zero Order Matrix
1 2 3 4 Experiential Marketing-1 1.000
Experiential Value-2 .747** 1.000 Purchase Behaviour-3 .685** .716** 1.000 Customer Loyalty-4 .631** .622** .578** 1.000
** Correlation is significant at the 0.01 level (2-tailed). Source: primary data
4.4.1 Experiential Marketing and Customer Loyalty
The results in the table above indicated that experiential marketing and customer loyalty are
positively and significantly related variables (r =.631**, p
30
4.4.2 Experiential Marketing and Purchase Behaviour
Correlation results indicated a significant positive relationship between experiential
marketing and purchase behaviour (r =.685**, p
31
immersion into a brand, this will improve consumers perceived, relativistic preference for
product attributes or service performances arising from interaction within a consumption
setting that facilitates or blocks achievement of consumer goals or purpose. Likewise, this
will promote customers to exhibit repeat purchasing behavior from UTL, possess a positive
attitudinal disposition towards UTL products/services and consider using only the companys
products/services when a need for them arises.
4.5 Regression Analysis
4.5.1 Regression Model for the study variables
A regression analysis was carried out to examine the extent to which experiential marketing,
purchase behaviour, experiential value predict customer loyalty. The overall potential of the
experiential marketing, experiential value, purchase behaviour to explain the customer
Loyalty, were presented using the regression model in the table below.
Table 4.6: Prediction Model for the study variables
Unstandardized Coefficients Standardized Coefficients t Sig.
Model B Std. Error Beta (Constant) .585 .168 3.473 .001 Experiential Marketing .345 .067 .315 5.148 .000
Experiential Value .303 .074 .263 4.100 .000 Purchase Behaviour .198 .067 .175 2.983 .003
Dependent Variable: Customer Loyalty
R Square .462 Adjusted R Square .458
Sig. .000 Source: primary data
32
Results showed that the experiential marketing, experiential value and purchase behaviour
can explain 45.8% of the variance in the customer loyalty (Adjusted R Square = .458). The
experiential marketing is most influential at explaining customer loyalty (Beta =.315, Sig.
33
There were no significant differences among the gender categories on the study variables
(sig. >.05) for all variables.
4.6.2 ANOVA results for Level of Education by Variable
Results below were used by the researcher to test for differences among the variables by
level of education.
34
Table 4.8: ANOVA results for Level of Education by Variable
N Mean
Std. Deviation Std. Error F Sig.
Experiential Marketing
Certificate 35 3.485 .514 .087
.333 .893
Diploma 59 3.446 .617 .080
Bachelors Degree 179 3.403 .671 .050 Masters 54 3.469 .623 .085
Professional 28 3.471 .634 .120 PhD 16 3.571 .504 .126
Experiential Value
Certificate 35 3.475 .559 .095
.532 .752
Diploma 58 3.419 .630 .083 Bachelors degree 174 3.414 .615 .047
Masters 54 3.510 .570 .078 Professional 28 3.359 .540 .102
PhD 16 3.285 .424 .106
Purchase Behaviour
Certificate 35 3.451 .533 .090
.579 .716
Diploma 59 3.337 .587 .076
Bachelors degree 174 3.410 .624 .047
Masters 54 3.489 .594 .081 Professional 28 3.311 .599 .113
PhD 16 3.343 .537 .134
Customer Loyalty
Certificate 35 3.582 .547 .092
3.086 .010
Diploma 58 3.572 .741 .097
Bachelors degree 174 3.381 .723 .055 Masters 54 3.693 .556 .076
Professional 28 3.310 .651 .123
PhD 16 3.754 .482 .120 Source: primary data
From the results in table 4.8 above, for experiential marketing, experiential value and customer
purchase behaviour, the researcher noted no significant differences among the respondents
when examined in light of their academic qualification (sig. >.05). Significant differences were
observed only on customer loyalty (sig.
35
4.6.3 ANOVA results for Age Group by Variable
Results below were used by the researcher to test for differences among the variables by age
group.
Table 4.9: ANOVA results for Age Group by Variable
N Mean
Std. Deviation Std. Error F Sig.
Experiential Marketing
18-24 71 3.394 .706 .084
1.449 .217
25-29 124 3.420 .623 .056
30-34 90 3.374 .593 .062
34-39 48 3.617 .546 .079 40+ 38 3.514 .674 .109
Experiential Value
18-24 68 3.345 .647 .078
1.012 .401
25-29 122 3.432 .598 .054
30-34 89 3.418 .572 .061
34-39 48 3.563 .518 .075 40+ 38 3.384 .600 .097
Purchase Behaviour
18-24 70 3.276 .649 .078
1.937 .104 25-29 121 3.410 .571 .052 30-34 89 3.378 .602 .064
34-39 48 3.576 .580 .084 40+ 38 3.456 .572 .093
Customer Loyalty
18-24 70 3.444 .754 .090
3.423 .009 25-29 120 3.418 .715 .065 30-34 89 3.399 .645 .068
34-39 48 3.779 .528 .076 40+ 38 3.627 .622 .101
Source: primary data
From the results in table 4.9 above, for experiential marketing, experiential value and
customer purchase behaviour, the researcher noted no significant differences among the
36
respondents when examined in light of their age groups (sig. >.05). However, significant
differences were observed only on customer loyalty (sig.
37
CHAPTER FIVE
DISCUSSION, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction
This chapter presents the discussion, conclusions, and recommendations arising out of the
research findings in chapter four and suggests areas for further study.
5.1.1 Experiential Marketing and Customer Loyalty
The findings revealed that experiential marketing and customer loyalty are positively related
variables. The findings are supported by Schmitt (1999) who emphasized that businesses
should have the ability to develop brand images, and design experiences that lead to positive
effects on consumer willingness to repurchase. Bi-jen Fan (2001) noted that experience is the
key factor in regard to motivation to (re)participate, to customer satisfaction and to customer
loyalty. The experiential approach seeks to identify behaviours (or attitudes and value sets)
held in common across an audience whose demographic characteristics (traditional basis of
segmentation) might be quite diverse. The idea is that once you resonate with that value set,
it becomes emotional and the customer is far likely to be loyal. Arguably, of course, the more
emotional the product, the more it lends itself to an experiential marketing campaign
(Newzealand Marketing Magazine, 2003).
5.1.2 Experiential Marketing and Purchase Behaviour
The findings revealed a significant positive relationship between experiential marketing and
purchase behaviour. Lee & Overby (2004) suggests that the value that motivates
38
consumption behavior has been attributed to functional, conditional, social, emotional and
epistemic utility. Due to marketing overload, an explosion of product choices and lack of
trust, consumers are changing the way they listen, research, talk and purchase products.
People want to buy products that satisfy personal emotions and brands need to work harder
than ever to provide the right information and product experiences to enhance the buying
decision (Lee & Overby, 2004). Experiential marketing highlights the increasing importance
of two way communication, allowing consumers to feel, smell and experience a product for
the first time. In addition, experiential tactics can successfully provide a sensory reminder to
reinvigorate brand and product usage.
However, experiential marketing only works if you understand the consumer decision
journey, consumer behavioural insights and the fast-moving trends associated with passive
and active interaction. It works if you have the models and processes in place for measuring
the impact of a campaign beyond footfall or cost per sample (Schmitt, 1999). In the mind of
the consumer, brand value is fostered through an experience, entertainment or in offering
free samples or trial. This is perceived as an investment in me (the consumer) and is an
enabler for consumers to move from mere product awareness, to an actual purchase
consideration. Too many agencies are claiming to do experiential without understanding the
depth and rigour of the planning, behavioural understanding, measurement tools and criteria
involved. This has had an impact on the perception of Experiential Marketing as a strategic
channel.
39
5.1.3 Experiential Marketing and Experiential Value
The findings showed a significant and positive relationships between experiential marketing
and experiential value. The findings are in agreement with the assertions of Szymanski &
Hise (2000), who posits that the consumption experience itself can also be rich in value.
Experiential value perceptions are based upon interactions involving either direct usage or
distanced appreciation of goods and services. These interactions provide the basis for the
relativistic preferences held by the individuals involved. Experiential value has been said to
offer both extrinsic and intrinsic benefit (Reardon & McCorkle 2002). Reactive or passive
value derives from the consumer's comprehension of, appreciation for, or response to a
consumption object or experience. Active or participative value, on the other hand, implies a
heightened collaboration between the consumer and the marketing entity.
Holbrook (1994) suggests a value landscape divided into four quadrants framed by
intrinsic/extrinsic sources of value on one axis and active/reactive value on the other.
Drawing upon prior research, we label these four dimensions of experiential value: consumer
return on investment, service excellence, playfulness, and aesthetic appeal. Consumer return
on investment (CROI) comprises the active investment of financial, temporal, behavioral and
psychological resources that potentially yield a return. The consumer may experience this
return in terms of economic utility--the perception of affordable quality (Reardon &
McCorkle, 2002) as well as utility derived from the efficiency of an exchange encounter (Lee
& Overby, 2004). In this study, therefore, these two aspects are conceptualized as indicators
of the higher order dimension, CROI. Service excellence reflects an inherently reactive
response in which the consumer comes to admire a marketing entity for its capacity to serve
as a means to a self-oriented end.
40
5.1.4 Experiential Marketing, Experiential Value and Customer Loyalty
The findings revealed a significant and positive relationship between experiential marketing
and experiential value and relationship between experiential value and customer loyalty. This
is in line with the work of Robertson & Wilson (2008) who affirms that connections in the
form of experiences that are personally relevant, memorable, interactive and emotional.
According to Robertson & Wilson (2008), experiential marketing is a brand strengthening
strategy. How it is presented creatively is critical, since it needs to be immediately
understood and relevant to the customer to have impact. When used effectively and across
channels, it can be awfully powerful, since experiential marketing can create memorable,
relevant and often valuable experiences. Engaging a customer through an experience is a way
of giving dimension, feel and smell to a brand. It can generate strong feelings that the
customer takes away and internalizes for years to come (Schmitt, 1999).
Schmitt (1999) argues that consumers responsed to two main components of their service
encounters (i.e. personal interaction encounters and physical environment encounters) are
reflected by four dimensions of experiential value: efficiency, service excellence, aesthetics,
and playfulness. The efficiency value, or CROI, reflects the utilitarian aspects of shopping,
and describes active investment in economic, temporal, behavioral and psychological
resources that may result in a positive return (Schmitt, 2003). The perceived aesthetic value
is a reaction to the consonance and unity of a physical object, cadency, or performance
(Battarbee & Koskinen, 2005). In retailing, aesthetics can be captured in relevant visual
elements of the retail environment (Mathwick et al., 2001). It is noteworthy that, visual
appeal is often spurred by the design and physical attractiveness of the shopping
41
environment, while the entertainment dimension of the aesthetic response results from an
understanding or appreciation of the retail display.
5.2 Conclusions
In general, the study looked at the relationships between experiential marketing, purchase
behaviour, experiential value and customer loyalty at UTL. From the findings, the
relationships between experiential marketing, purchase behaviour, experiential value and
customer loyalty were found to be positive and significant. It also examined the variance in
customer loyalty that is explained by the independent variables. All independent variables
were found to be significant predictors of customer loyalty. Experiential marketing and
experiential value were the most significant predictors. The independent variables combined
together accounted for only 45.8% variance in customer loyalty at UTL. Other factors
affecting customer loyalty of UTL recoded 54.2%.
5.3 Recommendations
In light of the research findings, the following recommendations are made:
i) According to the findings, experiential marketing and experiential value were found
to be the major predictors of customer loyalty. Therefore, the management of UTL
should put a lot of emphasis on the extensive use of experiential marketing and value
to grow customer loyalty. This can be carried out by putting in place attractive layout
of UTL outlets and products, use of captivating promotion drives, the promotion
drives should arouse inspiration and cause image to associate with the company.
42
ii) According to the findings on the relationships between the study variables and
customer loyalty, positive and significant relationships were observed. Therefore, the
management of UTL need to put a lot of attention on the significant relationships as
these will have a positive effect on the attitudinal, behavioural and cognitive aspects
of customer loyalty.
iii) The study used a cross sectional survey design to study the relationships between the
study variables and customer loyalty. However, to study the true nature and quality of
the relationships between the study variables and customer loyalty, the management
of UTL should conduct a study which is longitudinal in order to ascertain the true
nature and quality of customer loyalty.
iv) The results of the study point to a number of opportunities for strategy review in
regard to experiential marketing, purchase behaviour and experiential value to
improve customer loyalty. The management of UTL should therefore, assess
regularly the performance level of the company in regard to customer loyalty and
carry out review of the strategies being used to promote loyalty through experiential
marketing and value.
v) From the findings, it was clear that in order to shape customer purchase behaviour,
UTL needed to have attractive commodity prices, have variety, quality
products/services and at the same time use opinion leaders to have a positive
influence on customer loyalty.
43
5.4 Areas for further study
i) This study concentrated on experiential marketing, purchase behaviour, experiential
value and customer loyalty. Future research should attempt to collect data from other
telecommunication companies and other sectors to ascertain the findings.
ii) The study adopted a cross sectional survey design which studied the state of affairs at
UTL at a point in time. To study the true nature and quality experiential marketing,
purchase behaviour, experiential value and customer loyalty, a longitudinal study is
more appropriate.
iii) The study sample was restricted to UTL leaving out the other telecom companies
such as, MTN, Warid, Orange, Airtel etc. Future studies on the telecom sector should
take into consideration all the players in the telecom sector.
iv) The study concentrated on Kampala district as the area scope. Further studies carried
out on the telecom sector could comprise of a wider area scope including other
districts and or regions.
v) The model could only explain 45.8% of the variance in customer loyalty failing to
account for 54.2% of the variance in customer loyalty. Future studies should comprise
of other variables that were not part of the model to predict the variance in customer
loyalty.
44
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APPENDIX I
QUESTIONNAIRE
Dear Respondent, This questionnaire seeks to establish the relationship between EXPERIENTIAL MARKETING, EXPERIENTIAL VALUE, PURCHASE BEHAVIOUR AND CUSTOMER LOYALTY IN THE TELECOMS INDUSTRY. You have been selected to participate in this study and all the information that you will provide will be used for academic purposes only. Thank you for your cooperation. SECTION I: GENERAL INFORMATION Please tick the appropriate box for the questionnaire that follows below: Demographic Characteristics 1. Gender: Male (1) Female (2) 2. Level of Education 3. For how long have you worked with UTL? 4 Age group 5) What is your level of management in UTL?
Please indicate by ticking in the appropriate box to what extent you agree/disagree to the following statements below. (Strongly Disagree (SD)-1, Disagree (D)-2, Not Sure (NS)-3, Agree (A)-4 and Strongly Agree (SA)-5 SECTION II: EXPERIENTIAL MARKETING
SD D NS A SA Sensorial Experience 1 I feel that the way UTL outlets are designed is beautiful 1 2 3 4 5 2 The decoration design of UTL outlets is very attractive 1 2 3 4 5 3 I feel that the outlook of UTLs headquarters is nice 1 2 3 4 5
Certificate Diploma Bachelors degree Masters Professional PhD
0-3yrs (1) 3-6 yrs (2) 6-9 yrs (3) Over 9 yrs (4)
18-24 25-29 30-34 34-39 40+
Type Code Top management 1 Middle management 2 Lower management 3
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Emotional Experience 4 I am moved by the promotions done by UTL 1 2 3 4 5 5 The setup of UTL outlets makes me feel pleasant 1 2 3 4 5 6 The products/services offered by UTL makes me happy 1 2 3 4 5 7 The products/services offered by UTL enabled me to escape communication pressures 1 2 3 4 5 8 UTLs customer experience makes me joyful 1 2 3 4 5 9 I am excited when dealing with the