RELATIONSHIPS AMONG EXPERIENTIAL

MARKETING, EXPERIENTIAL VALUE,

AND CUSTOMER SATISFACTION
method
place: Starbucks \ Taiwan Yi-Hua “Erin” Yuan
year: 2003 Chihkang “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 and
tourism operations. Ten hypotheses were developed to examine relationships among
experiential marketing, experiential value, and customer satisfaction. Self-reported ques-
tionnaires were distributed at four Starbucks in different districts in Taipei, Taiwan, in
January 2003. Results of the linear structural relation analyses (LISREL 8.5) indicate
that 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 this
study 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 and
enjoyment 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 they
purchase. 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 these
experiences is critical for the hospitality and tourism industry because intangi-
ble experience is the core of the products/services offered by businesses. In
other words, the products of this industry are always experiential (Williams,
2006) and can be classified as a total experience (Lewis & Chambers, 2000).

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

Moreover, Schmitt (1999) suggested that the experiences a company delivers to

its customers are vital to success of the company. Creating memorable experience
is 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 for
its customers to experience. Schmitt (1999) further defined experiential market-
ing from the customers’ perspective as customers developing recognition and
purchasing goods or services of a company or a brand after they get experiences
from attending activities and perceiving stimulations. Experiential marketing,
an emerging form of marketing, focuses not only on a product or a service but
also on an entire experience that a company creates for its customers. Compared
with 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 of
experiencing, 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 marketing
efforts that businesses have made. Therefore, in this study, the performance of
experiential marketing was examined by measuring customers’ perceptions.
Customers define experiential value from different kinds of experiences
obtained through encountering service providers. This value is important to
induce customer satisfaction (Cronin, Brady, & Hult, 2000; Ennew & Binks,
1999; Kristensen, Martensen, & Gronholdt, 2000). In addition, creating and
retaining satisfied customers is essential for the success of businesses. Fonvielle
(1997) argued that high customer satisfaction is a competitive advantage for
businesses because it contributes to repetitive purchasing. Researchers have
pointed out that the higher customer satisfaction is, the higher will be customer
loyalty, intention of repetitive purchasing, positive word of mouth, and market
share (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 to
marketing practitioners.
The concept of experiential marketing has been applied to many areas, such
as 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 new
concept in the marketing field, about which little research has been conducted,
it is important that empirical studies be designed and implemented to verify this
new concept and to provide a solid foundation for further research.
The main purpose of this study was to empirically test the congruency of the
theory that experiential marketing can induce customer satisfaction through
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 389

experiential value in the hospitality and tourism industry. Based on the research
purpose, three general research questions were posed: (1) Can experiential mar-
keting induce experiential value? (2) Can experiential value induce customer
satisfaction? (3) Can experiential marketing induce customer satisfaction
through 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 will
help managers improve their understanding of customer experiences and further
develop effective marketing strategies, as well as allowing for managers and
businesses 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 intro for literature rev

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, which
constitutes the second stage, the product stage. Tangible goods and intangible
services are combined during the service stage. The final stage, the experience
stage, occurs following the evolution of services. In the end, society moves into
the “experience economy” as a result of this evolution. On entering the age of
experience economy, customers do not always focus on products. Rather, they
pay more attention to experiences; therefore, creating valuable experiences for
customers becomes a vital challenge for businesses.
Classification and evolution of economic offerings range from commodities
and goods to services and experiences. The economic benefit is increased by the
progress of this evolution. Businesses create values by charging their customers
for special experiences. Thus, companies sell not just products but, more impor-
tantly, good memories and experiences. The profit they obtain is significantly
improved in the experiences stage compared with the commodity stage. For
example, one pound of coffee beans is worth only one dollar at a plantation, but
a 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 is
becoming a key point for businesses’ success in the experience economy.
Pine and Gilmore (1998) divided experiences into four types according to
their 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). The
degree to which customers influence performance of activities decides whether
they are engaging in passive or active participation, whereas absorption and
390 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

immersion refer to the desire with which they engage in experiences. At one
extreme, absorption refers only to customers receiving some information or
stimulation; at the other, immersion means customers being completely
involved in an experience.
Examples of the entertainment experience are watching television and going
to 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 show
or play in an orchestra. On the other hand, taking a swimming lesson is an
example of the educational experience by which students can learn only by
actively participating. In the esthetic experience, individuals totally immerse in
the environment. For example, art lovers appreciate art exhibits in a gallery; they
are completely immersed but do not influence the environment. Customers cre-
ate new identities and realities by these experiences (Williams, 2006). Generally
speaking, the most beautiful experience, the sweet spot, contains qualities of all
four types of experiences (Pine & Gilmore, 1998). For example, visiting
Disneyland can be considered a sweet spot experience because it includes all the
aspects of these experiences.
Successful businesses create repeat and loyal customers by providing unfor-
gettable experiences. These are memorable activities created by a business
through its products and services to customers (Pine & Gilmore, 1998). Schmitt
(1999) argued that experiences are formed from the interaction among different
events 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 hospitality
and tourism industry. Williams (2006) argued that products of this industry are
always experiential. In addition to products/services, people get experiences
from 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 experiences
that they have never had. Driver and Toucher (1970) separated experience into
five different phases: planning, leaving for the destination, experiencing the des-
tination, returning, and remembering. Customers’ experiences in these phases
are 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, creating
unforgettable experiences is critical to the success of businesses in the hospitality
industry.
Traditional marketing provided useable strategies, tools, and concepts that
helped businesses succeed in an earlier age. Responding to today’s much more
complicated 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 solution
to respond to society and customers. Experiential marketing differs from tradi-
tional marketing in four major ways—marketing focus, product categories and
competition, customer characteristics, and research method (Schmitt, 1999).
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 391

Schmitt 1999 definition

Schmitt (1999) defined experiential marketing as customers’ developing
recognition of and purchasing goods or services from a company or brand after
they experience activities and perceive stimulations. These experiences enhance
the 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 point
of experiential marketing is extracting the essence of products and then apply-
ing it to intangible, physical, and interactive experiences that increase the value
of 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 businesses
in different industries, from Ford Motor Company to the North Hawaii
Community Hospital (Hill, 2001). Experiential marketing motivates customers
to make faster and more positive purchasing decisions (Williams, 2006).
In the hospitality and tourism industry, from providers’ points of view, they
use 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 and
customers’ perceptions. Simply put, the process can be formed as a procedure
of 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 for
businesses, so businesses should focus on long-term management of customer
value and attract, develop, and maintain their relationships with their customers.
Understanding what factors create customer value is an obviously important
concern in the marketing field.
To maintain a competitive advantage, creating special and innovative cus-
tomer value is necessary (Kotler & Armstrong, 2000). Customer value has been
defined divergently. Monroe (1991) defined it as the comparison between rec-
ognized benefits and sacrifices; whereas, Strauss and Frost (2002) suggested
that it is a combination of customers’ belief, attitude, and experience of a prod-
uct. Regardless of different perspectives, the main concepts of customer value
are that it is subjective to customers, perceived after an evaluation process, and
developed by a balance between benefits and sacrifices.
Experiential value refers to customers’ perceptions of products or services
through direct use or indirect observation (Mathwick, Malhotra, & Rigdon, 2001).
392 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

This value gives customers internal and external benefits (intrinsic/extrinsic values)
(Babin & Darden, 1995; Batra & Ahtola, 1991; Mano & Oliver, 1993). The
internal 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 a
dimension, active/reactive, to experiential value. The active value comes from
the increasing collaboration between customers and businesses; the reactive
value derives from customers’ evaluations, responses, and understanding of the
services or products they want to purchase. Interactions between perceptions
(intrinsic/extrinsic) and the active dimension (active/reactive) further classify
experiential 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, they
create the value of service excellence (Zeithaml, 1988). Aesthetics mainly
reflects two aspects: visual characteristics and wonderful service, which both
provide pleasure and help customers to finish their jobs (Deighton & Grayson,
1995). Playfulness is the feeling that attracts customers. It is also a way to
achieve 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 value
is limited. Measurement of experiential value developed in this study was based
on the literature of customer value (Table 1) because most scholars have agreed
that emotional and functional features are the main components of customer
value. Consequently, the measurement of experiential value in this article is
constituted 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 taste
good? Does the hotel provide a clean room and comfortable bed? On the other
hand, emotional value refers to the feeling or emotional reaction that customers
gain during and after experiencing (Berry et al., 2002; Schmitt, 1999). For
example, 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 comes
from the differences between customers’ perceptions and their expectations of
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 393

Table 1
Summary of the Literature Findings on the Integration
of Customer Value Measurement

Emotional Functional Sociable

Scholar Value Value Value

Sheth, Newman, & Gross (1991) 3 3 3

Burns (1993) 3
Holbrook (1994) 3 3 3
Lai (1995) 3 3 3
Naylor (1996) 3 3
Lapierre (2000) 3 3
Overby (2000) 3 3
Mathwick, Malhotra, & Rigdon (2001) 3 3
Sweeney & Soutar (2001) 3 3 3

the service. Expectations are established from word of mouth, personal needs,
past experiences, and external communication; whereas the perceived service
quality is created through the moment of truth. When the perceived service is
beyond a customer’s expectations, the customer is satisfied; when the service is
below expectations, the customer is dissatisfied.
Service quality has been defined in different ways. Garvin (1984) believed
that service quality derives not from customers’ objective evaluation but from
subjective recognition of service. It is also considered an attitude about an over-
all evaluation of service. Bitner, Booms, & Mohr (1994) proposed that service
quality 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 focusing
especially on interactions with the service provider.

Customer Satisfaction
Pursuing customer satisfaction is a critical goal for organizations, especially
for the highly competitive hospitality and tourism industry. There are many
alternatives 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 role
in achieving customer loyalty and profitability (Barsky & Nash, 2003).
Therefore, learning how to define and measure customer satisfaction are the
major 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 the
value they obtain after they finish one specific transaction (Howard & Sheth,
1969; Engel, Blackwell, & Miniard, 1995; Oliver, 1980). The cumulative aspect
394 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

is the customers’ overall measurement of all their purchasing and consuming

experiences 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 the
process 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 defined
in this study as after purchase, the evaluation and emotional recognition of the
completely purchasing process.

THEORETICAL FRAMEWORK AND HYPOTHESES

Based on above discussions, experiential marketing induces experiential value

and customer satisfaction. The theoretical framework of this study (Figure 1) was
developed according to relevant literature to examine this argument. Concepts
of experiential marketing and experiential value were further divided into sev-
eral areas to be effectively measured. Experiential marketing is measured by
sense perception, feel perception, think perception, and service quality; experi-
ential value is measured by emotional value and functional value. The definition
and 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 customers
get perception and information from sight, sound, scent, taste, and touch. Feel
means customers get emotional perception and information about company and
brand via experience. Think can be described as engaging in creative thinking
that may result in a reevaluation of the company and its products. Act means to
create experiences related to the customers’ physical body, longer-term patterns
of behavior, and lifestyles. Finally, relate, beyond the individual level, refers to
the 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, and
think) were selected to constitute the theoretical framework. The respondents
selected in this research were the current customers of Starbucks who have
adopted Starbucks as part of their lifestyles. This adaptation can be considered
the outcome that customers responded to Starbucks’ act strategies. Because the
major portion of the Starbucks experience focuses on the individual level, it is
hard to measure relate experience in this specific subject. Act and relate were
not included, therefore, in the experiential marketing construct in this study.
Consequently, sense, feel, and think were emphasized in this research because
they match the characteristics of the research subjective and help to achieve
research purposes.
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 395

Figure 1
Theoretical Framework of Experiential Marketing,
Experiential Value, and Customer Satisfaction

Experiential Marketing Experiential Value Customer Satisfaction

Sense
perception H1
H2
Emotional
H3 value
Feel H9
perception
H4
Customer
H5 Satisfaction
Think
perception H6
Functional H10
H7 value

Service
H8
quality

In addition to these three constructs, perceived service quality was added to

the framework because it is one of the important components of experience
(Lewis & Chambers, 2000) and supports the overall congruency of the theory of
experiential 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—sense
perception, 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 argument
also applied to each component of experiential marketing. Customers can also
obtain positive values through special experience. Berry et al. (2002) mentioned
that an experience can bring emotional and functional values to customers.
Many researchers have asserted, moreover, that different environmental factors
create 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),
396 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

and level of crowding (Eroglu & Machleit, 1990; Hui & Bateson, 1991). In
addition, Li (2001) found that color, brightness, music volume, and customers’
emotions affect customer satisfaction and time perception. Therefore, six
hypotheses 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 proposed
to 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 values
and customer satisfaction (Cronin et al., 2000; Ennew & Binks, 1999; Fornell
et al., 1996; Kristensen et al., 2000; Patterson & Spreng, 1997). Two hypotheses
relating to experiential value and customer satisfaction were developed to test the
relationship 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 test
relationships among the three main concepts: experiential marketing, experien-
tial value, and customer satisfaction as shown on the theoretical model (Figure
1). A set of 10 questions regarding experiential marketing was adapted from
Schmitt (1999) and translated into Chinese. Sixteen questions were translated
from Brady and Cronin (2001) on service quality, Sweeney and Soutar (2001) on
emotional values, Mathwick et al. (2001) on functional value, and Parasuraman,
Zeithaml, and Berry (1988) on customer satisfaction. Respondents were asked
to indicate their levels of agreement with a five-point Likert-type scale, where
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 397

1 = extremely disagree and 5 = extremely agree. Five demographic questions

were also included in this questionnaire.

Content validity. The original questionnaire was examined by a panel of

experts to evaluate validity of the questions and appropriateness of translation
further 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 an
international company that has focused its marketing strategy on applying the
concept of experiential marketing (Fan, 2003; Williams, 2006). The “Starbucks
experience” is distinct from others in two ways: unique corporate culture and
passing 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 in
Taipei. As of this writing, there are more than 170 stores in Taiwan (Starbucks
Coffee Company, n.d.). “More emotional, less rational” is the main marketing
message promoted by Starbucks in Taiwan; this message is further communi-
cated through employees, for example, by hosting coffee-tasting sessions every
morning to build the strong relationship between the brand and employees. As
a result, employees are willing to spread the message to customers. For
Taiwanese, Starbucks brings not only good coffee but also a new idea of coffee
experience (Chuang, 2001). An increasing number of Taiwanese go to Starbucks
and 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 to
design a stage for customers to experience through different stimulations. The
stimulations of each component of experiential marketing in Starbucks in
Taiwan are shown in Table 2.

Field workers. Four fieldworkers were trained to participate in the process of

collecting data and were separated into two groups. Each group was in charge
of two stores. The training focused on the understanding of all items in the ques-
tionnaire and the consistency of asking participants to respond.
420 questionnaire collected
Data collection. Questionnaires were distributed at four Starbucks in four
different districts of Taipei, Taiwan, in January 2003. Convenient samples were
collected. The survey was distributed to customers walking out of Starbucks
stores and collected by those fieldworkers on site. Respondents were usually
standing outside these stores while responding to the survey and spent about three
minutes to complete the survey. A total of 420 questionnaires were collected;
398 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

Table 2
Characteristics 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 service
Products Mainly unique products / intangible
Price Relatively high

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

Statistical Analysis
Variable Definition. The definition and measurements of each construct are
shown in Table 3.

Hypotheses testing. The model and the hypotheses were simultaneously

tested by the linear structural relation analyses (LISREL 8.5). The LISREL
model consists of a measurement model and a structural model. According to
Diamantopoulos and Siguaw (2000), the measurement model specifies how the
latent variables are measured in terms of the observed variable and describes
measurement properties of the observed variable; the structural equation model
specifies causal relationships among the latent variables and describes the
causal effects and amount of unexplained variances (Diamantopoulos &
Siguaw, 2000; Jöreskog & Sörbom, 2001). Three steps were developed to test
the hypotheses. First, internal consistency reliability, convergent validity, and
discriminant validity were examined. Second, a measurement model with con-
firmatory factor analysis was used to validate the proposed measurement
indexes. 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 are
reported (Table 4). As shown in the table, there were more female respondents
(55%) than males (45%). The majority of respondents were ages 20- to
30-years-old (77%). Most of the respondents were research assistants, sales rep-
resentatives, managers, supervisors, professionals, or students. The respondents’
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 399

Table 3
Definition 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 use
stimulations
Feel Perception Emotional and inner • certain mood Schmitt (1999),
messages • emotional mood Parasuraman
businesses delver • care et al. (1988)
to customers, such
as sincerity and
care
Think Perception Different ways that • thinking Schmitt (1999)
businesses make • curiosity
their customers
think and feel
curious
Service Quality A subjective • reliability Brady & Cronin
perception referring • timely response (2001)
to the evaluation of • attire
the service that • need and want
customers 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 service
processes

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

Table 4
Demographic Profile of Respondents

Variable Frequency %

Gender
Male 168 45
Female 206 55
Age
19 years and younger 28 7
20~25 167 45
26~30 121 32
31~35 39 10
36~40 14 4
41~45 4 1
45 years and older 1 0.3
Occupation
Manager / Supervisor 16 4.2
Assistant / Professional 144 39
Student 151 40
Unemployed / Housewife 2 0.5
Service sector 23 6
Others 38 10
Income
No fixed income 108 29
Less 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 2
More than $37,500 3 0.8
Education
High school / General equivalency diploma 27 7
Certificate of graduation 60 16
College degree 216 58
Postgraduate degree 71 19

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 accord
with 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 unique
customer characteristics of Starbucks in Taiwan, they inferred the following rea-
sons to explain the results. First, because Taipei is the largest city in Taiwan, a
large number of universities are located there. Second, students usually have
more free time and higher purchasing ability than other people do (Starbucks’
price is relatively high in Taiwan). Finally, because drinking coffee is a relatively
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 401

Table 5
Results 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 0.50

Feel perception 0.7478 0.60
Think perception 0.7412 0.58
Service quality 0.8153 0.53
Experiential Value Emotional value 0.8807 0.59
Functional value 0.7586 0.60
Customer Satisfaction Customer satisfaction 0.8074 0.58

new trend in Taiwan, it is easier for young people to accept the trend than it is
for 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’s
alpha for each construct was calculated to assess reliability. Each value should
be 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 be
dropped. Results of this assessment are shown in Table 5. The Cronbach’s alpha
of 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 factor
loadings of these measurements were greater than 0.55 and less than 0.86 except
easy use and care. Therefore, easy use of sense perception and care of feel per-
ception were eliminated from the original questionnaire. All measurements
were constructed alike as the theoretical model developed through in-depth lit-
erature review. The average variance extracted (AVE) was also used to examine
convergent validity of each construct. The AVE was checked to see if constructs
accounted 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 the
validity in LISREL, the difference between a limited model and an unlimited
model was checked in which the larger the difference, the higher the discrimi-
nant validity. The constructs were compared with each other. Among the 21
pairs of constructs tested, the differences between each pair were statistically
significant. The results suggested good discriminant validity.
402 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

Table 6
Results 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 = 0.00

Goodness-of-Fit Index (GFI) More than 0.9 0.93 0.93
Adjusted 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 1.80
Incremental Fit Index (IFI) More than 0.9 0.96 0.96

The Measurement Model

Results of the measurement model were derived from the confirmatory factor
analysis (CFA) using LISREL. Several indices describe overall model fit of a model
in LISREL to assess the fitting level between observed data and a model, including
chi-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 each
indicator 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 and
smell attention of sense perception, effectiveness, and convenience of functional
value did not achieve the standard, and deleting these measurements did not
affect 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 this
model, 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 was
not significant at the 0.05 significance level (χ2 =272.23, p = 0.00). However, the
chi-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 and
other 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, and
IFI=0.96. The model’s chi-square value was significant at the 0.05 significance
level (χ2 =284.24, p = 0.00). However, χ2 ratio and other indices exhibited good
model fitting results.
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 403

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), and
H10 (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 emotional
value; service quality affects customer satisfaction by means of functional and
emotional values; and think perception affects customer satisfaction through
emotional and functional values.
The results also showed that think perception and service quality have
stronger effects than sense perception and feel perception because of the larger
coefficients of think perception and service quality in the model. In addition, the
results 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 marketing
and customers’ perception. Results of this article show that 7 of the 10 hypothe-
ses were supported. Generally, this study concludes that experiential marketing
could partially induce customer satisfaction because Hypotheses 3, 5, 6, 7, 8, 9,
and 10 were supported. More specifically, experiential marketing can induce
customer satisfaction through emotional and functional value provided by feel
perception, think perception, and service quality. Based on these results, several
suggestions were constructed for further research.
Outcomes on sense perception differ from the results reported by other
researchers (Areni & Kim, 1993; Bellizzi et al., 1983) who argued that sense
perception should play an important role in experiential marketing. Hypotheses
related to sense perception were not supported in this research. Consequently,
investigating the possible reasons behind this incongruence in the theoretical
model 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 customers
may not pay too much attention to the decoration, music, or layout of the store
because they are familiar with the establishment. Second, the threshold of sense
perception may be another cause. When an environment achieves a certain
threshold, customers will not perceive minor differences. Third, other measure-
ment tools might be more appropriate to assess the perception of sense than
questionnaires, for example, interviews or focus groups. Fourth, because of a
surplus of information at the time of data collection, respondents may have
omitted less important sense information. Finally, sense stimulation may be a
 Figure 2
Conceptual and Structural Modeling: Experiential Marketing, Experiential Value, and Customer Satisfaction

404
Return Relaxation
Visual attention 0.7
Sense
Enjoyment Good feeling
Perception
0.72**
H1 0.8**
Auditory attention 0.7**
H2 0.8 0.78** Satisfaction
–0.12
0.75**
Certain mood 0.78 –0.16 Emotional
Feel H3 0.43** Value
Perception H9
Emotional manner 0.77** H4 0.56** Good Decision
0.04 0.76

0.76 0.15* Customer 0.72**

H5
Thinking Think satisfaction Satisfactory Product
Perception
H6 0.22* 0.8**
0.77** H10
Curiosity 0.56**
Functional Satisfactory Service
0.44** Value
H7
0.34**
Hypothesis supported
Reliability 0.75
Service 0.83 0.72**
H8 Hypothesis not supported
0.74** Quality
Timely Response
0.68**
*p < .05
Attire Shopping desirability Satisfactory Price
0.73** **p < .01
Needs and wants
 Yuan, Wu / RELATIONSHIPS AMONG EXPERIENTIAL MARKETING 405

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, and
Snyderman (1959), which has been widely accepted to explain employees’ job
satisfaction within an organization.
One practical implication based on the results of sense perception in this
study is that hospitality operators should be advised to reallocate their monetary
investment on decoration and other facilities, which had been thought to provide
customers with strong stimulation that could overcome the intangible character-
istics of service products. If indeed sense perception can be verified to be not as
important as previously thought, hospitality businesses could allocate more
money to the core operations, such as design and higher-quality products, or hire
and train better personnel to deliver better services. In this sense, they could use
their capital more efficiently and the return on investment would be higher.
No doubt Starbucks has invested in a considerable effort to create a good
environment for its customers regarding the experiential marketing concept.
Based on results of this research, Starbucks should consider the role of sense
perception in its business. As mentioned above, sense perception may not be an
important factor for attracting customers to Starbucks. Although Starbucks was
chosen to be the research site, the researchers believe that the results of this
research may be applied to other hospitality operations.
Experience audit and experience motif proposed by Berry et al. (2002) may be
good tools for operations to improve the management of its total customer expe-
rience. That is, managers can use videotape or in-depth interviews to increase
understanding 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. They
could 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 marketing
induces customer satisfaction through experiential value. In addition, the syner-
getic effects of experiential marketing and experiential value simultaneously
contributing to customer satisfaction have not been reported by other researchers.
Therefore, this study can serve as the basis for future study regarding experiential
marketing and customer satisfaction.
This article can provide managers with a new look at marketing, especially in
the hospitality industry. Most managers have not considered experiential market-
ing because they assume their customers are rational and make decisions based on
functional product features, for example, price and quality. This assumption is not
entirely valid today; managers should, therefore, take account of “excellent and
unique experiences” for customers. The outcome of this research also provides
empirical supports for managers to implement experiential marketing strategies.
In conclusion, the outcomes of this article should help marketing managers
develop appropriate strategies to design and stage operational processes and phys-
ical environments to satisfy their customers. On the other hand, customers also
benefit from the unforgettable experiences they desire.
406 JOURNAL OF HOSPITALITY & TOURISM RESEARCH

RECOMMENDATIONS FOR FUTURE RESEARCH

Several suggestions have been drawn for future study. First, the research
model can be applied to other hospitality settings such as lodging and/or food-
service operations. New results can be compared with the outcomes suggested in
this study to examine any differences between industries. Second, future research
can focus on sense perception to discover the possible reasons why the two
hypotheses 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 customer
experiences. Thus, using qualitative methods to conduct a research about experi-
ential marketing may be another good direction. Finally, the research model can
also be connected with other important concepts in the marketing field, such as
customer 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 of
respondents in this study were not normally distributed; for example, many of
the customers were students and young people. Moreover, this research focuses
on the scope of the hospitality and tourism industry. Consequently, it may be
difficult to transfer the findings to other industries or countries.

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Submitted October 20, 2006

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

Yi-Hua “Erin” Yuan (e-mail: yi-hua.yuan@ttu.edu), is a doctoral student in the

Department of Nutrition, Hospitality, and Retailing at Texas Tech University, Box 41162,
Lubbock, Texas 79409-1162.

Chihkang “Kenny” Wu (e-mail: ckenny.wu@ttu.edu), is an assistant professor in the

Department of Nutrition, Hospitality, and Retailing at Texas Tech University, Lubbock,
Texas 79409-1162.