Concept of Experiential Marketing - Literature review Example

Introduction This paper seeks to analyze the concept of experiential marketing by conducting extensive literature review and the criteria used by retailer in applying this concept in their retail shops. In a nutshell, experiential marketing involves integrating emotions, logic and general thought processes to establish links with customers. The aim of this marketing approach is to create a connection such that a customer would respond to a product emotionally. In this case, retailers focus on how best to inspire thoughts about comfort and pleasure in addition to a sense of practicality. The basis of this paper is therefore to observe how retailers, like Tesco attempt to steer consumers in a direction that would make them purchase a good or service. The basis is on some critical dimensions like aesthetics, education, entertainment, and escapism which are elaborated in a literature by Pine (1999). Some of the retailers utilise lighting, music, display, and point of sales criteria to manipulate the kind of consumer value perception and behaviour. Literature review Retail market is one of the key drivers of UK economy following an ongoing transition from manufacturing to an economy based on services, experiences and activities. According to Jobber (2007, p 203), retail is a very competitive and fast changing service industry that respond to changes in consumer values and behaviour. This is in recognition of the fact that businesses are motivated not only by economic benefits but also by customer satisfaction. Crane (2002) noted that social and moral concerns should be integrated into marketing strategies. Given the fact media has become more scattered and fragmented, it is essential need reach customers directly. The present customers have changed how they consume the media and their perception of traditional advertisement. Retailers are therefore obliged to utilise mobile marketing, event marketing, remarketing and other approaches with an intention of penetrating psychological orientation of customer’s mind. Numerous research have been done to explain the effect of visual, acoustic, olfactory, and tactile dimensions of the retail atmosphere on a number of behavioural factors (Turley, 2000). These studies explain the effect of one variable e. g music or a combination of variables e. g music and point of sales on customer behaviour. Pine (2009) agrees that each individual atmospheric variable is vital in the development of retail experience. Snodgrass (1999) suggests that the ultimate effect is dependent on customer’s evaluation of the retail environment. As mentioned earlier, Pine (1999) provided distinct experience designs that suit the retail setting. This experiential event connects potential customer in visual, enlightening, and entertainment or escapist context. In terms of enlightening and escapist experience a customer is allowed to take part actively in a situation where entertainment and visual events are passive. Furthermore, escapist and aesthetic events allow consumer to be absorbed in the environment whereas educational and entertaining events enables a consumer to gain some form of knowledge or understanding. Baumstarck (2008) conducted a study to deduce the effect of dressing room lighting direction on consumer’s perception of self and the environment. The scholar commented that the dressing room is a critical place in a retail experience where a consumer makes a decision whether to purchase a cloth or not since it is connected to user’s emotional state and personal evaluation. During the research, four female were assigned to dressing rooms with different lighting conditions. The colour and illumination of the lights were carefully controlled. Participants were then allowed to shop for different outfits and try them in the dressing rooms. It was apparent that the lighting conditions were significant in shaping perception of the dressing room. In this research, front lighting was classified as superior when the intent was elimination of facial shadowing or rather to make the dressing appear spacious. A scholar, Osborn (2000), stated that clothing store dressing rooms experience are important moments when a consumer is attempting to make a purchase decision. Poor atmospherics can result to a lost sale. It is therefore important that retailer pay special attention to the design of their dressing in order to increase sales levels. Rea (2000, p.17) spelled out the need for an appropriate vertical illumination and elimination of shadows in a dressing room. The researcher comments that shadows are eliminated by using directional lighting mounted in front of the face and making use of even illumination. To obtain the even illumination necessary for trying clothes, mirror lighting is used. Rea (2000) further noted that overhead fluorescent fixtures are used in stores but mirror lighting is employed by high-end stores. The colour rendering in a dressing room further provides facial appearance, fabric colour and texture. This is essential where potential buyer is carrying out colour match of several objects. Rea (2000) elaborated how clarity of light allows a consumer to inspect the material in detail. The consumer should have abiliy to read garment and price tag attached. In this case, high luminance is essential. In an investigation by Baker (2002) atmospherics are used by retailers to reinforce and improve the brand image, and further build emotional connection with consumers. According to the researcher, music is one of the atmospheric variables used to create an in-store experience and connect with customer emotions. Bernd (2000) support the view that music and sound have beneficial effect if included in brand identity. These positive effects are realisable when music is used with other in-store variables. The type of music played should ensure fit between brand images and positioning and any mismatch can lead to poor sales results. Turley (2000) appreciates the fact that inappropriate relationship between atmospherics, staffing, and processes ends up creating an irritating customer experience and undermine the effect of individual in store variable. To demonstrate this argument, classical music used in conjunction with soft lighting and multiple sales-staff create an impressive image in a retail store consequently leading to high service and quality rating. Stores that trigger high shopping experience costs or contain a taxing emotional environment forces a customer to avoid them. The fit between music and other atmospheric in-store variables adds value to the established brand meanings thus enhance brands equity. Any deviation makes customer to search for further information in order to make a new judgement about the brands position. Leading retailers are aware that customers can be won or lost within a few seconds hence it is imperative that the first impressions captured by the customer are appealing. All aspects of retail designs starting with point of sale displays are vital in capturing passers-by and further maximise revenue once they enter the retail outlet. The Green Room Displays play a role of creating energised retail displays and experiences that serve the purpose of driving sales to a higher level. Displays at the shops should catch the customer’s eye and give them direction to ones premise. Some examples of innovative methods of attracting passers-by are swing signs, pavement signs, and boards. Such method notifies potential customer’s existence of low prices, great customer service, and even specific event. Other criteria used to apply experiential marketing Mobile marketing: This is a very innovative approach to experiential marketing since customers are recognised as moving targets. Mobile marketing therefore gives retailer an opportunity to meet consumers where they are. This is possible by utilising technology road shows or moving billboards. In the year 2000, mobile marketing in Europe and some parts of Asia and was widely used after the advent of Short Message Services. Retailers used to capture mobile numbers and subsequently send off relevant content. Over the year, this approach of advertising has been accepted and gained prominence in developed regions of North American and Western Europe. On the contrary, SMA initially received aggressive media coverage for being a form of spam since advertisers purchased lists and sent unsolicited content to consumer’s phone. Nonetheless, guidelines formulated by mobile operators have enhanced mobile marketing in Europe. Apart from SMS, other forms of mobile marketing include: MMS, In-game, web, Bluetooth, Infrared and proximity system marketing. Event marketing: It is important to note that consumers are active individuals participating in sports, shows and events that are of importance to them. A retailer can therefore take this opportunity to make products and services known to consumers. The concept of event market was pioneered in India but this concept has evolved rapidly among Indian consumers. In order to register success in event marketing, it is important to ensure target audience attends the event. This means that enough research should be conducted on consumer profile. The location chosen for the research is essentially the most important factor in event marketing. Location should not be hidden from the eyes of potential consumers. The most ideal location for an exhibition is found at the entryway and near pathways to food outlets and restrooms. Tedesco (2009) gave a vivid demonstration of event marketing efficiency. The infamous Votomatic Machines that had been used in Florida were purchased and placed at prime locations in New York and Los Angeles with an intention of placing voters in a virtual polling places. The argument here is that this is a form of direct delivery to the consumer. The article further stated how creative event marketing is still valued despite economic downturn. Utilization of digital extension of live sponsored events is effective in executing experiential marketing. Event marketing has consequently taken an improved level away from promotions that brings audience into arenas to where AT&T Wireless customers access live concert footage online. This example is a trend towards intensive brand experiences (Tedesco, 2009). Remarketing: This criterion allows a marketer to demonstrate advertisements to the users who have previously visited a company’s website. The approach here is to tag pages of your site that correspond to specific categories that need to be advertised. This permits an individual to communicate with people who previously visited a page thus building a powerful tool that match the right people with the right message. Adveriser.com utilizes prolific remarketing technology that is capable of identifying and tagging lost visitor’s website with banner ads. These ads will be displayed as the visitor surf the internet. The effect of this approach is an increased number of visitors to a website and that the number of conversion will grow since remarketing brings back visitors as consumers who are ready to buy. Advertiser.com agrees that remarketing enable a company gain competitive advantage. In such a situation, payment is made after performance whilst the number of conversions is increased exponentially. Remarketing further keeps brand awareness fresh in the minds of potential customers who are participating in a buying cycle. From customised messaging and delivering targeted impressions, customer relationship is built Tesco Retail Outlet The transformation of Tesco into Britain’s largest supermarket is attributable to changes in Tesco brand image. Between 1990 and 1999, Tesco registered a £9 billion turnover whilst share price increased from 9.1% to 15.4 % consequently overtaking Sainsbury’s to take up the market leader position in 1995 (Humby, 2003). The success of Tesco is purely a consequence of its ability to attract new shoppers. Experiential marketing approach employed by Tesco increases customer loyalty. It is therefore vital to investigate motivation behind consumers shopping at Tesco. Research indicates that the retail outlet made radical changes to operational structures. The change in Tesco brand image was fundamental in increasing the reputation among the target audience. This contrasted with Sainsbury whose brand image deteriorated over time period when Tesco was recording success. The new brand image has been beneficial to Tesco since it allowed the retailer to venture into non-grocery where brand credibility is a critical element. In a marketing article by Hemsley (2006), in-store marketing in addition to customer-friendly store design and strong displays at Tesco increased customer satisfaction index thus beating Ikea from the leading position. The article further expresses how in-store experiential activity acts as the bench mark for the retail industry. Owners of brands thus ought to consider educational nature of experiential marketing with a view of ensuring that brands deliver their value to the customer. Matalan, which is a homecare and clothing chain, ensures that in-store marketing is balanced between what the brand is trying to achieve and the customer response to a marketing strategy. This retail outlet has done exceptionally in improving its outlets by using direct mail campaign to target specific audience experientially. Even though the shopping environment in Matalan may appear to be poor compared with John Lewis investment, the product range, pricing, and marketing strategy meets customer satisfaction. Tesco Retail Marketing Mix Price: In the year 2006, Tesco launched Tesco Direct with an intention of competing with rival catalogue retailer like Argos. The catalogue contained over 8,000 products sold at great Tesco prices. The retailer is aware of the fact that pricing technique is a tool that should be used appropriately with a goal to realise good results. to enhance delivery of services in an experiential manner, customers can now choose their products from an online catalogue and subsequently order in any of the following approaches: via tesco.com, by phone or in sample of stores at new Tesco direct desk. The outcome of this retail marketing approach was a record £1 billion sale in that year. Tesco product: The website Tesco.com is a portal to most products sold by Tesco. Products stretch from non-food ranges e. g books, DVDs and electrical items to services such as Tesco Personal Finance and the telecoms businesses. The retailer further offers services in partnership with specialist companies e. g dieting clubs, fights and holydays, downloads of music, and DVD rentals. Initially Tesco introduced clothing website so as to display Tesco brands and link potential customers to the nearest store with the product range. Tesco Competitors: At the moment, Tesco is a leading retailer in UK grocery market in terms of market share, 26.2% and £34,874 million sales (Humby, 2003). The same case applies to online presence. Second position is held by J Sainsbury contributing 16.5% market share with its 823 stores. Other competitors of Tesco in terms of online performance are Morrison with 12.5% retail share, Somerfield with 5.5% and Co-op with 5.0%. According to Pine (1999), customers are motivated to purchase in some specific stores by price levels charged and the quality of goods, opening hours and the store environment. Promotion: Tesco bases its promotion on in-store advertising and marketing to customers utilising Tesco Clubcard loyalty scheme. In online marketing of non-food goods, the supermarket uses keyword targeted ads. In the literature review, we noted that email marketing and direct mail market are vital when providing special offers and promotions to customers. The supermarket makes use of remarketing and maintains communication with the customer to encourage continued purchase. Conclusion It is evident from this essay that retail market is one of the key drivers of UK economy after a transition from manufacturing to an economy based on services, experiences and activities. This sector is characterized by competition and fast changing services in response to customer values and behaviour. Several literatures that address the effect of visual, acoustic, olfactory, and tactile dimensions of the retail atmosphere on a number of consumer behavioural factors were reviewed. Furthermore mobile marketing, event marketing and remarketing are employed by competitive retailers with an intention of reaching the customer directly. These experiential variables were applied in observing how Tesco manages to lead the retail market by reaching out to customer feelings and emotions. Retail market mix of Tesco was reviewed with emphasis of product, price, promotion, and competition. These are specific aspects that affect the brand image and ultimately customer loyalty. Reference list Baker, J. et al, 2002. “The Influence of Multiple Store Environment Cues on Perceived Merchandise Value and Patronage Intentions,” Journal of Marketing, 66(2), 120- 41. Baumstarck, A.., 2010. Effects of dressing room lighting direction on consumers’ perceptions of self and environment. Journal of Interior Design 35(2), pp. 37–49. Bernd, H. S., (2000). Experiential Marketing: To Get Customers to Relate to Your Brand. New York: The Free Press. Crane, A. and Desmond, J., 2002. Societal marketing and morality. European Journal Of Marketing, 36(5), pp. 548-569. Hemsley, S., 2006, In-Store Marketing: Can John Lewis teaches Tesco about loyalty? Marketing magazine. Available at http://www.marketingmagazine.co.uk/news/549486/In-Store- Marketing-John- Lewis-teach-Tesco-loyalty/?DCMP=ILC-SEARCH. Accessed 24th February 2011. Humby, C. and Hunt, T,. 2003. Scoring points. How Tesco is Winning Customer Loyalty. London: Kogan Page. Jobber, D., 2007. Principles & Practice of Marketing. 5th ed. Maidenhead: McGraw- Hill. Osborn, S.B., 2000. Little things make a big difference. Chain Store Age, 76(6), pp. 36. Pine, J. and Gilmore, J., 1999. The Experience Economy. Boston: Harvard Business School Press. Rea, M.S., 2000. IESNA lighting handbook: reference and application. 9th ed. New York: IESNA Publications Department. Smilansky, S., 2009. Experiential Marketing: A Practical Guide to Interactive Brand Experiences. London: Kogan Page Ltd. Snodgrass, J., Russell, J. and Ward. L.,1999, ‘‘Planning, Mood and Place-liking,’’ Journal of Environmental Psychology, 8, p.209-22. Tedesco, R., 2009. 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