Experiential Marketing – A case study of Starbucks
Abstract
We extend our heartfelt thanks to our instructor, Ling-Hui Hsu, Ph.D., the assistant
professor of Department of English at Ming Chuan University who herein her expertise
and always provide support and opinion for our study at the leisure time, and with her
professional skill and experience shared for us. Her valuable suggestions helped all of us to
apply and comprehend the theories and help us to get more details for our paper.
Starbucks is the top to become the most famous coffee chain store in the minds of
customers. These researchers attempt to find out why Starbucks has been able to gain a
lead in coffee chains. This research aims at verifying that the experiential marketing is not
only a theory, but a practical strategy which can help an international coffee chain stabilize
the repurchasing rate of customers and reach operational success.
Table of contexts
Abstract………………………………………………………………………………….1
Chapter One: Introduction
1.1 Background…………………………………………………………………….3
1.2 Motivation………………………………………………………………………4
1.3 Purpose of This Study………………………………………………………….5
1.4 Value of This Study……………………………………………………………6
Chapter Two: Literatures review
2.1Coffee Chains…………………………………………………………………..7
2.2Marketing Strategies…………………………………………………………….7
2.3Customer Relationship Management……………………………………………8
2.4Schmitt’s 5-Stages Experiential Marketing Strategy……………………………8
2.5 Consumer Behaviors Analysis…………………………………………………..14
2.6 Customer Satisfaction………………………………………………………….15
2.7 Customer Loyalty………………………………………………………………16
2.8 Satisfaction Affects Loyalty……………………………………………………16
2.9 Hypothesis……………………………………………………………………..19
Chapter Three: Mythology
3.1 Participants…………………………………………………………………….21
3.2 Procedure………………………………………………………………………21
3.3 Material…………………………………………………………………………22
3.4 Statistical Treatment …………………………………………………………..22
Chapter Four: Data Analysis
4.1 Reliability Analysis…………………………………………………………….23
4.2 Demographic variable………………………………………………………….27
4.3 Testing hypotheses …………………………………………………………………………..……28
Chapter Five: Discussion and Conclusion
5.1 Discussion………………………………………………………….…………..32
5.2 Further Suggestion………………………………………………………….….35
References
Attachment1
CHAPTER ONE
INTRODUCTION
1.1 Background
In recent years the growth of coffee shops has been accelerating in Taiwan. According to
TCFA statistics, there were between 5,800 and 6,000 coffee shops in each county of
Taiwan in 2005. However, more and more coffee chains such as Starbucks, Is Coffee, Ikari
and Dante have established their distinct features. Coffee chain stores have resorted to
effect gathering, selecting, using and retaining the relevant knowledge from the varied
types of internal stakeholders and external sources to become more competitive (David,
2007).
Furthermore, relation between coffee chains marketers and customers is getting closer
today. Transactional marketing or benefits marketing, focuses on price competition and
individual transactions (Strazdina, 2000). Coffee marketing environment is changing.
Marketers have been using scientific strategies to determine their marketing strategy.
Experiential marketing emphasizes customers’ action in marketers’ strategy making.
Figure1.1: The flow chart of research processes
In this research, the first step is to define the focus of the study. The second is an attempt to
review literatures on experiential marketing. Following the review is design of
questionnaires. Finally, data collected will be analyzed to explore how Starbucks
influences purchasing behavior of customers.
1.2 Motivation
Experiential marketing is a study of the gap between the intended effect and actual
response of customer. Starbucks uses experiential marketing as a case example to affect
customer loyalty in their products (Li, 2007,). In recent years, coffee has gradually
accounted for a larger percentage in beverage market. More and more coffee chain stores
are around in the city to form fierce competition. Those coffee shops have lots in common.
When it comes to coffee chain store, what comes to mind for most people is a goddess
image, the logo of Starbucks. Starbucks has made it to the top to become the most famous
coffee chain store in the minds of customers. It might be easy to name a couple of reasons
behind the success of Starbucks, such as nice store design and good advertising programs.
However, it is believed that the success of Starbucks is not quite straight forward as it
seems. These researchers attempt to find out why Starbucks has been able to gain a lead in
coffee chains.
Nowadays, society is a huge experiential machine. The goods should contain the elements
of experience and the process of shopping also needs (Liou, 2004). The pleasant
experience through shopping process is the major trend of the marketing in the future.
Experience is the result of a certain product brings out people’s identity of that product and
it can totally show their style and taste. In sum, the Experiential Marketing helps the
marketer to demonstrate their style and taste and it is going to be the essential marketing
strategy in the future.
1.3 Purpose of This Study
Experiential marketing is an interaction among customers, marketing team, and products.
It’ not based on traditional expectation. What has been created is true brand loyalty from
customer to gain the ultimate competitive advantage (Reichheld and Schefter, 2000). There
is little information available on how experiential marketing is directly related to the coffee
chain store Starbucks. Most of the research conducted previously on Schmitt’s experiential
marketing is related to hospitality. To minimize the selected range by focusing on the
operation of Experiential Marketing in one chosen coffee chain store, Starbucks, the other
coffee chain stores have been excluded in our research. The purpose of this research is to
explore the relationship between the reasons for customers’ loyalty to Starbucks and the
theoretical concepts of Schmitt’s experiential marketing so as to determine whether
experiential marketing can be used to explain Starbucks’ success.
1.4 Value of This Study
The trend in experiential marketing has broken away from the traditional marketing
strategies to create a new relationship between customers and marketers (Grundey, 2008).
The key concepts of experiential marketing are to include customers in decision making
and put customers as the focus in strategies forming. This research aims at verifying that
the experiential marketing is not only a theory, but a practical strategy which can help an
international coffee chain stabilize the repurchasing rate of customers and reach
operational success.
CHAPTER TWO
LITERATURE REVIEW
2.1 Coffee Chains
Each Starbucks chain insists on giving consistent quality service. According to studies,
coffee chains have enabled the creation of large numbers of similar outlets that deliver
relatively standardized products and services in an efficient way (David, 2007). Coffee
chain means that every coffee shop of the organization carries the same products and
services. People can visit any coffee shop of the organization and enjoy the same products.
The key to competitiveness is to effectively gather, select, use and retain the relevant
knowledge from various types of internal stakeholders and external sources (David, 2007).
The success of the coffee chain is that they integrate the internal and external sources.
2.2 Marketing Strategies
A marketing plan contains a set of specific actions required to successfully implement a
marketing strategy. Marketing strategy determines the choice of target market segment,
positioning, marketing mix, and allocation of resources (Peter & James, 1987). Once
relationship marketing starts to become a trend, many try and offer to provide a framework
for it, and most of them simultaneously (Strazdina, 2000). Strategy marketing is called the
strategies of 4P’s — product, price, promotion and place (Chiou & Jyh-Shen, 2001).
2.3 Customer Relationship Management
Customer relationship management is related to customer life (acquire, enhance, maintain)
(Kalakota & Robinson, 1999). Starbucks provides a humanized leisure place where
customers can enjoy the relaxing store atmosphere. Transactional marketing or benefits
marketing, focuses on price competition and individual transactions (Strazdina, 2000). In
order to compete with other coffee shops, Starbucks provides some rewards to customers
frequently. For example, during anniversary celebration periods, customers are rewarded
by “the buy one get one free” campaign.
2.4 Schmitt’s 5-Stages Experiential Marketing Strategy
Sense
Sense marketing focuses on five senses, which are vision, hearing, smelling, taste and
touch (Schmitt, 1999). Senses are transducers from the physical world to the realm of the
mind. Sensory systems code for four aspects of a stimulus: type (modality), intensity,
location, and duration. Certain receptors are sensitive to certain types of stimuli. Receptors
send impulses in certain patterns to send information about the intensity of a stimulus. The
location of the receptor that is stimulated gives the brain information about the location of
the stimulus. The duration of the stimulus is conveyed by firing patterns of receptors (Kolb
& Whishaw, 2003). The satisfactions and joy from sense perception create not only
supplementary value for products but also experience of sense perception.
If managed well, sense marketing makes it possible for customers to distinguish company
and product, stimulating customers’ sense experiences and delivering values to customers.
In order to create a positive image, marketing personnel need to pay attention to the main
elements, styles and theme. The visual identity of a corporation or a brand is often the
most important component in invoking attitudes, associations, and customer responses, a
phenomenon that Louis Cheskin called “sensation transfer.” Therefore, it is often the
sensory experience that attracts a customer to a corporation or brand and that needs to be
considered in making a strategic decision. The key strategic objects can motivate its’
customers to buy its product, and deliver value to customers’ recognition. The key success
of sense experience is to assure consistent provision of positive impressions and to create
diversity (Schmitt, 1999). For example, interior design, decoration, and jazz music in a
Starbucks coffee shop.
Feel
“Feel marketing is the strategy and implementation of attaching affect to the company and
brand via experience providers (Schmitt, 1999, p118).” Clearly, positive or negative
