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CHAPTER 1

1 INTRODUCTION

1.1 PREAMBLE

Marketing has been defined as the science and art of exploring,

creating and delivering value to satisfy the unfulfilled needs and desires of
target market/customers for a profit (Kotler 1977). Over the years, marketing
has undergone various stages of developments, namely production orientation,
product orientation, sales orientation, marketing orientation and customer
orientation (Kaur & Sharma 2009).

1.2 BACKGROUND OF THE STUDY

All the stages of developments in marketing involves the sale of

goods to the end customers through the incorporation of either push marketing
or pull marketing strategies (Robinson & Bennett 1995; Urban 2005). From
1900-1960 push strategy has been adopted in marketing, where the
producer/manufacturer utilises the wholesalers, distributors or retailers for
pushing the products to the customers (Crompton 1979). Later from 1960 to
till date, the pull strategy has been followed, where the process starts from the
market (customer) and goes on to the company: demand request supply and
‗pulls‘ it out of the company (Corniani 2008).
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The fields of marketing and economics are found to be highly
―inter related‖ (Wilkie & Moore 2003). The entire history of economic
progress can be recapitulated in four-stage evolution; the agrarian economy,
product-based industrial economy, service economy and experience economy.
The various practices in the marketing field varies with the types of economy,
namely production orientation (1900 – 1920) which was practiced in the
agrarian economy, product orientation (1920 - 1930) which was practiced in
the product-based industrial economy and sales orientation (1930 – 1960) and
marketing orientation (1960 – 1970) which had been practiced in the service
economy and customer orientation (1970 – till date) has been in the experience
economy (Pine & Gilmore 1998). Understanding of marketing orientation over
the years helps to know the past better and paves a way for the learning and
development in the current areas of marketing that are in the limelight (Vargo
& Lusch 2004). Tracing the developments in the field of marketing over the
years reveals the following:

1.2.1 The Age of Push Marketing

During the age of push marketing, products were manufactured

by the producers/manufacturers to fulfill the needs and wants of customers,
and thus have been driven by the economics of mass production, which was an
efficient process of creating many low-cost goods. Mass production of
products paves way for the push of the products to the customers through
aggressive advertising, promotion and distribution tactics (Urban & Hauser
2004). Push marketing refers to the traditional marketing methods such as
media advertising, aggressive promotion and one-sided communication. It has
been treating consumers as passive individuals who must be coerced into
buying products (Urban 2005; McGregor 1960).
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During production orientation period the demand for products
exceeded supply, manufacturers concentrated only in technological growth for
meeting out the excess demand, leading to the maximization of profits with
minimum product line (Zikmund & d‘Amico 2001; Fullerton 1988). Mass
production lead to the development of various departments such as human
resource management, financial management, transportation and
communication facilities (Sheth et al. 2000). Marketing activities during this
period have been focusing on physical production, new technologies,
management techniques, efficient production and distribution (Kaur & Sharma
2009). Firms concentrate only on production and technological developments
to maximise production, whereas there is no emphasis on personal and quality
services (Rosenberg 1977). Therefore the products with higher demand start
selling themselves (Berkowitz et al. 1994). Customer needs, product features
and services are not considered during this period.

Mass production coupled with mass distribution and

communication creates the mass consumption society. Mass consumption
makes the companies to carry out innovative practices in marketing, which, in
turn, paves a way for the product orientation activities (Sheth et al. 2000).
During product orientation period the product‘s quality, features and
performance are upgraded to suit customer needs. Consistent improvement in
innovation and development of product features quality and performance with
regular research and development have made the companies to enjoy
competitive edge (Kotler 2003).

During sales orientation period the supply exceeded demand,

which gives rise to competition and make the firms to focus on salesmanship
for retaining the existing markets (Berkowitz et al. 1994; Zikmund & d‘Amico
2001). Short-run sales and aggressive selling techniques are given importance.
Product differentiation and branding also are emphasised for increasing the
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demand by the use of marketing communication techniques such as
advertising, personal selling, sales promotion and publicity (Kaur & Sharma
2009). For the development of sales techniques, commercial research
departments are established for the study of consumer behaviour and
motivations. Importance is given to salesmanship technique of mesmerizing
the customers for short-run/immediate sales by making the customers to
respond immediately showing the initial benefits and monetary savings. This
leads to the loss of customer loyalty, destruction of brand equity and increase
of price sensitivity (Fullerton 1988; Chandonet al. 2000). There is
development in personal selling techniques, sales promotion activities,
consumer behaviour and motivational researches. The major drawbacks during
this period are lack of emphasis on customer needs, long-run profitability,
business partnership and customer loyalty.

Push marketing strategy involves communication between the

seller and the manufacturer. The communication can be a one-way or a two-
way process based on the medium used by the seller. Mostly, push strategy
involves one-way communication. The goal of push marketing strategy is to
make the customer aware of the product at the point of purchase. Push
marketing brings about significant developments as a result of the push force
applied by producers/manufacturers in areas such as technological
developments, product innovation and aggressive selling techniques. Even
though there are developments in certain areas such as understanding customer
needs and long-run profitability, customer satisfaction has been ignored or
given minimal importance. Production orientation, product orientation and
sales orientation introduce products and sales techniques for fulfilling the
needs and desires of the customers without the consent of customers through
the wholesalers and retailers. Hence these three orientations have been
categorised under push marketing.
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1.2.2 The Age of Pull Marketing

In pull marketing, customers become the active co-constructs of

the products, services and consumption situations (Firat & Dholakia 2006).
Products have been manufactured by the engineering and manufacturing
department by involving the customers through the retailers (Vargo & Lusch
2004). Manufacturer allots resources to the retailers for various promotional
activities to understand the customer needs and wants (Levy 2009).

Marketing orientation period has been considered as the

beginning of the era of understanding customer needs, wants and preferences
through analysis and interpretation. These needs, wants and preferences of the
customers are analysed and interpreted through the integrated role of
engineering, manufacturing, research and development departments (Buell
1985). Predetermination of customer needs and wants in achieving customer
satisfaction and inducing repeat purchase become the focus of manufacturing
department. Marketing orientation activities enhance customer satisfaction and
increased profitability by strongly positioning a product/service of a company
in the target market by emphasizing the practice of marketing culture ―inter
connectedly‖ in all functional areas of management within the ―Total business
concept‖ (Drucker 1982).

Marketing orientation basically concentrates predetermining the

wants of customers in order to achieve profitability (McCarthy & Perreault
1991; Hartley 1983). The organizations strongly position their products in the
market through the ―inter connection‖ of all the functional areas within the
organisation (Kaur & Sharma 2009). The increasing role of marketing in
strengthening, positioning, maintenance and the importance of the integrated
role of marketing orientation activities lead to the development of marketing
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department with an independent integral identity in organizations (McCarthy
& Perreault 1991).

In the marketing orientation period, the needs, wants and

preferences of the customers are identified as a whole, but the individual
needs, wants and requirements are not analyzed. This leads to the development
of customer orientation in which the needs, wants and requirements of
customers are analyzed at individual level. Thus, market segmentation and
customer orientation become the logical basis of successful marketing (Sheth
et al. 2000).

Market research activities and customer feedback on products

and services widen the scope of marketing towards new fields of study such as
service marketing, relationship marketing and experiential marketing.

Relationship marketing, on the one hand, identifies, establishes,

maintains and enhances customer relationships with individual customers by
building networks (Berry 1995; Jackson 1985). Whereas service marketing
over the years has gained significance and acceptability. Marketing
development hierarchy emerges from the mere exchange of goods to
intangibles, knowledge, process, relationship to service dominant logic (Vargo
& Lusch 2004; Kaur & Sharma 2009).

Experiential marketing, on the other hand, lays its footprints

through an experiential approach in consumption and marketing (Holbrook &
Hirschman 1982). Later it become a key element in understanding consumer
behaviour (Addis & Holbrook 2001), and the foundation stone of marketing
(LaSalle & Britton 2003; Schmitt 1999).
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The products/goods purchased are supposed to be an experience
rather than being material object (Campbell 1995). The experiential
perspective of consumption is not limited to mere customer satisfaction, but it
engages customers in influencing their decisions and future actions (Vezina
1999). Consumption experience is divided into four stages as pre-consumption
experience, purchase experience, core consumption experience and
remembered consumption experience (Arnold et al. 2002). It does not happen
within a short period; its spreads over a period of time. Pre-consumption
experience involves searching, planning and imagining about the purchase of
products while purchase experience is derived from the choices, payment,
packing, environment and service encounter. Core consumption experience
includes sensation, satisfaction, engagement and transformation, and finally
remembered consumption experience activates the photographs of past
experiences (Caru & Cova 2003).

Sociology and retailing join hands when shopping goes beyond

just purchasing to socialize to enjoying oneself in the company of other
persons while shopping (Codeluppi 2000; Falk & Campbell 1997). In
marketing (Hetzel 2002; Schmitt 1999) and economics (Gupta & Vajic 2000;
Pine & Gilmore 1999), experience is the fourth offering added to the products
and services, which suits the needs of ―post modern‖/millennial consumers by
creating pleasurable and memorable experiences (Pine & Gilmore 1999) and
even extraordinary experiences (La Salle & Britton 2003) through the
exploitation of their senses (Schmitt 1999). This type of experience creates
emotions which are the heart of consumption experiences, and hence the
transformations in individuals are brought through experiences.

Experience is defined as an episode in the transformation of

individuals through emphasis on emotion and senses. Offering experiences is a
solution for avoiding commodity trap (LaSalle & Britton 2003). Experiential
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marketing offers physical and sensational experiences during shopping
(Codeluppi 2000). It defines four realms such as entertainment, education,
escapism and aesthetic in an operational view (Pine & Gilmore 1999).
Consumers are living human beings who want to be stimulated, entertained,
educated and challenged. The consumption of products or services with
experiences paves a way for the engagement of customers physically,
mentally, emotionally, socially and spiritually (McKenna 1991).

A diagrammatic view of the above mentioned aspects is presented in

Figure.1.1.

Figure 1.1 Push and Pull Marketing Chart

In the present study, out the four types of marketing orientations

during the current customer orientation period, ―experiential marketing‖ has
been chosen to study its level of application in an emerging economy like
India.
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1.3 EXPERIENTIAL MARKETING

In tune with the research question which is what is the level of

role of experiential marketing in emerging economies a review of the literature
has been done to understand the concept of experiential marketing and the
same is presented here below.

Experiential marketing has been viewed as ‗marketing in terms of

experience‘. This type of marketing is a way of engaging and involving the
customers on multiple levels, including sensory, affective and physical
experiences. Customers want ―products, communications and marketing
campaigns to deliver an experience‖. Experiential marketing considers the
whole consumption situation, and is therefore a broader term than traditional
marketing. Customers are both emotionally and ―rationally driven‖. It is
therefore necessary to use a variety of marketing tools, not just analytical and
verbal as with traditional marketing, but also more intuitive and visual tools
(Schmitt 1999). The focus of experiential marketing is therefore to deliver
experiences to customers. However, this does not mean that the customers are
passive and that the outlet provides the experience (Schmitt & Rogers 2008).

Experiential Marketing over the years: Experiential marketing has

had its voyage through various disciplines such as psychology, sociology,
anthropology and so on before stepping into the marketing approach.
According to a holistic approach, the concept of experience began as the
totality of people‘s sense, feel, think, act and relate in an offered setting
(Dewey 1934). The notion of experience has entered marketing and
consumption through the conceptual article of Holbrook & Hirschman (1982)
as the 3Fs namely Fantasies, Feeling and Fun. Experiences along their
harmony with nature, communities, personal growth and renewal in River
Rafting have been dealt with by Arnould & Price (1993). In tourism industry,
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hedonic, novelty, stimulation, safety, comfort and interactive experiences have
been described by Otto & Ritchie (1996). Real to virtual, novelty or
communality, degree of mass production or customization and level of
interaction with people have been denoted by O‘Sullivan & Spangler (1998).
Likewise, entertainment, education, aesthetics, escapism, pleasurable and
memorable experiences have been denoted by Pine & Gilmore (1999).

Five strategic experiential modules of experiential marketing are

brought into the field of marketing by Schmitt (1999). They are sense, feel,
think, act and relate experiences that have been considered as the standard
measuring tools of experiential marketing. In a range of industries, rock
climbing gyms, theme parks, museums, gaming, hot air ballon rides and so on
have described the experiences, personal relavence, novelty, surprise, learning
and engagement of customers (Poulson & Kale 2004).

Mascarenhas et al. (2006) have dealt with physical and emotional

elements. In the words of Gentile et al. (2007), customer experience originates
from a set of interactions between a customer and a product, a company, or
part of its organization, which provoke a reaction. This experience is strictly
individual and it implies the customer‘s involvement at different levels
rational, emotional, sensorial, physical and spiritual. In the study on the select
widely-known brands, a sensorial, an emotional, a cognitive, a pragmatic, a
lifestyle and a relational component are listed. Verhoef et al. (2009) have
argued that prior customer experiences would influence future customer
experiences. The importance of the social environment, self-service
technologies and the store brand also are presented. Customer experience
management is also approached from a strategic perspective by focusing on
issues such as how and to what extent an experience based business can create
growth.
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The concept of happiest moments and experiences in the field of
marketing is brought into focus by Maslow (1964), who has defined the peak
of experience as moments of the highest happiness and fulfilment. ―In
moments like this we feel more powerful than usual and experience unusual
focus, joy, intensity, creativity, in other words being more fully human‖.
Csikszentmihalyi (1977) has stated individual experience flow as ―a unified
flowing from one moment to the next, in which is in control of his actions and
in which there is a little distinction between self and environment, between
stimulus and response, between past, present and future‖. Holbrook &
Hirschman (1982) have defined experience as a personal occurrence, often
with important emotional significance, founded on the interaction with stimuli
which is the product or service consumed. Arnould & Price (1993) have stated
that an extraordinary experience is characterized by a high level of emotional
intensity, and triggered by an unusual event. Carbone & Haeckel (1994) have
described experience which implies the ―take-away impression formed by
people‘s encounter with products, services, and business a perception
produced when humans consolidate sensory information‖. Pine & Gilmore
(1999) also have stated that ―experiences are events that engage individuals in
a personal way‖. Schmitt (1999) has given an understanding of experience as
―Private events that occur in response to some stimulation (e.g. as provided by
marketing efforts before and after purchase)‖.

Robinette et al. (2002) have denoted experiences as ―the

collection of points at which companies and consumers exchange sensory
stimuli, information and emotion‖. Shaw & Ivens (2002), have said ―An
interaction between an organization and a customer is a blend of an
organization‘s physical performance, the senses stimulated and emotions
evoked, each intuitively measured against customer experience across all
moments of contact‖. Caru & Cova (2003) have defined the concept of
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experience as ‗something extremely significant and unforgettable for the
consumer immersed into the experience‖. Implementing the experience
marketing concept by the use of unforgettable experience is a useful task for
the marketer as the impressed customer as well as his or her friends and
relatives through his or her word of mouth would be attracted towards the
product as a result of the unforgettable experience. Gortes (2004) has
described experience marketing as ―Aims to provide consumers with
compelling and memorable experiences that emotionally connect them to a
brand each time they buy a product‖. Similarly, Desmet & Hekkert (2007)
have defined product experience as ―the entire set of affects that is elicited by
the interaction between a user and a product, including the degree to which all
our senses are gratified (aesthetic experience), the meanings we attach to the
product (experience meaning) and the feelings and emotions that are elicited
(emotional experience).‖ Meyer & Schwager (2007) have stated it as ―The
internal and subjective response that customers have of any direct or indirect
contact with a company‖.

Organizations have moved away from traditional ―features-and-

benefits‖ marketing towards creating experiences for their customers.
―Experiences are not exclusively about entertainment; companies stage an
experience whenever they want to engage the customers in a personal,
memorable way‖ (Pine & Gilmore 1999). Interacting with the customers while
focusing on the identification of the problem is experience. Tailor-made
solutions and services have lesser scope than experiences. ―Life is not
measured by the number of breaths that we take, but by the moments that take
our breath away‖. So the experiences must be staged by the retailers in such a
way that would create a lasting impression in the minds of the customers.
Lasting impressions generally provide pleasure which would be a memorable
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experience in the minds of the customers. Customers have their primary focus
on satisfying their needs and demands (Sullivan & Spangler 1998).

1.3.1 Attracting Customer Through Experiences

The retail market is highly competitive as the customers are very

well informed about the changes made by all the retailers. Even before the
opponent party comes to know about the changes, the customers are updating
the changes. Due to this retail setting differentiation, has become a difficult
task for the retailers in attracting the customers towards their outlet (Petermans
& Van 2010a). Marketers have started thinking about the use of guerrilla
marketing, permission marketing, viral marketing, emotion marketing and
emotional marketing in attracting the customers. The reason behind this is that
the customers are so busy that they stay immune to any form of marketing
messages such as advertising through the audio or visual modes like television,
radio, magazine, hoarding and the like. The only way to attract the attention of
such customers is to create an experience within them. If the retail design and
service experience engage more or all the senses, then it can be the effective
and memorable design (Pine & Gilmore 2002).

Experiences can be made to occur within a customer by means of

making them to encounter, undergo or live through things. They have the
power of replacing the functional values in attracting the customers. Strategic
experiential modules can be used to create different type of experiences within
a customer. The experiential modules followed in experiential marketing for
the creation of experiences within a customer are categorised as sense, feel,
think, act and relate experiences (Schmitt 1999).

Experiences are unique, so the retailer must design the sensory

experiences in such a way that the customers can enjoy the unique range of
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experiential shopping environments. When a customer is passing through a
retail store, if the retail design attracts his or her visual sense, then he/she may
be compelled to enter the outlet as a result of an emotional urge. The customer
collects the information through the senses and links it with an emotional
decision (Lindstrom 2006).

Experiences are created within a customer at various stages.

When a customer starts searching for a product and if the customer gets all the
required information easily, then there are many chances of creating an
experience within the customer (Arnold; Price & Zinkhan 2002). If the
customer feels all his or her needs for the product are met out during the
shopping, then a positive experience will be created within the customer
(Brakus; Schmiit & Zhang 2008). When the customer receives the service
from the service provider at the right time, he or she would develop a good
experience and he or she would start recommending the products to others.
During the consumption of the products, if the customer receives a good
experience about the life (durability) and quality of the product, then he or she
will turn back to the same outlet again and again (Holbrook 2000).

Like goods and services, experiences are also expected to meet

the needs of the customers. When creating the experience, the marketers must
pay significant attention on the derivation of experiences starting from the
iterative process of exploration, scripting and staging (Pine & Gilmore 1998).
The retail environment is the powerful area where the retailers can
engage/attract all the senses of the customers in the creation of pleasurable and
memorable experience. In retail outlets, the customers can be attracted through
senses and emotions by three types of environment such as micro
environment, meso environment and macro environment (Massara & Pelloso
2006).
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1.3.2 Implementation of Experiential Marketing In Retailing
Outlets

While planning for the retail environment, designing the retailer

is expected to have the ‗sensory stimuli‘ as the core factor as it has got the
power of attracting the customers. The human senses play a vital role in the
creation of customer experiences by providing memorable experiences by
means of engaging their emotions. In retail design, the brands associated with
sensory experience attract customers and stimulate strong, positive, and
distinctive impression across all five senses (Song 1999).

A sign board with an attractive neon display has the power of

attracting the attention of customers even from a very long distance. The smell
of chat items in front of an outlet has the power of attracting a customer even
when he or she passes by the outlet. on daily basis, the customers are subjected
to huge volumes of marketing communication, which has the power of
unconsciously attracting the customer‘s basic senses, which might be a more
effective way than traditional marketing methods in appealing to customers
(Krishna 2012). Even though marketers are aware of the role of human in
consumer behaviour, for many years senses have been given minimal amount
of importance in the marketing field (Hultén et al. 2009; Hultén 2011).

Customers remember simple experiences easily than complex

ones. They are information seekers and they pay attention to new and
interesting things (Malnar; Joy & Vodvarka 2004). In the design of a retail
environment, simple sensory experiences with new and interesting things can
be developed by the retailers to attract customers.
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1.3.3 Macro Environment:

Macro environmental factors such as entrances, exterior signs,

exterior display windows, height, size and colour of the building, surrounding
buildings, lawns and gardens, address and location, architecture, parking
availability, congestion and traffic and exterior walls are considered as the
important touch points in paving a way for attracting the customers towards
the outlets (Massara & Pelloso 2006; Turley & Milliman 2000). When a
customer is moving towards or passing near retail outlet, the external
environment has the ability of attracting the customers and creates an image in
the minds of the customers, this is done particularly in service based
businesses like hotel, restaurants, banks, retail outlets and hospitals (Baker
1986; Bitner 1986; Kotler 1974; Shostack 1977; Upah & Fulton 1985). When
the entrance of the outlet is broader, neat and attractive with the attractive
exterior signs, then the customer would be induced to enter the outlet even if
he or she has not planned the visit. If the outlet displays the items in an
attractive manner in the windows, it can easily attract the visual sense of the
customers. If the height, size and colour of the building are huge and if it has
got the potential of accommodating a large crowd without creating a crowded
environment around the outlet, then it can easily attract a large group of
customers to come in with their family, friends and neighbours.

When a customer plans to go for grocery shopping, the first

consideration would be the travel which he or she has to undertake. The next
criterion would be the location of the outlet. The outlet must be located in an
area where the transportation accessibility would be easy for the customers
and the traffic around the outlet is also minimal. The next thing which comes
to the minds of the customers would be the parking space availability (Berry et
al. 2002; Hansen & Deutscher 1977). Due to the growing importance of the
macro environmental factors, marketers are forced to provide due importance
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to these factors also. Macro environmental variables have the power of
attracting the customers even from a distance as they comprises all the external
factors of a retail outlet.

1.3.4 Meso Environment:

Meso environmental factors such as orientation signs, placement

and grouping of merchandise, workstation placement, employee uniform,
space design and allocation, waiting areas, waiting queue, flooring and
carpeting, entrances/exits and decorations are the major touch points which
have got the power of attracting the customers towards the retail outlet
(Massara & Pelloso 2006; Turley & Milliman 2000).

When entering an outlet, the first touch point would be the

entrance through which the customers enter the outlet. The entrance must be
broad enough, so that the customers can freely enter the outlet. The second
touch point which catches the attention of the customer would be the flooring
and carpeting inside the outlet. Some customers would come with kids and
elders for shopping, so they would look for the neatness of the floors in
addition the grip of the floor. There are chances for the kids and elders to slip
at times during their passage and so they would look into the carpeting facility
inside the outlet. The third touch point is the salespeople. When the
salespeople in the outlet are neat and pleasant to approach, the customers
would develop an emotional attachment with that particular outlet and may
also recommend the same to other people.

The fourth touch point in attracting the attention of the customer

would be space design. The area within the store must be properly utilised by
the people of the retail outlet, so that the customers can easily move within the
store when they are in search of the products required by them. If the passage
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is narrow and cramped, then the customers will be disappointed during the
duration of their purchase. The fifth touch point in attracting the attention of
the customer would be the assortment. When the products are properly
assorted in the retail outlet, it would save the time and energy of the customers
in selecting the products. The customers can have a chance of avoiding
confusions during the selection of products as a result of assortment.

The sixth touch point in attracting the attention of the customers

would be the waiting area and the waiting queus. If the retail outlet makes
billing in a faster way and if it reduces the waiting time of the customers
during billing, the customers will be highly attracted towards the outlet. The
energy of the customers would be drained during the shopping process, so the
patience level of the customers during the billing time would be minimal and
even if it is made as an easier task even during the offer and peak hours, the
customers will be highly satisfied and attracted towards the outlet. The seventh
and final touch point would be the exit area. When the customers come out of
the retail outlet, they would come with their baggage, so they would see
whether exit has an easy accessibility to the parking area. They would look in
for free movement within the exit area also. If they select the external modes
of transportation, they will look into easy ways of accessibility even for that in
the exit area.

1.3.5 Micro Environment

Micro environmental factors such as product display, price

display, display decorators, scent, music, temperature, colors and lighting and
crowding are the major touch points in attracting the customers towards the
outlet (Massara & Pelloso 2006; Turley & Milliman 2000). The micro
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environment also has got the power of attracting the senses of the customers in
an emotional way.

The customers would look at the displays when they enter the
outlet. The sense of sight includes visual dimensions of colour, brightness, size
and shapes (Kim et al. 2007). Most of the previous researches on visual sense
have examined the colours which are the most powerful visual stimuli than
words or pictures (Arnold et al. 2004). As colour variable as a visual sense
indicator has got the power of attracting the customers. The retailers are
expected to give due importance to selecting the colour. The customer mood
and purchasing behaviour within the outlets are being influenced by the layout
factors such as brightness and colour which have got an influence on the visual
sense (Kotler 1974).

Colour influences the affective response and patronage

likelihood in the context of retail experiences (Bellizzi & Hite 1992). Results
of previous studies indicate that human exposure to warm hues (red-orange-
yellow) raises blood pressure, heart rate and perspiration, whereas exposure to
cool hues (green-blue) has the opposite effect. Commercial environments
show that yellow telephone booths increase the speed of phone calls, yellow
walls and fixtures resulting in people moving through stores at a faster pace
and orange fixtures in food restaurants stimulate hunger. Colour, therefore,
plays a vital role in the success of marketing stimuli; e.g. colours used in
advertising or in package design (Wolfe Kluener & Levi 2006).

Similarly, sound patterns have the power of creating relaxaive

mood or stimulation in attracting the customers emotionally and in inducing
them during their purchase (Arnold et al. 2004). The sense of sound can be
linked to emotions and feelings and it impacts brand experiences and
interpretations. Marketers are advised to pretest stimuli to ensure positive
 20
associations with a brand (Assael 1995). The tempo of background music
played affects the customer inflow and return on investment for the outlets in
retail store settings (Milliman 1982, 1986). The sense of smell can also be
related to pleasure and happiness and it is believed to be correlated closely
with emotions and memories (Hulten 2011). If scent is to be used as a
marketing tool to attract the attention of customer, it is vital that the scent
corresponds to that product (Suhonen & Tengvall 2009).

Experiential marketing provides marketing promotions in a

sensory way which does not change the fundamentals of attracting and
retaining customers. If the marketing promotions are more experiential and if
they create new experience offerings, that would be a new way of attracting
new customers and retaining the existing customers (Pine & Gilmore 2002).

Marketing would make selling as a superfluous activity through

its functions and promotional activities (Drucker 1993). The creation of new
experiences would make marketing a superfluous activity (Pine & Gilmore
2002). In this case, the next competitive-edge for the leading companies
would lie in the staging of experiences (Schmitt 1999) for the attraction and
the retention of the customer base.

1.4 FOOD RETAILING SECTOR IN INDIA

In the Indian economy, a sector which is undergoing a remarkable

change is the food retailing sector. So, the current study is undertaken in the
Indian food retailing sector to understand Experiential Marketing in the Indian
context.

Indian retailing industry in the modern era is a highly competitive

and challenging industry that experiences fast growth of organised retailing.
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Retailing has been one of the pillars of Indian economy and it accounts for
32% of the Gross Domestic Product (GDP). The retail industry has been
divided into organised and unorganised retailing. Organised retailing has not
been followed in most of the rural and small towns of India. It has been carried
out by licensed retailers who have registered for sales tax, income tax and so
on. It includes supermarkets, hypermarkets, retail chains and privately owned
large retail businesses. Unorganised retailing in contrast, refers to traditional
formats of low-cost retailing. It includes local mom and pop store, owner
manned general stores, pan/beeda shops, convenience stores, hand cart and
pavement vendors. Over 14 million outlets operate in India with only 4% of
them being larger than 500 sqft in size. Indian retailing takes place in open
markets and in millions of kirana stores. Unorganised retailers improve their
services to cater to the needs of the customers. They provide credit limits and
home services to hold their existing customers. Some studies in India report
that retailing focuses on changing towards satisfying different hierarchy of
needs of customers (Srivastava 2008, 2010).

In Indian retailing, the organised sector has been booming and

the growth of malls is a clear indicator of economic prosperity in India. Retail
activities have been dominant in the top cities, and tier II and III are also
witnessing the changes. In shopping malls, 75 % of the customers spend 1-3
hours and 52% of their purchases have been related to food, groceries and
apparels. Moreover, malls are becoming the outing places for most of the
families. As shopping malls have been providing all in one roof for their
customers, most of the customers prefer shopping in the grocery stores at the
shopping malls. Organised retail sector has been predicted to show the growth
of 20% annually. The growth of the sector also provides significant
employment opportunities for the citizens. International players have also been
continuously doing Foreign Direct Investments (FDI) in the sector. In grocery
 22
retailing, the organised retailing constitutes 4% of the market share, whereas
the remaining 96% of the market has been dominated by the unorganised
retailers.

Small retailers have improved their service to cater to Indian

consumers. Credit limits and home service are helping them to hold on to their
customers. The focus of retailing is changing towards satisfying the different
needs of customers (India Report 2009). At present, 51% of FDI is in single
brand retailing and retailers are hoping that it be extended to ―multi brand‖
outlets. It is estimated that Indian retail market, which has only 6% of itself in
organized retail segment as of 2010, according to Booz and Co (India) Pvt Ltd,
is estimated to grow at 20% per annum (Economic Times, 2017) . Hence there
is a great potential to be explored both in the organized and the unorganized
retail markets by domestic and international players.

Retailing presently contributes to about 10% of India‘s GDP and

6-7% of employment. The retail industry is the second largest employer in
India, next to farming sector. It provides employment to about 40 million
people (rural urban split is about 60-40) of which about 0.5 million are
employed in the organized retail sector in urban areas. The value of India's
organized retail is expected to grow to $1.3 trillion by 2020 from the level of
$672 billion in 2017 (Business line, 2018). From the demand side, major
drivers of growth in the retail sector and its constituents have been changing
the age structure of Indian population, rising income, changing food habits and
growing health and food quality consciousness among the customers. The
growth of large food retailing outlets has contributed to this change from the
supply side (Cygnus 2007). The food retailing industry has annual sales of
about $176 billion. Over the past few years, the industry has grown at about
10% a year, exceeding the GDP growth rate. It is also estimated that food
retailing sector accounts for slightly over 50% of the overall employment, in
 23
line with its revenue proportional to the total retail revenue. Food retail outlets
account for one third of all retail outlets and 63% of total retail sales. The
traditional food retail industry comprises two basic formats: Kirana stores and
pushcart vendors. TheKirana stores are family owned, small in size and they
carry a limited number of items. They are run mostly by family members,
supplemented with some hired help. There are approximately 12 million such
outlets in India with half of them involved in food retailing, but only 4% of
them are bigger than 500 sq. ft.

In Coimbatore, 52% have shop size less than 300 sq.ft. The most
frequent shops are shops less than 200 sq.ft., 82% of the shops have an
inventory of less than Rs.10 lakhs and 60% have no employees other than
family members. The average employment per shop is 3.5 persons; the most
frequent type of shop has two family members (Kalhan 2007).

In recent years, a number of corporate players such as Spencer's,

Reliance, Aditya Birla Ltd, Future Group and so on have entered the organized
food product retail sector. The food product industry is on a roller coaster ride
as Indians continue to have a feast. Fuelled by large disposable incomes, the
food sector is witnessing a remarkable change in consumption patterns,
especially in terms of food. Food retailing has come of age from a period when
food items were sold in small road side grocer shops & mandis, haats and
bazzars by vendors to a stage when food products (processed and groceries)
are retailed through supermarket stores where consumers can inspect, select
and pick up the products they like in a comfortable ambience and still pay a
fair price for the product and the merchandise, and sometimes even pay less
than the price they would have paid at the nearest food stores. Shopping for
groceries is no longer a strenuous and uncomfortable affair.
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The Indian Food retailing business, which was only a simple
trading activity earlier, has now transformed into a complex industry. One can
imagine oneself walking through the air-conditioned lanes smelling fresh food
and groceries, enjoying light music, experiencing five star ambiences and
above all, buying food products live vegetables, spices and beverages without
bargaining with the vendors. Food retail has surpassed the dominating apparel
and accessory sectors. "Contrary to the belief that fashion is the largest
segment of organised retail in India, food & beverages is the major segment,
worth Rs.8,97,000 crore," as said by Arvind Singhal, Chairman, Technopak, at
the Indian Retail Forum held in Mumbai. There is an old industry saying that ―
customer is king‖ Food retailers today would update it saying ―customers is
the dictator‖ and because of fierce competition, new technology and business
practices, the market power of customers is strong and growing stronger.

1.5 DEFINITION OF KEY TERMS

Marketing orientation: Marketing orientation has been defined

as ―the organization-wide generation of market intelligence pertaining to
current and future customer needs, dissemination of the intelligence across
departments and organization wide responsiveness to it‖ (Jaworski & Kohli
2006)

Shopping malls: A group of different stores operating in one

place by offering different products, brands or services is called a shopping
mall.

Organised food retailing outlets: ‗Licensed retailers paying

sales tax and income tax fall under organised food retail outlet‘ (Jhamb &
Kiran 2012).
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Experiential marketing: „An emerging concept in the field of
marketing, aims to create positive and memorable customer experiences to
create an emotional tie which can engage them for the long-term relationships
and business‘ (Dirsehan 2012).

Customer engagement: Customer engagement has been defined

as the level of cognitive, emotional and behavioural investment of a customer
under specific brand interactions (Hollebeek 2011).

1.6 SIGNIFICANCE OF THE STUDY

 Customers today have a growing preference towards shopping and each

customer expects his or her shopping experience to be entertaining and
relaxing. This prompts the food product retailers to understand the
customer‘s psychological and behavioral patterns and practice
experiential marketing.
 Experiential marketing aims to increase the sensual pleasure of
shopping for food products within the retail outlet, thereby giving a
competitive advantage over other retailers.
 A study on experiential marketing on organized food retailing outlets
would help the existing organized retailers to sustain in their business
for a longer period of time by
o helping the retailers in designing their atmosphere such as the
macro environmental factors, meso environmental factors and
micro environmental factors and
o Utilising the trained employees in the outlet, so that the
requirements of customers can be studied by the retailer easily
and a long run relationship with the customer can be developed
by the outlet.
 26
 This will also help new organized food retailers to enter and succeed in
the business.
 The present study would help the organized food retailers to engage
their customers in staying with them for the lifetime by understanding
post purchase involvement and intensions.
 Better customer engagement through experiential marketing methods
prevents brand switching to other competing outlets.

1.7 STATEMENT OF THE PROBLEM

Despite the increased research on the strategic experiential

modules of experiential marketing made so far, a clear picture about the
experiential ways of engaging customers is still limited and inadequate.
Studies on experiential marketing are usually undertaken by practitioners or
academicians to forecast the customer satisfaction as a result of the fourth
offering experiences which is only the first step in retaining customers for the
long-run profitability of the business. Hence it is imperative to study the
creation of transformations within the individual customers through the
attributes of customer engagement which would sustain the customer with the
business for the long-run or lifetime profitability. Organized food retail outlets
in India fail to offer experiences in engaging their customers in the creation of
post purchase involvement by offering value to the money paid.

1.8 RESEARCH QUESTIONS

Experiential marketing is the next logical stage in engaging the

customers beyond satisfying their demands, through commodities, goods or
services at individual level (Pine & Gilmore 1999). The following questions
are addressed in the current research:
 27
 What are the customer perceptions regarding the elements of
experiential marketing such as sense, feel, think, act and relate?

 Do the demographic characteristics of the customers have an impact

upon the way experiential marketing is perceived?

 Do the understanding and application of experiential marketing

techniques give the intended result to the retailers?

 How engaged is a customer who is receptive to experiential marketing

activities?

 Will experiential marketing influence the loyalty of customers?

1.9 OBJECTIVES OF THE STUDY

The present research is undertaken with the following objectives.

 to study the demographic features of the customers of organised food

retail outlets on the basis of their (i) personal profile (ii) purchase
practices.

 to assess customer perceptions related to the aspects of experiential

marketing, customer engagement and post purchase involvement.

 to study the differences in the perceptions of experiential marketing,

customer engagement and post purchase involvement based on
customer feature related to (i) personal profile and (ii) purchase
practices.
 28
 to propose, validate and test a suitable model to study the influence of
experiential marketing on customer engagement and post purchase
involvement.

 to find out the moderating effect of demographic characteristics of the

customers upon the influence of experiential marketing on post
purchase involvement.

1.10 SCOPE OF THE RESEARCH

The study is undertaken in organized food product retail outlets in

major cities like Chennai and Coimbatore in Tamil Nadu state. Organized food
product retailers and grocery shops in shopping malls are the subject in this
study.

Though the tentacles of marketing spread out into several

disciplines, the current research aims at studying the evolving concept of
experiential marketing in organized grocery retailing outlets. This study links
the behavioral intensions of customers to learn, absorb and perceive various
elements of marketing induced by the marketer to bring about a delightful
customer experience. The cognitive, affective and behavioral components that
have a bearing on the customer through extensive experiential marketing
activity of these organized food product retailers have been the prime focus of
this study.

1.11 CHAPTER SCHEME

The thesis is divided into five chapters. Chapter 1 highlights the

progress of marketing from a mere ―production oriented‖ concept to a more
dynamic experiential field of study. It also highlights the relevance of this
 29
study in today's context, the problem that needs to be addressed and the
objectives to be focused in this study. Chapter 2 deals with the review of
literature, theoretical frame work and Hypotheses development. Chapter 3
details the research framework, instrument validation and purification,
sampling framework and statistical tools adopted for the study. Chapter 4
gives the analysis and interpretation of data collected in addition to
discussions. The objectives are analyzed and proved using statistical analysis
and chapter 5 summarizes the findings, scope for further research, in addition
to managerial implications and contribution of the research to the scientific
body of knowledge.