Pop-up initiatives in the cultural industry
An experiential marketing tool to increase audience reach
Truus Swart
10301372
MSc. in Business Studies - Track EMCI First supervisor: E. Dirksen MSc. Second supervisor: M. Kackovic MSc. Date: 31/08/2015
2 Abstract
Over the last two decades, cultural organizations face extreme funding reductions. This leads to a need to find different ways to make money, such as boosting ticket sales. Marketing strategies to promote culture can fulfill an important role in this process. At the same time, the use of pop-up in the Dutch cultural industry is increasing, such as pop-up theatres, pop-up cinemas, pop-up museums, pop-up exhibitions and pop-up libraries. In retail, pop-up stores have been used as an experiential marketing tool to promote brands. Could this be a marketing tool for the cultural industry as well?
The pop-up retail literature shows there are two core characteristics of pop-up: temporality which will be reviewed from the perspective of scarcity marketing theory and experience offering which will be reviewed from the perspective of experiential marketing theory. This thesis will address the effect of pop-up on the behavioral intentions of customers. It researches whether pop-up has the power to increase audience reach for the cultural organizations that use this tool. Here, increasing audience reach is inextricably linked to customer engagement: the intensity of the customer-brand relationship including the processes to realize the aim of attracting, building, maintaining, and enhancing the relationships with potential and existing customers (Vivek et al., 2012; Gambetti and Graffigna, 2012). This leads to the main question: How can a pop-up initiative function as an experiential marketing tool for cultural organizations to increase audience reach? Audience reach consists of three categories: can a cultural organization use pop-up as a tool to strengthen the relationship with the existing customer (audience deepening), to attract a new audience that is already interested in culture (audience broadening) and to attract a new audience without any cultural interests (diversifying)? In order to find answers to these questions, a qualitative research strategy has been used, interviewing 13 different type of cultural organizations that make use of pop-up.
The results has been split up into two section. The first results show that the experience of pop-up functioning as an experiential marketing tool has a positive effect on the audience deepening, broadening and diversifying. The second section shows that the temporality aspect of pop-up functioning as a marketing tool has a positive effect on audience broadening, deepening and diversifying. Therefore, creating a temporal experience that is memorable has the ability to increase audience reach, and thus is a valuable tool to implement in the marketing strategy of a cultural organization.
Statement of originality
This document is written by Student Truus Swart who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Table of content
1. Introduction 4
2. Theoretical framework 7
2.1 Cultural industry 7
2.1.1 Cultural industries and audience reach 7 2.1.2 Cultural industries and marketing 8
2.2 Customer engagement 12
2.2.1 Customer engagement as the binding concept 14
2.3 Pop-up 15
2.3.1 History 15
2.3.2 Definition and characteristics 16
2.3.3 Motives to use pop-up 20
2.4 Experience as a marketing tool 23
2.4.1 Definition of experience marketing 24 2.4.2 Motives to use experience marketing 25
2.4.3 Experience characteristics 26
2.5 Scarcity as a marketing tool 27
3. Method section 31 3.1 Research method 31 3.2 Unit of analysis 33 3.3 Quality of research 34 3.4 Data analysis 35 4. Results section 36
4.1 Necessary pop-up elements 36
4.2 Experience elements of pop-up 41
4.3 Reasons for creating the pop-up 45
4.4 Pop-up as marketing tool 47
4.4.1 Pop-up to promote the participating cultural organization or arts in general 48 4.4.1.1 Pop-up to promote the cultural organization 48 4.4.1.2 Pop-up to promote the arts in general 49 4.4.2 The marketing function of temporality and experience 50 4.4.2.1 The marketing function of temporality 50 4.4.2.2 The marketing function of experience 52
4.4.3 The audience of pop-up 58
4.4.3.1 Deepening 58
4.4.3.2 Broadening 59
4.4.3.3 Diversifying 59
4.5 The future of pop-up 60
5. Conclusion 62
5.1 Summary of empirical findings 62
5.1.1 Temporality findings 62
5.1.2 Experience findings 64
5.2 Discussion of the findings 64
5.3 Managerial recommendations 67
5.4 Limitations and future research 68
6. Literature 70
7. Appendices 76
7.1 Appendix 1: Short description of the interviewed organizations 76
7.2 Appendix 2: Interviews 79
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1. Introduction
The cultural industry has been characterized by a dominant paradox. Intrinsically, artistic activities focus on maintaining their creative integrity. At the same time the cultural organizations bring along an economic aspect. Over the last two decades, the wider environment of these artistic entities has become worse: funding institutions lowered their budgets on culture and the demand for cultural products remains the same or even decreases. This development requires more extensive research into the application of management principles, in particular marketing concepts, to the cultural industry (Bouder-Pailler, 1999).
With this notion in the back of my mind, I was watching an item of the television program De Wereld Draait Door (DWDD) regarding their initiative to open a pop-up museum. Ten famous Dutch co-hosts of the show were linked to ten different art museums. They got the opportunity to be guest curator and to fill one room in the pop-up museum with artworks that they could find in the museum depots. The Allard Pierson Museum arranged the location. This initiative has been the inspiration for my research topic: pop-up activities in the cultural industry. While the television program was on, I was thinking: what an interesting way of promoting the ten participating art museums to a wider audience. This thought initiated my first search for other cultural pop-ups. I came to the conclusion that the Dutch cultural industry counts several pop-ups, such as pop-up theatres, pop-up cinemas, pop-up museums, pop-up exhibitions and pop-up libraries. The combination of the need to apply marketing ideas to cultural enterprises and the growth of the up phenomenon has led to the preliminary question: can a pop-up activity somehow function as a marketing instrument to promote culture?
The literature makes clear that that pop-up finds it origins in the retail industry. “Pop-up retail
refers to the practice of opening a transitory, short-term, and often unannounced retail sales space. Such a space may be set up in a movable container or in an existing structure to offer consumers experiential shopping and face-to-face interaction with brand representatives” (Ryu, 2011: p. 139). The recent
emergence of pop-up activities explains the lack of scientific literature on this topic. The few studies about pop-up that have been executed only concern retail. Apart from a master thesis (Devreese, 2012), there is no literature about pop-up activities in the cultural industry. The existing articles can be used to formulate a definition of pop-up and to map its characteristics. The articles also show the motives for using pop-up in retail. A motive that has been mentioned multiple times is the use of pop-up as an experiential marketing tool. A pop-up shop that is open for a limited time forms a new experiential marketing concept aimed at offering a memorable, exclusive experience to the customers with the aim of engaging these customers. (Niehm, et al. 2007; Ryu, 2011; Smilansky, 2009). As stated before, the literature that addresses pop-up is limited. In order to come to a theoretical foundation regarding the
5 functioning of pop-up, I will turn to marketing literature about the two core characteristics of pop-up: experience offering and temporality.
The first aspect, the experience offering and its marketing value has been researched extensively from an experiential marketing perspective. Wood and Masterman (2008) explain that marketing events have the ability to create remarkable experiences for customers with the aim of building awareness, creating positive feelings towards the brand, but also behavioral intentions of customers as purchasing the service or brand, and loyalty. The second core aspect of pop-up is the temporality. According to Pomodoro (2013) and Surchi (2011) a synonymous for a pop-up store is a temporary store, making the short-term character the core quality of the shop. The marketing function of temporality links to scarcity as a marketing instrument. This addresses the anxiety of being excluded from the event (Pomodoro, 2013). In this thesis, the combination of temporality and experience offering present in pop-up will be researched in order to find out the following two things: first, does the temporality factor have the ability to convince the consumer to visit the pop-up, and second, when the consumer is finally participating, does the experience offering have the ability to make the pop-up memorable resulting in a positive attitude towards the cultural organization that organized the pop-up?
This thesis will address the effect of pop-up on the behavioral intentions of customers. It researches whether pop-up has the power to increase audience reach for the cultural organizations that use this tool. Here, increasing audience reach is inextricably linked to customer engagement. This thesis follows the idea of customer engagement as a dynamic process. It’s understood as the intensity of the customer-brand relationship including the processes to realize the aim of attracting, building, maintaining, and enhancing the relationships with potential and existing customers (Vivek et al., 2012; Gambetti and Graffigna, 2012). Therefore, customer engagement as a process incorporates the aim of increasing the amount of customers, and in the context of the cultural industry, this means increasing audience reach. This leads to the question, can a cultural organization use pop-up as a tool to strengthen the relationship with the existing customer (audience deepening), to attract a new audience that is already interested in culture (audience broadening) and to attract a new audience without any cultural interests (diversifying)? The process of increasing audience reach will be positioned in a broader customer engagement theory framework.
This approach fills a gap in the literature, which makes it scientifically relevant. The literature does not provide any information about the concept of pop-up applied to cultural organizations. Pop-up as an experiential marketing tool has only been researched in the retail industry. Further, the last two decades relationship marketing studies have been focusing on creating a stronger relationship with existing customers, and did not pay much attention to attracting a new customer segment (Vivek et al., 2012). This thesis takes into account existing and new customers. Lastly, combining experiential
6 marketing with customer engagement and increasing audience reach, divided in audience broadening, audience deepening and audience diversifying has never been studied in any industry. This leads to the following research question: How can a pop-up initiative function as an experiential marketing tool for cultural organizations to increase audience reach? This is twofold: can pop-up function as a marketing tool for 1) cultural organizations that use pop-up as a side activity in order to promote their fixed cultural organization or other cultural activities, 2) the arts in general. Is a cultural pop-up capable of making the consumers who experience the pop-up more interested in art, and does it stimulate them to go to cultural activities (more often)? I hope to find answers to these questions via a qualitative research strategy interviewing different type of cultural organizations that make use of pop-up.
The rest of the study consists of four sections. The first section concerns the theoretical framework that forms the foundation of the empirical study. The second section is the description of the methodology including an explanation of case study type, followed by section three, the data analysis part. The results will be displayed in the fourth section. The final part is a summary of the case study results and provides an overview of the conclusions, managerial recommendations, limitations and suggestions for future research.
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2. Theoretical framework
2.1 Cultural Industry
The cultural sector consists of a wide variety of different types of organizations. There are some commonalities that define whether an organization can be classified as a cultural organization. In every cultural organization the artist and product created by its creative act, play a central role. The creative act is what the consumer wants to buy. Most of the time, the creative act is independent of a firm, particularly for art forms such as literature and visual arts, where many artists work by themselves. Cultural organizations can have different roles, from designing, producing, and reproducing the product, to distributing or preserving. Producing an artwork corresponds to building a prototype. Each artwork is unique. In certain disciplines, the prototype is designed in such a way that mass production is possible in order to create many copies at the same time such as books or films. Product-centered organizations focusing on a unique prototype, form a collective mostly named the art sector which usually concerns smaller, nonprofit organizations. The market-centered organizations that reproduce which are mostly profit generating enterprises such as enormous conglomerates form a different group (Colbert, 2014). This description of the cultural industry then exists of the so called classical cultural organizations such as recorded music, architecture, film, broadcast media, publishing, design, new media, and the traditional arts, such as visual art, museums and galleries, concerts, crafts, theatre, literature, all those activities which qualify for public funding as ‘art’ (O’Connor, 2000).
According to O’Connor (2000), cultural industries comprise activities which primarily concern symbolic goods: goods that shape a person’s identity and express the type of commitments this person has (Dolfsma, 2007). Further, because the consumption of a cultural activity mostly is a leisure activity, the main motive for consuming it, is hedonism. Hedonic consumption addresses the search for pleasure and emotions in which the esthetic aspect is extremely important (Bouder-Pailler, 1999).
2.1.1 Cultural industries and audience reach
The aim of this thesis is to find out whether pop-up initiatives can function as marketing tools to increase the audience of the organizing cultural organization. Therefore, it’s relevant to research which marketing instruments to attract more visitors or to make visitors more loyal already have been used by cultural organizations. The first step is to make clear what audience reach is and which elements make up audience reach. This is important because certain marketing tools focus on reaching specific audience groups. Art participation can be defined as participation through attendance such as going to a theatre play or an art museum (Bakhshi and Throsby, 2010). Various empirical studies concentrate on the levels of participation, characteristics of participants and the reasons for participating (McCarthy and Jinnett, 2001; Vander Stichele and Laermans, 2006; Swanson et al., 2006; Hager and Winkler, 2012). The
8 economic literature about art participation provides two general insights. First, practical aspects as price, income, information and leisure alternatives play an important role in making decisions about art participation. Second, experience with art leads to higher participation levels because experienced people gain more enjoyment from a certain level of art consumption than people who lack this experience. These statements indicate the variance in participation levels among rare and frequent arts consumers. (McCarthy and Jinnet, 2001; Stigler and Becker, 1977).
One way to categorize art participants which are not visiting cultural organizations is the separation between soft targets and hard targets. Soft targets are persons who are currently no art participants but who are likely to become participants. Hard targets are persons who are not participating in arts and who are not likely to become participants. This potential audience group is harder to reach and it’s more difficult to convince them to participate (Morison and Dagleish, 1999; Diggle, 1994).
Another more detailed categorization has been described by McCarthy and Jinnett (2001). In their work “New framework for building participation in the arts” they describe three categories of audience participation goals:
1) “Audience broadening: capturing a larger share of the population segment known to be traditional participants but who currently do not attend;
2) Audience deepening: intensifying current participants’ level of involvement measured, for example, by the number of attendances per individual per year, or by the degree of audience (active or passive) engagement with the art form itself; and
3) Audience diversifying: attracting new groups of consumers who would not otherwise attend”
(McCarthy and Jinnett in Hassan and Throsby, 2010: p.15).
Because of the comprehensive character of the McCarthy and Jinnet (2001) classification, it will be used for this thesis. When discussing topics related to audience reach, there will be a specification whether this concerns audience broadening, deepening or diversifying.
2.1.2 Cultural industries and marketing
This section starts with a broad view on marketing: what is it? The next step is to zoom in on cultural marketing. Marketing can be understood as the “performance of activities that seek to accomplish an
organization’s objectives by anticipating customer or client needs and directing a flow of need satisfying goods and services from producer to customer or client” (Perreault et al., 2010: p.6). The process of
communicating these valuable offerings to the customer is an important aspect of marketing (AMA, 2013). Lovelock and Wirtz (2011) illustrate that a marketer can use a wide set of communication tools, including advertising, sales promotion, events, public relations and publicity, direct marketing, and
9 personal selling. Together these tools form the marketing communication mix (Lovelock and Wirtz, 2011). Smilansky (2009) also writes about the different marketing communication channels that can be used to send specific marketing communication massages to relevant customer segments. He selects live brand experiences as a new communication channel which is key for achieving marketing objectives. He adds that the selected channels need to be integrated in order to have a maximum impact on these objectives. Wood and Masterman (2008) explain that marketing events have the ability to build remarkable experiences for customers. These experiences enable the development of relationships with customers. The experiential marketing events change or build the image of the brand through associating the brand with the event qualities. These type of marketing events can have a wide range of objectives including different communication effects: building awareness, creating positive feelings towards the brand, but also behavioral intentions of customers as purchase and loyalty (Wood and Masterman, 2008). This thesis will research whether pop-up can be a new communication channel for the cultural industry. First, an overview the arts marketing theory will be provided to find out which marketing tools already have been used by cultural organizations.
In the 1970s arts marketing emerged as a specialized subcategory of marketing (Rentschler, 2002; Colbert and St-James, 2014). In their review article about arts marketing, Colbert and St-James (2014) address the main topics that have been researched. The most relevant topics linking to pop-up will be discussed. A large share of the literature is consumer behavior related. Besides the art participation topics mentioned earlier in chapter 2.1.1, the experiential view has been researched as well (Rubinstein, 1995; Colbert- and St-James, 2014). For the last 30 years, research about experiential elements of arts consumption has increased (Carù and Cova, 2003; Hume et al., 2006; Goulding, 2001; White et. al., 2009). Hirschman and Holbrook (1982) introduced the experiential view into the marketing field by studying the symbolic, emotional and creative aspects of consumer behavior. They conclude that it’s especially relevant to include these aspects in cultural marketing, because cultural products in particular have rich symbolic meanings and multisensory qualities.
Other studies address the topic of consumers as co-creators of art. Researchers have explained that active participation and interactivity lead to a reduction in distance between the consumer and the artwork, which increases customer engagement (White et. al., 2009). Boorsma (2006) states that this co-creation process in which the consumer gives meaning to the object through his imaginative capabilities, should be included in a marketing experience.
Especially relevant for this thesis is the arts marketing literature concerning increasing audience reach and the tools cultural organizations already use to increase participation numbers. Important goals of arts marketing are maximizing audience numbers and generating funds (Boorsma, 2006).
10 According to Wiggins (2004) the majority of the art institutions are using marketing activities to focus on their existing and loyal customers. At the same time Wiggins (2004) notices that the number of organizations that believe they need to move beyond their regular customer base and reach out to new audiences, is increasing. Boorsma (2006) states that cultural organization should reach an optimal mix of competent, art loving consumers and consumers who are not specialized in art consumption. This trend of addressing new customer groups has continued (Bakhshi and Throsby, 2010). In order to reach new customers, different marketing communication activities are needed (Wiggens, 2004; Boorsma 2006). For example, names of artists and technical jargon do not mean anything to these potential consumers. Cultural organizations need to research the decision-making behavior of this group because only then they are able to provide them with relevant information (Boorsma, 2006).
One model that provides insights in this decision-making process is the RAND model of audience development. This model distinguishes different levels of arts participation and explains the steps that need to be taken in order for individuals to become involved in arts. Further it points out how cultural organizations can influence this process (McCarthy and Jinnet, 2001). For marketing it’s relevant to become aware of the different stages of decision making in order to be able to design marketing tools that make it possible to broaden, deepen and diversifying the audience.
The model consists of four stages that make up the consumer’s decision making process. The background stage studies the background elements that determine a person’s general attitude towards art. It consists of social demographic factors such as education, occupation, income, age and gender; personality factors which are unique to a person; prior experiences with art; and social cultural factors which includes the group identity of a person. Stage 1 is an analysis of the benefits and costs of various forms of art. This will be influenced by a person’s attitudes towards art and social norms towards arts participation, reflecting the opinion of the reference group. Persons in this stage may vary from feeling strongly disinclined to inclined to go to art manifestations. It’s particularly difficult to get disinclined persons enthusiastic. It might be easier for them to participate in art activities that require little effort. Stage 2 includes the practical factors as date, price and location of the art activity. Persons who are strongly inclined, will seek information about an art event. Disinclined persons rely more on word-of-mouth. In stage 3 the person has become a participant. Experiential factors strengthen the personal relationship of the customer with the art organizations. (McCarthy and Jinnet, 2001).
The RAND model gives valuable insights in which marketing strategy to use in order to reach the desired target group. For example, it’s not useful to lower ticket prices (stage 2) when a person’s attitude towards art is negative and needs to be addressed (stage 1). This can be linked to the three categories of audience participation goals (broadening, deepening and diversifying).
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Table 1 – Participation goals
Participation goal Diversifying Broaden Deepen
Target Population Disinclined Inclined Current participants
Relevant factors Perceptual Practical Experience
Table 1 provides an overview of the alignment of participation goals, target population and relevant factors. Marketing activities to diversify participation are effective for persons who are disinclined to participate. These persons do not perceive any benefits of art participation or they see art as something that is elite, exclusive or in some way not related to their lives. Therefore their attitude towards art needs to be changed. A possible tactic is to provide a programming that connects to their interests, sending artist to the areas where they live and where they feel comfortable to have conversations about art. It’s also important to make them aware of the continuum between entertainment they know and traditional forms of art. Emphasizing the social aspect of art can also be a way to convince this potential audience of trying out art activities. People can attend with their peers, have conversations with them and meet new people.
Marketing activities to broaden participation are effective for individuals who are inclined to participate, but are not attending yet. This is mostly due to practical issues such as a lack of information about prices, dates, and program. Other problems are ticket prices that are too high, or a venue that is too hard to reach and a program that is inconvenient. The solutions have to deal with offering the right information through the right channels.
At last, marketing efforts to deepen participation are effective for persons who are already participating. For this group of participants it’s important to increase their involvement by making their experiences more rewarding. One way to do this is by increasing the consumer’s knowledge about art by offering special events, workshops, discussion before and after the show. Another aspect is emphasizing the social aspect of art consumption by organizing pre- and post- social activities which can lead to the feeling of belonging to a community. In the following chapters, this thesis will research whether pop-up can be a marketing tool to realize these three participation goals. Wiggens (2004) states that the motivation for people not to go to art is the most difficult barrier to take away and requires innovative marketing techniques. The thesis will look into the possibility of pop-up to reach this difficult audience group.
When looking into the specific marketing communication tools by cultural organizations, mostly traditional means such as posters, flyers, advertisements, audience education and direct marketing have been used. Online promotion has become more attractive as well. Nonetheless, these tools become less
12 important because of the overload of information and the customer’s aversion to advertisements. A more popular communication tool is word of mouth, based on social media such as Twitter and Facebook. Viral communication has the potential of reaching large groups of persons. Therefore, it’s important for cultural organization to keep their social media updated and provide relevant, ludic information addressing the user on an emotional level. At the same time, organizations should stimulate users to respond. In this way, interesting content and the interactive options have the power to generate traffic and buzz (Hausmann, 2012; Morison and Dagleish, 1993).
The literature about arts marketing to increase audience participation has shown that different audience groups exist and that it is important for art organizations to be aware of these different groups. A cultural organization has the possibility to extend its consumer base by focusing on existing and new customers. Approaching different categories of art participants need marketing tools that are relevant for these specific groups. Later sections will discuss in what way pop-up uses those marketing ideas to broaden, deepen and diversify the audience reach of cultural organizations. The following section explains the concept of customer engagement and its link to reaching these three different audience segments. It also specifies that customer engagement values experience creation as a marketing means to reach the audience groups.
2.2 Customer Engagement
Vivek et al. (2012: p. 127) defines customer engagement as “the intensity of an individual’s participation
in and connection with an organization’s offerings and/ or organizational activities, which either the customer or the organization initiate.” Different customer engagement studies emphasize the
multilayered character of the concept, consisting of a cognitive, an affective and a behavioral aspect (Gambetti and Graffigna, 2012; Vivek et al., 2012; Hollebeek, 2011). The cognitive element concerns the mental process that activates the customer towards a certain brand. Hollebeek (2011) links this to the customer engagement theme ‘immersion’ which means that the customer is fully absorbed in the brand interaction moments. The affective element consists of the customer’s feelings that are being activated while interacting with the brand. Hollebeek (2011) links this to the customer engagement theme ‘passion’ which includes the degree of a customer’s passion: a strong, positive affect. The behavioral aspect concerns the behavioral actions towards a certain brand. This goes beyond the purchasing moment. Hollebeek (2011) links this to the theme ‘activitation’ which means the degree of effort and time spent on the brand. (Gambetti and Graffigna, 2012; Vivek et al., 2012; Hollebeek, 2011).
Different researchers incorporate the concept of customer engagement in a model that describes drivers and consequences of customer engagement (Vivek et al., 2012; Gambetti and Graffigna, 2012). One example is the model of Vivek et al. (2012). According to them participation and involvement of customers are drivers of customer engagement. Customer participation is described as
13 the involvement of the customer in delivering the service, which engages the customer in an interactive process. This interaction leads to increased positive feelings towards the brand, and thus a higher level of engagement. Involvement is the relevance of the brand perceived by the customer. This leads to a high level of interest resulting in engagement (Vivek, 2012). Vivek et al. (2012) mention value, trust, affective commitment, word of mouth, loyalty, and brand community involvement as consequences of customer engagement.
Other researchers that describe a different set of drivers are Gambetti and Graffigna (2012). According to them the core of customer engagement is brand enacting defined as putting the brand into action. The consumer participates in the brand world which leads to the brand getting embedded in the life of the consumer. Gambetti and Graffigna (2012) describe three drivers of brand enacting. First, the physical and value-based proximity which means that the brand encounters the customer in a direct way. This allows the customer to get to know the brand, to influence it and in the end, building a strong relationship with the brand. The second driver is consumer protagonism. Consumers are unpredictable and in search for hedonic satisfaction when connecting with the brand. Therefore, the brand needs to act as a protagonist activating a continuing dialogue with the customer. Third, brand communication integration illustrates a shift from passive advertising messages to an active role of the consumer where he or she wants to be part of the brand world via entertaining and emotional experiences. Traditional communication channels have mass visibility, while the integration with unconventional promotion makes it possible to create direct encounters and express personal messages.
Customer engagement has the aim to attract, build, maintain, and enhance the relationships with potential and existing customers. Many studies focus on defensive strategies which lead to ignoring the application of customer engagement ideas for attracting new audiences (Vivek et. al., 2012). Recent studies emphasized that customer engagement also plays an important role in customer acquisition (Vivek et al., 2012; Bodwen, 2009). Including this relationship building function in the customer engagement concept links to the idea of understanding customer engagement as a dynamic process (Gambetti and Graffigna, 2012; Sashi, 2012; Bodwen, 2009). According to Gambetti and Graffigna (2012) the customer engagement process evolves in intensity based on the level of brand disclosure and consumer interaction. Brand disclosure means that the brand opens up to the consumer which makes direct encounters possible. Here, values can be shared. Customer interaction means that the customer is part of an exchange process with the brand in a direct way.
Bowden (2009) also proposes a process model of customer engagement. He makes an explicit distinction between the new customer and the existing, repeat customer. This leads to two different
14 engagement processes. The model states that the new customer of a service brand lacks experience with this brand and therefore, has limited knowledge and no clear ideas of what to expect of the brand. The new customer applies an attribute based evaluation to evaluate the brand, which leads to calculative commitment. This is an evaluative method that focuses on determining the utility of the brand. In this case, satisfaction is not the primary driver of loyalty for the new customer. Instead it is a step towards calculative commitment. There are three outcomes of the new customer’s evaluation. First, the calculative commitment is confirmed which leads to willingness to return. Second, the experience of a delighting service aspect which rises above the expectations leads to the creation of an affective form of commitment and leads to the willingness to return. Third, the evaluation is negative, and thus the new customer does not want to return.
The second sub-process of customer engagement that Bowden (2009) describes, concerns the repeat customer. This type of customer has clear knowledge and expectations about the brand because of prior experiences. The customer relies on relationally oriented evaluations in which recent experiences will be evaluated compared to previous experiences. Repeat customers are more involved than new customers because they are more interested in the brand itself. Further, trust reduces the customer’s risk perception of the brand. It also turns the calculative oriented commitment into affectively oriented commitment which makes the customer committed to brand on a psychological level and creates the wish to stay loyal to the brand.
The customer engagement theory emphasize the importance of experience creation. Gambetti and Graffigna’s (2012) findings show that customer engagement is a multi-dimensional concept which brings together elements as interaction and sensorial pleasure with the aim of creating a comprehensive brand experience with consumers. Brodie et al. (2011) and Hollebeek (2011) state that the interactive customer experience forms the foundation of customer engagement. Bowden (2009) describes two roles of experience in the customer engagement process linking it to customer delight. The experience let people feel joy via unexpected levels of arousal and surprise. A delightful experience first attracts new customers based on other customers’ word of mouth recommendations and second, the existing customer who is involved in the brand on an emotional level may be more likely to respond positively to marketing efforts that attempt to create a delightful, personalized experience. Thus the key to the success of this approach is to provide customers with nonstandardized service experiences that result in relationship-based reciprocity (Bowden, 2009; Brodie et al, 2011).
2.2.1 Customer engagement as the binding concept
This thesis understands customer engagement as a dynamic process. It’s understood as the intensity of the customer-brand relationship including the processes to realize the aim of attracting, building,
15 maintaining, and enhancing the relationships with potential and existing customers. As described in chapter 2.2.1, this thesis makes a distinction between three cultural participation goals: audience broadening which concerns existing customers and audience deepening and audience diversifying which concerns new customers. Therefore this thesis researches customer engagement on these three levels. First, how does pop-up function as a marketing tool to increase customer engagement on the level of audience broadening, thus aiming at capturing a larger share of the population segment known to be traditional participants but who currently do not attend. Second how does pop-up function as a marketing tool to increase customer engagement on the level of audience deepening, thus aiming at intensifying current participants’ level of involvement measured, for example, by the number of attendances per individual per year. Third, how does pop-up function as a marketing tool to increase customer engagement on the level of audience diversifying, thus aiming at attracting new groups of consumers who would not otherwise attend.
Further, customer engagement values experience creation because this is the instrument which allows the brand to connect to the customer, build a strong relationship and increase its reach. Therefore, cultural pop-up as an experiential marketing which focuses on creating a memorable experience in order to connect to its audience seems an appropriate means to reach potential and existing customers. Thus, customer engagement forms the binding concept between pop-up as experiential marketing instrument and audience reach.
2.3 Pop-up
Pop-up is a relatively new phenomenon in society. A motive that has been mentioned multiple times is the use of pop-up stores as an experiential marketing tool. This will be described in this section. The chapter starts with the history of the pop-up phenomenon.
2.3.1 History
There are different opinions about when the first pop-up store came to life. Pomodoro (2013) explains that it started in 2003, in Great Britain. Not long after this introduction, it moved to the USA and in 2005 it arrived in Europe. Others point out that 2004 forms the starting point of pop-up, when fashion brand Comme Des Garcon opened the very first pop-up store in Berlin (Clark, 2012; Ryu, 2011; Baumgarth and Kastner, 2012). Today, pop-up retail plays a significant role in the fashion industry because many retailers make use of the pop-up concept. (Ryu, 2011; Surchi, 2011). In other industries, pop-up activities are increasing as well, for example in the cultural industries (Devreese, 2012). The first pop-ups arose because of different developments.
16 According to Bauman (2007) today’s society is a liquid society, in which social structures and organizations are becoming fluid. These institutions move away from permanence. Life is characterized by rapidity and the urge for novelty. Structures and identity can change every day and new developments continuously change patterns. Fluidity also influences distribution and communication channels. The pop-up shop is a result of this fast moving environment and is especially relevant for the fashion industry and its short life cycles. Pop-ups can adapt themselves to dynamical contexts (Surchi, 2011; Pomodoro, 2013).
Also, consumer behavior has changed. The current consumer is always in search of thrilling experiences, continuously demanding for novel ideas and is open-minded towards experiments. This means consumer’s desire for experiential shopping environments has been growing. They want more options, participation and personalization in the retail experience (Niehm et. al. 2007; Pomodoro, 2013). At last, the economic crisis resulted in empty property. It became inexpensive to rent these buildings for a short time period. Therefore, renting space for opening a pop-up store does not need to cost a lot. 2.3.2 Definition and characteristics
An analysis of the retail literature points out that there is not one clear definition of what pop-up is (Baumgarth and Kastner, 2012). Different articles emphasizing different pop-up elements. Therefore, a complete overview of the characteristics will be provided below. In the field of pop-up retail Niehm et al. (2007; 2009) executed two extensive, often cited studies on pop-up, and therefore their definition will form the starting point in the process of defining pop-up: “It is a promotional/ retail setting designed
to offer an exclusive and highly experiential interaction for the consumer. Further, a pop-up store is a way for select products or brands to be promoted. The brands may be widely known to smaller, new brands. Pop-up stores allow visitors to have unique, personalized interactions and experiences with the brand, and they may be open in only one location and for a limited time, from a few days to a year.”
(Niem et. al., 2007: p.2).
The first basic statement is that a pop-up shop concerns a retail space. Some researchers describe pop-up shops as a place where objects need to be sold (Ryu, 2012). Other emphasize that it can also be a showroom where people can encounter select products without the option of buying (Niehm et. al. 2007; Surchi, 2011; Pomodoro, 2013; Kim et. al., 2009).
According to Niehm et al. (2007; 2009) pop-up shops offer an experience. Niehm et al. (2007; 2009) give the impression that the experience is something special by emphasizing its interactive and exclusive elements. Pomodoro (2013) emphasize this special character by stating it can’t be ordinary. The pop-up shop should offer the consumer a range of theatrical, hedonistic and memorable
17 experiences. Kim et al. (2009) add that it concerns unique and sensation-rich experiences that relate to the customer’s increasing desire for innovativeness toward unique and diverse experiences.
The central role of experiences in pop-ups have been confirmed by other researchers (Surchi, 2011; Baumgarth and Kastner, 2012). Pop-up leads to an experience by including elements as excitement, novelty, exclusivity, uniqueness, learning possibilities, personalization and entertainment (Pomodoro, 2013; Baumgarth and Kastner, 2012). Surchi (2011) offers a detailed description of the elements of the pop-up experience: it needs to surprise the consumer, create emotional reactions and strengthen the brand. The multisensory environment including sound, scents, colors, visuals, tastes leads to the immersion of the customer in the shopping experience. Curiosity and the emotional involvement in a unique event stimulate purchasing behavior and result in positive feelings towards the brand. This links to a characteristic of pop-up that is closely related to the experience offering. Pop-ups are event-driven (Niehm et al., 2007). Kim et al. (2009) continue that event-driven pop-ups combine offerings with lifestyle experiences that are personally relevant such as sporting events or concerts.
Different researchers emphasize interactivity as an aspect in the creation of the experience. Interaction means the face-to-face communication with brand representatives that takes place (Niehm et al. 2007; 2009; Kim et al., 2009). Kim et al. (2009) explains that consumers not only communicate with brand representatives to obtain information but also want to share their insights. This relates to the changing role of the consumer becoming a producer as well. Consumers contribute to shaping brand identity and products through shared information during face-to-face interaction with brand representatives and proactive online communication with companies and other consumers. According to Kim etal. (2009) and Baumgarth and Kastner (2012) brand representatives are extremely important to attract customers to the experience. This means they need to possess knowledge about the brand, but they also need to be able to assist in delivering distinctive and authentic experiences. Thus, the overall experiences need to result in the consumer’s perception of pop-up as not easy to duplicate, inspiring, exclusive and a once-in-a-lifetime-event (Baumgarth and Kastner, 2012).
The next line of the Niehm et al. (2007; 2009) definition relates to the products offered in the pop-up store. The pop-up promotes select products. Product categories suitable for pop-ups are experience oriented lifestyle and luxurious brands (Baumgarth and Kastner, 2012). These brands can be known or new and small (Niehm et al., 2007). According to Pomodoro (2013) and Kim et al. (2009) the offering needs to be exclusive. That’s why many shops offering limited edition products (Baumgarth and Kastner, 2012). In their 2007 article, Niehm et al. (2007) also explain that the initiators of the pop-up store do not have to be major retailers, they can also be small.
18 About the location, Niehm et al. (2007; 2009) and Baumgarth and Kastner (2012) state that it may be open in one, smaller location. According to Kim et al. (2009) pop-ups are located in small spaces because this fosters more face-to-face dialogue with brand representatives. Others are convinced that pop-ups can also move around (Ryu, 2011; Surchi, 2011; Pomodoro, 2013). According to Pomodoro (2013) the location needs to be innovative. A retailer can vary from traditional locations as shopping malls to more creative ones as containers, galleries and churches (Pomodoro, 2013; Ryu, 2011). Pomodoro (2013) continues that the geographical location is a strategic decision because the image of the location transfers to the brand. That’s why certain retailers choose trendy and fashionable spots for their pop-up store. Surchi (2011) states that the most effective locations are urban regions, because of the high-traffic shopping places. Others are convinced that the shops can be located anywhere because pop-ups are suitable for various communities (Niehm et al., 2007; Ryu, 2011).
Surchi (2011) categorizes the pop-up stores into four groups which provide more location insights. First, he describes the guerrilla stores. It can be strategically wise to locate the shop away from the central shopping areas to less obvious regions such as suburbs with no link to fashion. This decision can lead to a consumer’s curiosity and the increase of word-of mouth. The nomad store, the second category, is unique because of its mobility. It’s a vehicle that transports the brand to different locations in order to broaden its customer reach or to meet similar customers who live in different areas. The third category Surchi (2011) describes is the online pop-up store which can reach an enormous amount of people with just one website. The fourth category is the temporary outdoor site and differentiates itself by being located outdoors.
Niehm et al. (2007; 2009) end with a core characteristic namely temporality (Garcia-Pareta and Dalton, 2013; Kim et al., 2009). According to Pomodoro (2013) and Surchi (2011) a synonymous for a pop-up store is a temporary store, making the short-term character the core quality of the shop. According to Kim et al. (2009) the temporary nature is a distinguishing feature of pop-up stores. Temporality means that it stays open for a limited time period, varying from a few days to a year. On average, a pop-up store is open for one month. Most shops make their temporality visible and explicit by showing clocks counting down the hours until the shop closes (Pomodoro, 2013; Surchi, 2011). According to Pomodoro (2013) the limited time span of the shop creates a feeling of novelty and exclusivity because it relies on the ‘here-and-now’ principle. The core impetus is the “anxiety of being
excluded from the event, of missing to visit something unique, fleeting and unrepeatable” (Catalano and
Zorzetto in Pomodoro, 2013: p.344). The store becomes an event which is special because it offers a personalized and exciting experience. Baumgarth and Kastner (2012) relate temporality not only to time shortages, meaning the limited time span but also to volume-related shortages such as the limited editions and co-brandings. These shortages are artificial and created by the brand with the aim to realize
19 the illusion of uniqueness and exclusivity. Another aspect related to time that needs good consideration, is the date. That’s why retailers open their pop-ups at the same time as other relevant events such as fashion weeks or in certain periods as summer of Christmas (Pomodoro, 2013).
Niehm et al. (2007; 2009) did not pay attention to the promotion of pop-up stores in their definition, but they’ve made some comments about it. Mostly, pop-ups are unannounced and they make use of less costly guerilla marketing mechanisms, like public transport advertising, stickering, public relations, mobile technologies and social network services instead of mass media strategies to attract people (Ryu, 2011; Surchi, 2011; Niehm et al., 2007; Kim et al., 2009; Baumgarth and Kastner, 2012). Word-of-mouth is an effective promotion means for pop-ups to inform customers of its existence. Because of its temporal character and the offering of something different as a unique experience, it attracts the curiosity of passersby. The impact of word-of-mouth promotion can be increased by making use of social networks (Surchi, 2011). This is called viral communication, the fast distribution of messages through social media determines the success of a pop-up (Baumgarth and Kastner, 2012). Baumgarth and Kastner (2012) use the term, ‘the visitor group effect’, which relates to the social attractiveness of pop-up visits. A visitor attracts other peers to the pop-up because of his positive experience with the store. The pop-up needs to become the ‘talk of the town’. (Baumgarth and Kastner, 2012). Overall, the goal is to create a positive and viral buzz related to the brand. Here, the consumers are tools that create brand dissemination. Besides the word-of-mouth advertising, there is a minority of pop-up organizers that makes use of a more extensive promotion program focusing on publicity and media exposure (Surchi, 2011; Pomodoro, 2013; Clark, 2012).
To conclude, Baumgarth and Kastner (2012) state that there needs to be a brand fit. This is a coherence between a brand and pop-up, based on a certain theme for example. It will result in an identity transfer of the pop-up to the brand. This extensive literature overview of pop-up shows that there are different manifestations of pop-up stores. Pomodoro (2013) describes that stores can vary in terms of store layout, physical features, consumption patterns, depending on different planning and design strategies by retailers. There are two basic elements that needs to be in place in order to be able to name an activity, pop-up. Firstly, the experience offering. What the analysis above shows, is that the overall experience of a pop-up is based on all aspects provided by the pop-up, for example the multisensory location, interactivity, event characteristics and mobility. The characteristics may vary but in the end the chosen combination of pop-up aspects needs to lead to a memorable experience for the customer. Secondly, the short-term character of the store makes it a pop-up. A store which is permanent is just a normal store, offering special services. Niehm et al. (2007) already mentions that pop-up can be extended to other businesses, beyond traditional retail environments. This is what’s
20 going to be researched in the thesis. In what form are the two core characteristics, experience offering and temporality, present in cultural pop-ups? And what is the effect on reaching a larger audience? 2.3.3 Motives to use pop-up
Pop-ups can serve various goals. Pomodoro (2013) concludes that different strategic goals need different forms of pop-up shops, because every pop-up creates a different consumer experience. So when designing a pop-up, it’s necessary to create one that suits the strategic and marketing goals of the organization (Pomodoro, 2013).
According to Baumgarth and Kastner (2012) pop-up stores help to realize long-term strategic communication -, brand - and customer relationship building objectives. Sub-goals linking to the realization of these main goals are inspiring, interacting with and involving the store visitor, building an emotional brand relationship with the store visitor, differentiation of the brand and generating PR and media attention. The objective of pop-up that Ryu (2011) describes, links to the long-term brand building objectives. He states that pop-up shops can be used as a new distribution channel in order to increase brand image and visibility. According to Surchi (2011) pop-ups have two roles: pop-up functions as a communication - and investigative tool. Pop-up serves as a communication tool for the brand, because it drives the attention of the consumer toward the brand. Pop-up stores help brands to stand out in crowded markets. Pop-up is an unconventional form of promotion with the objective to communicate brand aspects in a way that is different from traditional marketing mechanisms to which consumers have become indifferent, such as television commercials, radio advertisements, advertisements in magazines and billboards. It informs but in an entertaining way (Surchi, 2011).
Baumgarth and Kastner’s (2012) second set of goals relate to the short-term operational sales objectives. This includes temporarily maximizing sales and selling prior collections with discounts. There is also a third set of goals, the ‘other objectives’. Examples are testing new products or testing repositioning strategies by changing brand images (Baumgarth and Kastner, 2012; Pomodoro, 2013 and Surchi, 2011). This is what Surchi (2011) calls the investigative tool of pop-ups which allows companies to test ideas at a certain place before investing huge amounts of money in permanent stores.
The common factor of all these goals is that it is somehow linked to reaching existing and new consumers and to building a strong relationship with these customers. The long-term objectives such as differentiation of the brand and strengthening the brand image communicates to the customer what the brand stands for. This in combination with customer relationship building means such as inspiring, interacting with, involving and building emotional relationships with the customer, needs to result in a positive perception of the brand (Kim et al., 2009). Because pop-up is a diversification of distribution channels, it allows the retailer to reach more consumers and to improve its brand promotion (Ryu, 2011;
21 Surchi, 2011). Clark (2012) mentions in her article that pop-up shops not only reach more consumers, the relationship built, is also far stronger than when other marketing mechanism are being used. This is because of its personal manner of addressing the consumers instead of using a media channel. Surchi (2011) adds that building a tight relationship between customer and brand increases customer loyalty. In order for a pop-up to fulfill its goals and to reach more customers, it’s necessary that people are aware of the existence and the special character of the pop-up. This is mainly accomplished by positive buzz using word-of-mouth as promotion, whereby the consumer himself functions as a brand dissemination instrument. A pop-up store is an interesting instrument because it allows the retailer to tap into new markets with a tool that is low-cost because of the low rents and the creation of buzz without investing in heavy advertising (Niehm et al.; 2007; Clark, 2012). So, the pop-ups offer high return on investment based on the high level of buzz compared to the short-term character of the investment. In this way consumers are not just users of products but are also playing a significant role in the production and distribution process. The pop-up shop’s emphasis on word of mouth is as innovative as the store itself (Surchi, 2011). This has a risk. Ryu (2011) found out that the awareness of pop-ups is low, meaning people are not aware of the concept and the benefits of pop-ups. Niehm et al. (2007) confirm that awareness and experience with pop-up lead to positive attitudes towards pop-up which has a positive influence on the intention to try this pop-up format. So, in order to increase the positive effects of pop-up stores, it’s important to increase the level of awareness by emphasizing the innovative and exciting nature of this distribution channel. Therefore, it’s extremely important to have realized a right amount of buzz.
How is this buzz created? How do you get people to talk about your pop-up? That is mainly because of the most important features of the pop-up: offering a memorable experience that is temporarily available (Clark, 2012; Pomodoro, 2013).
First, the role of the experience and its link to increasing customer reach will be discussed. Pop-up as a new marketing instrument provides an experiential environment that attracts new customers (Clark, 2012). Niehm et al. (2007; 2009) perceive a pop-up store as an experiential marketing tool which aims to engage consumers. Kim et al. (2009) confirm that pop-ups function as highly experiential marketing tools focusing on brand or product line promotion. Hedonic experiential retail environments have the ability to enable consumer interaction with brands that other tools cannot create, it allows brands to portray themselves in ways that are new to the consumer. It attracts attention of consumers who seek diverse, innovative experiences. At the same time, pop-up addresses people who are simple present at the location where the pop-up shows up. This links to the mobility of pop-up as an important characteristic of the experience (Ryu, 2011; Clark, 2012). By using, for example movable containers as
22 low-cost and low-risk options, brands could increase their presence and move around. The spontaneous nature of consumers’ decision-making process is important here. It has been explained as one of the success factors of pop-up. The fact that people spontaneously go to pop-ups, because they get surprised by it and it’s right in front of them, can mean that pop-ups have the ability to reach a new consumer group (Ryu, 2011). In this sense because of this spontaneous visiting behavior, pop-up can have a positive effect on audience diversifying. Pop-up increases consumers’ recognition of and knowledge about a specific brand. At the same time it decreases their association with competing firms (Woodside and Walser in Ryu, 2011: p. 140; Clark, 2012; Kim et. al., 2009).
According to Niehm et al. (2007) the pop-up store, integrated in a complete experiential marketing strategy will strengthen brand, increase brand recall and makes the brand top of mind when making purchase decisions. As an experiential marketing tool, pop-up comprises marketing elements such as entertainment, emotional involvement, interaction and experiences relating to all human senses via creative use of design and locations (Niehm et al., 2007; Schmitt, 1999). All aspects are being used to engage consumers, and together they lead to a source of competitive advantage (Niehm et al., 2007). Niehm et al. (2007; 2009) continue that in order to benefit from pop-ups, these shops need to create experiences with experiential and utilitarian value. Excitement from novelty and exclusiveness of the experience and the entertainment associated with pop-up retail are examples of experiential value, whereas facilitation of purchase decisions due to free samples, acquisition of product knowledge from brand representatives, and product trial reflects utilitarian value. Novelty and exclusiveness of the experiences, facilitation of purchase decisions, presence of brand representatives and product trial are the most important perceived benefits of pop-ups by consumers. Including these benefits has a positive effect on attitude and behavioral intentions towards pop-up such as willingness to recommend, buy from and try pop-up retail (Niehm et al., 2007; Kim et al., 2009).
Kim et al. (2009) adds to this that the experiential value (novelty/ uniqueness) of pop-up attracts more persons than the utilitarian aspects (facilitators of purchase decisions). This suggests that the pop-ups should minimize the selling elements and focus on the relationship building qualities of the experience (Kim et al., 2009). They also conclude that because of the positive relationship between the emotional experience of a consumer and attitude, marketers should focus on engaging the customer emotionally. This leads to the objective of pop-up, namely pop-ups should start building a long-term customer relationship, which results in an increasing emotional attachment to the organization’s products and brands.
Besides the experience offering, the temporality is a core characteristic of pop-up. What do the pop-up research articles say about the way in which temporality influences consumer numbers and
23 consumer relationships? As explained before, artificial temporality creates an illusion of uniqueness and exclusivity. Temporality can be created in two ways. First, volume-related shortages such as limited editions, cobranding, temporary special offerings and discounts should lead to an increased purchase incentive. These products are only available in the pop-up which stimulates a feeling of urgency to go to the shop and purchase. Not going feels as a loss and leads to regret. Second, time-related shortage emphases the temporality of the store. The short-term character needs to be communicated to the consumer, for example by count-down clocks. This further increases the feeling of urgency and the ‘here and now principle’. The articles state that temporality attracts customers because people do not what to miss out on such a unique event (Niehm et al, 2007; Pomodoro, 2013).
In sum, literature confirms that as an experiential marketing tool, pop-up is capable of attracting new customers. It’s not clear whether this concerns a larger part of the traditional customers (broadening) or a whole new customer group who would otherwise not attend (diversifying). The experience aspect of pop-up also strengthens the relationship with customers to make them more loyal, which links to audience deepening. About the temporality elements the literature only states that it attracts new customers. No information has been provided about broadening, deepening and diversifying. In the following sections, the functioning of experience and temporality as marketing tool will be researched to find out more about the possibilities of increasing audience reach. These findings will be linked to cultural pop-op organizations.
2.4 Experience as a marketing tool
The concept of experience entered the marketing and consumption field with the pioneering article of Hirschman and Holbrook in 1982, addressing the symbolic and hedonic aspects of consumption and conceiving the consumption experience as something that is directed towards the pursuit of fantasies, fun and feeling. This has formed the foundation for a specific type of economy. In 1998, Pine and Gilmore introduced the term, ‘The Experience Economy’, a new economic era in which the progression of economic value has advanced to the stage of experience offering. According to Pine and Gilmore (1998) the form of the offering and its core characteristics changed from 1) commodities that are natural and fungible to 2) goods that are standardized and tangible to(3) services that are customized and intangible to 4) experiences that are personal and memorable (Pine and Gilmore, 1998; Tsaur et al., 2007). The Experience Economy view takes into account the changes in consumer behavior: customers are not only concerned about buying products and services. They also expect memorable experiences (Niehm, et al. 2007). Therefore, all businesses need to create valuable experiences for their customers (Kirezli, 2011, Yuan and Wu, 2008). Organizations have recognized that establishing a suitable experiential environment can result in a competitive advantage that is hard to imitate and substitute
24 (Tsaur et al., 2007). Experiences can function as an organization’s differentiators that will add value for its customers, build strong relationships, and in the end results in higher margins. (Pine and Gilmore, 1999; Smilansky, 2009; Petkus jr, 2002).
The principles of the Experience Economy have been translated into a specific branch of marketing: experiential marketing (Dirsehan, 2012). The number of experiential marketing events is increasing due to a number of reasons. First of all, traditional media are being used too often which resulted in the need to do something else than the competition. Secondly, consumers request added value, innovation and individualism. Lastly, building emotional ties with brands is an effective way of bonding with the customer (Wood and Masterman, 2008).
In his widely cited work “Experiential marketing” (1999), Schmitt (1999), the first researcher who wrote about experiential marketing, compares traditional marketing and experiential marketing. He concludes that traditional marketing does not offer any support on how to make use of the ideas related to the Experience Economy (Schmitt, 1999).
According to Schmitt (1999) experiential marketing is different from traditional forms. First, experiential marketing focuses on consumer experiences which are the result of living through or undergoing things. This contradicts the view of traditional marketers who consider customers as persons who choose products with the highest utility based on the evaluation of the separate functional features. Second, experiential marketing focuses on the perception of consumption as a holistic experience. In traditional marketing, product category and competition are narrowly defined. Experiential marketing defines boundaries of categories and competition much broader. It examines the meaning of the specific consumption situation in its broader socio-cultural context. Third, in experiential marketing customers are besides rational, also emotional decision makers. Consumption experiences often involve the pursuit of fantasies, feelings, and fun. Traditional marketers think of customers as rational decision makers that follow reasoned steps of action taking which leads to need satisfaction, namely need recognition, information search, evaluation of alternatives, purchase and consumption (Schmitt, 1999).
2.4.1 Definition of experience marketing
Let’s start with where we left off: Schmitt (1999) defines experiential marketing as a consumer’s development of positive attitudes towards an organization or a consumer’s buying behavior, purchasing goods or services from it, after they’ve experienced activities which enhance the brand value. Williams (2006) state that experiential marketing extracts the essence of a product and then applies it to interactive – intangible or physical – experiences increasing the value of products or services and helping
25 customers in making decisions about purchasing products or services (Williams, 2006; Yuan and Wu; 2008).
Smilansky (2009) defines experiential marketing as “the process of identifying and satisfying
customer needs and aspirations, profitably, engaging them through two-way communications that bring brand personalities to life and adding value to the target audience” (Smilansky, 2009: p. 5). This value
adding process needs to be functional and emotional. Experiences that comprise both emotional and functional value have a positive impact on customer satisfaction (Yuan and Wu, 2008; Maghnati, 2012).
Here, two-way communication is a core characteristic meaning that customers want more than only receiving messages. They also would like to communicate back with the brand which results in interactive engagement. This two-way communication process takes place in live brand experiences that occur in the form of live events. The interactive character of the event, connecting with all five senses of the customer, makes it possible for consumers to feel the brand. This forms the key in creating memorable experiences driving word-of-mouth, and change customers into brand advocates. Reaching this level, means that a real customer relationship has been established (Smilansky, 2009).
2.4.2 Motives to use experience marketing
First of all, experiential marketing and its special and personal experiences have the ability to create a competitive advantage (Prahalad and Ramaswany, 2000). The brand immersive experience is the most valuable way for a brand to differentiate itself from its competitors (Smilansky, 2009).
This unique way of marketing should catch the attention of the consumer. According to Berry (1983) and Chou (2009) experiential marketing reaches new customers and existing customers. They link experiential marketing to relationship marketing. Relationship marketing concerns offering services to attract, maintain and increase relationships with customers. Attracting new customers is just one aspect, more important is the question, how to retain these customers and create brand loyalty. Experiential marketing is defined as experience-centered relationship marketing (Chou, 2009).
Smilansky (2009) states that the overall motive using experiential marketing, is to create a long-lasting relationship with the target customers. The two-way engagement is the key to create loyal consumers who trust the brand and recommend it to others. To reach this it’s necessary that experiential marketing is more than a tactic. It should have a central role in the long-term marketing strategy of a brand.
Other researchers confirm the role of experiential marketing in building stronger customer relationships (Dirsehan, 2012; Yuan and Wu, 2008; Lee and Chang, 2012). Yuan and Wu (2008) state that providing unforgettable experiences lead to repeat and loyal customers. Lee and Chang (2012) add
