The influence of a Brand Store Experience on Customer performance
and the moderating effect of brand attitude
Marieke van de Werfhorst
Master thesis
MSc Business Administration Marketing Management
The influence of a Brand Store Experience on Customer performance
and the moderating effect of brand attitude
Author: Marieke van de Werfhorst
Department: MSc Business Administration, Marketing Management Qualification: Master thesis
Address: Gerrit Blaauwlaan 1 Phone number: 06 - 23400163 Student number: S1919881
Completion date: 20th June, 2011 Supervisor: dr. K.J. Alsem Second supervisor:
MANAGEMENT SUMMARY
Traditional roles for manufacturers and retailers are blurring. One prominent and largely unstudied phenomenon that exemplifies this trend is “partial forward integration” (PFI) by manufacturers. PFI describes a setting where a manufacturer sells to end consumers not only through traditional independent retailers but also through company-owned brand stores (Wang, Bell and Padmanabhan, 2009), which are called Brand Stores. A Brand Store is a store that offers only one brand, the brand of the store name. An important reason why manufacturers start a brand store is because companies want to create a brand experience, which was found to improve customer satisfaction and loyalty (Brakus, Schmitt & Zarantello, 2010). Brand Store Experience is a subjective consumer response that is evoked by specific brand-related experiential attributes in a brand store. A brand store experience is based on sensations, feelings, cognitions and behavioral responses, which are evoked by brand-related stimuli (Brakus, Schmitt, & Zarantonello, 2009). A perceived brand store experience is strictly personal and can vary in its strength, depending on how many dimensions are evoked, stimulation intensity and type of experience a customer is focused on (Brakus, Schmitt, & Zarantonello, 2009). A high brand experience during a brand store visit can positively enthuse and surprise customers. Chitturi, Raghunathan & Mahajan (2008) found that a brand that is meeting or exceeding a customer‟s hedonic needs and expectations improves customer loyalty more than a brand that is meeting or exceeding a customer‟s utilitarian needs and expectations. Therefore, we expect that when a brand with a more hedonic brand attitude starts a brand store with a high brand experience, customer‟s hedonic needs and expectations will be met or exceeded during the brand store visit, caused by a high brand experience. In addition, besides positive effects on purchase intentions and willingness to pay a price premium (Zarantonello and Schmitt, 2010), customers also prefer spending more time for acquiring hedonic brands (Okada, 2005) and therefore will be more willing to spend more time in a brand store of a more hedonic brand, which will add in the brand store experience. These reasons made us hypothesize that a more hedonic brand increases the effect of a brand store experience on Customer Performance. Chitturi, Raghunathan & Mahajan (2008) stated that utilitarian aspects of a brand refer to functional, instrumental, and practical benefits and hedonic aspects refer to their aesthetic, experiential, and enjoyment-related benefits.
The central question of this research therefore is: ‘What is the effect of a brand store experience on
Customer performance and does a more hedonic brand attitude increase this effect?’
In addition to current research, we researched effects of a brand store visit and included all effects that are useful in an effectiveness measurement of a marketing effort. Moreover, until now there was no evidence found yet that a brand experience really leads to more Value to Customer and, even more importantly for a company, Value to Firm. We answered these remaining questions found in the current research literature by researching four groups which differ in level of Perceived brand store experience and Brand attitude. To conclude causality we developed an experimental research design with a One Group Pretest-Posttest Design. Special about our research is that it is a Field Experiment, which included a real life brand store visit, which makes our outcomes very realistic. Our sample consisted of about 20 respondents per
age did not influence our results. The independent variable Brand Store Experience was measured with the four dimensions of a brand experience of Brakus, Schmitt, & Zarantonello (2009). The moderator brand attitude was measured with HED/UT scale of Voss, Spangenberg and Grohmann (2003). The dependent variable, Customer performance, was measured by the components Value To Customer and Value To Firm. In addition to researchers who only measure the Value To Firm (e.g. measuring Customer Lifetime Value), we added a Value To Customer measurement, because Bouma et al. (2010) state that only companies who build relationships that create both a high Value To Firm and a high Value To Customer are expected to have long, profitable relationships. Therefore Value To Customer is also an important factor that should be taken into account, and that is why we included both measurement dimensions in our Customer
Performance measurement.
Result of our experimental research is that a brand store visit significantly increases Customer performance. Having a brand store that creates a high brand experience has an even significantly stronger and more positive effect on Customer performance than a brand store with a low brand experience. However, a more hedonic brand attitude was not found to positively moderate the relationship between a brand store
experience and Customer performance. In addition, we therefore analyzed the effects a more hedonic brand attitude has on the individual components of Customer Performance, which showed that a brand store with a high brand experience of a more hedonic brand increases Value Equity, Brand Equity, Relationship Equity and Value to Customer significantly in comparison with a brand store with a high brand experience of a more utilitarian brand. A more hedonic brand attitude thus showed to influence measures related to Value to Customers, which reflect a change in the affective feelings and cognitive thoughts of customers about a brand. Measures related to Value to Firm, which reflect a conative behavioral change, were not moderately affected by a more hedonic brand attitude. A reason for this could be that Value to Firm measures reflect a more long-term impact on purchasing behavior, while Value to Customer measures reflect a more short-term impact. Our after measurement data has been collected four weeks after the brand store visit and therefore it could be that these long term Value to Firm conative effects are not visible yet. Another explanation for the not significant effect on Value To Firm could be that brand stores were not aware that a more hedonic brand attitude leads to higher purchase intentions (Zarantonello and Schmitt, 2010), and the brand chosen for our assignment did not create a lot of possibilities to purchase the brand (e.g. with many sales representatives) or the goal of the brand store was not to sell, but mainly to inspire. These reasons could cause our not significant outcome for Value to Firm.
PREFACE
With this master thesis I conclude my study MBA - Marketing Management. After my Bachelor degree I wanted to further develop my analytical skills and the Pre-Master Business Administration – Marketing and the Master Marketing Management gave me the opportunity to do so. This thesis in front of you is my final report and with this I conclude my education and a new phase in my life will begin, namely starting a career to eventually become a successful brand manager.
I would like to thank everyone who supported me during my study period and a few I would like to mention specially. First , my supervisor dr. Karel-Jan Alsem for his advice and useful feedback. Second, I would like to thank my husband and my family and friends for their support. Third, my manager Dany Bruinewoud at B&C Raamdecoratie, who made it possible for me to study and work together.
With this thesis I hope to give the brand managers of today a new view on brand management and a new possibility to create an even stronger brand.
Marieke van de Werfhorst
TABLE OF CONTENT
MANAGEMENT SUMMARY 3 PREFACE 5 1 INTRODUCTION 7 2 THEORETICAL FRAMEWORK 12 2.1 BRAND STORE 122.2 BRAND STORE EXPERIENCE 17
2.3 BRAND ATTITUDE 21
2.4 EFFECTS OF A BRAND STORE 23
3 CONCEPTUAL MODEL AND HYPOTHESIS 33
3.1 EFFECT OF A BRAND STORE EXPERIENCE ON CUSTOMER PERFORMANCE 34
3.2 BRAND ATTITUDE 39
4 RESEARCH DESIGN
41
4.1 EXPERIMENTIAL RESEARCH DESIGN
41
4.2 SCALE DEVELOPMENT
42
4.3 DATA COLLECTION
44
4.4 REPRESENTATIVENESS, RELIABILITY AND VALIDITY
45
4.5 MANIPULATION CHECK 50
4.6 PLAN OF ANALYSIS 51
5 RESULTS 53
5.1 SAMPLE CHARACTERISTICS 53
5.2 BRAND STORE VISIT 53
5.3 PERCEIVED EXTENT OF BRAND STORE EXPERIENCE 54
5.4 BRAND ATTITUDE 56
5.5 ADDITIONAL EFFECTS 59
5.6 REVISED CONCEPTUAL MODEL 59
6 CONCLUSION AND RECOMMENDATION 61
6.1 RESEARCH DESIGN 61 6.2 CONCLUSION 62 6.3 MANAGERIAL IMPLICATIONS 63 6.4 ACADEMIC CONTRIBUTION 64 6.5 LIMITATIONS 64 6.6 FURTHER RESEARCH 65 APPENDIX A - QUESTIONNAIRE 66
APPENDIX B – CORRELATION MATRIX 71
1. INTRODUCTION
This introduction starts with some background information about the research we propose and gives an overview of the research and the main research question.
1.1 BACKGROUND
Traditional roles for manufacturers and retailers are blurring, and their activities are becoming more intertwined. One prominent and largely unstudied phenomenon that exemplifies this trend is “partial forward integration” (PFI) by manufacturers. PFI describes a setting where manufacturer sells to end consumers not only through traditional independent retailers but also through company-owned brand stores (Wang, Bell and Padmanabhan, 2009). A brand store is a store where only the brand of the store name is sold. The last few years we have seen a huge increase in the number of brand stores in Europe. Strong and well-known brands like Apple, Nike, Ralph Lauren, Douwe Egberts, Nespresso, LEGO and recently even automobile manufacturers such as Audi are opening brand stores. Nivea brand stores are finding their way in the German and Austrian market, Louis Vuitton can be found all over the world with brand stores at top locations and of course we all know the giant M&M store in New York. But why are manufacturers starting brand stores and what are effects of having a brand store? Many researchers (Grewal, Levy and Lehmann, 2004; Wang, Bell and Padmanabhan, 2009) underline the importance of this research area. They stimulate research on this topic to find effects of a brand store. In addition, there are also retailers, such as H&M and HEMA which have created such a strong brand name that an average consumer does not make a distinction anymore between store and brand, but in this study we only consider brands that were already distributed via other channels (e.g. internet or retailer stores) and in addition started company-owned brand store.
The reasons why brands start a brand store vary. Companies for example want to be where customers are, want to increase or create new brand associations, but most heard reason is because companies want to create a brand experience, which was found to improve customer satisfaction and loyalty (Brakus, Schmitt & Zarantello, 2010). Verhoef et al. (2009) states that a superior experience seems to be one of the central goals in marketing today. This also immediately raises critical questions: Does having a brand store really create a brand experience and by doing so, does a higher extent of a brand experience increase brand performance?
aesthetic, experiential, and enjoyment-related benefits. Both of these types of benefits contribute, in differing degrees, to overall goodness of a consumer good, brand or behavior. A brand store visit can positively enthuse and surprise customers about a brand. Chitturi, Raghunathan & Mahajan (2008) found that a brand that is meeting or exceeding a customer‟s hedonic needs and expectations improves customer loyalty more than a brand that is meeting or exceeding utilitarian needs and expectations. When we analyze brands that start a brand store, often these brands indeed are brands with a more hedonic attitude, due to existing sensory, emotional brand attributes. Brands that start a brand store are merely luxury, high positioned brands, which have specific emotional, sensory brand values linked to them, e.g. Louis Vuitton, Apple, Ralph Lauren and Nespresso. This raises the question: Can having a more hedonic brand moderate the effect of brand store experience on company performance?
1.2 EFFECTS BRAND STORE
Having a brand store is a huge marketing expenditure. It requires real estate mostly at top locations, trained employees and up-to-date assortments. Therefore marketing effectiveness measurements are an important issue for starting a brand store. Rust, Lemon and Zeithaml (2004) claim that top
management too often view marketing expenditures as short term costs rather than long-term investment and therefore as financial unaccountable. Rust, Lemon and Zeithaml (2004) propose that firms should make marketing expenditures more financial accountable. This will give marketing a better position in firms and will give more certainty about high investments like starting a brand store. Fischer, Völckner and Sattler (2010) also underline the importance for managers to carefully analyze economic potential of brand investments, like a brand store for their business. But how can we show accountability of a brand store?
The most important resource of a brand store the brand itself, according to Keller (2008, p. 60). Therefore effects of marketing efforts (like a brand store) should be measured by finding effect on its Brand Equity. In addition, Payne and Frow. (2005) state that a key point in finding out effects of a marketing activity is finding effect it has on the value for a firm. According to Bouma et al. (2010) effects should not only be measured with the value for a firm, but also with the value for a customer‟. Therefore we propose the question: How should we measure effects of adding a brand store c.q. how can we prove accountability of adding a brand store?
importance. When we find out which moderators influence the effect of a brand store on the
performance, we can increase the probability for success and give advice to companies whether to start a brand store. The moderating variable we will focus on is whether a brand attitude (more hedonic or utilitarian) influences the relationship between a brand store experience and Customer performance.
1.3 ACADEMIC CONTRIBUTION
Kim, Kim and Lee (2010) found that brands sold via traditional stores like brand stores and specialty stores receive the highest score on emotional, utilitarian, and expressive/social values. Traditional stores create specific values that have shown to lead to brand loyalty (Kim, Kim and Lee, 2010). In this research, we want to elaborate on this and find out what in a brand store creates value and whether we can influence effects of a brand store.
Our research contributes to current academic research in four ways. Kim, Kim and Lee (2010) found the effects of adding a channel on customer loyalty and Chu, Chintagunta and Vilcassim (2007) measured the financial contribution of adding a channel. In addition to them we research effects of a Brand store visit, which is our first academic contribution.
Current research measured single effects of adding a channel e.g. brand loyalty effects (Kim, Kim and Lee, 2010) and financial effects (Chu, Chintagunta and Vilcassim, 2007), but we include all effects that are essential for an effectiveness measurement of a marketing effort. Our research expounds how effects of a marketing effort should be measured. Researchers (Bouma et al., 2010; Rust and Lemon and Zeithaml, 2004; Venkaheran and Kumar, 2004b; Kumar et al., 2009; Kumar et al., 2010) wrote a lot about how to measure marketing effects, but there is no measurement yet which bridges these important marketing views. We will discuss their effect measurement methods and we will elaborate on a measurement scale that includes all important elements mentioned in academic research. We research (1) value that it adds to consumers, e.g. consumers can perceive stronger and more unique associations with a brand or consumers perceive more value for money or create and feel a strong relationship with a brand and (2) value to firm, e.g. consumers can increase expenditures of a brand or do not consider another brand anymore, which consumers used to buy. Our second academic
contribution is therefore that we research all effects on the individual components of Customer performance due to adding a brand store.
Our third academic contribution is that retailers and manufacturers try to add an experience because it is assumed to lead to more success (Baker et al., 2002; Verhoef, 2009; Pine & Gilmore, 1999; Brakus, Schmitt, & Zarantonello, 2009), but no evidence is found yet that it really leads to more value to consumer and, even more importantly for a company, value to firm.
hedonic brand attitude are opening a brand store. In addition, Chitturi, Raghunathan & Mahajan (2008) found that a brand that is meeting or exceeding a customer‟s hedonic needs and expectations improves customer loyalty more than a brand that is meeting or exceeding utilitarian needs and expectations. Therefore, we also expect that when a brand with a more hedonic brand attitude starts a brand store with a high brand experience, customer‟s hedonic needs and expectations will be met or exceeded (caused by the high brand experience), which increases the effect of a brand store experience on Customer Performance more than when a brand with a more utilitarian brand attitude would start a brand store. We will find out whether having a brand store of a more hedonic brand increases
Customer performance effects.
From a managerial point of view, this research gives insight in effectiveness of a brand store.
Especially for brand manufacturers this can be of great value, because brand manufacturers are dealing with the question to start a brand store. Understanding the additional value to customer and value to firm due to starting a brand store can help them make a decision whether to start a brand store. This study further gives insight on how essential it is to create an experience in a brand store and whether it is possible to create more success with a more hedonic brand in comparison with a more utilitarian brand.
1.4 OVERVIEW THESIS
The central question of our thesis is:
WHAT IS THE EFFECT OF A BRAND STORE EXPERIENCE ON CUSTOMER
PERFORMANCE AND DOES A MORE HEDONIC BRAND ATTITUDE INCREASE THIS EFFECT?
The sub questions raised and necessary to answer the central question are 1. What is a brand store?
2. What is a brand store experience? 3. What is a brand attitude?
4. How should we measure Customer performance?
4. What are the effects of a brand store experience on the Customer performance?
1.5 STRUCTURE THESIS
2. THEORETICAL FRAMEWORK
In this chapter we explain relevant terms for our research. First, we explain the term brand store, its history and future. Second, we discuss variables that affect success of a brand store; (1) brand experience and (2) a more hedonic or utilitarian brand attitude. Third, we discuss how to measure effect of a brand store on Customer performance.
2.1 BRAND STORE
The term „brand store‟ is a term used in marketing for manufacturer owned stores which only sell one brand, which is also the name of the brand store. Discussing brand stores requires us to expound elements attached to it namely (1) a brand and its associations (2) adding a new channel (3) synonyms for a brand store used in scientific papers and (4) virtual brand stores. To conclude this chapter, we will give our definition of a brand store.
2.1.1 Brands and associations
Brands are an important part of consumer behavior (Kozinets et al., 2002). A brand can be described as a name, term, sign, symbol or design or a combination of them, intended to identify goods and services of one seller or group of sellers and to differentiate them from those of competition (Keller, 2008). A brand is more than a product, because it can have dimensions that differentiate a product in some way from other products designed to satisfy the same need. For consumers a brand can be an identification of a source, a risk reducer, a signal of quality, a symbolic device and/or a way to emphasize a lifestyle. A brand therefore can be very important for a consumer. Fischer, Völckner, Sattler and Ischer (2010) researched overall importance of brands for consumer decision making, called brand relevance in a product category, across multiple categories and countries. Fischer, Völckner, Sattler and Ischer (2010) underline the importance of brands for consumer decision making and show that this importance differs per country and product category.
Every brand has core brand associations, which are abstract or functional associations, characterizing the most important aspects or dimensions of a brand (Keller, 2008). These associations can be basically everything; tangible and intangible, functional and performance related and abstract and imagery related. Perceived quality and perceived value are particularly important brand associations, according to Keller (2008). Brand associations, according to Keller (1993) can be classified into three major categories based on their level of abstraction:
to its purchase or consumption. The four main types of non-product-related attributes are: price information, packaging or product appearance information, user imagery (i.e., what type of person uses product or service), and usage imagery (i.e., where and in what types of situations product or service is used).
(2) Benefits; personal value consumers attach to product or service attributes, which can be:
(a) functional benefits, intrinsic advantages of product consumption and usually correspond to product-related attributes
(b) experiential benefits, what it feels like to use product or service
(c) symbolic benefits, extrinsic advantages of product or service consumption.
(3) Brand attitudes; consumers' overall evaluations of a brand (based on attributes and benefits), which often form basis for consumer behavior (e.g., brand choice).
A brand store can influence and add non-product related attributes, experiential and symbolic benefits which can lead to a stronger and better brand attitude than when it would have only based on product related attributes and functional benefits. These associations can vary according to their favorability, strength, and uniqueness (Keller, 1993).
Associations can also be divided into primary and secondary brand associations. Primary associations are associations with a brand and products of a brand and secondary associations are associations due to linking a brand with a country of origin, a celebrity, a sport event or via a channel of distribution (Keller, 2008). Brand store therefore is a secondary brand association.
To conclude, it is important to build a strong brand, because consumers more and more attach value to a brand when buying a product. Creating strong non-product related, experiential and symbolic associations with a brand, which can be done when starting a brand store, can help building a strong brand. In addition, brand building requires considerable investments in communication and proper distribution. A way of distributing your brands is via a new channel, a brand store.
2.1.2 Adding a new channel; brand store
may be insulated from competitive pressure and subject to bureaucratic phenomena. However, certain dimensions of transactions raise transaction costs and make vertical integration more efficient than performing it outside the company. These dimensions are asset specificity, uncertainty, and transaction frequency (Geykens, Steenkamp and Kumar, 2006).
When starting a brand store, a new channel of distribution is started, which is a new customer contact point or a medium through which firm and customer interact (Neslin et al., 2006). This interaction reflects a two-way communication. Stone et al. (2002) studied multichannel distribution strategy, which is a strategy in which more than one retail type is used to serve consumers, and Stone et al. (2002) concluded that multichannel retailing provided unique shopping experiences and values for consumers. Kim, Kim and Lee (2010) elaborated on this and researched brand values for different channel diversification cases for a high fashion brand. Kim, Kim and Lee (2010) researched what effect a channel had on brand loyalty, based on values consumers can receive from a specific channel. Kim, Kim and Lee (2010) tested expressive/social value, utilitarian value, emotional value and economic value. When testing brand values for each channel diversification case, high fashion brands sold only at traditional distribution channels (e.g. brand stores, department stores or specialty stores) received the highest score on emotional, utilitarian, and expressive/social values, which also found to be most important for establishing brand loyalty. This means that adding a traditional channel, e.g. a brand store, to current traditional channels, e.g. retail stores can lead to the highest brand loyalty in comparison with non-traditional distribution channels like webshops. Emotional value had most significant value on brand loyalty. Kim, Kim and Lee (2010) therefore claim that to establish brand loyalty, traditional channels need to satisfy consumers by providing emotional pleasure.
2.1.3 Terminology brand stores
The term brand store is more familiar in research under the names flagship brand store and manufacturer-owned retail store.
Kozinets et al. (2002) identified three types of brand-related stores; a flagship store, a themed entertainment brand store and a themed flagship brand store. Table 1 explains what the terms mean with additional examples.
TABLE 1: THREE TYPES OF BRAND STORES (Kozinets et al., 2002)
Term
Characteristics
Example
Flagship brand store
• carry a single (established) brand • brand‟s manufacturer owns the store
• intention of building or reinforcing image of a brand rather than to sell products at a profit.
• can be exclusive for a manufacturer‟s brand and non exclusive, which means that the brand is also sold at other retail stores.
Exclusive: The Body Shop Nonexclusive: Nike Town, Lego Center, Apple store.
Themed entertainment brand store
• focused primarily on selling branded services rather than selling branded products
• no brand history outside of this particular themed brand store • seek to build their brand and merchandise on it
Planet Hollywood, The Hard Rock Café
Themed flagship brand store
• an established brand becomes basis for a retail approach in which new, entertainment-oriented services are offered.
• combines elements of flagship brand stores and themed entertainment brand stores, because it promotes an existing brand and in addition also seeks to become an entertainment destination that generates revenue directly from sales of entertainment services.
• consumers go to themed flagship brand stores not only to purchase products, but also to experience a brand, company and products.
World of Coca Cola, Coca Cola Museum.
In addition, there are also new developments in brand stores; brand stores in online virtual social worlds, described in the next section.
2.1.4 Virtual brand store
Virtual social worlds, have experienced increasing managerial interest in recent years. The number of brand stores within these virtual worlds is increasing rapidly. Haenlein & Kaplan (2009) showed that exposure to flagship brand stores within virtual worlds positively influences attitude toward the associated brand and real life purchase intent and vice versa. Haenlein & Kaplan (2009) also show that a user‟s purchase experience (shopping frequency, purchase frequency, spending per purchase) and the gratification derived from using purchases have a significant moderating effect on these relationships. This means that advertising impact of Second Life flagship stores is not the same for all users but instead varies with increasing levels of purchase frequency or use gratification sought from Second Life usage.
2.1.5 Conclusion; Definition Brand Store
When we define a brand store, we state that a brand store is a store that offers only one brand, the brand of the store name. In line with Kozinets et al. (2002), we state that it is a non-exclusive flagship, because we only consider brand stores from which the brand is also sold via other distribution
2.2 BRAND STORE EXPERIENCE
In order to enhance consumers‟ emotional connections to a brand and provide a point of differentiation in a competitive environment, retailers have increasingly turned their attention to creating memorable experiences, which appeal to consumers at a physical andpsychological level (Healy et al., 2007) . The concept of experience has been investigated in different contexts, e.g. consumption experiences, product experiences, aesthetic experiences, service experiences, retail experiences, shopping
experiences and customer experiences. Recently, a concept has been presented that spans across these various contexts: the concept of brand experience (Brakus, Schmitt, & Zarantonello (2009). As stated in the introduction, many retailers start a brand store to create a brand experience. But when do we label something as a brand experience and what includes a brand store experience?
2.2.1 Brand experience
The term „Brand experience‟ is relative new. Before Brakus, Schmitt, & Zarantonello (2009) introduced this term, researchers used the term customer experience when researchers discussed an experience in a retail store context. In our point of view these two terminologies mean the same, namely senses a consumer activates and feelings consumers perceive from experiencing a brand retail store.
Sources of a brand experience
Verhoef et al. (2009) states that an experience originates from a set of interactions between a customer and a product or company which provoke a reaction. This experience is strictly personal and implies customer involvement at different levels (rational, emotional, sensorial, physical and spiritual). Customer experience is the internal and subjective response consumers have to any direct (purchase, use, service) or indirect (unplanned encounter with representatives of company‟s product, service etc e.g. via advertising, or news reports) contact with a company. It is created with elements retailers can and cannot control and it encompasses a total experience, including search, purchase, consumption and after-sale phases and may involve multiple retail channels.
Variables that determine customer experience are social environment, service interface, assortment, price, customer experience in alternative channels, retail brand, previous customer experience and retail atmosphere. According to Verhoef et al. (2009) a retail atmosphere is determined by elements like design, color, temperature and music, but also crowding.
Healy et al. (2007) distinguishes two design elements in a retail store:
(1) Static design elements are hard, tangible features of the store that facilitate functional
characteristics of product(s), and sensual and psychological benefits that emanate from a store‟s hard design features. These benefits include sensory pleasures such as sights and sounds, and feelings of status, privacy and security.
(2) Dynamic elements relate to the exchange of dynamic information, which emphasizes human interaction through the customer–staff–store interface. This relational context allows the customer to identify himself with a retailer via an interaction with human/warm/soft/dynamic elements of a store, which helps to create a sense of belonging (Healy et al., 2007).
Dimensions of a brand store experience
Brakus, Schmitt, & Zarantonello (2009) stated that brand experience is a subjective consumer
response evoked by specific brand-related experiential attributes like consumer and retail experiences. Brakus, Schmitt, & Zarantonello (2009) conceptualized brand experience in four dimensions which are evoked by brand-related stimuli that are part of a brand‟s design and identity, packaging, communications, and environments. The four dimensions are:
(1) Sensory dimension; visual, auditory, tactile, gustative, and olfactory stimulations
(2) Affective dimension; feelings generated by a brand and its emotional bond with customers. (3) Intellectual dimension; ability of a brand to engage customers‟ convergent and divergent thinking (4) Behavioral dimension; bodily experiences, lifestyles, and interactions with a brand.
Depending on how many of these dimensions are evoked and intensity of stimulation, a resulting brand experience can be more or less intense. Brand experiences can be positive or negative, short-lived, or long-lasting (Zarantonello and Schmitt, 2010).
Effects brand experience
Pine & Gilmore (1999) researched and found that firms that successfully start a brand store, will be those that can leverage an intrinsically strong product or brand interest into an adaptable and truly entertaining brand experience within a brand store. This experience can lead to new associations or a strengthening of current associations. In addition, by having a brand store which creates a stronger experience, with e.g. more sensations, feelings, cognitions, and behavioral responses evoked by brand-related stimuli it is shown that it will affect and increase consumer satisfaction and loyalty directly and indirectly through a brand personality (Brakus, Schmitt, & Zarantonello, 2009). Having a brand personality provides differentiation, increases preference, and enhances trust and loyalty (Fournier, 1998) and enables consumers to express themselves (Aaker, 1999).
2.2.2 Perceived brand experience
In our study so far we assumed that consumers all perceive brand experience equally, but Zarantonello and Schmitt (2010) found that perceived experiences of consumers differ, due to different types of experience-focused consumers. Holistic consumers are e.g. focused on all aspects of experience and therefore will perceive a higher extent of brand store experience. On the other hand, a consumer that is not focused at all on an experience, „the utilitarian customers‟, because they have primarily a rational, functional approach towards brands, will have a lower extent of brand store experience and therefore effect of a brand store visit on Customer performance will decrease. Zarantonello and Schmitt (2010) have found that there are different types of experience-focused segments, mentioned in table 2.
TABLE 2: FIVE EXPERIENCE-FOCUSED SEGMENTS (Zarantonello and Schmitt, 2010)
Our results show that there is not just one type of experiential-focused consumers and based on these insights marketers may develop differentiated experiential strategies and tactics for different segments of customers (Zarantonello and Schmitt, 2010). In addition, it has been shown that the two personality traits openness and extraversion are positively related to perceived hedonic value of a product (Matzler et al., 2006). It has been shown that extraversion is positively related to positive affective responses. Matzler et al. (2006) also found that extraverts perceive stronger hedonic values of a product, which is related to brand affect. Hence, a positive indirect relationship between extraversion and brand affect and a positive relationship between openness to experience and hedonic value and brand affect has been found by Matzler et al (2006). These findings are of interest to marketers who want to affectively bond their customers and to create brand loyalty. These results suggest that customers who score high on extraversion and openness respond stronger to affective stimuli.
2.2.3 Measuring brand store experience
Brakus, Schmitt, & Zarantonello (2009) constructed a brand experience scale that includes four dimensions; sensory, affective, intellectual, and behavioral. The brand experience scale constructed is
Dimension Characteristics
Holistic consumers seem to be interested in all aspects of experience
Hybrid consumers hedonistic consumers, who attach importance to
sensorial gratification emotions
Action-oriented consumers focus on actions and behaviors
Inner-directed consumers focus on internal processes such as sensations,
emotions, and thoughts.
Utilitarian consumers do not attach much importance to brand
reliable, valid and consists of 12 items. The 12 questions established to measure a brand experience are mentioned in table 3.
TABLE 3: FOUR DIMENSIONS OF BRAND EXPERIENCE (Brakus, Schmitt, & Zarantonello, 2009)
Brand Experience
Dimension Items/Questions
Sensory - This brand makes a strong impression on my visual sense or other senses
- I find this brand interesting in a sensory way - This brand does not appeal to my senses
Affective -This brand induces feelings and sentiments -I do not have strong emotions for this brand -This is an emotional brand
Behavioral -I engage in physical actions and behaviors when I use this brand -This brand results in bodily experiences
-This brand is not action oriented
Intellectual -I engage a lot of thinking when I encounter this brand
-This brand does not make me think
-This brand stimulates my curiosity and problem solving
2.2.3 Conclusion; Definition Brand Store Experience
2.3 BRAND ATTITUDE
A high brand experience during the brand store visit can positively enthuse and surprise customers. Chitturi, Raghunathan & Mahajan (2008) found that a brand that is meeting or exceeding a customer‟s hedonic needs and expectations improves customer loyalty more than a brand that is meeting or exceeding utilitarian needs and expectations. An attitude towards a brand can be more hedonic or utilitarian (Batra and Ahtola, 1990). When we analyze brands that start a brand store, indeed often these brands are brands with a more hedonic brand attitude, due to more sensory, emotional brand associations. It are mainly luxury, high positioned brands, which have specific emotional, sensory brand values attached to them, e.g. Louis Vuitton, Apple, Ralph Lauren and Nespresso. This raises the questions: What is a brand attitude, how can we measure a brand attitude and can having a more hedonic brand attitude increase the effect of a brand store experience on Customer performance?
2.3.1 Brand attitude
Brand attitudes are complex and multidimensional and have distinct hedonic and utilitarian components. Brand attitude is a positivity or negativity valence of an attitude weighted by the confidence or certainty with which it is held (i.e., extent to which it is considered valid). Strong attitudes result from effortful thought about an attitude object, most often because of its personal relevance. This effortful thought and confidence with which an attitude object is held guides behavior (Park et al., 2010). In addition, consumers purchase goods, brands, services and perform consumption behaviors for two basic reasons:
(1) consummatory affective (hedonic) gratification (from sensory attributes)
(2) instrumental, utilitarian reasons concerned with expectations of consequences (of a means-ends variety, from functional and nonsensory attributes) (Batra and Ahtola, 1990).
Chitturi, Raghunathan & Mahajan (2008) stated that utilitarian aspects of a product or brand refer to functional, instrumental, and practical benefits of consumption offerings, and hedonic aspects refer to their aesthetic, experiential, and enjoyment-related benefits. Both of these types of benefits contribute, in differing degrees, to overall goodness of a consumer good, brand or behavior. These hedonic and utilitarian reasons or motivations for consumption usually are not mutually exclusive nor need these two motivations be evaluatively consistent. Further, these two bases of evaluation may not be equally salient. In some product categories, brands and behaviors may be more positively evaluated on one dimension than in others, and different objects should differ predictably in extent to which overall attitudes towards them are hedonic or utilitarian (Batra and Ahtola, 1990).
and repurchase intentions, more than in case of a brand that is meeting or exceeding utilitarian needs and expectations and fulfill prevention goals that enhanced customer satisfying. Zarantonello and Schmitt (2010) state that a more hedonic brand attitude does not only lead to a willingness to buy a brand, but also to a willingness of paying a price premium for that product. Moreover, compared to utilitarian brand attitudes, hedonic brand attitudes affect purchase intentions more strongly,
Zarantonello and Schmitt (2010) state. Besides effects on purchase intentions, customers prefer expending more time (effort) for acquiring hedonic items (Okada, 2005). In addition, Okada (2005) in her research found that relative preferences between hedonic and utilitarian alternatives can reverse, depending on how immediate a purchase situation presents itself. A hedonic alternative tends to be rated more highly than a comparable utilitarian alternative when each is presented singly, but a
utilitarian alternative tends to be chosen over a hedonic alternative when the two are presented jointly.
2.3.2 Measuring attitude
Hedonism and utilitarianism are not necessarily two ends of a one-dimensional scale (Voss, Spangenberg and Grohmann, 2003). Different products can be high or low in both hedonic and utilitarian attributes. Batra and Ahtola (1990) developed a scale that can be used to measure utilitarian components (by measuring extent of; useful/useless, valuable/worthless, beneficial/harmful,
wise/foolish) and hedonic components (by measuring extent of; pleasant/unpleasant, nice/awful, agreeable-disagreeable, happy/sad). Voss, Spangenberg and Grohmann (2003) revised these items and established a reliable, valid and, in addition to Batra and Ahtola (1990), a generalizable measures of hedonic and utilitarian dimensions of overall brand/product attitudes. Voss, Spangenberg and Grohmann (2003)‟ten-item HED/UT scale demonstrated solid performance in several psychometric tests and in multiple tests of criterion and discriminant validity. The HED/UT scale items used are; (1) Utilitarian dimension; effective/ineffective, helpful/unhelpful, functional/not functional,
necessary/unnecessary, practical/impractical
(2) Hedonic dimension; fun/not fun, dull/exciting, not delightful/ delightful, not thrilling/thrilling, enjoyable/unenjoyable.
2.3.4 Conclusion; Brand attitude
2.4 EFFECTS OF A BRAND STORE
When one wants to know effects of a brand store it is important to measure all effects a brand store generates. We expect that short term effects will give a distort view of real effects. When we would measure effect directly after a brand store experience, consumers will probably full of the experience and claim to have a for example heavy loyal reaction, but this effect will weaken soon when
consumers come in contact with other competitive brands and their regular buying behaviour again. We therefore focus on somewhat longer term effect of a brand store, because this will give more valid and reliable outcomes. In addition, Rust, Lemon and Zeithaml (2004) also emphasized on the
importance for management to focus on long-term effects of a marketing expenditure.
2.4.1 Measuring Customer performance
With adding a channel, in this case a brand store, firms must consider multichannel customer management, which is the design, deployment, coordination and evaluation of channels to enhance customer value through effective customer acquisition, retention and development (Payne and Frow, 2005). A key point in this is the emphasis on customers as a strategy for creating more value for firm (Payne and Frow, 2005). Calculating this value to firm is useful, because Kumar and Venkaheran (2004b) showed that only selecting customers based on their customer lifetime value (CLV) provides higher profits and more value for a firm than when firm focus on other customer value metrics (e.g. satisfaction, worth-of-mouth, etc). Kumar et al. (2010) showed that each customer varies in their CLV to a firm and that including projected (forward-looking) profitability of customers in computation of lifetime duration can lead superior value for firm. CLV is the net present value of all current and future profits from a customer. It shows what a customers‟value is for the future. Kumar and Venkaheran (2004b) state that CLV is based on:
(1) Discount rate, which is based on:
(a) Costs for financing an investment in a customer
(b) Risk, because there is a chance that a company invests money but a customer leaves (2) Retention Probability, which is the likelihood that a customer would buy the same product or brand the next time
(3) Revenues (profits) from that customer.
According to Rust, Lemon and Zeithaml (2004) it is important not only to measure value that a customer has to a firm, but also to measure the value a firm offers to a customer, when a company wants to measure the effects of a marketing effort. Rust, Lemon and Zeithaml (2004) measure this value to customer with (1) Value Equity; customers objective assessment of the utility of a brand based on quality, price and convenience
(2) Brand Equity; customers subjective and intangible assessment of the brand, based on brand awareness, brand attitudes, perceptions and ethics
(3) Relationship Equity; customers tendency to stick to a brand.
Rust, Lemon and Zeithaml (2004) claim that measurements of Value To Customer and Value To Firm are related. Many of the actions that will increase Brand Equity, Value Equity or relationship will also increase customer equity, which is the total of discounted lifetime values summed over all the firm‟s current and potential customers (Rust, Lemon and Zeithaml, 2004). Firms should therefore improve their drivers of customer equity. Bouma et al. (2010) emphasize to measure both value to customer and value to firm. Bouma et al. (2010) state a company should create relationships that create high value to a firm and to a customer, because only these relationships are expected to lead to a long, profitable relationship. That is why Bouma et al. (2010) included both measurement dimensions in their Customer performance measurement.
Kumar et al. (2010) also state that assessing value of customers solely upon their transactions with a firm is not sufficient. Kumar et al. (2010) add the importance of Customer Engagement Value (CEV). Kumar et al. (2010) claim that customers‟value to a firm is driven by the nature and intensity of customer engagement regarding to a brand and its product and service offerings. Customer engagement means „the active interaction of a customer with a firm, with prospects and with other customers, transactional or non-transactional‟ (Kumar et al. 2010). Verhoef, Reinartz and Krafft (2010) state that customer engagement behaviours go beyond transactions and may be defined as customer behavioural manifestations that have a brand or firm focus, beyond purchase, resulting from motivational drivers. Kumar et al. (2010) measure Customer performance (CEV) using four
components of customer engagement value which are elements that show the value of a customer to a firm, which are
Customer Lifetime Value, Customer Referral Value, Customer Influencer Value and Customer Knowledge Value.
TABLE 4: CUSTOMER PERFORMANCE MEASUREMENTS
Customer performance Customer Equity Customer Lifetime Value Customer Engagement
Value
Bouma et al. (2010) Rust & Lemon & Zeithaml (2004)
Kumar and Venkaheran (2004b) Kumar et al. (2009) Kumar et al. (2010) Value to customer - Value Equity - Brand Equity - Relationship Equity
- Emotions (Zeelenberg en Pieters, 2004)
Value to firm
- Revenues
- Retention Probability - Risk
- Net Promotor Score (Reichheld, 2003)
Value to customer - Value Equity - Brand Equity - Relationship Equity Value to firm Customer Equity Value to firm
- Customer Lifetime Value
- Revenues/profits - Retention Probability - Discount rate
Value to firm
- Customer lifetime value
- Customer influence value - Customer referral value - Customer knowledge value
Note, Bouma et al. (2010) added „Emotion‟ and „Net Promotor Score‟. Kumar et al. (2010) added „Customer influence value‟, „Customer referral value‟ and „Customer knowledge value‟.
Analyzing these Customer performance measurements we can state there are two essential dimensions for measuring Customer performance;
(1) Value to customer, which includes value of a brand or product for a customer and; (2) Value to firm, which includes value of a customer for a firm.
These measurements can be used as a benchmark for companies.
We will expound on these two dimensions in sections 2.4.2 and 2.4.3 based on leading streams of measuring Customer performance and by using additional papers which discuss the importance of measuring these individual components.
2.4.2 Effects value to customer
Value to a customer, a value customers perceive from buying or using a product or brand from a firm, must be measured by four components, according to literature; Emotions, Value Equity, Brand Equity and Relationship Equity. We now will elaborate on these four components.
Emotions
negative emotions like regret, anger and distrust. Bouma et al. (2010) added this measurement, because Zeelenberg and Pieters (2004) found that specific emotions can have different influence on consumer behavior (inertia, switch, worth of mouth, complain), but a criticism is that Zeelenberg and Pieters (2004) only tested negative emotions.
Bailey et al. (2001) found that both positive and negative emotions influence customer satisfaction. An important characteristic of emotions is that emotions are experienced. Emotions provide a critical component to what is experienced as well as how an experience is subsequently evaluated (Bailey et al., 2001). That is why this component „Emotion‟ is especially an important component for the service industry (Bailey et al., 2001). Emotions often used in literature as a valid and reliable scale to measure the emotions are: interest, joy, anger, disgust, contempt, shame, guilt, sadness, fear and surprise (Westbrook, 1987).
Value Equity
Value Equity is customers objective assessment of a utility of a brand or product based on quality, price and convenience (Rust, Lemon and Zeithaml, 2004). In addition, it is an appreciation of customers for a price-acquirement proportion and a judgment about price (Bouma et al, 2010). This perceived value for money is based on four elements: service perception, quality, time/effort and price (Wang, Zhang and Ouyang, 2009). Customers‟ perceived value is a ratio of weighted received
attributes to total sacrifices, according to Wang, Zhang and Ouyang, (2009). A customers‟ perception of a value received from a company, can motivate consumer to stay with a company, which is empirically tested by Sirdeshmukh, Singh and Sabol (2002) and Yang & Peterson (2004).
Furthermore, Chattopadhyay, Shivani and Krishnan (2010) found that that good store image is likely to increase brands‟ perceived quality and when a manufacturer adds a brand store, manufacturers are adding a store image.
Brand Equity
Brand Equity is customer‟s subjective and intangible assessment of a brand (Rust, Lemon and
Zeithaml, 2004). Leone et al. (2006) describe Brand Equity as an added value endowed to a product in thoughts, words and actions of customer. Higher Brand Equity can help a brand become more
profitable through higher brand loyalty, premium pricing, lower price elasticity, lower advertising-to-sales ratios, and trade leverage (Keller, 2008). Brand Equity according to Keller (1993) in his
memory. These associations can be attached to a brand via an emotional path (imagery and feelings) and via an instrumental path (performance and judgements) (Keller, 2008, p. 61).
Aaker (1995), Yoo and Donthu (2001) and Rust, Lemon and Zeithaml (2004) all have a slightly different view on Brand Equity. To show this, we developed table 5. The last row shows our perception of Brand Equity, based on the former.
TABLE 5: TERMINOLOGY BRAND EQUITY
Aaker (1995) Keller (2008) Customer Based Brand Equity
Yoo and Donthu (2001)
Rust, Lemon and Zeithaml, 2004 Our view Brand awareness strength of a brand in customer‟s mind Brand awareness salience and identity
Brand awareness ability of a buyer to recognize or recall that a brand is a member of a certain product category
Brand awareness extent in which a customer recognizes or recalls a brand
Brand awareness recognition of a brand in different conditions and the aided and unaided recall
Perceived quality perception and judgment of quality
Brand associations anything linked to a brand
Brand meaning based on strong, favorable and unique brand associations (feelings and judgments)
Perceived quality customers judgment about a product‟s overall excellence or superiority.
Brand associations anything linked in memory of a brand.
Brand perceptions perceptions about a brand (emotional and instrumental)
Brand attitudes Established feeling and judgment about a brand
Brand associations strong, favorable and unique emotional associations attached to a brand, perceived experiential and symbolic benefits and non-product related attributes and brand attitudes based on non-product related attributes and benefits
Brand loyalty favorable attitudes and beliefs resulting in repeated buying behavior Brand relationship resonance Brand loyalty tendency to be loyal to a focal brand.
Other proprietary assets e.g. patents, trademarks
Brand ethics
high ethical standards with respect to its customers and employees and sponsors e.g. events
prevent an overlap in terms as much as possible, we decide that brand awareness and brand associations are used for our measuring Brand Equity.
For our research we describe brand awareness as recognition of a brand in different conditions and aided and unaided recall of a brand using specific cues.
Brand associations, in our point of view, are non-product related associations attached to a brand, which include according to Keller (1993):
(1) Non product related attributes product appearance information, user imagery and usage imagery (2) Perceived experiential and symbolic benefits
(3) Brand attitudes based on non product related benefits and attributes
With considering associations we should also consider strength (how deep is an association settled in the mind of the consumer), favorability (is it demanded/needed by consumers) and uniqueness (is it an association that no other competitor has) (Keller, 2008). To find out whether having a brand store adds to brand awareness and/or adds valuable association requires a valid measurement method.
Ultimate top of the customer based Brand Equity pyramid a brand manager wants to achieve is the a strong brand relationship (resonance), which is an intense, deep psychological bond with a brand. It is based on intensity (strength of attitudinal attachment) and activity (number purchases and other activities related to a brand) (Keller, 2008). As stated before, this is measured by Relationship Equity.
Relationship Equity
Relationship Equity is customers tendency to stick to a brand (Rust, Lemon and Zeithaml, 2004). Here, it means value a customer perceives from a relationship. A brand store can influence a customer relationship / loyalty level and when a relationship strength increases it is expected to lead to a better performance of a company, according to Bolton, Lemon and Verhoef (2004). This relationship commitment is influenced by satisfaction level, quality of alternatives and investment size (Bügel, Buunk and Verhoef, 2010).
Brand relationship is described as extent of an intense, psychological relationship or bond with a brand, which according to Keller (2008) can be measured with concerning behavioral loyalty (like what brands do you usually buy, what brand are you using now?) and brand substitutability (if the brand was not available, what would you have done?). Loyalty can be divided into relationship perception and customer behavior. Behavior is an observed action customers demonstrate (the length, depth and breadth of consumption) and relationship perception is a price perception, satisfaction and commitment, according to Bolton, Lemon and Verhoef (2004).
(2) Affective loyalty; loyalty has grown towards an affective loyalty, in which liking a brand/store or company comes up.
(3) Conative loyalty; repeated experiences and positive affects lead to real commitment. It is a brand-specific commitment to repurchase.
(4) Action loyalty; this ultimate phase is described as deeply held commitment to rebuy a preferred product/service constantly in the future and with that is willing to overcoming obstacles like situational influences and marketing efforts of competitors.
To conclude, we describe Relationship Equity as value a relationship has for a customer. We therefore include behavioural and attitudinal components of this Relationship Equity, because this shows whether consumers are really committed to a brand and also whether consumers really act upon this and therefore are truly loyal to a brand and truly love a brand. If consumers for example claim to have a bond with a brand, but do not buy a brand every time it can be that consumers buy it because of other reasons, e.g. price or product related attributes, and there is only cognitive loyalty instead of real conative loyalty. In addition, this behavioural component is also measured in the value to firm
component „retention‟, but in a way in which it shows what the value of a customer to a firm would be in the future.
In addition, some researchers claim that consumer loyalty is thé right measurement to measure successfulness (Kozinets et al. 2002) and performance (Bolton, Lemon and Verhoef, 2004) of a brand store. The CUSAMS model established a link from customer loyalty towards revenues and ultimately towards CLV (Bolton, Lemon and Verhoef, 2004). Customer loyalty is said by marketers to lead to a higher profitability, but Reinartz and Kumar (2002) claim that the relationship between loyalty and profitability is much weaker than marketers think. When one tries to relate loyalty with profitability, some drawbacks ask for attention. There is little to no evidence to suggest that customers who purchase steadily from a company over time are necessarily cheaper to serve, less price sensitive or particularly effective at bringing in new business. In addition, to identify true loyal customers,
companies need to judge customers on attitudinal and behavioural loyalty, Reinartz and Kumar (2002) claim. Kumar (2009) states that loyalty cannot be related to profitability because loyalty is an
2.4.3 Effects value to firm
The value that a consumer has for a firm can be measured by a consumers‟ CLV, which is measured by consumers‟ Revenues, Retention Probability and Risk (Venkaheran & Kumar, 2004b). In addition, Reichheld (2003) added Promoter‟s Value and Kumar et al. (2010) added Customer Influence Value, Customer Referral Value and Customer Knowledge Value in their Promoter‟s Value measurement.
Revenues
Revenues are the total expenditures that consumers do at a firm (Bouma et al. 2010). This can be indicated by customer‟s net contribution (Venkatesan and Kumar, 2004b). This net contribution is determined by relationship duration times expected revenues in every time period and expected costs of marketing to and serving a customer in a future period. Kumar and Venkatesan (2004a) found that adding a channel (e.g. starting a store brand) will enhance multichannel buying, which will lead to a higher likelihood to stay active, a higher mean revenue and a higher share of wallet in comparison with single channel buyers.
Retention
Retention is the possibility that a customer will keep buying the same brand and can be asked by questioning where a consumer would do his next purchase (Bouma et al 2010). Retention is an
average likelihood that a customer purchases from a specific firm in a period (t), given that a customer also purchased at the same firm last period (t-1). Retention can be measured with concerning
behaviors and brand substitutability (Keller, 2008). Retention rate can also be measured by 1 minus churn rate, also called defection rate (Kumar and Reinartz, 2006). Retention rate is not the same as loyalty, because with loyalty there is an additional affective component available, while retention is a behavioral measurement (Kumar and Reinartz, 2006). Therefore we label retention as the probability that a customer buys the same brand his next purchase.
Risk
Promoter’s value
Customer Engagement of Kumar et al. (2010) and Net Promoter Score (NPS) of Bouma et al. (2010) both show the importance of measuring a promoters value of customer to a firm because customers promote a brand for a company and help develop new product ideas or ideas for improvement. This is therefore differently from Relationship Equity, because Relationship Equity is perceived from the customer‟s perspective. The Relationship Equity is the value a customer perceives from a relationship, while engagement value is the value of customers who promote a firm‟s brand for a firm. But how can we measure this promoter‟s value? Keiningham et al. (2007) state that NPS is an indication of whether people will recommend a brand to family or friends. NPS is measured with a percentage of customers who are promoters of a brand or company minus the percentage who are detractors (Keiningham et al. 2007). This can be tested with the question: „How likely is it that you would recommend [brand X] to a friend or colleague?‟ (Keiningham et al. 2007). Founder of NPS is Fred Reichheld. According to Reicheld (2003) NPS offers organizations a powerful way to measure and manage customer true loyalty and he even states it is the best predictor of growth. Keiningham et al. (2007) reject this statement and found that NPS and changes in revenue have no causality with profitability. Therefore, the usability of this measurement is questionable. The NPS can be influenced by a marketing efforts like starting a brand store, but it completely depends on whether a customer is getting enthusiastic within a store, whether a person is an extravert person and even then, it is not significantly leading to an increase in profitability for a company. Hogan et al. (2002) state that marketers miss a substantial amount of value of a customer by treating customer as an isolated entity. Social processes among consumers may help increase retention rates as current customers share their experiences with one another (brand communities). Thus Hogan et al. (2002) claim that value of a customer asset can be substantially higher when a customer is valued in the context of a social system in which he or she resides. Kumar et al. (2010) measured this with:
(1) Customer Referral Value, which is acquisition of new customer through a firm initiated and incentivized formal referral program
(2) Customer Influencer Value, which is customers influence on other acquired customers as well as on prospects
(3) Customer Knowledge Behavior, which is the value added to a firm by feedback from a customer to a firm for ideas for innovations and improvements and contributing to knowledge development.
2.4.4 Conclusion; effect measurement
TABLE 6: CUSTOMER PERFORMANCE MEASUREMENT
Value to the customer components
Value Equity Quality perception of a brand
Time/effort perception of a brand Price perception of a brand
Brand Equity Brand awareness; recognition of a brand, aided and unaided recall
Brand associations; strong, favorable and unique emotional associations attached to a brand (including the non product related brand attributes, perceived experiential and symbolic brand benefits (e.g. self-confidence) and non-product related brand attitudes (established feeling and judgment about the brand, e.g. credible and excitement)). Relationship Equity Extent of an intense, psychological relationship or bond with a brand (from the point of
view of the customer) Behavioral loyalty Attitudinal loyalty
Emotions Positive emotions (excitement, enthusiasm and happiness)
Negative emotions (disgust, contempt and sadness) Value to the firm components
Revenues Indication of expenditures that consumers do at a firm, based on expected relationship duration and expected revenues
Retention Probability Probability that a customer will buy with his next purchase the same brand
Risk Variation in revenues and Retention Probability over time
Promoter‟s Value Extent to which a customer recommends a brand in their social environment
3. CONCEPTUAL MODEL AND HYPOTHESIS
After our detailed theoretical foundation, a conceptual model can be designed. Aim of this thesis is to investigate effects of a Brand store experience on Customer performance, which consists of value to firm and value to consumer. This Perceived brand store experience is also found to influence Brand attitude and in addition, we expect that Type of experience-focused customer influences Perceived extent of brand store experience.
Another aim is to find whether having a more hedonic or utilitarian brand attitude moderates the relationship between Perceived brand store experience and its effect on Customer experience. Based on literature and dimensions of Customer performance we designed the following conceptual model. Relations between variables are explained in our hypotheses in the following section.
FIGURE 1: CONCEPTUAL MODEL
3.1 EFFECT OF A BRAND STORE EXPERIENCE ON CUSTOMER PERFORMANCE
To find how Perceived extent of a brand store experience influences Customer performance
components, we will first take a closer look at the individual components to come to a conclusion for Customer performance. We elaborate extensively on all individual components, because Brand Store experience is the main variable of our report. We state that a brand experience is created by
influencing its sensory dimension (with e.g. many visual or auditory stimuli) and/or its affective dimension (by e.g. generating feelings towards a brand) and/or its intellectual dimension (by e.g. making people think and learn about a brand in a store) and/or its behavioral dimension (which includes creating bodily experiences, lifestyles, and interactions with a brand). Depending on how many of these dimensions are evoked and intensity of stimulation, a brand experience can be more or less intense (Brakus, Schmitt, & Zarantonello, 2009). We formulate our hypothesis considering perceived low and high brand store experiences, because we found that the extent of perceived brand store experience is strictly personal. That is why we measure perceived brand store experience, based on customer perception. We first hypothesize on effects of a low vs. high perceived brand store experience on Customer performance.
3.1.1 Value To Customer
We start our hypothesis about our expectations of effects of a brand store experience on value to customer. The first dimension of Value To Customer is emotions.
Emotions
As stated before, important characteristics of emotions are that emotions are experienced. Emotions provide a critical component to what is experienced as well as how experience is subsequently evaluated (Bailey et al., 2001). Because a brand store experience enables an experience, we think that a brand store experience has the opportunity to add positive emotions and by doing so increase value to customer. In addition, we should also consider negative emotions that can increase with having a brand store, e.g. a long waiting line before a check-out, because that is expected to decrease
satisfaction. These negative emotions will provide more attention to consumers in a low experience brand store, while in a high experience store positive emotions experienced will be predominant. Therefore we hypothesize:
Hypothesis 1a: Adding a brand store with a high brand experience increases the positive Emotions more than adding a brand store with a low brand experience.
Value Equity
