rapid development of the Internet

International Journal of Business and Management; Vol. 10, No. 1; 2015
ISSN 1833-3850 E-ISSN 1833-8119
Published by Canadian Center of Science and Education
104
Customer Satisfaction and Loyalty in an Online Shop: An Experiential
Marketing Perspective
Mei-Ying Wu1 & Li-Hsia Tseng1
1 Department of Information Management, Chung-Hua University, Hsinchu, Taiwan
Correspondence: Mei-Ying Wu, Department of Information Management, Chung-Hua University, No.707,
Sec.2, WuFu Road, Hsinchu 30012, Taiwan. R.O.C. E-mail: meiying@chu.edu.tw

Abstract
The rapid development of the Internet has facilitated the proliferation of online stores. How businesses can seize
this enormous business opportunity and survive intense competition is an important issue. Based on strategic
experiential modules (SEMs), including sense, feel, think, act, and relate, this study attempted to explore the type
of experience preferred by consumers of lativ, a well-known low-cost apparel brand in Taiwan, and further
examine the relationship between customer satisfaction and loyalty. Results showed that perceptions of
experiential marketing differed significantly on some demographic variable; experiential marketing was
positively related to customer satisfaction and customer loyalty; customer satisfaction and customer loyalty were
positively related; and experiential marketing was a significant predictor of customer satisfaction and customer
loyalty. The empirical results about experiential marketing were obtained from the online apparel retail industry.
Keywords: strategic experiential modules, experiential marketing, customer satisfaction, customer loyalty
1. Introduction
With the rapid development of online stores, the competition from brick-and-mortar stores has also escalated,
putting much pressure on the online retail industry. The rise of the Internet offers consumers an alternative
shopping channel, through which they can obtain sufficient information, have a plenty of similar items to choose
from, visit many virtual stores in a snapshot, place orders and make payments easily, and buy whatever they ever
need at home. Online shopping caters to the busy lifestyle of modern people, and its prevalence manifests the
rise of the stay-at-home economy. In nowadays, one will be greeted by countless ad banners of online apparel
brands when accessing a portal site. In e-commerce, apparel is a category characterized by a lower entry barrier
but a higher profit rate. The inventory and retail procedures for this product category are also easier compared to
other product categories. As a result, many businesses open an online apparel store as their first step of entering
the e-commerce market.
This study focused on lativ and obtained data from consumers who had purchased any item from the online store
of lativ. Based on the five strategic experiential modules (SEMs) proposed by Schmitt (1999), this study
attempted to explore the type of experience that is most favored by consumers of lativ and examine the
relationship between customer satisfaction and customer loyalty. The results could be a reference for online
apparel retailers not limited to lativ.
1.1 Introduction to Lativ
Apparel is one of the best-selling categories in e-commerce. In recent years, lativ, a new brand of low-cost
apparel sold primarily on the Internet, has gained much popularity in the market. “Lativ” is an abbreviation of
“Life should be attractive in various way”. It is a Taiwanese brand of low-cost apparel established in 2007. Its
founder, Chang Wei-chiang, created the first original online apparel brand in Taiwan without prior experience in
related businesses. This brand is known for its low-cost but high-quality leisure wear and has an annual revenue
reaching NT$4 billion. Chang has convinced all of us with a miracle he created in the apparel industry. Its
products cover women’s wear, men’s wear, and children’s wear, and are sold through a business-to-customer
(B2C) online store. The goal of lativ is to provide high-quality wear at affordable prices. With the promotion of
keyword advertising and successful online marketing strategies, lativ became popular in a short time and also
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delivered a skyrocketing sales performance. Lativ is positioned as a brand of low-cost apparel, so its wear
products are designed to be simple and non-flasy while offering comfort and functions. Lativ uses certain basic
elements to highlight personal characteristics of its consumers. Its high popularity in the online apparel retail
market is mainly attributed to the effective marketing strategies used. Many scholars have noticed the success of
lativ and attempted to explore factors contributing to its success from various perspectives. However, none of
them has addressed this issue from the experiential marketing perspective. This study is driven to fill this gap.
1.2 Experiential Marketing
The brand marketing guru, Professor Bernd Schmitt, was the first to introduce the concept of experiential
marketing. Viewing experiential marketing as an extension of traditional marketing, he integrated various
methods, concepts, and media used in products and marketing campaigns that involve or appeal to consumer
experiences to propose the concept of experiential marketing. He stressed that the ultimate goal of experiential
marketing is to create holistic experiences for customers and defined experiential marketing as a process or
technique of promoting a product and increasing its value by offering customers an opportunity to observe or
participate in events or activities where they may be motivated to buy or agree with the concept behind the
product. Experiential marketing is to create an unique experience for customers and induce their purchase
intentions by getting them to sense, feel, think, act, and relate. The focus of experiential marketing is on
customers. In Experiential Marketing, Schmitt (1999) integrated the concept of traditional marketing into his
view of experiential marketing and proposed a framework of experiential marketing that can be used for
customer experience management based on theories about individual consumer psychology and social behavior.
The conceptual framework of experiential marketing consists of two elements: Strategic Experiential
Modules (SEMs) and Experience Providers (ExPros). The purpose of SEMs is to create effective forms of
experiences for customers, allowing them to have a unique encounter with the product, facility or service that is
being promoted. SEMs refers to five forms of experiences, including sense, feel, think, act, and relate.
ExPros are strategic tools of marketing. They include communications, product presence, co-branding,
spatial environments, websites, and people. These strategic tools are helpful for businesses to create a
pleasant experience for customers, increase product values, and enhance customer satisfaction and
loyalty. According to Schmitt (1999), we define experiential marketing as “a process of creating an experiential
context where consumers are allowed to sense, feel, think, act, and relate to the product promoted and have a
pleasant memory about this experience, resulting in increased product awareness and product value”.
1.3 Customer Satisfaction
Fornell (1992) stated that customer satisfaction is an accumulated and experience-based attitude. Customer
satisfaction is a feeling that can be directly evaluated. It is the result of customers’ comparison between the
expected and actual performance of a product or service. Known as the Father of Modern Marketing, Kotler
(1996) pointed out that customer satisfaction is a function of the difference between the perceived performance
and expectation. Therefore, customer satisfaction is the level of delight or disappointment deriving from the
comparison between perceptions of the characteristics or performances of a product and personal anticipations.
Kotler (1999) also suggested that the level pleasure with a product is a result of comparison between perceived
performances and individual expectations. Pine and Gilmore (1998) mentioned in The Experience Economy that
customer satisfaction is evaluated based on customers’ experience with the product and depends largely on
customer’s evaluation of individual experiences with the product relative to expectations of its quality. Oliver
(1999) argued that customer satisfaction is the degree to which customers’ expectations of a product or service
are fulfilled and can reflect the consistency between the anticipated and actual performances of the product or
service. According to Schmitt (1999), higher customer value leads to higher customer satisfaction. Wei (2002)
provided a simple approach to increasing customer satisfaction. It is to identify the needs of customers and
satisfy them. In other words, it is to understand customers’ expectations of a company, product or its employees,
manage to meet the expectations earlier than competitors, and improve weaknesses through constant evaluations
from customers’ perspective to win customers’ trust and lifetime loyalty. Assaf et al. (2011) mentioned that
understanding how to satisfy customers is critical to transformation of available information into effective
marketing strategies and future development of the organization. Higher customer satisfaction can result in a
higher organizational revenue. To sum up, despite the variety of definitions of customer satisfaction, scholars
generally agreed that customer satisfaction is related to the difference between anticipated and actual
performances, and customer satisfaction is crucial to corporate profits. In this study, we define customer
satisfaction as “the result of consumer evaluation based on pre-purchase expectations and post-purchase
experiences”.
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1.4 Customer Loyalty
“Loyalty” is an old idea in business and marketing dating back to at least the 1940s. Brown (1952) was the first
scholar who empirically studied loyalty in customer. Focusing more on customer behavior, Brown (1952)
associated customer loyalty with the repeat purchase behavior of customers. According to Dick and Basu (1994),
customer loyalty plays a pivotal role in creating profits, and it can be viewed as the strength of the relationship
between an individual’s relative attitude and their repeat patronage. Jones and Sasser (1995) identified two types
of customer loyalty: long-term loyalty and short-term loyalty. Long-term loyalty is true loyalty, with which
customers are not easily influenced by external factors to change their view about a product or service.