EXPERIENTIAL MARKETING, EXPERIENTIAL VALUE, PURCHASE BEHAVIOUR AND CUSTOMER LOYALTY IN THE TELECOMS INDUSTRY

By

MOSES OBONYO 2006/HD10/6171/U (PLAN A)

A RESEARCH DISSERTATION SUBMITTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE IN MARKETING MAKERERE UNIVERSITY

NOVEMBER, 2011

DECLARATION

I, Moses Obonyo declare that this research dissertation is my own original work, and it has never been presented to any university or institution for the award of any academic qualification.

Signature.. MOSES OBONYO 2006/HD10/6171/U

APPROVAL

This is to certify that this research dissertation has been submitted for examination with our approval as university supervisor.

Signed

: . Dr. Joseph Ntayi Supervisor

Signed

: . Mrs. Sarah Eyaa Bulaamu Supervisor

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DEDICATION

This piece of work is dedicated to my late dad, Mr. Eugenio Okori, my Mother, Mrs. Florence Atai Okori and the entire Olaka clan.

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ACKNOWLEDGEMENT

I am specifically delighted to mention the following; my wife Susan Juliet and my daughter Gabrielle who have been my rock through the times. My family and friends who have patiently endured the challenging times and borne with all the times we have gone through together, with a constant cheer; all of you have always encouraged me greatly. Participating respondents, who always warmly welcomed me and made my interviews very fruitful.

My special thanks also go to my supervisor, Dr. Joseph Ntayi and Mrs. Sarah Eyaa for their encouragement, patience, good will and professional guidance. I would also like to thank, my classmates and my lecturers at the University, who have been a source of continuous encouragement and growth.

I am also indebted to all the people whose guidance made this study a success. I would like to thank them here as I will not be able to mention all of them by name. Their contributions will always be in my memory. appreciation to you. May all of you out there consider this to be a token of my

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TABLE OF CONTENTS
DECLARATION ..........................................................................................................................................................i APPROVAL ................................................................................................................................................................ ii DEDICATION ........................................................................................................................................................... iii ACKNOWLEDGEMENT ....................................................................................................................................... iv LIST OF TABLES .................................................................................................................................................. viii ABSTRACT ............................................................................................................................................................... ix CHAPTER ONE.........................................................................................................................................................1 INTRODUCTION......................................................................................................................................................1 1.1 1.2 1.3 1.4 1.5 1.6 1.6.1 1.6.2 1.6.3 1.7 1.8 Background to the Study ...............................................................................................................................1 Statement of the Problem ..............................................................................................................................4 Purpose of the Study......................................................................................................................................4 Research Objectives .......................................................................................................................................4 Research Questions ........................................................................................................................................5 Scope of the Study ..........................................................................................................................................5 Subject scope ...................................................................................................................................................5 Geographical scope ........................................................................................................................................5 Time Scope ......................................................................................................................................................5 Significance of the Study...............................................................................................................................6 Conceptual Framework ..................................................................................................................................6

CHAPTER TWO .......................................................................................................................................................8 LITERATURE REVIEW ........................................................................................................................................8 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Introduction .....................................................................................................................................................8 Experiential Marketing ..................................................................................................................................8 Experiential Marketing and Customer Loyalty ..........................................................................................9 Experiential Marketing and Experiential Value .......................................................................................10 Experiential Value and Purchase Behaviour ............................................................................................12 Experiential Marketing, Experiential Value and Customer Loyalty .....................................................14 Experiential Marketing, Purchase Behaviour and Customer Loyalty ...................................................16

CHAPTER THREE .................................................................................................................................................19 RESEARCH METHODOLOGY .........................................................................................................................19 3.1 3.2 3.3 Introduction ...................................................................................................................................................19 Research Design ..........................................................................................................................................19 Study Population and Area ..........................................................................................................................19

3.4 3.5 3.6 3.7 3.8 3.9

Sample Size and Sampling Technique ......................................................................................................20 Data Sources and Data Collection Instruments ........................................................................................20 Measurement of variables............................................................................................................................21 Validity and Reliability Instrument ............................................................................................................22 Data Processing and Analysis .....................................................................................................................23 Limitations to the Study ...............................................................................................................................23

CHAPTER FOUR ....................................................................................................................................................25 PRESENTATION AND INTERPRETATION OF RESULTS ....................................................................25 4.1 4.2 4.3 4.3.1 4.3.2 4.3.3 4.3.4 4.4 4.4.1 4.4.2 4.4.3 4.4.4 4.5 4.5.1 4.6 4.6.1 4.6.2 4.6.3 Introduction ...................................................................................................................................................25 Response Rate ...............................................................................................................................................25 Sample Characteristics .................................................................................................................................25 Gender distribution .......................................................................................................................................26 Level of Education distribution ..................................................................................................................26 Period worked with the company ...............................................................................................................27 Age Group of respondent ............................................................................................................................28 The Relationship between the Study Variables ........................................................................................29 Experiential Marketing and Customer Loyalty ........................................................................................29 Experiential Marketing and Purchase Behaviour .....................................................................................30 Experiential Marketing and Experiential Value .......................................................................................30 Experiential Marketing, Experiential Value and Customer Loyalty .....................................................30 Regression Analysis .....................................................................................................................................31 Regression Model for the study variables .................................................................................................31 Analysis of Variance (ANOVA) ................................................................................................................32 ANOVA results for Gender by Variable. ..................................................................................................32 ANOVA results for Level of Education by Variable ..............................................................................33 ANOVA results for Age Group by Variable ............................................................................................35

CHAPTER FIVE .....................................................................................................................................................37 DISCUSSION, CONCLUSION AND RECOMMENDATIONS..................................................................37 5.1 5.1.1 5.1.2 5.1.3 5.1.4 5.2 Introduction ...................................................................................................................................................37 Experiential Marketing and Customer Loyalty ........................................................................................37 Experiential Marketing and Purchase Behaviour .....................................................................................37 Experiential Marketing and Experiential Value .......................................................................................39 Experiential Marketing, Experiential Value and Customer Loyalty .....................................................40 Conclusions ....................................................................................................................................................41

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5.3 5.4

Recommendations ..........................................................................................................................................41 Areas for further study .................................................................................................................................43

Reference .....................................................................................................................................................................44 APPENDIX I................................................................................................................................................................48

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LIST OF TABLES

Table 3.1: Sample Size .............................................................................................................................. 20 Table 3.2: Reliability ................................................................................................................................. 22 Table 4.1: Respondent Category by Gender........................................................................................... 26 Table 4.2: Respondent Category by Level of Education ...................................................................... 27 Table 4.3: Period worked with the company .......................................................................................... 27 Table 4.4: Age Group of respondent ....................................................................................................... 28 Table 4.5: Relationships between Variables/Zero Order Matrix ......................................................... 29 Table 4.6: Prediction Model for the study variables ............................................................................. 31 Table 4.7: ANOVA results for Gender by Variable .............................................................................. 32 Table 4.8: ANOVA results for Level of Education by Variable .............................................................. 34 Table 4.9: ANOVA results for Age Group by Variable ....................................................................... 35

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ABSTRACT

The study examined the relationship between experiential marketing, experiential value, purchase behaviour and customer loyalty in UTL. The study undertook a cross sectional survey design with a population of 1,090 respondents from which a sample of 381 was drawn. Self-administered questionnaires were used to collect responses. Measurement of the relationships of the study (experiential marketing, experiential value, purchase behaviour and customer loyalty) was done and subjected to rigorous data processing and analysis using the relevant statistical computer software packages.

From the findings, the relationships between experiential marketing, experiential value, purchase behaviour, experiential value and customer loyalty were found to be positive and significant. Results from regression analysis showed experiential marketing, experiential value and purchase behaviour were significant predictors of customer loyalty. The study recommends therefore, that since the model could only explain 45.8% in variance of the customer loyalty of UTL products and services, a study be carried out comprising of other factors which were not part of the model. Likewise, to study the true nature and quality of experiential marketing, experiential value and customer loyalty, a longitudinal study is more appropriate.

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CHAPTER ONE INTRODUCTION

1.1

Background to the Study Consumers are not just willing to buy products, but are ready to experience them and some will go so far that they will help companies build them. Therefore, experience is a central element of the life of todays consumer (Schmitt, 2003). Experience occurs as a result of encountering through things and thus, experience is the stimulation of a single event, for example, marketing before and after purchasing (McLuhan, 2008). Experience includes the whole living element, and usually is caused by directly observing or participating in events, no matter if the events were real, dream-like or virtual. Experience usually is not unprompted but induced. Experiential marketing is the operator standing on consumer's point of view of consumers to experience the concept of the purchase, process of the purchase, thoughts of purchase and driving force of the purchase, that is, from a consumer's senses, feelings, thinking, action and connection these five aspects define and design the way of thinking about marketing (Schmitt, 2001). It advocates the experience, enables customers to experience and become directly involved as the main body, creating a kind of "feeling that will not forget" satisfy their needs mentally to the greatest extent in order to win customer trust and loyalty so that to promote product sales (Liu, 2006).

Therefore, a well designed experience engages the consumer, becomes memorable and allows for a free interpretation as it is non-partisan (McLuhan, 2008). McLuhan, (2008) attests that the growth of quality, intensity, meaning and value are outcomes of an experience. Positive

experiences need to become institutionalized within the system so that all touch points deliver the brand essence (Shaw and Ivens, 2005). This ensures that there is no gap between the brand promise and the brand delivery and attempts to connect consumers with brands in personally relevant and memorable ways and also gives customers an opportunity to engage and interact with brands, products, and services in sensory ways(Ponsonby-Mccabe and Boyle, 2006). Personal experiences help people connect with a brand and make intelligent and informed purchasing decisions. When done right, it is the most powerful tool to win customer loyalty (Smith and Wheeler, 2002). Kotler and Keller, (2006) stated that emotion, based on consumption, impacts a consumers satisfaction judgment. In essence, an outstanding customer experience will certainly lead to customer satisfaction which normally will result in building brand loyalty. Intuitively, brand loyal consumers may be willing to pay more for brand because they perceive some unique value in the brand that no alternative can provide (Xiao, 2004).

Uganda Telecom Limited (UTL), previously a government parastatal and the only telecommunications provider in the country offering landline services, until the introduction of the liberalization policy, which brought other entrants into the telecommunications industry. To date, subscriber estimates for the four major operators: MTN, Uganda Telecom, Warid and Zain Uganda show that the number of active mobile subscribers in Uganda has risen to more than 7.7 million up from 5.7 million in March, 2009 (Reports from Business Power, 2008). In February, 2009, the UTL operator hit the one million mark, UTL Public Relations Manager, Mr. Mark Kaheru, said the number was achieved, due to its aggressive $150 million network and expansion plan. UTL commands a share of 17.5% of the customers loyal to its network (company profile, 2008) leaving 82.5% of which MTN enjoys a 66% market share and the rest is shared between Zain and Warid. Despite UTLs long existence in the telecom industry, the

market share of the company has remained below averaged compared to competitor companies. According to the UCC Report (2006), UTL has a wide range of products and services offered, although meeting customers expectations is still somewhat challenging for the company. For example, the companys telephone network coverage is limited to particular regions with regular experiences of poor connectivity of the telephone lines, delays in repairs of damaged telephones and installation of new lines. The telecom statistics show that the companys products and services market share had reduced from 18.3% to 14.8 %.

The presence and visibility of the companys products and adverts on the markets was being constrained by dealers having to travel to the company headquarters to stock products contrary to competitor companies which deliver the products to their dealers. Likewise, the Business Development Coordinators were failing to effectively monitor product inventories and merchandising of the company products hence causing stock outs of the company products and limited promotional materials respectively. Since customer intentions are predetermined by experiences, it is important that consumers experience the concept of the purchase, process of the purchase, thoughts of purchase and driving force of the purchase. UTL continues to use traditional marketing methods of print and radio advertisement, which seem not to be yielding the expected results of enhancing customer loyalty. Although UTL prides it is self of having realized growth in clientele base, but there was no planned improvements in network coverage and databases to meet the growth. This resulted into network congestions, dropped calls and delayed SMS deliveries which resulted into phone churning (The New Vision 2/8/2007, The Daily Monitor 8/31/07, Sunday Monitor 8/25/7007) which compromised the value of customers experiences. The shortcomings in the delivery of the services to the customers

explain why the service centres/ departments are always congested with long queues of customer complaints.

1.2

Statement of the Problem The market share of UTL has continued to stagnate in comparison to other major players such as MTN Uganda in the Ugandan telecom sector (UTL Quarterly Report, 2008). The companys continued use of traditional marketing methods to communicate company products and services and delivery of poor services has led to network congestions, dropped calls and delayed SMS deliveries, phone churning, limited network coverage and lack of presence and visibility of the company products and communication materials, a situation that has greatly damaged the image of UTL (Telecommunications Report, 2007). The continuous use of traditional marketing methods, the lack of customers experiencing value during the consumption of the products and services with little attention on customer loyalty by the company may attribute to the low levels of market share, profitability and low capacity utilization in the telecom sector in Uganda.

1.3

Purpose of the Study The study examined the relationship between experiential marketing, experiential value, purchase behaviour and customer loyalty in UTL.

1.4

Research Objectives i) ii) iii) To examine the relationship between experiential marketing and customer loyalty. To establish the relationship between experiential marketing and purchase behaviour. To determine the relationship between experiential marketing and experiential value.

iv)

To determine the relationship between experiential marketing, experiential value and customer loyalty.

1.5

Research Questions i) ii) iii) iv) What is the relationship between experiential marketing and customer loyalty? What is the relationship between experiential marketing and purchase behavior? What is the relationship between experiential marketing and experiential value? What is the relationship between experiential marketing, experiential value and customer loyalty?

1.6

Scope of the Study

1.6.1 Subject scope The study was confined to the relationship between experiential marketing, experiential value, purchase behaviour and customer loyalty in UTL. 1.6.2 Geographical scope The study comprised of corporate customers, dealers, Small & Medium Enterprises and UTL staff in central region. In the region focus was on Kampala Outer one of UTLs Regional Territories covering Wakiso, Mpigi and Mukono. The focus was put on Kampala Outer one because this is where most of the UTLs corporate customers and SMEs are located. 1.6.3 Time Scope The study considered clients of UTL who have been consuming the products of the company for a period of 5 years starting 2004 to 2009. Also, the company records within the same period were used for the study. 5

1.7

Significance of the Study i) The results of the study will help the management of UTL realize the effect of experiential marketing on customer loyalty so as to develop the necessary strategies to strengthen loyalty through relaying emphasis on experiential marketing. ii) For the academicians, the study will bring out the relationship between experiential marketing, experiential value, purchase behaviour and customer loyalty. The results will contribute to the existing pool of knowledge and debate on experiential marketing, customer quality perception, customer satisfaction and loyalty, which in turn will be used as a future reference for other researchers by drawing examples from the Ugandan setting. iii) For the policy makers such as the Ministry of Information Communication Technology and the Uganda Communications Commission, the findings and recommendations will be useful in the development and strengthening of the existing policies and regulations in the telecommunication sector. iv) The study will identify problems in the telecommunications sector and suggest recommendations on how the telecommunication companies can develop strategies that can enable them overcome the challenges in the sector.

1.8

Conceptual Framework The framework shows the different determinants of customer loyalty. The model shown in the figure below examines the relationship between experiential marketing, experiential value, purchase behaviour and customer loyalty. Experiential marketing plays a big role in communicating the product/service to the consumer in such a way that loyalty is attained.

According to Fulbright, Troche, Skudlarski, Gore & Wexler (2001) experiential marketing is positively related to experiential value. The same was observed by Schmitt (2001) for the relationship between experiential marketing and purchase behaviour. McLuhan (2008) recognizes experiential value as independent contributors to customer loyalty.

Fig. 1.1:

Conceptual Framework

Experiential Marketing Sensorial Emotional Cognitive Life style Relational

Experiential Value Entertainment Visual appeal Interaction Value Return on investment

Customer Loyalty Attitudinal loyalty Behavioral loyalty Cognitive loyalty

Purchase Behavior

Source: Literature review (Williams, 2006, McCole, 2004, Andrews et al, 2007 and Gentile et al, 2007)

CHAPTER TWO LITERATURE REVIEW

2.1

Introduction This section presents a review of the relevant literature on the study variables of experiential marketing, experiential value, purchase behaviour and customer loyalty.

2.2

Experiential Marketing Schmitt (1999) is primarily responsible for the rise of experiential marketing. He stated that: . . . traditional marketing and business concepts offer hardly any guidance to capitalize on the emerging experiential economy (LaSalle & Britton, 2003). Experiential marketing is essentially concerned with the six senses: smell, vision, taste, hearing, touch and balance. Experiential marketing has grown in importance because traditional marketing has largely ignored the notion of act experiences. Experiential marketing is not a fad. It is being implemented in practice, yet is not accounted for in the various philosophies (concepts) of marketing. According to US and European marketing experts, experiential marketing is set to turn most of traditional marketing on its head.

A study conducted by Marketing Week (Newzealand Marketing Magazine, 2003) forwarded that 71 per cent of senior executives in the US and UK agreed that the customer experience is the next big battleground. Experiential marketing will rise in importance because marketing in the twenty-first century is more challenging than ever due to fragmented media, clever and articulated consumers, and the rise of the free-thinking consumer. Experiential marketing is

about more than a one-off experience. Its a totally new way of thinking about marketing (Xiangyi, 2006). The crux of experiential marketing is that a marketer should not only be concerned with customer satisfaction. He or she should be (more) concerned with making the consumer emotionally attached to the product/service.

2.3

Experiential Marketing and Customer Loyalty Customer loyalty is defined by Bowen & Chen, 2001 as the degree to which a customer exhibits repeat purchasing behavior from a service provider, possesses a positive attitudinal disposition towards the provider and considers using only this provider when a need for this service arises. Whereas, Oliver, (1999) defines loyalty as: a deeply held commitment to rebuy or repatronize a preferred product/service consistently in the future, thereby causing repetitive same-brand or same-brand set purchasing, despite situational influences and marketing efforts having the potential to cause switching behaviors. There are three dimensions of loyalty which include behavioral, attitudinal and cognitive where behavior loyalty is measured by determining the purchase frequency of the products and services of the company, attitudinal loyalty is determined by measuring the intention to repeat purchase and cognitive loyalty determined by measuring top of mind (how easily a consumer can recall the brand) (Milligan & Smith, 2002).

Experiential marketing represents a fundamental shift from the traditional marketing concept with regards to segmentation. Newzealand Marketing Magazine (2003) reported that traditional marketing is no longer as effective as it once was . . . in this new world, experiential marketing creates relationships. Again, experiential marketing represents a divergence from the traditional teachings and once again provides evidence that it is time to re-

vitalise, re-think, re-align and refocus both the concept and the function to reflect contemporary practices. Traditional marketing thinking fights against embracing experiential marketing yet pioneers are making it work. One of our criticisms in the past has been that marketing lacks imagination and that current research methods are not producing new insights into customers behaviour because they are encumbered by traditional segmentation, which is not as powerful as revealing attitudes and value sets. The experiential approach seeks to identify behaviours (or attitudes and value sets) held in common across an audience whose demographic characteristics (traditional basis of segmentation) might be quite diverse. The idea is that once you resonate with that value set, it becomes emotional and the customer is far likely to be loyal. Arguably, of course, the more emotional the product, the more it lends itself to an experiential marketing campaign (Newzealand Marketing Magazine, 2003).

2.4

Experiential Marketing and Experiential Value Experiential creative is all about providing a shopping atmosphere that is relevant to the customer, one that includes them in the process. Experiential Marketing is the operator standing on consumer's point of view of consumers to experience the concept of the purchase, process of the purchase, thoughts of purchase and driving force of the purchase, that is, from a consumer's senses, feelings, thinking, action and connection this five aspects to define and design of the way of thinking about marketing (Forlizzi & Ford, 2000). Experiential Marketing has changed the past concept that only stressing "clients" or "customer service" manner. It advocates the experience, enables customers to experience and become directly involved as the main body, creating a kind of "feeling that will not forget" satisfy there needs mentally to the greatest extent in order to win customer trust and loyalty so that to promote product sales (Farinet & Ploncher, 2002). Experiential Marketing breaking the assumption of the "rational

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consumer" and believe that the consumer have both sense and sensibility, and consumers experience in the pre-sale, sale, after-sale are the key to study the behavior of consumers and how to manage the brand of a competation.

Consumers today are seeking value, choice, and a great customer experience. Current retailing literature highlights the critical role of service experience and proposes that retailers should: create a theatrical retailing environment, stress fun, excitement and entertainment; and encourage greater customer participation in the retail service experience (Mathwick et al., 2001). Market trends also show that the role of customer experiential value has attracted growing attention among practitioners in the retail industry. Douglas & Craig (2000) broadened the traditional conceptualization of experiential value to incorporate three spheres: extrinsic versus intrinsic value; active versus reactive value; and self- versus other-oriented value. In a shopping context, extrinsic value is acquired from satisfying utilitarian consumption goals such as saving money, whereas intrinsic value is derived from an enjoyable and playful shopping trip (Caru & Cova, 2007). On the other hand, reactive value refers to a situation when customers appreciate the physical shopping environment or respond positively to service personnel. Active value, in contrast, results from customers efficient manipulation of the shopping resources to satisfy their functional or affective needs (Kim, 2002). An experiential value scale (EVS) was devised by Mathwick et al., (2001) for measuring these four subdimensions of the customer experiential value. One main contribution of the present study is to link service encounters with the experiential value theory.

The perceived excellence value reflects the product performance and generalized consumer appreciation of a service provider who demonstrates his/her expertise and maintains a reliable

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service performance. Peppers & Rogers (2000) suggested that consumers favor particular objects or experiences owing to their ability to accomplish certain objectives or perform certain expected functions. That is, excellence value involves ensuring that patronizing shopping malls results in value-added services that exceed ordinary expectations. Finally, perceived playfulness, which is created by customers themselves, is an inner, initiative and self-oriented experience (Caru & Cova, 2003). According to Mathwick et al. (2001), the major distinction between perceived playfulness and perceived aesthetics is that the former reflects the active role the customer adopts as exchange is elevated to play. The playful or hedonic shopping value mirrors the potential amusement and emotional worth of shopping (Calder & Malthouse, 2006). It is suggested that a playful exchange experience is reflected in the intrinsic enjoyment associated with actively engaging in shopping for pleasure or an escape of everyday, mundane consumption behavior. A recent study by Pine & Gilmore, (1999) associated consumer participation in retail services with audience participation in theater, and the authors stressed the importance of joyful customer participation in the service experience. Interestingly, the task-related side of shopping has been more widely studied than the fun side (Prahalad & Ramaswamy, 2004).

2.5

Experiential Value and Purchase Behaviour The value that motivates consumption behavior has been attributed to functional, conditional, social, emotional and epistemic utility (Lee & Overby 2004). Despite this broad conceptualization, empirical researchers have traditionally interpreted value more narrowly as the tradeoff between quality and price (Szymanski & Hise 2000). In investigating the price dimension, value researchers have come to recognize that the "price" customers pay can extend far beyond money to include investments of time and effort (Lee & Overby 2004). The

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consumption experience itself can also be rich in value. Experiential value perceptions are based upon interactions involving either direct usage or distanced appreciation of goods and services. These interactions provide the basis for the relativistic preferences held by the individuals involved. Experiential value has been said to offer both extrinsic and intrinsic benefit.

In a retail context, extrinsic benefit is typically derived from shopping trips that are utilitarian in nature, often initiated as "an errand" or "work" (Reardon & McCorkle 2002). An extrinsically oriented shopper is often happy to simply get through this type of exchange encounter. Intrinsic value, by contrast, derives from the "appreciation of an experience for its own sake, apart from any other consequence that may result". Reardon & McCorkle (2002) note the subjective and personal nature of intrinsic value perceptions that result from the "fun and playfulness (of an experience), rather than from task completion." Holbrook (1994) broadens the traditional extrinsic-intrinsic conceptualization of experiential value by including an activity dimension.

Reactive or passive value derives from the consumer's comprehension of, appreciation for, or response to a consumption object or experience. Active or participative value, on the other hand, implies a heightened collaboration between the consumer and the marketing entity. Deighton and Grayson (1995) cite consumer collaboration as a necessary prerequisite to creating a playful, game like exchange experience. In their view, the marketer "lures the buyer across a threshold" from distanced appreciation to active collaboration, and in the process, opens the door to a broad range of value sources. Collaboration can come in the form of cognitive, behavioral or financial investment on the part of the consumer. The activity

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dimension is used in this study as a means of bringing economic and experiential sources of value under one conceptual umbrella.

The typology of experiential value proposed by Holbrook (1994) suggests a value landscape divided into four quadrants framed by intrinsic/extrinsic sources of value on one axis and active/reactive value on the other. Drawing upon prior research, we label these four dimensions of experiential value: consumer return on investment, service excellence, playfulness, and aesthetic appeal. Consumer return on investment (CROI) comprises the active investment of financial, temporal, behavioral and psychological resources that potentially yield a return. The consumer may experience this return in terms of economic utility--the perception of affordable quality (Reardon & McCorkle, 2002) as well as utility derived from the efficiency of an exchange encounter (Lee & Overby, 2004). In this study, therefore, these two aspects are conceptualized as indicators of the higher order dimension, CROI. Service excellence reflects an inherently reactive response in which the consumer comes to admire a marketing entity for its capacity to serve as a means to a self-oriented end.

2.6

Experiential Marketing, Experiential Value and Customer Loyalty Experiential marketing is one specific marketing tool. It's an idea. A mindset. A focus on creating fresh connections between brands and consumers out in the world where things happen. Connections in the form of experiences that are personally relevant, memorable, interactive and emotional. Connections that lead to increased sales and brand loyalty. Experiential marketing is a brand strengthening strategy (Robertson & Wilson, 2008). How it is presented creatively is critical, since it needs to be immediately understood and relevant to the customer to have impact. When used effectively and across channels, it can be awfully

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powerful, since experiential marketing can create memorable, relevant and often valuable experiences. Engaging a customer through an experience is a way of giving dimension, feel and smell to a brand. It can generate strong feelings that the customer takes away and internalizes for years to come (Schmitt, 1999). Experiential marketing is really a fancy way of saying your catalog, store. Website and email have developed a method of engaging customers on a higher level with an "experience" that resonates with them and creates brand perception and action. Doing this also requires an investment of both time and money.

It is argued that mall shoppers responsed to two main components of their service encounters (i.e. personal interaction encounters and physical environment encounters) are reflected by four dimensions of experiential value: efficiency, service excellence, aesthetics, and playfulness. The efficiency value, or CROI, reflects the utilitarian aspects of shopping, and describes active investment in economic, temporal, behavioral and psychological resources that may result in a positive return (Schmitt, 2003). For example, consumers consider all of the related input resources, namely time spent queuing, energy spent on finding the desired products, monetary cost of parking and transportation, and various other factors only indirectly related to shopping when determining the convenience of visiting a specific shopping mall. Service excellence and aesthetics as viewed by customers are considered part of the reactive side of the customer experience. The perceived aesthetic value is a reaction to the consonance and unity of a physical object, cadency, or performance (Battarbee & Koskinen, 2005). In retailing, aesthetics can be captured in relevant visual elements of the retail environment (Mathwick et al., 2001). It is noteworthy that, visual appeal is often spurred by the design and physical attractiveness of the shopping environment, while the entertainment dimension of the aesthetic response results from an understanding or appreciation of the retail display.

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2.7

Experiential Marketing, Purchase Behaviour and Customer Loyalty Specifically, this study applies experiential value conceptualization developed by Addis and Holbrook (2001) and relates it to personal interaction and physical environment encounters with the shopping malls as a means of explaining customer behavioral intentions. Dick & Basu, (1994) suggest an attitudinal theoretical framework that also envisages the loyalty construct as being composed of relative attitude and patronage behaviour. Recent research have added cognitive aspect to loyalty, this involves the consumers conscious decision making process in the evaluation of alternative brands before purchase is effected. Companies that engage in experiential marketing take a brand essence and bring it to life in the form of an event, experience, or interaction. The company must be active rather than passive in relation to the brand. Experiential marketing offers new and exciting challenges to marketing academics (and practitioners). It demands that the marketing department must know their (products) brand essence (Arhippainem, 2004).

Brand essence has two dimensions: a functional one and an emotional one. A functional essence asks the question what is it that we do? An emotional essence is more concerned with customer perceptions, that is, how do you feel about it? For example, the functional element of Red Bull is that it is an energy boosting drink, whereas the emotional essence is one gives you enhanced ability or gives you wings. It is the latter essence that demands the greatest effort from marketers (Newzealand Marketing Magazine, 2003). The main interest of retailers in a shopping mall is to produce more profits which, in turn, are achieved via maintaining loyal patronage, generating positive word of mouth recommendations, and increasing the time and money consumers spent while shopping. Thus, mall managers need to understand how to motivate mall shoppers spending behavior. First, Soderlund & O hman (2005) showed

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intentions-as-expectations and intentions-as-wants are positively associated with customer satisfaction as well as re-patronizing behavior. In general, individuals shop to obtain hedonic and/or utilitarian values (Xiao, 2004). A shopping mall may turn out to be more profitable if it could satisfy both types of shoppers. Further, Babin & Darden (1996) argued that store-induced affect could influence customer expenditures and level of shopping satisfaction. When a shopping mall is perceived as exciting, consumers may visit it more frequently and be less likely to visit other shopping malls (Tavassoli, 1998). Thus, it is our contention that increasingly more intensive competition forces retailers to please todays mall shoppers or the retailers profitability is likely to suffer.

Experiential marketing and purchase behavior in particularly the process of devising a companys strategy, has gained growing attention on the customer resulted in an increased focus on Customer Relationship Management philosophies. More recently, as the number of contact points between a company and its customers increased, such attention to the customer revealed the fundamental importance of monitoring the many experiences that originate from those contact points. In this perspective, the central idea is to expand the transaction-based notion of customer relationship to the continuous concept of customer experience. Consequently, it becomes necessary to consider aspects that refer to the emotional and irrational side of customer behavior (Yao, 2007) and which, more than the only rational ones, account for the whole experience coming from the set of interactions between a company and its customers. Such experience plays a fundamental role in determining the customers preferences, which then influence their purchase decisions.

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In fact, whilst the classical economic theory regards the consumer as a logical thinker whose purchasing decisions are based on rational problem solving, the recent developments on the literature on economics and marketing, and particularly the new stream of the experiential marketing, advocates for the exploitation of intangible elements linked to the emotional value perceived by customers. In addition, a similar position can be found in the managerial field; in fact, 85% of senior business managers believe that differentiating solely on the traditional elements, such as price, product and quality, is no longer a sustainable competitive advantage and even more senior managers hold the Customer Experience as the next competitive battleground (Shaw and Ivens, 2005).

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CHAPTER THREE RESEARCH METHODOLOGY

3.1

Introduction This chapter depicts the methodological aspects that were used in conducting the study on experiential marketing, purchase behaviour, experiential value and customer loyalty: A case of Uganda Telecom (UTL). It describes the research design, target population, sampling design and size, data collection instruments, data analysis and interpretation tools and limitations of the study.

3.2

Research Design A cross sectional survey was used with the aim of establishing the relationships between experiential marketing, experiential value, purchase behaviour and customer loyalty. The survey was descriptive and analytical in nature.

3.3

Study Population and Area The population of the study was 1,090 comprising of 7 top management, 119 corporate clients, 4 dealers, 950 SMEs, 6 staff in the marketing department, 2 sales staff and 2 staff in the channel. For purposes of this study the population consisted of customers who for the last five consecutive years have been consuming the products of UTL and the staff who have been in constant contact with the clients. The corporate clients comprised of customers who consume a wide range of the products of the company such as those using 10 or more connected post paid lines, an intercom with more than 20 extension lines on the PBAX and subscription to UTL internet. The SMEs comprised of companies with subscription to less than 10 post paid lines

19

and operating an intercom with less than five extension lines. Only corporate companies and SMEs in the Kampala Outer one were considered for the study because the majority of the registered companies are located in the area. The population also considered senior staff in the area who provide reports to management.

3.4

Sample Size and Sampling Technique The sample size was determined scientifically using the table for determining sample size developed by Kreijcie and Morgan, (1970) as indicated in the table below:

Table 3.1: Category

Sample Size Population Sample Sampling Method 7 6 4 119 950 2 2 1090 7 6 4 86 274 2 2 381 Purposive sampling Purposive sampling Purposive sampling Simple random sampling Simple random sampling Purposive sampling Purposive sampling

Top Management Marketing Staff Dealers Corporate clients SMEs Sales Representatives Channel Department Total

Sourced from the Small and Medium Enterprises Report, 2007

Simple random sampling was employed for the study and for the different strata responses was collected purposively.

3.5

Data Sources and Data Collection Instruments Primary data was the main source. Data from the field was obtained through the use of selfadministered questionnaires to the respondents following systematic and established academic

20

procedures. The responses in the questionnaire were anchored on a 5-Likert scale with responses ranging from 1= Strongly Disagree to 5= Strongly Agree. 3.6 Measurement of variables Measurement scales from earlier studies were adopted to be used in the study. Experiential marketing was measured by a string of authors among which include Bernd & Schmitt, (2001); Fornerino et al. (2006) and Schmitt (1999). Moving from the basic idea of engagement at different levels Schmitt (1999) proposed a modular conceptualization of the concept of customer experience. Specifically, Schmitt identifies five Strategic experiential modules: sensory experiences (sense); affective experiences (feel); creative cognitive experiences (think); physical experiences, behaviors and lifestyle (act); and social-identity experiences that result from relating to a reference group or culture (relate). Therefore, the scales developed by Schmitt (1999) were adopted and modifications were made on the scales to suit the study. Experiential value was measured using scales adapted from Addis and Holbrook (2001). According to Addis and Holbrook (2001), experiential value was conceptualized as entertainment, visual appeal, interaction, value and consumer return on investment. The study adopted the scales developed by Addis and Holbrook (2001). The scales were anchored on a 5 point likert scale ranging from; 5- strongly agree, 4- agree, 3 not sure, 2 disagree and 1- strongly disagree. Customer loyalty was measured using scales adapted from Dick & Basu, (1994). According to Dick & Basu, (1994) loyalty is made-up of three dimensions which include behavioral, attitudinal and cognitive where behavior loyalty is measured by determining the purchase frequency of the products and services of the bank, attitudinal loyalty is determined by

21

measuring the intention to repeat purchase and cognitive loyalty determined by measuring top of mind. The scales were anchored on a 5 point likert scale ranging from; 5- strongly agree, 4- agree, 3 not sure, 2 disagree and 1- strongly disagree. Purchase behaviour was measured using scales adapted from Juster (1960). The scales were anchored on a 5 point likert scale ranging from; 5- strongly agree, 4- agree, 3 not sure, 2 disagree and 1- strongly disagree. 3.7 Validity and Reliability Instrument Validity of the instrument was measured through seeking for views from experts both academicians and practitioners in the area of marketing who assisted on the relevance of the scales in the instrument. The reliability of the questionnaires was enhanced through pre-testing of pilot samples from the field which enabled the re-phrasing of some questions. Additionally, reliability of the items was done with the application of the Cronbach Coefficient Alpha for the computations so as to check for the internal consistency of the items. The Cronbach Coefficient Alpha on internal consistency test was used with the following results. Table 3.2: Reliability No of Items 22 24 22 24 Cronbach Alpha Value .900 .892 .883 .873

Variable Experiential Marketing Experiential Value Purchase Behaviour Customer Loyalty

Source: primary data

The table above displays the reliability indices/coefficients for all constructs used in the study. All alpha reliabilities () for all scales were above 0.6, ranging from 0.873 to 0.900 therefore meeting acceptance standards for research (Nunnally, 1978).

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3.8

Data Processing and Analysis Data from the field was compiled, sorted, edited and coded to have the required quality, accuracy and completeness. Then entered into the computer using the Statistical Package for Social Sciences (SPSS) for analysis. The data was analyzed according to the research questions. Frequency tabulations was used to describe sample characteristics, Pearson Correlation coefficient was used to establish the relationship between the study variables. The regression analysis was used to establish the effect of experiential marketing, purchase behaviour and experiential value on customer loyalty.

3.9

Limitations to the Study a) Bias from the respondents to simply fill the questionnaires to please the researcher. The researcher conducted a face to face interaction to clarify the purpose and objective of the study. b) On looking at the limited time which the researcher had to conduct the study, respondents may suspect that the research findings are to be used for other purposes while others are likely to delay the questionnaires because of busy schedules. Here the researcher used covered letter from the Graduate and Research Centre to mitigate the out come. c) The scales in the questionnaire were adopted from other studies conducted in different environments from that of Uganda, which is likely to cause bias. The researcher indulged experts in the fields of experiential marketing, purchase behaviour and experiential value on customer loyalty to moderate the scales adapted to fit the local environment.

23

d)

Fear of giving confidential information as viewed by the organization they work for. Here the researcher assured them of at most good faith with supporting documents for undertaking the study.

e)

The way the questionnaire was designed might limit additional response. This was however mitigated through prompting the respondents to give more information.

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CHAPTER FOUR PRESENTATION AND INTERPRETATION OF RESULTS

4.1

Introduction This chapter presents the results of the study and interpretation of findings. The chapter comprised of three sections. Section one presents the sample characteristics showing, gender, level of education, tenure of employment, age group and level of management. The presentation begins with a description of the sample characteristics using frequency tabulation. The second section of the chapter presents statistics on the relationship between the study variables using the correlation matrix. Section three presents the results of the impact of the independent variable on the dependent variable using the regression analysis.

4.2

Response Rate Out of the 381 questionnaires distributed, three hundred and seventy two (372) usable ones were collected, giving a response rate of 97.6%.

4.3

Sample Characteristics To present sample characteristics, frequency tabulations were used to indicate variations of respondents based on gender, level of education, tenure of employment, age group and level of management. The sample characteristics were presented basing on the responses from the respondents. The sample characteristics were presented basing on the responses in tables 4.1 to 4.4.

25

4.3.1 Gender distribution Frequency tabulation was used by the researcher to present gender respondent category distribution. Table 4.1 below presented the results:

Table 4.1:

Respondent Category by Gender

Frequency Valid Percent Cumulative Percent

Male Valid Female Total Source: primary data

200 172 372

53.8 46.2 100.0

53.8 100.0

From the results, 53.8% of the respondents were male whereas 46.2% were female as shown in the table above. 4.3.2 Level of Education distribution Frequency tabulation was used by the researcher to present the level of education respondent category distribution. Table 4.2 below presented the results:

26

Table 4.2:

Respondent Category by Level of Education Frequency Valid Percent Cumulative Percent

Certificate Diploma Bachelors degree Valid Masters Professional PhD Total

Source: primary data

35 59 180 54 28 16 372

9.4 15.9 48.4 14.5 7.5 4.3 100.0

9.4 25.3 73.7 88.2 95.7 100.0

From the results above, over 78% of the respondents were degree holders (48.4%), diploma holders (15.9%) and masters holders (14.5%) whereas, less than 30% were certificate, professional and PhD holders.

4.3.3 Period worked with the company Frequency tabulation was used by the researcher to present the period worked with the company respondent category distribution. Table 4.3 below presented the results: Table 4.3: Period worked with the company

Frequency Valid Percent Cumulative Percent 0-3yrs 3-6 yrs Valid 6-9 yrs Over 9 yrs Total Source: primary data 135 100 92 45 372 36.3 26.9 24.7 12.1 100.0 36.3 63.2 87.9 100.0

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From the results in table 4.3 above, over 60% of the respondents had worked for the company for 6 years and below with the least serving being in the category of over 9 years (12.1%). This is implication that the majority of the staff had served the company short period of time. 4.3.4 Age Group of respondent Frequency tabulation was used by the researcher to present the age group respondent category distribution. Table 4.4 below presented the results:

Table 4.4:

Age Group of respondent

Frequency Valid Percent Cumulative Percent 19.4 52.7 76.9 89.8 100.0

18-24 25-29 Valid 30-34 34-39 40+ Total Source: primary data

72 124 90 48 38 372

19.4 33.3 24.2 12.9 10.2 100.0

According to the results in table 4.4 above, over 55% of the respondents were in the 25-29 age group (33.3%) and in the 30-34 age group (24.2%) with those in the 40 years and above registering the least (10.2%). This is implication that the majority of the consumers of UTL product were young adults.

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4.4

The Relationship between the Study Variables In this section, the results that address the research objectives are presented and Pearsons Correlation Test was used to answer the research questions of the study. To investigate the relationship among the constructs a Zero-order correlation table was generated. The Pearson correlation coefficient (r) was employed to establish the relationship between experiential marketing, purchase behaviour, experiential value and customer loyalty.

Table 4.5:

Relationships between Variables/Zero Order Matrix

1 2 3 4

Experiential Marketing-1 Experiential Value-2 Purchase Behaviour-3 Customer Loyalty-4

1.000 .747** 1.000 .685** .716** 1.000 .631** .622** .578** 1.000

** Correlation is significant at the 0.01 level (2-tailed).

Source: primary data

4.4.1 Experiential Marketing and Customer Loyalty The results in the table above indicated that experiential marketing and customer loyalty are positively and significantly related variables (r =.631**, p<.01). The researcher observed that all the components of the experiential marketing i.e. sensorial experience, cognitive

experience, life style, relational experience, emotional experience, are positively related to customer loyalty. These results support the idea that when the telecom companies market their products and services by first having the customer try them for instance by giving customers an opportunity to make free calls for a week when new to the network, they are more than likely to remain loyal to the network.

29

4.4.2 Experiential Marketing and Purchase Behaviour Correlation results indicated a significant positive relationship between experiential marketing and purchase behaviour (r =.685**, p<.01). This is confirmation that customers sensorial experience, cognitive experience, life style, relational experience and emotional experience had a positive effect on purchase behaviour towards UTL products and services. The results imply that if UTL had in place experiential marketing strategies to promote the company products, this would have a positive effect on the purchase behaviour of their consumers.

4.4.3 Experiential Marketing and Experiential Value Correlation results indicated significant and positive relationships between experiential marketing and experiential value (r=.747**, p<.01). This is indicative of the fact that the more the consumer is able to experience the concept of the purchase, process of the purchase, thoughts of purchase and driving force of the purchase, that is, from a consumer's senses, feelings, thinking, action and connection, the likelihood that the consumers consumption behavior will be motivated in regard to functional, conditional, social, emotional and epistemic utility. This implies that a consumers marketing experience shapes and affects their experience of the value of the products and services.

4.4.4 Experiential Marketing, Experiential Value and Customer Loyalty Correlation results indicated a significant and positive relationship between experiential marketing and experiential value (r=.747**, p<.01), and relationship between experiential value and customer loyalty (r = .622**, p<.01). This implies that the more UTL carries out a cross-media promotional activity which encourages two way interaction and direct physical 30

immersion into a brand, this will improve consumers perceived, relativistic preference for product attributes or service performances arising from interaction within a consumption setting that facilitates or blocks achievement of consumer goals or purpose. Likewise, this will promote customers to exhibit repeat purchasing behavior from UTL, possess a positive attitudinal disposition towards UTL products/services and consider using only the companys products/services when a need for them arises.

4.5

Regression Analysis

4.5.1 Regression Model for the study variables A regression analysis was carried out to examine the extent to which experiential marketing, purchase behaviour, experiential value predict customer loyalty. The overall potential of the experiential marketing, experiential value, purchase behaviour to explain the customer Loyalty, were presented using the regression model in the table below. Table 4.6: Prediction Model for the study variables
Unstandardized Coefficients Standardized Coefficients Model (Constant) Experiential Marketing Experiential Value Purchase Behaviour R Square Adjusted R Square Sig. Source: primary data B .585 .345 .303 .198 .462 .458 .000 Std. Error .168 .067 .074 .067 .315 .263 .175 Beta t Sig.

3.473 .001 5.148 .000 4.100 .000 2.983 .003

Dependent Variable: Customer Loyalty

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Results showed that the experiential marketing, experiential value and purchase behaviour can explain 45.8% of the variance in the customer loyalty (Adjusted R Square = .458). The experiential marketing is most influential at explaining customer loyalty (Beta =.315, Sig. <.01). The regression model was statistically significant (sig. <.01). Telecommunications companies should work on experiential marketing, experiential value and issues that influence purchase behaviour, they will see an improvement in customer loyalty by 45.8%. 4.6 Analysis of Variance (ANOVA) The study was conducted with the use of a one-way ANOVA to test for the differences in the study variables among the respondents from UTL. 4.6.1 ANOVA results for Gender by Variable. Results below were used by the researcher to test for differences among the variables by gender. Table 4.7: ANOVA results for Gender by Variable
Std. Deviation .600 .666 .568 .614 .600 .597 .680 .684

N Experiential Marketing Experiential Value Purchase Behaviour Customer Loyalty Source: primary data Male Female Male Female Male Female Male Female 200 171 196 169 197 169 197 168

Mean 3.460 3.415 3.479 3.362 3.429 3.373 3.544 3.421

Std. Error .042 .051 .041 .047 .043 .046 .048 .053

Sig.

.484 .487 3.596 .059 .798 .372 2.986 .085

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There were no significant differences among the gender categories on the study variables (sig. >.05) for all variables. 4.6.2 ANOVA results for Level of Education by Variable Results below were used by the researcher to test for differences among the variables by level of education.

33

Table 4.8: ANOVA results for Level of Education by Variable

N Certificate Diploma Experiential Marketing Bachelors Degree Masters Professional PhD Certificate Diploma Experiential Value Bachelors degree Masters Professional PhD Certificate Diploma Purchase Behaviour Bachelors degree Masters Professional PhD Certificate Diploma Customer Loyalty Bachelors degree Masters Professional PhD Source: primary data 35 59 54 28 16 35 58 54 28 16 35 59 54 28 16 35 58 54 28 16 Mean 3.485 3.446 3.469 3.471 3.571 3.475 3.419 3.510 3.359 3.285 3.451 3.337 3.489 3.311 3.343 3.582 3.572 3.693 3.310 3.754 Std. Deviation .514 .617 .671 .623 .634 .504 .559 .630 .615 .570 .540 .424 .533 .587 .624 .594 .599 .537 .547 .741 .723 .556 .651 .482 Std. Error .087 .080 .050 .085 .120 .126 .095 .083 .047 .078 .102 .106 .090 .076 .047 .081 .113 .134 .092 .097 .055 .076 .123 .120 3.086 .010 .579 .716 .532 .752 .333 .893 F Sig.

179 3.403

174 3.414

174 3.410

174 3.381

From the results in table 4.8 above, for experiential marketing, experiential value and customer purchase behaviour, the researcher noted no significant differences among the respondents when examined in light of their academic qualification (sig. >.05). Significant differences were observed only on customer loyalty (sig. <.05). 34

4.6.3 ANOVA results for Age Group by Variable Results below were used by the researcher to test for differences among the variables by age group. Table 4.9: ANOVA results for Age Group by Variable
N 18-24 25-29 Experiential Marketing 30-34 34-39 40+ 18-24 25-29 Experiential Value 30-34 34-39 40+ 18-24 25-29 Purchase Behaviour 30-34 34-39 40+ 18-24 25-29 Customer Loyalty 30-34 34-39 40+ Source: primary data 71 124 90 48 38 68 122 89 48 38 70 121 89 48 38 70 120 89 48 38 Mean 3.394 3.420 3.374 3.617 3.514 3.345 3.432 3.418 3.563 3.384 3.276 3.410 3.378 3.576 3.456 3.444 3.418 3.399 3.779 3.627 Std. Std. Error Deviation .706 .623 .593 .546 .674 .647 .598 .572 .518 .600 .649 .571 .602 .580 .572 .754 .715 .645 .528 .622 .084 .056 .062 1.449 .217 .079 .109 .078 .054 .061 1.012 .401 .075 .097 .078 .052 .064 1.937 .104 .084 .093 .090 .065 .068 3.423 .009 .076 .101 F Sig.

From the results in table 4.9 above, for experiential marketing, experiential value and customer purchase behaviour, the researcher noted no significant differences among the

35

respondents when examined in light of their age groups (sig. >.05). However, significant differences were observed only on customer loyalty (sig. <.05).

36

CHAPTER FIVE DISCUSSION, CONCLUSION AND RECOMMENDATIONS

5.1

Introduction This chapter presents the discussion, conclusions, and recommendations arising out of the research findings in chapter four and suggests areas for further study.

5.1.1 Experiential Marketing and Customer Loyalty The findings revealed that experiential marketing and customer loyalty are positively related variables. The findings are supported by Schmitt (1999) who emphasized that businesses should have the ability to develop brand images, and design experiences that lead to positive effects on consumer willingness to repurchase. Bi-jen Fan (2001) noted that experience is the key factor in regard to motivation to (re)participate, to customer satisfaction and to customer loyalty. The experiential approach seeks to identify behaviours (or attitudes and value sets) held in common across an audience whose demographic characteristics (traditional basis of segmentation) might be quite diverse. The idea is that once you resonate with that value set, it becomes emotional and the customer is far likely to be loyal. Arguably, of course, the more emotional the product, the more it lends itself to an experiential marketing campaign (Newzealand Marketing Magazine, 2003).

5.1.2 Experiential Marketing and Purchase Behaviour The findings revealed a significant positive relationship between experiential marketing and purchase behaviour. Lee & Overby (2004) suggests that the value that motivates

37

consumption behavior has been attributed to functional, conditional, social, emotional and epistemic utility. Due to marketing overload, an explosion of product choices and lack of trust, consumers are changing the way they listen, research, talk and purchase products. People want to buy products that satisfy personal emotions and brands need to work harder than ever to provide the right information and product experiences to enhance the buying decision (Lee & Overby, 2004). Experiential marketing highlights the increasing importance of two way communication, allowing consumers to feel, smell and experience a product for the first time. In addition, experiential tactics can successfully provide a sensory reminder to reinvigorate brand and product usage.

However, experiential marketing only works if you understand the consumer decision journey, consumer behavioural insights and the fast-moving trends associated with passive and active interaction. It works if you have the models and processes in place for measuring the impact of a campaign beyond footfall or cost per sample (Schmitt, 1999). In the mind of the consumer, brand value is fostered through an experience, entertainment or in offering free samples or trial. This is perceived as an investment in me (the consumer) and is an enabler for consumers to move from mere product awareness, to an actual purchase consideration. Too many agencies are claiming to do experiential without understanding the depth and rigour of the planning, behavioural understanding, measurement tools and criteria involved. This has had an impact on the perception of Experiential Marketing as a strategic channel.

38

5.1.3 Experiential Marketing and Experiential Value The findings showed a significant and positive relationships between experiential marketing and experiential value. The findings are in agreement with the assertions of Szymanski & Hise (2000), who posits that the consumption experience itself can also be rich in value. Experiential value perceptions are based upon interactions involving either direct usage or distanced appreciation of goods and services. These interactions provide the basis for the relativistic preferences held by the individuals involved. Experiential value has been said to offer both extrinsic and intrinsic benefit (Reardon & McCorkle 2002). Reactive or passive value derives from the consumer's comprehension of, appreciation for, or response to a consumption object or experience. Active or participative value, on the other hand, implies a heightened collaboration between the consumer and the marketing entity.

Holbrook (1994) suggests a value landscape divided into four quadrants framed by intrinsic/extrinsic sources of value on one axis and active/reactive value on the other. Drawing upon prior research, we label these four dimensions of experiential value: consumer return on investment, service excellence, playfulness, and aesthetic appeal. Consumer return on investment (CROI) comprises the active investment of financial, temporal, behavioral and psychological resources that potentially yield a return. The consumer may experience this return in terms of economic utility--the perception of affordable quality (Reardon & McCorkle, 2002) as well as utility derived from the efficiency of an exchange encounter (Lee & Overby, 2004). In this study, therefore, these two aspects are conceptualized as indicators of the higher order dimension, CROI. Service excellence reflects an inherently reactive response in which the consumer comes to admire a marketing entity for its capacity to serve as a means to a self-oriented end. 39

5.1.4 Experiential Marketing, Experiential Value and Customer Loyalty The findings revealed a significant and positive relationship between experiential marketing and experiential value and relationship between experiential value and customer loyalty. This is in line with the work of Robertson & Wilson (2008) who affirms that connections in the form of experiences that are personally relevant, memorable, interactive and emotional. According to Robertson & Wilson (2008), experiential marketing is a brand strengthening strategy. How it is presented creatively is critical, since it needs to be immediately understood and relevant to the customer to have impact. When used effectively and across channels, it can be awfully powerful, since experiential marketing can create memorable, relevant and often valuable experiences. Engaging a customer through an experience is a way of giving dimension, feel and smell to a brand. It can generate strong feelings that the customer takes away and internalizes for years to come (Schmitt, 1999).

Schmitt (1999) argues that consumers responsed to two main components of their service encounters (i.e. personal interaction encounters and physical environment encounters) are reflected by four dimensions of experiential value: efficiency, service excellence, aesthetics, and playfulness. The efficiency value, or CROI, reflects the utilitarian aspects of shopping, and describes active investment in economic, temporal, behavioral and psychological resources that may result in a positive return (Schmitt, 2003). The perceived aesthetic value is a reaction to the consonance and unity of a physical object, cadency, or performance (Battarbee & Koskinen, 2005). In retailing, aesthetics can be captured in relevant visual elements of the retail environment (Mathwick et al., 2001). It is noteworthy that, visual appeal is often spurred by the design and physical attractiveness of the shopping

40

environment, while the entertainment dimension of the aesthetic response results from an understanding or appreciation of the retail display.

5.2

Conclusions In general, the study looked at the relationships between experiential marketing, purchase behaviour, experiential value and customer loyalty at UTL. From the findings, the relationships between experiential marketing, purchase behaviour, experiential value and customer loyalty were found to be positive and significant. It also examined the variance in customer loyalty that is explained by the independent variables. All independent variables were found to be significant predictors of customer loyalty. Experiential marketing and experiential value were the most significant predictors. The independent variables combined together accounted for only 45.8% variance in customer loyalty at UTL. Other factors affecting customer loyalty of UTL recoded 54.2%.

5.3

Recommendations In light of the research findings, the following recommendations are made: i) According to the findings, experiential marketing and experiential value were found to be the major predictors of customer loyalty. Therefore, the management of UTL should put a lot of emphasis on the extensive use of experiential marketing and value to grow customer loyalty. This can be carried out by putting in place attractive layout of UTL outlets and products, use of captivating promotion drives, the promotion drives should arouse inspiration and cause image to associate with the company.

41

ii)

According to the findings on the relationships between the study variables and customer loyalty, positive and significant relationships were observed. Therefore, the management of UTL need to put a lot of attention on the significant relationships as these will have a positive effect on the attitudinal, behavioural and cognitive aspects of customer loyalty.

iii)

The study used a cross sectional survey design to study the relationships between the study variables and customer loyalty. However, to study the true nature and quality of the relationships between the study variables and customer loyalty, the management of UTL should conduct a study which is longitudinal in order to ascertain the true nature and quality of customer loyalty.

iv)

The results of the study point to a number of opportunities for strategy review in regard to experiential marketing, purchase behaviour and experiential value to improve customer loyalty. The management of UTL should therefore, assess regularly the performance level of the company in regard to customer loyalty and carry out review of the strategies being used to promote loyalty through experiential marketing and value.

v)

From the findings, it was clear that in order to shape customer purchase behaviour, UTL needed to have attractive commodity prices, have variety, quality products/services and at the same time use opinion leaders to have a positive influence on customer loyalty.

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5.4

Areas for further study i) This study concentrated on experiential marketing, purchase behaviour, experiential value and customer loyalty. Future research should attempt to collect data from other telecommunication companies and other sectors to ascertain the findings. ii) The study adopted a cross sectional survey design which studied the state of affairs at UTL at a point in time. To study the true nature and quality experiential marketing, purchase behaviour, experiential value and customer loyalty, a longitudinal study is more appropriate. iii) The study sample was restricted to UTL leaving out the other telecom companies such as, MTN, Warid, Orange, Airtel etc. Future studies on the telecom sector should take into consideration all the players in the telecom sector. iv) The study concentrated on Kampala district as the area scope. Further studies carried out on the telecom sector could comprise of a wider area scope including other districts and or regions. v) The model could only explain 45.8% of the variance in customer loyalty failing to account for 54.2% of the variance in customer loyalty. Future studies should comprise of other variables that were not part of the model to predict the variance in customer loyalty.

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APPENDIX I

QUESTIONNAIRE Dear Respondent, This questionnaire seeks to establish the relationship between EXPERIENTIAL MARKETING, EXPERIENTIAL VALUE, PURCHASE BEHAVIOUR AND CUSTOMER LOYALTY IN THE TELECOMS INDUSTRY. You have been selected to participate in this study and all the information that you will provide will be used for academic purposes only. Thank you for your cooperation. SECTION I: GENERAL INFORMATION Please tick the appropriate box for the questionnaire that follows below: Demographic Characteristics 1. 2. Gender: Level of Education Certificate 3. Diploma Bachelors degree Masters Professional PhD Male (1) Female (2)

For how long have you worked with UTL? 0-3yrs (1) 3-6 yrs (2) 6-9 yrs (3) Over 9 yrs (4)

Age group 18-24 25-29 30-34 34-39 40+

5)

What is your level of management in UTL? Type Top management Middle management Lower management Code 1 2 3

Please indicate by ticking in the appropriate box to what extent you agree/disagree to the following statements below. (Strongly Disagree (SD)-1, Disagree (D)-2, Not Sure (NS)-3, Agree (A)-4 and Strongly Agree (SA)-5 SECTION II: EXPERIENTIAL MARKETING SD 1 2 3 Sensorial Experience I feel that the way UTL outlets are designed is beautiful The decoration design of UTL outlets is very attractive I feel that the outlook of UTLs headquarters is nice 1 1 1 D 2 2 2 NS 3 3 3 A 4 4 4 SA 5 5 5

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4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 20 21 22

Emotional Experience I am moved by the promotions done by UTL The setup of UTL outlets makes me feel pleasant The products/services offered by UTL makes me happy The products/services offered by UTL enabled me to escape communication pressures UTLs customer experience makes me joyful I am excited when dealing with the staff of UTL In addition to enjoying the services of UTL, it also brings me happiness Cognitive (Curiosity & Think) Experience The promotional activities of UTL inspire me to reflect on them The outlets inside environment inspires my curiosity about the products/services of UTL The display of UTL products/services inspire my inquisitiveness Life-Style It is a routine for me to share my experience of UTL products/services with friends Product/service engagements of UTL do influence my way of life I would like to further explore UTLs other products/services to improve my life-style My experience with UTL products/services makes me want to change my life-style My experience with UTL products/services makes me think of my life-style Relational I feel obliged to share information on UTL products/services Participating in UTL promotional drives represents my enthusiasm toward the UTLs activity Participating in UTL promotional drives enables me speak about my experiences with those who have common interest as mine

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

SECTION III: EXPERIENTAL VALUE Entertainment: In my opinion, UTL outlets are very entertaining UTL sales representatives do not merely sell products, but also entertain customers. I am amused by the service offers of UTL I am absorbed with the service attitude of UTL staff UTL staff do not get distracted during service delivery The staff of UTL capture my attention when explaining products/services and their operations Visual Appeal The locations where UTL products are sold are pleasing The way UTL displays its products is attractive The enthusiasm of UTLs locations is catching, it picks me up The company colours of UTL are very attractive to me I like the design style of the products/services of UTL Interaction I like to help others, particularly when interacting with products/services of UTL I believe it is beneficial to participate in the product evaluations, surveys or discussion groups on UTL products/services I enjoy helping and giving advice on UTL products to other users. When I need help, I turn to discussion groups, notice boards and other electronic forums offered by UTL. When UTL offers information or something else of value, I try to respond with equal amount of information or feed-back. Value UTL products are considered good buys for the prices. I consider the prices of UTL products acceptable. I am satisfied when I buy products from UTL. UTL products offer value for money SD 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 D 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 NS 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 A 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 SA 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

17 18 19 20

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21 22 23 24

Consumer Return on Investment I feel that it is worth spending money on UTL products/services I feel that the pricing of UTL products/services is reasonable I am very satisfied with the pricing of UTL products/services I feel that consumption of UTL products/services is cost-effective

1 1 1 1 1

2 2 2 2 2

3 3 3 3 3

4 4 4 4 4

5 5 5 5 5

SECTION IV: PURCHASE BEHAVIOUR 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 It is important to me to get the best price for the products/services I buy from UTL Getting quality UTL products/services is very important to me. To get variety, I shop at different stores and choose different products/services of UTL I always buy from the outlets/sale representatives of UTL that I know and trust My friends' evaluation and preference of UTL products/services will influence my choice Other people's recommendation of UTL products/services may influence my final decision The preferences of family members can influence my choice of UTL products/services To satisfy the expectations of my colleagues, my decision to purchase UTL products/services is influenced by their preferences I tend to choose UTL products/services that will enhance my image in others' eyes I would search information about various UTLs products/services from independent group of experts I will collect information on UTL products/services from those friends, neighbors, relatives, or work associates The UTL network is simple and hassle free in its use, it influences my purchase behaviour UTL offers competitive prices I trust more in UTL than in any other telecom company My spending habits on phone calls are creating chaos in my life I feel driven to shop and spend UTL products/services, even when I don't have the time or the money I cannot resist sales signs in window or shop displays of UTL, I just have to check them out I get a lot pleasure from shopping at UTL outlets I hate to go shopping I only shop at UTL outlets out of necessity Shopping is fun at UTL outlets I return purchases in case they do not work well CUSTOMER LO YALTY SD Attitudinal loyalty I use UTL products/services because it is the best choice for me. I consider myself to be a loyal patron of UTL. I am committed to UTL for purchase of telecom products/services In the future, I would be willing to pay a higher price for UTL products/services. I consider UTL my first choice when buying telecommunication products/services. I consider UTL my first choice among other telecom companies Behavioral loyalty If I had to do it all over again, Id buy telecom products/services from a different company. I intend to keep buying the products/services of UTL. I would not switch to a competitor, if I get a problem with the products/services of UTL. I intend to continue purchasing the products/service of UTL for long I will change to another telecom company if UTL increases their charges I intend to continue with UTL in the foreseeable future. I have considered going to another telecom network in the recent past. I recommend UTL to someone who seeks my advice. I say positive things about UTL to other potential customers D NS A SA SD 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 D 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 NS 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 A 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 SA 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

SECTION V:

1 2 3 4 5 6 1 2 3 4 5 6 7 8 9

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

50

10 1 2 3 4 5 6 7 8

I will switch to another telecom network if I experience any problems with UTL Cognitive Loyalty To me, UTL would rank first among the other I would patronize UTL for a long period of time I will deal exclusively with UTL I think of UTL as my telecom The telecom I patronize reflect a lot about who I am I have found UTL better than other telecoms I always find the terms of UTL superior compared to other telecoms. Repeatedly, the performance of UTL is superior to that of competitors

1 1 1 1 1 1 1 1 1

2 2 2 2 2 2 2 2 2

3 3 3 3 3 3 3 3 3

4 4 4 4 4 4 4 4 4

5 5 5 5 5 5 5 5 5

51