Article 3

2009 Kamaladevi B. 37

CUSTOMER EXPERIENCE MANAGEMENT IN
RETAILING

Kamaladevi B.

Abstract
Survival of fittest & fastest is the mantra of today’s business game. To compete successfully in this
business era, the retailer must focus on the customer’s buying experience. To manage a customer’s
experience, retailers should understand what “customer experience” actually means. Customer
Experience Management is a strategy that focuses the operations and processes of a business around
the needs of the individual customer. It represents a strategy that results in a win–win value exchange
between the retailer and its customers. The goal of customer experience management is to move
customers from satisfied to loyal and then from loyal to advocate. This paper focuses on the role of
macro factors in the retail environment and how they can shape customer experiences and behaviors.
Several ways (e.g., Brand, Price, Promotion, Supply Chain Management, Location, Advertising,
Packaging & labeling, Service Mix, and Atmosphere) to deliver a superior customer experience are
identified which should result in higher customer satisfaction, more frequent shopping visits, larger
wallet shares, and higher profits.

Kamaladevi B. - Customer Experience Management in Retailing

38 Business Intelligence Journal January

Introduction and customers. This information is feed back
to the company in a self-calibrating system
Just when companies are becoming that (in theory) makes optimal use of every
comfortable with the idea of Customer opportunity to influence customer behavior.
Relationship Management (CRM), a new Obviously these are overlapping
term has emerged: Customer Experience approaches, and both have merit if designed
Management (CEM). The two are similar and applied intelligently. Up until now
in many ways, not least in that they are the spotlight has predominantly been on
both difficult to define. Neither can be CRM, in part because it is technologically
identified with a unique product or a specific impressive (as well as astonishingly
technology; rather, they both comprise a expensive). Unfortunately, CRM has not
group of applications, technologies and been nearly as effective as promised;
analytics that orbit around a central premise. according to some estimates, from 50% to
The premises of CRM and CEM are quite 70% of CRM initiatives fail to achieve their
different, however, and are best understood goals.
when compared side by side. As CRM is more widely used, its
The idea at the center of CRM can weaknesses become more apparent.
be stated in the following way: Every Analysts have become fond of noting that
time a company and a customer interact, there is no R in CRM (some go so far as
the company learns something about to say there is no C, either). The idea of
the customer. By capturing, sharing, a “relationship” with customers seems
analyzing and acting upon this information, hollow: CRM is very good at receiving, but
companies can better manage individual not very good at giving. It asks customers
customer profitability. Customer Experience to provide access and information without
Management’s premise is almost the mirror telling them what they will get in return. It
image. It says that every time a company pigeonholes customers based on past actions
and a customer interact, the customer learns without informing them how to build a more
something about the company. Depending advantageous profile. It prompts customers
upon what is learned from each experience, to become more valuable to the company
customers may alter their behavior in ways without promising greater value from the
that affect their individual profitability. Thus, company.
by managing these experiences, companies Furthermore, while CRM is fairly
can orchestrate more profitable relationships effective at measuring its own successes, it
with their customers. does not provide much information about
In a sense, this is a classic nature vs. its failures. It can record when customers
nurture argument. CRM uses profiling, respond positively to its automated
micro-segmentation and predictive analyses prompting and prodding, but it doesn’t
to identify each customer’s figurative genetic give much insight when customers do not
structure. CRM thus uncovers the preferences respond in the predicted way. CRM is thus
and propensities of customers so that they unable to determine whether failures are
can be nudged towards optimal profitability. the result of faulty assumptions, incorrect
Customer Experience Management, on the information or poor execution. It is also
other hand, looks at the environment. It unable to tell how these “failed” interactions
gathers and analyzes information about the affect the customer relationship; it treats all
dynamics of interactions between companies failures as neutral, when in fact the fabric

Business Intelligence Journal - January, 2010 Vol.3 No.1


of the relationship may have been weakened moving to a new, state-of-the- art warehouse
or undermined by a poorly executed service facility in Delhi.
encounter.
CEM’s strengths lie in precisely the areas * Pizza hut
where CRM is weak. By focusing on the
experiences of customers and how those It recognises frequent callers and the
experiences affect behavior, CEM examines context of their call enabling the customer
both the quality of the company’s execution to be routed to the agent who can best fulfill
and the efficiency of the result. It aligns their requirements, whether its a new order,
customer needs with the company’s ability changes to an existing order or a status
to fulfill those needs, leading to business inquiry on an existing order.
relationships that are mutually beneficial and Pizza Hut operators can access up-to-date
that both parties — company and customer information on its outlets in the catchment
— are motivated to improve. area, enabling them to select the Pizza Hut
store that can fulfill the customer order
Examples of CEM quickest, thereby meeting its commitment
to deliver hot pizza quickly.
* “Best New Airline of the Year Award
2005” – Kingfisher airlines Conceptual Background

Given by Centre for Asia Pacific Aviation Overview of literature on aspects of
for its significant innovation and outstanding customer experience
customer experience.
For the first time in the Indian skies, Theme Study

Kingfisher Airlines offers world-class in- Customer Experience Berry, Carbone, and
Haeckel (2002); Sousa and
flight entertainment with personal video Voss (2006); Gentile, Spiller,
screens for every seat. There’s a wide and Noci (2007), Meyer and
selection of 5 video channels and 10 audio Schwager (2007); Naylor et
al. (2008);
channels available on- board. Also on offer
are extra-wide seats and spacious legroom, Customer Experience Chartrand, and Fitzsimons
Driver Brand (2008); Ofir and Simonson
delicious gourmet meals, international-class (2007); Keller and Lehmann
cabin crew and a whole host of comforts and (2003); Lee and Rhee
delights. Kingfisher Airlines also facilitates (2008); Gauri, Trivedi, and
Grewal (2008).
doorstep delivery of tickets on guest request.
Price Ofir et al. (2008); Kopalle
et al. (2009); Bronnenberg
* Blue Dart Express Limited, South and Wathieu (1996); Wedel
Asia’s largest integrated air express, and Zhang (2004); Dorotic,
courier and logistics company Verhoef, and Bijmolt (2008);
Gauri, Sudhir and Talukdar
(2008); Noble and Phillips
Their focus was on providing customers (2004).
with quality service and an enhanced
customer experience, they continued to
upgrade and expand their infrastructure, by
adding new facilities in Lucknow, Mumbai,
Pune, Ahmedabad, Meerut and Jaipur, and



Theme Study
Major Factors Influencing Consumer
Promotion Ailawadi et al. (2009); Van Buying Decision Process
Heerde and Neslin (2008);
Gijsbrechts, Campo, and
Goossens (2003); Chiou-Wei On the consumer front, many people’s
and Inman (2008); Lwin, savings have evaporated in the year 2008,
Stanaland, and Miyazaki
primarily because of the precipitous decline
(2008).
in stock prices, suffering real estate markets,
Supply Chain Garg et al. (2005); Dant
Management et al. (2009); Burkle and and increasing unemployment. Consumers
Posselt (2009), Xu and Kim thus take greater care in what they buy,
(2008), Neslin et al. (2006); where they buy, and how much they will
Patricio, Fisk, and Falcao e
Cunha (2008); Sousa and
pay. Although hardly a sufficient silver
Voss (2006); Verhoef, Neslin lining, researchers now have the opportunity
and Vroomen (2007). to examine more thoroughly many of
Location Durvasula, Sharma, and the issues discussed in the remainder of
Andrews (2002); Ghosh and this introduction in a new light. How do
Craig (2001); Gauri, Trivedi,
and Grewal (2008); Xu and consumers react differently to brand, price,
Kim (2008). promotions, supply chain management,
Advertising Chaudhuri & Buck (2005); location, advertising, packaging, labeling,
Petty & Cacioppo (2003); service mix & atmosphere in an economic
Janoschka (2004); Fisher,
Gainer, and Bristor (1997);
crisis? Can retailers take certain actions to
Goff et al. (1997). increase patronage, both before and during
Packaging & labeling Koirala (2005); Kotler and a shopping experience? Does consumer
Armstrong (2005); Young cherry picking change when consumers
(2003); Jugger (1999); Luo face more difficult economic trade-offs?
(2005); Wakefield and Baker
(1998); White and Dahl Will consumers continue to embrace more
(2006). expensive and higher quality private-label
Service Mix Oliver (2001); Parasuraman, merchandise? How should retailers alter
Zeithaml, and Berry (2004); their assortments? Should they continue
Baker et al. (2002); Beatty et
to experiment with new categories that
al. (1996); Folkes and Patrick
(2003); Meuter et al. (2005); previously appeared only in stores with
Van Dolen, Dabholkar, and different retail formats? Will price elasticities
de Ruyter (2007); Weijters et for substitute and complementary purchases
al. (2007).
differ during economic downturns? What
Atmosphere Baron, Harris and Harris
(2001); Kozinets et al (2002);
innovative strategies might multichannel
Schmitt (1999); Baker et al. and online retailers use to gain greater shares
(2002); Kaltcheva and Weitz of wallet? And how might retailers adjust
(2006); Wakefield and Baker
their global sourcing strategies and the way
(1998).
they work with and develop relationships
Figure 1. Overview of literature on aspects of with their global vendors? These questions
customer experience and many more depend on the major
economic issues that confront consumers
and the retailers they serve.



addition, Ofir and Simonson (2007) found

Recognition

Information

Evaluation

Purchase

Purchase
Factors

Search
that customer expectations (when stated prior
Macro

Need

Post
to a service encounter) have a significant
effect on post purchase evaluations of the
Brand x x x x
shopping experience and the firm. This
Price x x x x
suggests that customer brand perceptions (of
Promotion x
the retailer), when primed prior to shopping
Supply Chain experience, might significantly influence the
x x x
Management
customer’s experience. It is also important
Location x x x x
to consider the reinforcing effects of the
Advertising x x x
customer’s experience and the brand over
Packaging &
labeling
x x time. Prior research suggests that customer
experience has a significant influence on
Service Mix x x x x
the customer’s overall perception of the
Atmosphere x
brand. In addition, Keller and Lehmann
Figure 2. Macro Factors Influencing Consumer (2003) propose that the customer mindset
Buying Decision Process (e.g., awareness, associations, attitude,
attachment and activity) is the key driver of
The Brand Experience brand performance (e.g., price premiums,
price elasticities, market share, expansion
The customer comes to a retailing success).
environment with perceptions about two
types of brands: the retail brand (e.g., Research Discussion
Victoria’s Secret, Starbucks, Wal-Mart,
Macy’s, Best Buy) and the manufacturer or There is much yet to learn about the
service brand that is sold in the retail stores influence of brand perceptions on the
(e.g., Verizon, Ralph Lauren, Tide, Dell, customer’s retail experience. There may
private label brand). Here, the discussion is be asymmetric effects of brand perceptions
about the retail brand customer experience, on customer experience. Consumers whose
although the ideas put forth below could be first impression of a brand is negative can
investigated in relation to the manufacturer be influenced by providing them with
or service brand as well. non-comparative information, whereas
consumers with positive first impressions of
Background a brand are influenced more by comparative
information. This suggests an area that is ripe
Customers’ brand perceptions may for future research—namely, understanding
influence their customer experience. Recent how a customer’s initial perceptions of a
research has begun to investigate new aspects retail brand may influence distinct elements
of this relationship. Specifically, Fitzsimons, of the customer’s subsequent experiences
Chartrand, and Fitzsimons (2008) found with the brand, and how those experiences
that the type of brand and consumers’ in turn may influence brand perceptions in
perceptions of the brand can influence their the future. In addition, positive customer
behavior. For example, consumers primed brand perceptions may influence customer
to think of Apple behave more creatively experiences differently than negative
than consumers primed to think of IBM. In customer brand perceptions. As such, future



research could also investigate the extent to because retailers stock thousands of items,
which strong (positive or negative) brand most of which are irrelevant to any given
perceptions may have a significant effect on consumer. Furthermore, because different
the customer’s experience. In addition to the consumers buy different market baskets, a
direct effects of customer brand perceptions category or store that one customer perceives
on customer experience, future research as high priced may seem low priced to another.
could examine the extent to which customer Research suggests that retailers therefore
brand perceptions may act as a moderator in should carry some high-priced merchandise
influencing the effects of other determinants to extract rents from loyal customers and
of customer experience. For example, some low-priced merchandise to attract new
might brand perceptions (either retail or ones, but more work is needed in this area.
manufacturer) moderate the effects of social Moreover, the emergence of discount stores
environment, self-service technology, or carrying fashion products and luxury brands
price on customer experience? can affect pricing in traditional retail chains
(Kopalle et al. 2009).
The Price Experience Previous pricing research regarding
private labels versus national brands
A lot rides on how a retailer sets its suggests asymmetric sales effects, such
prices. The three other P’s create value for that higher price/higher quality brands
the seller; the fourth P of price captures steal sales from lower price/lower quality
value. In addition, this is the only P that brands when the higher tier reduces its price
earns revenue for the retailer. When (Blattberg and Wisniewski 1989). In various
retailers price a product or service too high, examinations of the different features
consumers view it as a poor value and will of the private label/national brand and
not buy. A price set too low may signal low price/sales interactions, asymmetric effects
quality, poor performance, or other negative predominate (Allenby and Rossi 1991;
attributes about the product or service. Bronnenberg and Wathieu 1996; Pauwels
Although setting the “right” price is clearly and Srinivasan 2004; Sethuraman and
an important retailing task, it is often treated Srinivasan 2002; Wedel and Zhang 2004).
as an afterthought, partly because it remains These studies again focus on grocery and
the least understood and therefore most drugstore formats, in which private-label
difficult to manage task. prices generally are significantly lower than
those of national brands. Further research
Background should investigate the pricing aspects
of private labels versus national brands
Recent research demonstrates that a using premium private labels (Kumar and
consumer’s store price image likely results Steenkamp 2007) and durable and fashion
from a numerosity heuristic, such that the goods.
greater the number of low priced products at
a store, the lower is the price image among Research Discussion
knowledgeable consumers (Ofir et al. 2008).
Kopalle et al. (2009) concentrate on the A popular pricing strategy adopts
interaction between pricing and competitive loss leaders, items priced at or below the
effects in retailing, noting the difficulty of retailer’s cost. The preponderance of loss
research into category and store level prices, leader activity in retail stores believes the



gaps in our knowledge about its impact minor impact on retailer profits; they also
on traffic, sales, and profits. Although conclude that not all promotions have a
store traffic increases and sales generally positive revenue impact for retailers though.
increase for items used as loss leaders, these Rather, the profit impact is decidedly mixed.
loss leaders may not influence the sales
of other, non-promoted items, and their Background
impact on profitability is questionable. A
more definitive understanding of how loss Literature on integrated marketing
leaders affect the sales of non-promoted communications is vast, but research
items and profitability would be very useful. pertaining to retailing is very specific.
Research on online and multi channel Ailawadi et al. (2009) logically organize
pricing takes a prominent place in modern this body of research into manufacturer
academic journals, yet limited study promotion decisions, as it relates to retailers,
addresses online pricing strategies. Much and retailer promotion, the manufacturer
of this limited research focuses on customer primarily is interested in using promotions
reactions to different pricing strategies and to enhance the performance of its brands,
shipping fees, the role of infomediaries, whereas the retailer is interested in
advertising revenues, channel interactions, enhancing their own performance (Van
and personalized pricing schedules. Yet Heerde and Neslin 2008). Significant
some of the issues described herein and research on trade promotions centers on the
examined in brick-and-mortar store settings extent of the monetary savings passed on to
would be useful pursuits in the virtual and consumers. Some controversy surrounds the
multichannel world. For example, how might impact of pass-through trade promotions;
online strategies differ from in-store strate- specifically, does a trade promotion from
gies for similar merchandise and services? one manufacturer in a given period influence
Should they differ across channels? Do the promotion of another manufacturer’s
consumers behave differently online? What brand in the same period (e.g., Moorthy
competitive behavior effects exist? 2005)? The accounting records pertaining
to trade promotions remain inadequate for
The Promotion Experience deriving a definite answer (Parvatiyar et
al. 2005). Ailawadi et al. (2009) therefore
Consumer promotions also take several suggest further research should examine
forms, including price promotions, loss how different types of trade promotions
leaders, and in-store displays. Meta get funded, passed through, and perform. A
analyses show that the immediate increase plethora of research investigates the impact
in sales of a promoted item is substantial. of different types of promotions on sales and
However, brand switching as a result of profits, including the composition of flyers
consumer promotions is closer to 30–45 (Gijsbrechts, Campo, and Goossens 2003).
percent, far less than previous estimates
of approximately 80 percent. A consumer Research Discussion
promotion, such as a loss leader, on one
item should increase sales of other items Although most retail promotions
and overall profits, yet empirical research emphasize price, studies often consider
in this area is mixed. Consumer “cherry them in isolation. Yet price promotion
picking” for special prices has a relatively coordination is a key driver of retailer



profitability. Retailers and researchers alike Background
need more information about the impact of
coordinating price promotions within and Ganesan et al. (2009) examine several
across categories and across retail formats important supply chain issues, including
within a chain, such as Wal-Mart and global sourcing practices, multichannel
Neighborhood Markets. The National brands routes to market, and relationship-based
should be promoted more than private-label innovation. These authors note that with
brands, because the national brands attract private-label merchandise, as opposed to
customers’ attention and attract them to the national brands, the burden of ensuring that
store. Yet retailers promote private-label merchandise production adopts corporate
merchandise, because they generally earn socially responsible (CSR) policies, as well
higher margins on private labels. as quality and safety control issues, rest
Although the customer knows much with the retailer. And most of this sourcing
about the sales bump caused by consumer is done globally today. Academic research
promotions, they have a poorer understanding at the nexus of global sourcing and CSR is
of the profit impact. Retailers’ increased somewhat sparse (e.g., Wagner, Lutz and
emphasis on private-label merchandise Weitz 2008); more research might examine
demands more work investigating the the circumstances in which customers will
effectiveness of private-label promotions. pay more for merchandise produced in a
It also seems important to identify win– socially responsible manner, particularly
win promotions for manufacturers and during economic downturns. Ganesan et
retailers. Because many purchase decisions al. (2009) also examine several issues for
take place in brick and mortar stores and hierarchical multichannel relationships, in
as new methods for reaching consumers in which both manufacturers and retailers sell
stores emerge, more research should assess through multiple channels to consumers.
the effectiveness of in-store promotions to As hierarchical multichannel relationships
customers. develop, conflict can occur between the
channel members, which must compete
The Supply Chain Management with one another. Retailers can respond to
Experience this competitive situation by taking direct
action, such as refusing to sell products that
Most of the researchers centers on what the supplier sells directly (Schoenbachler
happens at the front-end of the retail store, and Gordan 2002), or looking for alternative
supply chain management occurs at the ways to service customers (Vinhas and
back end. For decades, retail supply chain Anderson 2005). A more positive approach
and logistics issues seemed somehow less would pursue a channel structure with mutual
important than other activities such as benefits, such as profit sharing (Neslin et
promotion, pricing, or customer service. al. 2006; Yan 2008). Ganesan et al. (2009)
But this erroneous perception no longer therefore suggest that further research
exists. Supply chain issues, from both the should attempt to increase our understanding
more managerial partnering side and the of how hierarchical multichannel structures
more technical operations side, have proven affect the participants’ relationships, their
important sources of competitive advantage relative power, and their performance.
for many retailers, particularly low-cost
providers such as Wal-Mart and Zara.



Research Discussion has major ramifications for price, promotion,
and merchandising decisions.
Most recent retailing innovation
initiatives seem to come from sustainability Background
initiatives designed to improve the
environment, healthcare, diversity, and Durvasula, Sharma, and Andrews
sourcing. It investigates how relationships (2002) recommend STORELOC, a store
between retailers and their suppliers may location model that incorporates managerial
facilitate product or process innovations. judgment data in addition to consumer
Specifically, when supply chain partners data. Because key managers participate
exchange information, the relationship in the process, their buy into the outputs
grows stronger, and the likelihood that of the location model increase, namely,
valuable and important information gets the identification of the best retail sites for
exchanged increases. However, the strength expansion. The key store attributes and
of relational ties may play a more important their relationships with relative competitive
role for process than for product innovations. strength can be estimated using varied
When retailers have supply chain partners methods in this model, including conjoint or
with diverse, rather than complementary, logit analysis. Another interesting location
capabilities and resources, they are more problem involves understanding how to
likely to innovate, because the information expand a franchisor distribution system
acquired from these varied sources differs. optimally, because in some cases, that
Finally, asymmetrical dependence between which is best for the franchisor may be at
the retailer and its supply chain partners odds with the preferences of the individual
should negatively affect innovations, franchisees. Ghosh and Craig (2001)
because the weaker party guards against develop FRANSYS, a franchise distribution
exploitation, while the stronger party tends system location model, to address this kind
to exploit opportunities without worrying of problem. Another important issue related
about negative partner perceptions. to locating franchises concerns the choice
between multi unit franchisees (MUF)
The Location Experience versus single unit franchisees (SUF) since
the modal franchisee in the US is no longer
Retailing academics and practitioners the stereotypic mom and pop single unit
seem always to emphasize “location, operator, but a mini chain operator (Garg et
location, location” as the key to success. An al. 2005; Kaufmann and Dant 1996). Some
important research advance could consider recent evidence suggests that even though
the role of travel time on consumers’ choices MUF may be preferred by franchisors
of retail formats and the related retailing for reasons of rapid system growth,
implications because consumers value their system-wide adaptation to competition,
time, researchers should investigate what minimization of horizontal free-riding, and
it might take, in terms of price savings and the strategic delegation of price or quantity
deals, to attract consumers to a factory outlet choices to franchisees, it is the SUF that
store (normally located some distance away) characterize their dyadic relationships with
rather than a similar store in a conveniently their franchisors as more relational and
located mall. The location decision likely cooperative as compared to their MUF
counterparts (Dant et al. 2009).



Research Discussion the growth process, marketers recognized
that the Internet was a medium for reaching
The age of these models clearly shows, millions of potential customers. Since
however, the need for more research into then, marketers have adapted value based
location issues. With the greater availability advertising strategies to the Internet.
of excellent geographical information
systems (GIS), rich data are easily accessible. Background
For example, GIS data supplemented with
appropriate panel consumption data could Traditional consumer behavior literature
enable empirical tests of a host of location would suggest that intense product
models. More recent research highlights the information is vital for high involvement
role of two key location factors: proximity product web sites, while entertainment
to customers (measured in travel time) and content may be fit for low involvement
proximity to other stores or agglomeration. product sites (Chaudhuri & Buck, 2005;
For example, grocery stores appear to benefit Petty & Cacioppo, 2003). Additionally,
from agglomeration with discount stores, but the primary reason for distinguishing
Wal-Mart discount stores suffer reductions between high and low product involvement
in revenues when they agglomerate with is that habit, intuition and convenience
grocery stores. Prior research recognizes sometimes guide the actions of consumers
several different retail formats, according to rather than rational considerations
pricing (e.g., everyday low price vs. high/ (Lamb, 1996). There are various types
low promotions), merchandise (wide of online advertising, including “emails,
vs. narrow) and Internet presence (bricks, newsletters, screensavers, e-sponsoring,
clicks, or bricks and clicks). Insights from asynchronous and synchronous chat groups,
this area of inquiry suggest that bricks still infomercials, online games, and web sites”
hold an advantage over clicks and are likely (Janoschka, 2004). Similar to other types of
to dominate in certain categories, such as advertisements, web ads are paid or unpaid
high end apparel and jewelry. Research form of communication aim at informing
also shows that consumers may use the the existence of a product or service and/or
different retail formats for different stages persuading consumers to take actions. And
of the consumer decision process, such that Janoschka (2004) found one major difference
the online store might be a great way to is that web ads are hyperlinks in nature,
compare alternatives, but brick-and-mortar which enable activation by their users. They
stores seem more suitable for purchases. A not only contain promotional messages on
systematic understanding of the role of these themselves which tries to attract consumers’
different formats in the consumer decision attention, but also embedded with hyperlinks
process and how retailers can best optimize and then point to a much greater information
their multiple channels would be a fruitful pool, such as the corporation’s website.
area of inquiry.
Research Discussion
The Advertising Experience
The global online advertising industry
Exponential growth in Internet hosts has witnessed the rapid emergence of social
and personal computer adoption has led to networking sites and is growing rapidly
dramatic increases in online activity. During despite the economic slowdown. The



growth of this industry is being driven by (e.g., molding society’s material wants) and
increasing internet users, rising awareness media content (e.g., the information content
and growing broadband subscription rate of ads). Advertiser concerns include ad
and ecommerce, which is playing a key role agency concerns (e.g., self-regulation or the
in this industry. In coming years online Ad ethical codes of ad agencies) and the voice/
spending is expected to overtake the TV tone of the ad (e.g., corporate advocacy or
advertising market. comparative ads). Finally, legal concerns
The industry is divided into various include the use of deception, advertising to
segments but mainly three segments (search, children, and public service announcements
display and classifieds) represent the whole (e.g., anti-drug or anti-cigarette ads).
industry. Rich media is a new segment
recently entered in the online Ad industry, The Packaging & Labeling
caters to a small portion of the market Experience
whereas search, display and classifieds
serves almost 80% of the online Ad industry. Packaging plays a major role when
There are various revenue models, out of products are purchased. After all, it is the
which pay-per-impression and pay-per click first thing seen before making purchase
are the most common among others. choices and it is widely regarded that over
In terms of online Ad spending by 50 per cent of purchasing decisions are made
geography, UK, Netherlands and the pan- at the shelf, or point of purchase. Therefore,
European sector lead the market but in packaging which creates differentiation
terms of internet Ad budget allocation and identity in the relatively homogenous
France, Germany, Spain and Italy have consumer packaged goods industry is
a strong presence. United States is the therefore highly important.
most developed market for the advertising
industry. In Canada, internet advertising Background
accounted for almost one third of total
advertising market. As a fifth ‘p’ of marketing, packaging
The areas for future research are discussed refers to the activities of designing and
here. The thirty-three items suggested by producing the container or wrapper for
the fourteen academicians may be grouped a product. It may be primary, secondary,
into types of ads, types of appeals, larger and shipping to perform the objectives as
effects on society, advertiser concerns, and containment, protection, identification,
legal concerns. Types of ads include ads for communication, promotion and product
legal vices (e.g., ads for tobacco or alcoholic differentiation. Good packaging also
beverages), ads for sex-related products (e.g., provide information based on truth, it must
condom ads or ads for abortion services), be economical, attractive, convenient,
and ads for health care and professional protective and transparent (Koirala, 2005).
services (e.g., ads for personal care and A label is a simple tag attached to a product
hygiene products or ads for professional or an elaborated designed graphic that is
legal services). Types of appeals include the part of the package. It identifies, grade,
the use of questionable appeals (e.g., fear or scribe and promote the product by providing
negative appeals) and stereotypical appeals the information to the buyer. It may be brand
(e.g., sexual or racial stereotyping). Larger labels, grade labels and descriptive labels
effects on society include value formation (Kotler and Armstrong 2005). It is vitally



important that when researching package incidents. Packaging is integral to boosting
design that it is measured in the context perceptions of safety and will therefore be
within which it is usually found (Young, an important part of more concerted efforts
2003). “The ‘right’ packaging solution is to regain consumer trust going forward.
different for each brand. What is important
is that it works when placed next to the The Service Mix Experience
competition on the shelf” (Jugger, 1999).
Customer service is the ability of an
Research Discussion organization to constantly and consistently
give the customer what they want and need.
Packaging has a better reach than
advertising does, and can set a brand apart Background
from its competitors. It promotes and
reinforces the purchase decision not only at Customer satisfaction is a key consequence
the point of purchase, but also every time of service quality and can determine the
the product is used. Packaging in different long-term success of a service organization
serving sizes can extend a product into (Parasuraman, Zeithaml, and Berry 2004). In
new target markets or help to overcome general, customer satisfaction is affected by
cost barriers. Packaging can even drive customer expectation or anticipation prior to
the brand choice (especially in the context receiving a service and can be approximated
of children’s products). As the market by the following equation: Customer
becomes more competitive and shelf space Satisfaction = Perception of Performance –
is at a premium, products need to be able Expectations (Oliver 2000). When translated
to stand out from the crowd and packaging to services, a distinction between service
needs to provide more than just functional quality and customer satisfaction needs to
benefits and information. Under time be made (Parasuraman, Zeithaml, and Berry
pressure and in low involvement purchases, 2004). Furthermore, one must differentiate
less time is spent looking at the detail and between service expectations and service
information provided on packaging – this perceptions.
is especially true in the FMCG category. While service expectations are a
Research into packaging has found that combination of a customer’s predictions
different packaging cues impact how a about what is likely to happen during a
product is perceived. Often the packaging service transaction as well as the wants
is perceived to be part of the product and it and desires of that customer, service
can be difficult for consumers to separate perceptions can be defined as a customer’s
the two (the concept of gestalt). Aspects global judgments or attitudes, which relate
such as packaging colour, typography, to the superiority of a service (Oliver 2001;
illustrations and graphics can influence how Parasuraman, Zeithaml, and Berry 2004).
a product is perceived. Labeling should not
be unnecessarily confusing or misleading in Research discussion
order to hide the poor nutritional/ingredient
profile of certain products. The decrease in A lot of companies are so preoccupied
consumer confidence in food safety is not a with day-to-day operations, but if they
result of the number of recalls, but instead the don’t have customers for life we’re going
high-profile, long-lasting nature of the safety to go out of business. Many service



organizations, such as hotels, retail stores, Schmitt 1999). Sharma and Stafford (2000)
and airlines, invest substantially in their suggest that customers have a higher need
physical plant to provide a superior service to affiliate with salespeople working in nicer
experience. However, little is known about retail environments or ‘prestige ambience
how to design a servicescape to enhance the environments’– which should lead to an
consumption experience. For example, it increase in the perceived level of credibility
may be unsurprising to learn that research for the salesperson, and subsequently a
has shown that pleasant music, compared higher likelihood to purchase. However, the
with less pleasant music, is associated ‘prestige’ and ‘discount’ ambience stores
with longer consumption times, shorter have been hard to define in the literature,
time perceptions, less negative emotional with most researchers testing atmospherics
reactions to waiting, more favorable attitudes in isolation, and not at a holistic perspective
toward the physical environment, more (Turley and Milliman, 2000).
positive attitudes toward service providers,
and more favorable customer assessments, Research Discussion
purchase intentions, and behavior.
The future research should examine
The Atmosphere Experience retail store environments where customer-
salesperson relationships may exist
Consumer spending behavior can to increase understanding in this area.
be significantly influenced by the store Furthermore, customer service quality
atmosphere and the customer mood. measures typically given when examining low
Customers require a store layout that sales interaction stores should be compiled
maximizes the number of products seen in conjunction with relationship selling and
within the context of a customers’ need for other measures that influence the customer
the product. Customers who experience experience to understand if relationship
a form of personal control, whether in selling is necessary in these retail settings.
orienting themselves to the store section Store atmospherics did have a significant
they need to go to or in finding the products impact on customer expectations of the
they want, generally feel good about the retail salesperson, but in behaviour only. A
store. Good feelings lead to more purchases, higher perceived store ambience resulted in
especially if products are presented within a higher expectations of a retail salesperson’s
display that shows the potential usefulness behaviour, but a higher store atmosphere did
of the product for them. not result in higher expectations of a retail
salesperson’s credibility. Store atmospherics
Background manipulate customer’s expectations of the
retail salesperson behaviour, subsequently
Store atmospherics have been at the affecting customer satisfaction if the retail
centre of numerous discussions recently salesperson does not match expectations.
as a means of creating a pleasurable Future research will be directed into
consumption experience; engaging and the exploration of characteristics of the
luring customers, with hopes that they salesperson and store atmospherics to
will increase their likelihood to purchase, determine the optimal blend for certain store
revisit and recommend to others (Baron, environments.
Harris and Harris 2001; Kozinets et al 2002;



10 Best Practices to make the 3. Focusing on the most strategically
Successful CEM important customers

1. Successful deployment requires the The starting point for the work is
active and continuing involvement of collecting customer data to inform the
leadership definition of a promise and design the
new experience. The most frequent client
Execution is the hardest part of creating response to this suggestion is “We already
a customer experience because in order to have lots of customer data and research so
deploy successfully they have to mobilize you don’t need to bother.” In reality whilst
employees at all levels and align competing organizations undertake customer research
agendas, functions and executives. This is and collect mountains of data, relatively
not an easy task. Perhaps that is why that few know who their most profitable (not
so many of the exemplars of Customer largest) customers are. The fact is that a
Experience tend to be organizations led by few customers will typically represent the
passionate founders or CEOs that see it as a significant proportion of the profit and these
primary source of differentiation. Think of are the ones to focus improvement efforts
Starbucks, Amazon, Southwest Airlines or on.
Virgin and inevitably you quickly think of
Howard Schultz, Jeff Bezos, Herb Kelleher 4. Finding out what these customers
and Richard Branson. CEM can work just as truly value
successfully and achieve startling results in
large mature corporates too, but the need for Knowing who are the most profitable
leadership is even greater. customers is all very well, but if they do
not know what these customers value and
2. Ensuring cross-functional the three or four most important attributes
ownership is vital which drive their intention to repurchase,
cannot influence their behaviour. Without
If the CEO or President recognizes that the answers to these questions they may
it will take more than rhetoric to make a have data, but they do not have insight.
difference, the next common mistake is A key component of a branded customer
asking the Marketing VP, HR Director or experience is being differentiated in a
Customer Service Executive to “fix the way that is valuable to target customers.
problem.” The brand and the customer A key component of a branded customer
experience must be owned collectively experience is being differentiated in a way
by the senior management team. Each that is valuable to target customers.
function has its particular part to play, but
to be successful these three functions must 5. Being clear about what we stand
operate as what we refer to as a “Triad” to for
optimise resources, efforts and budgets to
create an organization-wide strategy for In 2001, UK-based bank Barclays aired a
delivering the brand. television advertisement called “Big Idea.”
It was a beautifully crafted ad featuring
Anthony Hopkins as a big shot businessman
with a big house, a big car and a big meeting



to attend. The tagline was, “A big world training is bad. In fact there are some very
needs a big bank.” The ad received a bronze good off-the-shelf programmes that really
award at that year’s British Television help to improve customer-facing skills and
Advertising Awards, but customers replied make service more consistent.
with a less than enthusiastic, “big deal!” A key ingredient of successful branded
The ad simply reinforced common customer training is to build executives into the process
preconceptions about large banks that they so that they have an active role in cascading
don’t care about the average person and are the message. Leaders have been trained as
interested only in making as much money as champions of customer experience and are
they can. leading its implementation.
In the Polish market, 55 percent of
executives feel that they have “defined a 8. Designing CEM before installing
brand promise that differentiates us in the CRM systems
eyes of their target customers” but only
35 percent “have mapped their customer At the peak of CRM hype, expenditure
touchline to determine the key points of on CRM systems was estimated to have
contact their customers have with us and increased from $20 billion in 2001 to $46
how their promise should be delivered at billion in 2004. Yet one survey by Gartner
each.” This omission is quite common in research estimated that 55 percent of CRM
their experience and takes us on to our next systems drove customers away and diluted
point. Making a promise to the customers is earnings. This is because most CRM
one thing, delivering it quite another. systems are installed without any thought
about how they will be used to add value
6. Delivering the promise at every for the customer. These powerful systems
touch point allow companies to collect knowledge
about the customer that can be used to offer
This is particularly true in today’s them products and services tuned to their
economy. With the pressure on sales and particular needs and preferences. However,
costs they have to make sure that every for many customers the acronym CRM
effort is made delivering those things that stands for “Constantly Receiving Mail-
customers value rather than things that shots” since many organizations (and banks
they don’t. This means having an intimate are the worst) use them as a blunt instrument
understanding of the customer experience to stalk, rather than woo, the customer
and being intentional about designing it to through junk mail. Some software providers
deliver value at the key touch-points. are now designing their products to support
the customer experience and build CEM
7. Providing branded training to functionality into their call-centre products
ensure that employees understand so that the agent is provided with all the
the brand story information, tools and measures necessary
to deliver the desired experience.
Many organizations provide customer
service training yet few are differentiated in
the service they provide. The reason is that
“vanilla” training creates “vanilla” service.
This is not to say that all generic service



9. Measuring the customer appropriate measurement and rewards then
experience it is unlikely to happen.

Peter Drucker’s maxim that “what gets Conclusion
measured gets managed” is still true today.
Yet most organisations focus exclusively Customer Experience Management
on end-results measures. Market share, is not, however, simply an old idea in a
profitability and EPS growth are all vital new wrapper. In recent years a number of
measures of business performance but they fundamental changes have occurred in
are all lagging indicators—the result of the business environment that have led to
differentiation, customer loyalty and brand the emergence of Customer Experience
preference. The answer is to move up-stream Management as both a strategic discipline
and measure and manage those activities that and a fast-growing industry, complete with
deliver the required customer experience a wide array of tools and solution sets. The
and drive customer advocacy. Market share, changes have been fueled by technological
profitability and EPS growth are all vital advancements, which have expanded the
measures of business performance but they range of services available to customers, and
are all lagging indicators. simultaneously led to escalating customer
Yet over 51 percent of the executives expectations. The result is that there are
the organization surveyed reported that their now more services and products available
organization did not have a scorecard to than at any time in the past, yet customer
measure the customer experience. The mean satisfaction are on a downward slide.
score for the statement “We have a scorecard Customer Experience Management can
of indicators that provide leaders with help reverse that slide by providing efficient
objective and timely feedback on how well business tools that make the interactions
we are delivering against our promise” was between companies and customers more
the lowest achieved in the survey scoring at rewarding for both parties.
just 4.6 on their ten-point scale. Hope this article provide a broad-based
overview of the various domains (e.g.,
10. Aligning the organization with Brand, Price, Promotion, Supply Chain
the customer experience Management, Location, Advertising,
Packaging & labeling, Service Mix
One of the lowest scoring items in the and Atmosphere) of the retail customer
organization survey was “Leaders measure experience and in turn provide a research
and monitor the quality of the customer catalyst for a plethora of important retailing
experience.” As many respondents disagreed issues. Keeping customers in the next few
with this statement as agreed with it. This years will be even more important than
poor result was reinforced by the fact that making a sale. Shoppers are getting used to
only 47 percent of respondents agreed those 50–75 percent off sale signs, and that
with the statement “Our leaders reward is bad news for merchants who worry they
employees who put customers first.” The will also have to quickly slash prices on
fact is that unless there is a link between merchandise to attract customers. Retailers
the desired business results, the customer will have to engage their customers every
experience necessary to achieve it and day to create the long-term loyal advocates
necessary to compete in these challenging



times. The most important thing is to be A Risk-Based Explanation,” Journal of
able to identify ways to hold on to profitable Retailing, 84 (1), 39–47.
customers. 10 Best Practices to make the
Successful CEM have shown in this article Fay, Scott (2008), “Selling an Opaque
to provide a great customer experience for Product Through an Intermediary: The
retail shoppers. Case of Disguising One’s Product,”
Journal of Retailing, 84 (1), 59–75.
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