314 Int. J. Services and Operations Management, Vol. 11, No.

3, 2012

Critical success factors for experiential marketing:

evidences from the Indian hospitality industry

Saranjit Gupta, Samrat Dasgupta and

Ranjan Chaudhuri*
National Institute of Industrial Engineering,
Mumbai, 400087, India
E-mail: [email protected]
E-mail: [email protected]
E-mail: [email protected]
*Corresponding author

Abstract: With the continuous proliferation of communication media and

ever-dynamic consumer expectations, the fight for capturing a prospect’s
mind-space has seen a radical shift from product/service orientation to a
customer-experience driven approach. In the cluttered space of brands and
advertising noise, consumer engagement is turning out to be the winning
formula. The traditional product-centric positioning needs to be necessarily
complemented by emotional buying triggers encountered during the ‘moments
of truth’ to lead to consumer action and advocacy.
This paper, based on existing literature and a primary research conducted on
17 luxury restaurants and over 200 customers and service staff in and around
Mumbai, identifies seven essential factors (physical ambience, food quality,
interaction with service staff, interaction with other customers, price, service
quality and theme) contributing to a positive customer experience. The study
examines the contribution of the service elements to customer perceived value
and explores the service gap model for delivering experiential value across
restaurants. Using these insights on the psyche of the Indian consumer and his
response to experiential marketing; the paper helps propose an indicative
framework to successfully launch and sustain experiential marketing from the
perspective of the Indian hospitality industry.

Keywords: experiential value; customer satisfaction; behavioural intention;

service gap model; price reasonability; India.

Reference to this paper should be made as follows: Gupta, S., Dasgupta, S. and
Chaudhuri, R. (2012) ‘Critical success factors for experiential marketing:
evidences from the Indian hospitality industry’, Int. J. Services and Operations
Management, Vol. 11, No. 3, pp. 314–334.

Biographical notes: Saranjit Gupta is a student of PGDIM at National Institute

of Industrial Engineering, Mumbai.

Samrat Dasgupta is a student of PGDIM at National Institute of Industrial

Engineering, Mumbai.

Ranjan Chaudhuri is an Assistant Professor in Marketing at National Institute

of Industrial Engineering (NITIE), Mumbai. He also served as a faculty in the
Department of Management Studies, Indian Institute of Technology, Delhi. He
has over ten years of industrial, teaching and research experience. He has
presented research papers and case studies in international symposiums in the

Copyright © 2012 Inderscience Enterprises Ltd.

 Critical success factors for experiential marketing 315

USA, Japan, Thailand, Russia, Pakistan and UAE. He is the recipient of

Ramaswamy P. Aiyar Best Young Teacher Award 2009, AIMS International
Management Researcher of the Year 2010, Dewang Mehta Best Teacher in
Retail Management 2010 and Dewang Mehta Best Teacher in Marketing
Management 2009. He is also the recipient of Jawaharlal Nehru Memorial
Award, 2001 for best published paper in the Journal of the Institution of
Engineers (India), Interdisciplinary Division. He has authored/co-authored
more than 70 publications in refereed national and international journals.

1 Introduction

Experiential marketing needs to be essentially understood as a concept, a philosophy

which aims to provide holistic experiences to consumers at the right place and time. It
involves engagement – appealing to consumers rationally to elicit logical thought, and
simultaneously connecting with them emotionally through personal and meaningful
experiences. Customers usually start evaluating their dining experience at a restaurant as
soon as they interact with the service-scape and with the service staff of the restaurant
(Lin, 2010). Service encounter, also referred to as that ‘moment of truth’, can be defined
as any interaction that the customer may have with the service organisation (i.e., service
staff, other customers consuming in the organisation, and service-scape) throughout his
or her entire experience at the restaurant (Fitzsimmons and Fitzsimmons, 2008) that
shapes his perception. Academicians and scholars have in the past explored different
perspectives of how customer satisfaction is achieved by meeting customer needs the
experiential way. However, consumer dining experiences and its significance in the
creation of customer value from the point of view of the Indian hospitality industry have
seldom been studied empirically. Moreover, previous studies linking the effect of
service-scape to customer emotions and satisfaction have been conducted mainly in a
laboratory setting (Mehrabian and Russell, 1978; Turley and Chebat, 2002; Lin, 2010).
To further generalise and validate these prior findings, it is important to test these effects
in a real-life setting, especially from the perspective of the Indian consumer.
Our present study on the use of experiential marketing in the Indian hospitality
industry comprises three distinct parts. Firstly, the probable factors influencing
experiential value from the customer’s perspective have been identified through a
combination of reviewing existing literature and primary research which have been
narrowed down to a set of six potentially significant parameters through factor analysis.
Secondly, the contribution of each of these identified factors towards the experiential
value proposition of a restaurant has been explored and subsequently the impact of the
aggregated experiential value on customer satisfaction has been estimated. Moreover,
we have analysed the impact of the satisfaction derived through the experience
on the behavioural intention of a customer (repeat visit and desire to spread positive
word-of-mouth) which directly influences the ROI on the experiential marketing
initiative undertaken by the restaurant. In the final section, we have developed a
framework to identify the gaps existing in the service model of Indian restaurants in light
of the critical success factors identified previously which initiates plausible action points
though which the experiential marketing initiative of a restaurant can be further
strengthened and sustained to maximise customer satisfaction and engagement.
316 S. Gupta et al.

2 Literature review

2.1 Importance of service quality

Service quality is an issue that has engaged academics and practitioners alike, leading to
substantial debate over its conceptualisation. The concept is often defined as the overall
difference between a customer’s expectations and perceptions of the service experience
(Parasuraman and Zeithaml, 1988; Grönroos, 1984). The concept of service quality
assumes paramount importance as far as the dining experience in a restaurant is
concerned. Hospitality as a commercial activity is a special kind of relationship between
service providers and customers. In this relationship, the host understands the needs and
wants of the customer and gives pleasure to the customers in order that they enhance
their needs and feel comfortable (Uzkurt, 2010). The hospitality industry simply cannot
survive without delivering satisfied quality of their services. Concepts such as
employees’ empowerment, ownership, continuous improvement, together with the
systematic implementation of quantitative methods build the organisational basis for
achieving operational excellence in services, reducing costs and most importantly
increasing service quality (Cesarotti and Spada, 2009). Service quality exerts both direct
and indirect effects (through emotional satisfaction) on behavioural intentions of
customers (Ladhari, 2009). Delivering high quality service and creating superior
customer value can result in achieve high customer satisfaction, thus affecting the firm’s
image, and ultimately leading to consumer retention (Hsin-Hui and Kandampully, 2009).
Based on academic literature, Wuest (2001) reported similar impacts of service
quality in tourism, hospitality, and leisure businesses which were improving guest
convenience; enhancing service provider’s image; ensuring customer security; generating
traffic linking to profits, saving costs and higher market share; and establishing a
competitive edge, and customer demand. Wishna (2000) predicted that, in the future,
customers will be more sophisticated in their dining decisions mainly because of their
willingness to expand their dining horizons and try new things. Customers will seek new
dining experiences that will satisfy their ever-changing expectations. Thus, it is
extremely imperative to know, understand and meet customers’ expectations.

2.2 Drivers of service quality for experiential marketing

Service encounter elements are often studied by service marketing scholars to reveal
personal interaction because increasing the pleasure of service encounters can “reduce
the perceived risk associated with purchasing a service and improve the buying
experience” (Julian and Ramaseshan, 1994).
The essential aspects of service quality like the tangible aspect that includes the
exterior design, the equipment and the ambient conditions in the environment all have an
influence on the service quality, especially for a restaurant. The importance of food
quality was mentioned by Ryu and Han (2010). They also discussed the importance of
hedonic and utilitarian aspects to a restaurant which, if understood, balanced, and applied
correctly, could provide a better understanding of the customer’s wants and needs and
appeal to them more. Nankung and Jang (2009) discovered setting reasonable prices and
providing efficient services in a timely manner could negate negative emotion. The
findings also suggested that providing high-quality tangible outcomes and intangible
services are vital to evoking positive emotions and eventually generating future
 Critical success factors for experiential marketing 317

favourable behaviours. Sulek and Hensley (2004) argued that the atmosphere of a
restaurant significantly affects its customer satisfaction. Bitner (1990) and Baker et al.
(2002) proposed that consumer interaction with intangible and tangible elements in the
service environment (e.g., lighting, music and internal and external environmental
design) or the periods during which a consumer interacts with physical facilities and
other tangible elements in the service environment function as “critical exogenous
constructs leading to endogenous impulse”. These cues, which exhibit strong correlation
with consumer merchandise value, subsequently influence customer advocacy.
Specific behaviours, including the behaviour of service employees and other
customers, also function as “key determinants of perceived service quality and also of
consumer satisfaction” (Andaleeb and Conway, 2006; Wu and Liang, 2009). Keng et al.
(2007) found that personal interaction encounters and physical environmental
interaction encounters have significant influence on customer experiential value.
Baker and Cameron (1996), and Sommer and Sommer (1989) proposed that
since consumer-to-consumer interactions can influence consumer service satisfaction,
managers must be aware and sensitive to such interactions. However, while a
consumer-to-consumer interaction like social facilitation, positively impacts
consumer-to-consumer interaction, social intrusion, in which consumer perceives other
consumers in the service setting as intruders, can be potentially adverse (Baker and
Cameron, 1996).
According to the definition and dimensions of experiential value, a few studies have
examined how the variables are related. Smith and Colgate (2007) indicated that
experiential value is derived from how a product creates appropriate experiences, feelings
and emotions in a customer. Lee and Bang (2004) examined online shopping behaviour
and proposed that consumer online shopping value (utilitarian and experiential value)
positively influences consumer satisfaction. Gallarza and Saura (2006) proposed that
perceived value is a direct antecedent of consumer satisfaction. Moreover, Shieh and
Cheng (2007) tested a consumer behavioural model of adolescent and young adult online
gamers and proposed that experiential constructs (social function, empathy and escapism)
positively impact satisfaction. Statistics-driven examination of these links has been
initiated by Tang and Lim (2000), who demonstrated the relationship of customer
satisfaction to profitability among hospitals, and Rust and Zahorik (1993), who examine
the relationship of customer satisfaction to customer retention in retail banking. The
Bank Administration Institute has also dwelt on these ideas, in particular Roth and
van der Velde (1991).

2.3 Measuring service quality

The quality of service in the restaurant industry is difficult to evaluate, because the
assessments are made not only on the service outcome, but also on the process of service
delivery. Bitner (1990) stated that service encounter in restaurant settings consists of
three main elements: environmental elements (e.g., design, music, lighting), employees
(e.g., professional skills, reliability) and customers (e.g., interaction with other
customers). To understand all characteristics of the restaurant service quality, an
appropriate measurement instrument should be developed.
One of the well-tested instruments available to measure service quality from the
customer’s perspective is the SERVQUAL instrument. It was developed by Parasuraman
and Zeithaml (1988) and was later refined. The instrument contains two sections.
318 S. Gupta et al.

One section consists of 22 items that measure consumers’ expectations. The other
section includes 22 corresponding items that measure consumers’ perceptions of the
service they received. The 22 statements represent the five service dimensions that
consumers use to evaluate service quality: tangibles, reliability, responsiveness,
assurance and empathy. In the SERVQUAL instrument the service quality measurement
is based on the comparison of customers’ expectations and their perceptions of delivered
service. The difference between expectations and perceptions scores is called the
SERVQUAL gap. A negative gap indicates that received service did not meet customers’
expectations. On the contrary, a positive gap indicates that customers perceived that
service delivery exceeded their expectations. The instrument has received serious
academic attention, because it represents a useful tool for monitoring and assessing a
service provider’s performance. The original or modified version of SERVQUAL
instrument was used in a variety of service industries (Ladhari, 2008). Several
researchers have applied SERVQUAL methodology in the restaurant industry, as well
(Bojanic, 1994; Lee and Hing, 1995; Yuksel and Yusel, 2002; Andaleeb and Conway
2006).
Stevens et al. (1995) created an instrument called DINESERV to assess customers’
perceptions of restaurant service quality. The instrument was adapted from SERVQUAL
and was proposed as a reliable and relatively simple tool for determining how customers
view a restaurant’s quality. The final version of DINESERV contained 29 items,
measured on a seven-point scale.
The outcomes of studies on service quality addressed several contributions to
dimensional structure of service quality in the hospitality industry. These studies have
argued that in the hotel sector, some of quality dimensions are different from the five
dimensions described by the original SERVQUAL researchers. Akan (1995) developed a
questionnaire adapted from the SERVQUAL instrument and investigated the application
of the SERVQUAL instrument in an international environment. Akan aimed to examine
the dimensions of the SERVQUAL and measure the level of importance of the
dimensions for the users of four and five star hotels in Turkey. Enz et al. (2000)
examined the best practices in service quality among the US hospitality industry. Only a
small number of hotel operations focused specifically on service excellence, which they
did extremely well for one or more service issues; creating a service-culture; building an
empowered service-delivery system; facilitating a customer listening orientation; and
developing responsive service guarantees. Mei et al. (1999) examined the dimensions of
service quality in hotel industry in Australia. They used the SERVQUAL approach as a
foundation and developed a new scale called HOLSERV scale as a new instrument to
measure service quality in the hotel industry. They concluded that service quality could
be represented by three dimensions in the hotel industry as employees, tangibles, and
reliability. Fick and Ritchie (1991) examined the SERVQUAL approach and its
management implications in four major sectors of travel and tourism industry, i.e.,
airline, hotel, restaurant, and ski area services. They found that the most important
expectations concerning service are reliability and assurance for all of the four sectors. In
the Indian context, Mohinder (2010) examined the drivers of customer satisfaction and
service quality pertaining to tourism destinations in India using the SERVQUAL;
PalaniNathaRaja et al. (2006) analysed service quality framework from the healthcare
industry domain while Ramanigopal and Mani (2011) studied the service quality
framework from a commercial bank’s point of view.
 Critical success factors for experiential marketing 319

Thus, while most existing works have dwelt only on the significant factors
influencing experiential value and their effect on customer satisfaction, our research
attempts to extend this study to explore the holistic impact of experiential marketing
induced customer satisfaction on customer behaviour which directly impacts the ROI.
Further, we have attempted to address the need of mapping these significant factors to
current practices in the Indian hospitality industry to identify prominent gaps existing
between their service model and customer expectations which will enable Indian
restaurants to carefully utilise and completely leverage the powerful customer
engagement features of experiential marketing.

3 Objectives

The objective of the paper is to explore how through experiential marketing one can gain
customer satisfaction in the hospitality industry and increase his profitability through
retaining the same customer, charging more premium price and better word of mouth
advertising. The paper has further captured the quantitative measure of the experiential
value that is delivered to the customer and how his satisfaction bears relationship with
the return on investment, i.e., the experiential value he derives for the price he pays. The
paper then establishes the service gap model for Indian hospitality industry where we
have tried to identify the gap between a customer’s expectations and his perceptions
about a service and explore the contributory service quality gaps of the restaurant in the
customer-organisation relationship. The paper has statistically proved the relationship
lemma through a couple of models. The first one shows the application of experiential
marketing to gain customer satisfaction and induce positive behavioural intensions like
repeat buying and positive word of mouth advertising. The second one is the service gap
model in Indian hospitality industry. This model outlines the contributory factors behind
the gaps existing between the expectations and perceptions of customer in his
relationship with a restaurant and identifies the major driving factors behind the gap. The
models, discussed at the end of this study are conceptualised based on the following set
of hypotheses and by proving them statistically through an exploratory research.

3.1 Hypotheses for model 1

H1 Customer satisfaction has a linear relationship with experiential value and price
reasonability of a restaurant, as perceived by the customer.
It is hypothesised that the satisfaction a customer draws out of a visit to a restaurant is a
function of his high experiential value, derived from the service provided and his
expectations about the same; and the reasonability of the price he pays for that service.
Ideally, his satisfaction would be measured by the return on investment (ROI) which is a
quotient of the experiential value upon the monetary price he pays. But for the purpose of
simplicity, instead of capturing the absolute price he paid we have measured price
acceptance on a Likert scale where the rating is higher for a relatively lower absolute
price he pays for a quality service. Experiential value is then calculated as the weighted
sum of the contributing factors identified through factor analysis. So the hypothesis
claims a direct positive relationship of customer satisfaction with both price reasonability
320 S. Gupta et al.

and the experiential value. The easiest way of representing this relationship is through a
linear equation like the one mentioned below.
Customer satisfaction = Constant + ( Positive coefficient1 )
* Experiential value + ( Positive coefficient 2 )
* Price reasonability

H2 Behavioural intentions of customers have strong linear relationship with the

customers’ satisfaction level.
Two positive behavioural intentions are considered here; repeat buying and positive word
of mouth advertisement. Both the intentions are measured on a scale of 5 and their
correlation coefficient is evaluated with the customer satisfaction measured on the same
scale. The equation can be represented as:
Pearson correlation coefficient r (Behavioural intentions / Customer satisfaction) > 0

3.2 Hypotheses for model 2

There are gaps in the service quality delivered, which restrict the delivery of full
experiential value and leads to a gap between customer expectations and his perceptions
about the service delivered to him. Such gaps stop the restaurants to capture the potential
of customer satisfaction and realising the positive behavioural intentions. The model 2
follows service gap model to discuss the contributory factors of such gap in a structured
way.
H3 There is at least one element of experiential value, for which there lies a significant
difference between customer expectations and perceptions of customer expectations
held by restaurant managers.
For any factor of experiential value X for which the following null hypothesis premise
holds false for a statistical significance level.
Null hypothesis, H0 Customer expectations(X) – Manager’s perception(X) = 0
Alternate hypothesis, HA Customer expectations(X)* – Manager’s perception(X)** ≠ 0
H4 There is at least one element of experiential value, for which there lies a significant
difference between the importance of an element of experiential value in generating
customer satisfaction as perceived by restaurant manager and the service
mechanism designed to deliver the same element to a customer.
For any factor of experiential value X for which the following null hypothesis premise
holds false for a statistical significance level.
Null hypothesis, H0 Manager’s perception(X) – Design to deliver(X) = 0
Alternate hypothesis, HA Manager’s perception(X) – Design to deliver(X)*** ≠ 0
H5 There is at least one element of experiential value for which there lies a significant
difference between the service mechanism designed to deliver the element of
experiential value to customer and the degree by which it is actually delivered as
perceived by customers.
 Critical success factors for experiential marketing 321

For any factor of experiential value X for which the following null hypothesis premise
holds false for a statistical significance level.
Null hypothesis, H0 Design to deliver (X) – Actually delivered(X) = 0
Alternate hypothesis, HA Design to deliver (X) – Actually delivered(X)**** ≠ 0
* customer’s expectation: measured from customer
** manager’s perception: measured from manager regarding customer expectation
*** design to deliver: measured from manager regarding service blueprint design
**** actually delivered: measured from customer rating for a particular factor

4 Methodology

4.1 Research framework

Based on the above literature review and hypotheses, this study proposes an integrated
research model. The research is conducted through primary survey based on
questionnaire, followed by statistical analysis.

4.2 Questionnaire development and sample study

Two questionnaires were developed, one for customer survey and the other for
surveying restaurant managers. This investigation used a five-point Likert scale to rate
the questionnaire responses from 1 (very poor/insignificant) to 5 (excellent/essential)
using questions taken from previous consumer behaviour studies and modified based
on industry features, as suggested by practitioners of the hospitality industry and
researchers of experiential marketing. Pilot runs of the questionnaire were administered
to 20 customers and two professional managers in the Bistro Grill Restaurant and
Aromas Restaurant at Hiranandani Park, Mumbai. Questions were eliminated in response
to

1 respondent suggestions
2 item factor loading.
The final draft of questionnaire for restaurant managers consists of two parts – his
understanding of the importance of different factors generating experiential value and his
self rating about how the restaurant delivers all these parameters to a customer. The
questionnaire for customers contains mainly four sections – his expectations from a
restaurant, his judgment about the different service encounter elements of a restaurant,
his satisfaction level and his behavioural intentions when he is satisfied or dissatisfied.
The final questionnaires were floated to 180 customers and 32 restaurant managers. The
following section outlines the operational definitions for all variables and measurement
tools.
322 S. Gupta et al.

4.3 Operational definition of variables

1 Experiential value is defined as customer assessment of food quality, service quality
and different service encounter elements like restaurant environment (light, sound,
temperature, aesthetics, smell, theme conveyed, interior decoration), interaction with
service employees (how courteousness and proactive they are to serve customers)
and other customers during service encounter. By definition, restaurant environment
measures consumer perceptions of the environment (Wakefield and Baker, 1998).
Interaction with service employees was defined as consumer perceptions of the
attitudes and behaviour of service employees (Baker et al., 2002). Interaction with
other consumers was defined as consumer perceptions of their interactions with other
consumers (Huang and Chen, 2003).
2 Price reasonability is the customers’ perception about how justified the prices of a
restaurant is with respect to his willingness to pay for the food and service offered.
3 Consumer satisfaction was defined as pleasure obtained from the product and
service. Customer satisfaction measure consists of responses to a single question.
The problems associated with the use of a single response variable were mitigated
by: the simplicity of the question; and Yi’s (1990) suggestion that a single overall
satisfaction measure scored as this one was is ‘reasonably valid’.
4 Behavioural intention dimensions are repeat visit, and spread of good word of mouth
by a satisfied customer.
5 The service quality gap model (Parasuraman and Zeithaml, 1988) tells us about five
gaps. Our study identifies three gaps in the hospitality service model. Gap 1 is the
gap between customer expectations and perceptions of the same by the managers.
Gap 2 is the gap between the understanding of managers about the service
requirements of customer and the blueprint to actually deliver the service. Gap 3 is
the gap in between service delivery design or standard and what is actually delivered
to customer as perceived.

5 Data analysis and findings

5.1 Factor analysis

For data analysis, descriptive statistics and analytical tools were applied by using
SPSS 16.0 version. Kaisar-Meyer-Olkin measure of sampling adequacy was used to
examine the appropriateness of factor analysis. Since KMO value (Table 1) is 0.616
(greater than six) it has been decided to use factor analysis. Bartlett’s test of spherecity
(Table 1) was used to test the hypothesis that the variables with each dimension are
uncorrelated in the population. A large value of the test statistics (p < 0.05) favoured the
rejection of null hypothesis and thus it supported the use of factor analysis for data
analysis.
The data obtained were executed with factor analysis using principle component
analysis utilising Varimax rotation method with Kaiser normalisation in order to reduce
the information in multiple variables into a set of weighted linear combinations of those
variables. Factor analysis helped in identifying the latent variables, which were
 Critical success factors for experiential marketing 323

contributing to the common variance in a set of measured variables. In factor analysis

only those component were considered whose eigen value was greater than 0.95, Kaiser
rule (i.e., the retention of principal components with Eigen values above one). Table 2
shows the application of principal component analysis to the data obtained for
determinants of experiential value in selected luxury restaurants in Mumbai.
Table 1 KMO and Bartlett’s test

Kaiser-Meyer-Olkin measure of sampling adequacy 0.616

Bartlett’s test of sphericity Approx. chi-square 316.670
df 91
Sig. 0.000

As it can be seen from Table 2, extraction sums of squared loadings yield first six
components accounting for 79.182% of total variance whereby component 1 accounts for
22.996% of total variance, component 2 accounts for 13.760% of total variance,
component 3 accounts for 13.493% of total variance, component 4 accounts for 11.990%
of total variance, component 5 accounts for 8.961% of total variance and component 6
accounts for 7.981% of total variance. But the results obtained with simple extraction
sums of squared loadings show asymmetrical nature of data. So the data was also applied
with rotation sum of squared loadings using principal component analysis. The result
obtained (Table 2) were more symmetrical and thus component obtained by rotation sum
of square was considered for further evaluation.
To determine the number of factors for the study, scree plot was constructed
(Figure 1). Scree plot indicated a distinct break between the steep slopes of factors at
factor number 6 after which there was a gradual trailing off associated with rest of the
factors.

Figure 1 Scree plot

 324

Table 2

Initial eigen values Extraction sums of squared loadings Rotation sums of squared loadings
Component
S. Gupta et al.

Total % of variance Cumulative % Total % of variance Cumulative % Total % of variance Cumulative %

1 4.136 29.540 29.540 4.136 29.540 29.540 3.220 22.996 22.996
2 1.952 13.943 43.483 1.952 13.943 43.483 1.926 13.760 36.756
Total variance explained

3 1.562 11.155 54.638 1.562 11.155 54.638 1.889 13.493 50.249

4 1.481 10.576 65.214 1.481 10.576 65.214 1.679 11.990 62.239
5 0.995 7.104 72.319 0.995 7.104 72.319 1.255 8.961 71.200
6 0.961 6.863 79.182 0.961 6.863 79.182 1.117 7.981 79.182
7 0.648 4.627 83.809
8 0.525 3.748 87.557
9 0.493 3.525 91.082
10 0.423 3.020 94.102
11 0.308 2.202 96.304
12 0.247 1.766 98.071
13 0.166 1.187 99.258
14 0.104 0.742 100.000
 Critical success factors for experiential marketing 325

Table 3 Rotated component matrix

Component
1 2 3 4 5 6
lightexp 0.818 –0.049 0.065 –0.011 –0.020 0.060
smellexp 0.770 0.269 0.056 0.199 0.127 –0.035
tempexp 0.745 0.206 0.005 0.020 –0.159 –0.182
decorexp 0.662 0.138 0.229 –0.035 0.248 –0.017
foodppt 0.637 –0.005 0.027 –0.138 0.493 –0.274
soundexp 0.613 0.394 0.236 –0.224 –0.315 –0.170
servcourt 0.243 0.890 –0.023 0.047 0.014 0.055
servpro 0.119 0.861 –0.002 0.015 0.270 –0.033
uniquetheme 0.072 0.067 0.925 0.031 0.186 –0.162
themeexc 0.199 –0.078 0.919 –0.126 0.039 0.098
waittable 0.159 –0.052 –0.107 0.894 0.157 0.027
queuelong –0.141 0.100 0.015 0.865 –0.227 –0.038
foodtaste 0.012 0.278 0.240 –0.031 0.790 0.069
intothercs –0.142 0.018 –0.046 –0.014 0.022 0.963
Notes: Extraction method: principal component analysis;
Rotation method: varimax with Kaiser normalisation
Table 4 Summary of factor loadings and variances

% of variance
Factor Attribute Factor loading Eigen value
covered
Physical Light 0.818 22.996 3.220
ambiance Smell 0.770
Temperature 0.745
Decoration 0.662
Aesthetics of food 0.637
presentation
Sound/music 0.613
Interaction with Courteousness 0.890 13.760 1.926
service staff Proactiveness 0.861
Theme Uniqueness of 0.925 13.493 1.889
theme
Execution of theme 0.919
Service response Waiting time at 0.894 11.990 1.679
time table
Standing in queue 0.865
outside
Food quality Taste of food 0.790 8.961 1.255
Interaction with How other 0.963 7.981 1.117
other customers customers around
are behaving
326 S. Gupta et al.

Component matrix showcases the relationship between factors and individual variables
but the results were difficult to be interpreted because the factors were correlated with
many variables. in order to have a transformed matrix with simpler factors, matrix was
rotated utilising Varimax rotation method with Kaiser normalisation and the resultant
matrix (Table 3) was considered for interpretation purpose.
The results obtained from Table 2, Table 3 and Figure 1 can be displayed in the form
of Table 4, which projects factors extracted along with attributes, % of variance covered,
respective Eigen values and factor loadings.
To calculate the scores of these underlying components of experiential value, as
derived from the survey from the listed original variables, a component score coefficient
matrix is derived (Table 5). The values of the six factors derived from the factor analysis
are calculated using these coefficients of the major loading attributes from Table 5.
VIZ Score of theme = 0.522 × Uniqueness of theme + 0.521× Execution of theme
Table 5 Component score coefficient matrix

Component
1 2 3 4 5 6
lightexp 0.351 –0.173 –0.043 0.005 –0.056 0.196
soundexp 0.142 0.198 0.115 –0.132 –0.389 –0.057
tempexp 0.248 0.023 –0.049 0.009 –0.191 –0.056
smellexp 0.256 0.011 –0.046 0.124 0.044 0.078
decorexp 0.213 –0.057 0.031 0.000 0.143 0.084
foodtaste –0.089 0.071 0.028 0.000 0.627 0.035
foodppt 0.197 –0.168 –0.143 –0.069 0.421 –0.182
servcourt –0.046 0.510 –0.017 0.000 –0.113 0.064
servpro –0.119 0.484 –0.036 –0.015 0.123 –0.051
intothercs 0.098 0.003 0.010 –0.017 –0.010 0.909
queuelong –0.069 0.091 0.122 0.520 –0.199 –0.056
waittable 0.091 –0.114 –0.041 0.540 0.169 0.041
uniquetheme –0.112 0.029 0.522 0.087 0.019 –0.129
themeexc 0.014 –0.069 0.521 –0.006 –0.109 0.155
Notes: Extraction method: principal component analysis;
Rotation method: Varimax with Kaiser normalisation;
Component scores.

5.2 Regression analysis

Regression analysis was applied by using Minitab 15 version. The factor scores
calculated from the values of original surveyed variables as obtained from factor analysis
are multiplied with corresponding weightages given by customers indicating the
importance they give to those factors in their expectations from a restaurant. The
weighted average score including all the six factors stand for the score of experiential
 Critical success factors for experiential marketing 327

value as perceived by a customer. The other important predictor for generating customer
satisfaction is how reasonable is the price of the restaurant. Customer satisfaction is
defined as the return on investment that he makes. The return on investment is difference
of perceptual experiential value and the price he pays for the service. So the reasonability
of price is strongly correlated with customer satisfaction. Regression analysis is
performed to establish the relationship of customer satisfaction to the derived experiential
value and price reasonability, i.e., the proximity between what the restaurant charges him
and his willingness to pay. The result of regression analysis is tabulated in Table 6.
Table 6 Regression analysis of customer satisfaction to experiential value and price paid

The regression equation is

Satisfaction = 3.34 + 0.627 Are the prices reasonable + 0.209 Experiential value
Predictor Coef SE coef T P
Constant 3.3409 0.4241 7.88 0.000
Are the prices reasonable 10.62716 0.09850 6.37 0.000
Experiential value 0.20928 0.04540 4.61 0.000
S = 0.468580, R-Sq = 72.6%, R-Sq(adj) = 71.6%

The p values show the relationships between customer satisfaction and the predictors
Reasonable price (p = 0.00) and Experiential value (p = 0.00) being significant. The
T values show customer satisfaction being more dependent on price reasonability than on
experiential value. The high R-square value (72.6%) shows that the predictors explain a
significant proportion of the variance of rated customer satisfaction. Regression analysis
shows a linear relationship between customer satisfaction to experiential value and price
reasonability, thus proving the hypothesis H1.

5.3 Correlation test

The correlation analysis is performed using Minitab 15 version. Correlation test will
prove if there is any linear correlation between customer satisfaction level and
behavioural intentions. Two consecutive correlation tests are performed, the first with
“Willingness to come again” and customer satisfaction and the second with “Willingness
to spread a good word of mouth” and customer satisfaction. The results are furnished in
Table 7.
Table 7 Correlation analysis between behavioural intentions and customer satisfaction

Behavioural intentions Correlation coefficient p-value

Willingness to come again and satisfaction Pearson correlation p-value = 0.000
coefficient = 0.538
Willingness to suggest the restaurant to others Pearson correlation p-value = 0.000
and satisfaction coefficient = 0.642

The p values show that the correlations between the behavioural intention variables and
customer satisfaction has very significant correlation since the p values are less than
α = 0.05. Thus, hypothesis H2 is proved.
328 S. Gupta et al.

5.4 2-t sample test for gap model

2-t sample test is performed across all the factors leading of experiential value, identified
through factor analysis to find out if there is any factor for which there lies a significant
difference between customer expectations and managerial perceptions, i.e., Gap 1. The
results are shown in Table 8.
Table 8 2-t sample test results: identifying Gap 1

Ambience
Difference = mu (Amb_Cust) – mu (Amb_M)
Estimate for difference: –0.018
95% CI for difference: (–0.348, 0.312)
T-test of difference = 0 (vs not =): T-value = –0.11, p-value = 0.913, df = 107
Not significant
Food quality
Difference = mu (FQual_C) – mu (FQual_M)
Estimate for difference: 0.218
95% CI for difference: (0.006, 0.431)
T-test of difference = 0 (vs not =): T-value = 1.84, p-value = 0.131, df = 107
Not significant
Interaction with service staff
Difference = mu (Staff_C) – mu (Staff_M)
Estimate for difference: 0.873
95% CI for difference: (0.595, 1.511)
T-test of difference = 0 (vs not =): T-value = 1.24, p-value = 0.236, df = 93
Not significant
Interaction with other customers
Difference = mu (Othcust_c) – mu (Othcust_m)
Estimate for difference: 0.709
95% CI for difference: (0.386, 1.032)
T-test of difference = 0 (vs not =): T-value = 4.36, p-value = 0.000, df = 107
Significant
Service response time
Difference = mu (ServQ_C) – mu (ServQ_M)
Estimate for difference: 0.182
95% CI for difference: (0.078, 0.441)
T-test of difference = 0 (vs not =): T-value = 1.39, p-value = 0.168, df = 107
Not significant
Price reasonability
Difference = mu (Price_C) – mu (Price_M)
Estimate for difference: –0.527
95% CI for difference: (–0.841, –0.213)
T-test of difference = 0 (vs not =): T-value = –3.33, p-value = 0.001, df = 107
Significant
 Critical success factors for experiential marketing 329

There lie significant differences in interaction with other customers and Price
reasonability leading to Gap 1. Hence, hypothesis H3 is proved. The same test is applied
across all the elements for Gap 2 and Gap 3 as well. Only those factors that show
significant differences are captured in Table 9.
Table 9 2-t sample test results: identifying Gap 2 and 3

Gap 2 Difference of managerial Service response time

perception about Difference = mu (ServQ_M) – mu (ServQ_R)
customer expectations
and managerial Estimate for difference: 0.709
perception about 95% CI for difference: (0.393, 1.025)
orientation of service
design and standards to T-test of difference = 0 (vs not =): T-value = 4.74
meet customer p-value = 0.000, df = 96
expectations Significant
Gap 3 Difference of managerial Physical ambiance
perception about Difference = mu (PhyAmb_C) – mu (PhyAmb_R)
orientation of service
design and standards to Estimate for difference: –0.899
meet customer 95% CI for difference: (–1.278, –0.520)
expectations and the
actual service delivery as T-test of difference = 0 (vs not =): T-value = –4.70
rated by customers p-value = 0.000, df = 103
Significant

Results depicted in Table 9 statistically show that there is a difference in managerial

perception and service design in Service response time leading to Gap 2. Hence,
hypothesis H4 is proved. Table 9 also depicts a significant difference between service
design and standards and customer perceptions about service delivery for Physical
ambience which accounts for Gap 3. Hence, hypothesis H5 is proved.

6 Discussions

6.1 Model 1
Physical ambiance, food quality, service response time, interaction with service staff,
interaction with other customers and theme are the six broad categories of service
encounter elements identified in this paper, which a customer can experience in a
restaurant. They, depending on the customer’s preference and expectations, can give rise
to positive cognition in him/her, what we call the customer perceived experiential value.
The other aspect a customer ascribes importance to is the reasonability of the price he is
paying for that value. This experiential value if delivered to a customer economically;
gives him high return on investment which eventually leads to customer satisfaction. This
fact is proved by the statistical inference of hypothesis H1.
The repeat visit and recommendations of the restaurant to others are the behavioural
intensions of customers that lead to sustainable profitability. It is proved through
hypothesis H2 that customer satisfaction in turn instigates positive behavioural intensions
like repeat visit and positive word of mouth that directly impact the potential top line of
the restaurant. A model describing the same is pictorially represented in Figure 2.
330 S. Gupta et al.

Figure 2 Model 1: pictorial representation of experiential values to profitability mapping

Interaction with 
 Response time 
service staff  Interaction with 
Physical ambiance 
other customers 

 
Food quality  Theme 
Experiential value

Price reasonability 
H1

Customer satisfaction

H2

Behavioral intentions 

6.2 Model 2
This model is based on Parasuraman’s famous service gap model. This model
offers an integrated view of the consumer-company relationship. In this case expected
service is a function of word of mouth communication, personal need and past
experience, and perceived service is a product of service delivery and external
communications to consumers. This customer gap depends on the three gaps existing in
organisation-consumer environments.
The key points for each gap can be summarised as follows:
• Customer gap: the difference between customer expectations and perceptions – the
service quality gap. Customer Gap = f (Gap 1, Gap 2, Gap 3).
• Gap 1: the difference between what customers expected and what management
perceived about the expectation of customers. Gap 1 is signified by hypothesis H3.
• Gap 2: the difference between management’s perceptions of customer expectations
and the translation of those perceptions into service quality specifications and
designs. Gap 2 is signified by hypothesis H4.
• Gap 3: the difference between specifications or standards of service quality and the
actual service delivered to customers. Gap 3 is signified by hypothesis H5.
Statistical analysis proves hypotheses H3, H4 and H5. So, it can be inferred that in Indian
hospitality industry there are evidences of Gap 1, Gap 2 and Gap 3. The magnitude and
the direction of each gap will affect the service quality. These gaps lead to customer gap,
i.e., difference between what he expects from a restaurant and what he perceives to get.
The lesser these gaps are, the more is the customer satisfaction level.
 Critical success factors for experiential marketing 331

Figure 3 Model 2: gap model in hospitality industry

CUSTOMER 
Expected service
Consumer 
dissatisfaction 
Perceived service

Service delivery
Gap 3  Gap 1

Service design and standards
Gap 2 
Manager’s perception of  RESTAURANT 
customer expectation

We left out the fourth gap in Parasuraman’s model of service quality. It signified the
difference between the service delivered to customers and the promise of the firm to
customers about its service quality. This gap is mostly addressed by advertising and PR
department and is outside the purview of our research.

7 Conclusions

The paper identifies an almost exhaustive set of all service encounter elements in Indian
hospitality industry, that make a customer sense, feel, think, act and relate, i.e., engage
customers the experiential way. The statistical research shows how positive cognition
about the service encounter experiences leads to higher value for the customer and
enhances his willingness to pay. The paper also replicates the generic service marketing
gap model for Indian luxury restaurant industry and identifies the gaps that prevail at
each level of service quality. The study finally derives an indicative framework to
address these gaps through economic experiential marketing, i.e., delivering experiential
value at a reasonable price, enhancing customer satisfaction. The proposed model
extends previous work in the area but is distinguished by its focus on the holistic value
network spread through experiential marketing and its use of the network to engage
customers in positive behavioural intentions like repeat visit and positive word of mouth
advertising. However it also must be mentioned that the basis of our findings being
limited to the survey undertaken in 17 restaurants around Mumbai which encapsulates
the voice of about 200 customers of this region, the findings and implications might vary
in other regions having distinctly different cultures and dining habits. Moreover, since
the perception of service quality of a restaurant is essentially a very personal and intimate
experience for a customer, the current mental state of the customer, his emotional status
and other individual idiosyncrasies might also impact the service quality perception apart
from the tangible and intangible factors we have considered for our research.
The future scope of the research lies in understanding how a customer’s expectations
from a restaurant are guided by his or her demographics and psychographics to prescribe
a framework for differential experience treatment on separate demographic and
psychographic segments to engage customers better. The other direction where our
research can take significant stride is to investigate how strongly the profitability of a
332 S. Gupta et al.

restaurant is correlated the behavioural intentions of its customers. Our present work,
appended with researches in these two directions can give an end to end empirical model
to launch an experiential marketing campaign for hospitality industry and calculate the
return on investment of the campaign.

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