Journal of Global Business Review: Volume 21 No. 2 July-December 2019 pp. 59-82

WHAT DRIVES EXPERIENTIAL LOYALTY? A CASE STUDY OF CHAIN STORES IN

Thananporn Sethjinda1, Wongphun Laothumthut1 1Graduate School of Business, Assumption University of , 592/3, Ramkhamhaeng 24 Rd., Hua Mak, Bangkok Thailand, 10240

ABSTRACT

Over the past 20 years, the rapid expansion of coffee chain stores has transformed the Thai coffee consumption landscape with coffee stores penetrating mass market to high end specialty and premium segments. This study aims to identify key components of customers’ experience and how it relates to customers’ loyalty among customers of coffee chains in Bangkok Metropolitan area. Based on the conceptual framework of Wu (2017), this study examined the drivers of experiential quality (EQ), namely interaction quality (IQ), physical environment quality (PEQ), outcome quality (OQ) and affective quality (AQ) and the relationship among Experiential Quality, experiential satisfaction (ES), perceived value (PV), experiential trust (ET) and experiential loyalty (EL). Gender was added as a control variable to identify whether there was a difference between male and female customers on experiential loyalty. An on-line self-administered questionnaire was distributed to target respondents, using convenience sampling methods during August-October 2018. Based on the valid response of 408, data was analyzed using Pearson’s correlation, Multiple Linear Regression Analysis (MLR) and Simple Linear Regression Analysis (SLR) were used to test the hypothesized relationship of all variables and One-way ANOVA was performed to test the mean differences. Results showed that physical environment quality and affective quality were the key determinants of experiential quality among coffee chain stores in Bangkok. Additionally, experiential quality was the antecedent for experiential satisfaction, perceived value and experiential trust. In turn, these three variables namely experiential satisfaction, perceived value and experiential trust were the antecedents of experiential loyalty. Results of this study renders support coffee consumption as lifestyles experiences and contributes academically to the linkages of experiential quality with experiential loyalty through experiential satisfaction, experiential trust and perceived value.

Keywords: Coffee chain store, Customers’ loyalty, Experiential loyalty, Experientail quality, Physical environment quality, Affective quality, Interaction quality, Outcome quality, Bangkok Metropolitan

60 Journal of Global Business Review

Introduction subsidiary of C.P. group with the largest Around the world, coffee chain stores have convenient store network nationwide, were enjoyed rapid expansion. During 2010-2018, aggressively adding coffee corner in its 7-11 the worldwide revenue of roasted coffee convenience stores, targeting to reach 5,000 industry grew from US $171,555 million to outlets by 2018. Similarly, Family Mart had US $286,297 million, representing a compound recently introduced freshly brewed Japanese annual growth rate of 8 per cent per year. coffee corner operated by McThai (Marketeer, Additionally, the global coffee market was 2018). In short, competition in Thai coffee expected to expand at an annual rate of 5.8% chain businesses are expected to intensify at during 2019 to 2023. Although the majority all levels for at least the next 3-5 years. of revenue could be attributed to developed With the phenomenal influence of western markets such as US., Brazil, Japan, Canada coffee cultures, researchers have been keen and Germany (Statista, 2019), the influence to develop understandings on customers’ of western coffee cultures has been dominating behaviors and determinants of success in in many markets in Asia, creating growing today’s context of modern lifestyles, driven and highly competitive coffee chain industries. by pop-culture, convenience, comfort and In Thailand, for instance, there had been 8,025 mass consumption. In the past, studies on coffee shops in operation as of 2018 with the coffee consumption prior to 1990s focused overall market of THB 36 billion baht or mainly on the issue of sustainability and approximately US $ 1 billion (Jitpleecheep ethical consumption, such as sustainability & Hicks, 2019). labelling and fair trade. In terms of consumption Twenty years ago, the coffee chain industry behaviors, researchers viewed coffee as a in Thailand started with Black Canyon type of beverages, and focused on consumers’ (Udomkit & Mathews, 2005). Today, the market reasons and preferences, economic attributes, is dominated by Amazon Coffee with existing context of consumption and socio-demographic outlets of over 2,123 stores nationwide, factors (Samoggia & Riedel, 2018). In the Starbucks with its predominance in the late 1990s and the early 2000s, researchers in premium segment in 336 locations, and other marketing and hospitality industry recognized chains such as Doi Chang, Coffee World, the emergence of experiential economies as True Coffee and All Café. Despite the highly they observed that companies no longer crowded landscape, chain operators were focused on selling products or providing confident in the growth potential, as coffee services alone. Rather, the change in social consumption in Thailand had grown at an environment had contributed to the shift in average rate of 15% per year. consumers’ needs beyond necessity and In fact, coffee chain outlets are expected to usefulness, arguing that indulgence and witness further expansion in all segments. In amusement have developed into the consumers’ the premium segment, Starbucks aimed to world of feeling and experiences (Kilian, open an average of 30 stores every year with 2009). the target of 600 stores by 2022, with several From a broader perspective, Pine and Gilmore niche providers such as Roots and Bridge Art (1999) put forth the concept of experiential Space entering the segment with unique value economy, arguing that experiences were propositions (Jitpleecheep & Hicks, 2019). distinct economic values which have been In the mass market segment, All Café, a taken together with services. By viewing experiences as a distinct construct, companies Journal of Global Business Review 61 could strategize experience design principles (Yu & Fang, 2009) or brand loyalty (Han, around their traditional product or services Nguyen, Song, Chua, Lee, & Kim, 2018; offering towards creating differentiated Wu, 2017), building on key constructs in economic values. Since then, there have been service marketing namely service quality, continual interests in various aspects of perceived value, customer satisfaction and experiential economy such as strategic customer loyalty (Gallarza, Moreno, Chiappa, components of experiential marketing (Schmitt, & Saura, 2016). 1999), experiential marketing and brand For instance, Alan et al. (2016) posited that experience (Kilian, 2009), experiential marketing in-store related cognition such as product and ultrafine dining experiences (Basil & attributes, atmospherics, perception of merchandise Basil, 2009), experiential marketing and and service quality and experience related hospitality services (Alagöza & Ekici, 2014; cognition such as escape, entertainment, LaTour, Carbone, & Goan, 2009; Knobloch, efficiency, economic value and excellence Robertson, & Atiken, 2017), to name a few. led to positive or negative emotions, which Resonating with this trend, academic researches in turn influenced store loyalty. Similarly, on coffee and coffee consumption have also Han et al. (2018) hypothesized that cognitive shifted towards the consumption of specialty drivers, including brand awareness, perceived coffee and coffee house brand as lifestyle quality, brand image and perceived value experiences (Samoggia & Riedel, 2018). In influenced the affective drivers, leading to particular, researchers observe that customers’ brand satisfaction, relationship commitment experience in coffee chain stores seem to and brand loyalty. Their study of 379 play an equally important role in influencing consumers in Korean coffee chain stores customers’ behavior as the quality of coffee confirmed the hypothesized relationship. as product offering. Several studies suggest Finally, Wu (2017) proposed that experiential that consumers spend time at coffee chain quality which consisted of four components, stores not just for coffee consumption, but namely interaction quality, physical environment rather for escaping the routines (Alan, quality, outcome quality and affective quality Kabaday, & Yilmaz, 2016), the feeling of influenced perceived value, experiential being at home away from home, being part satisfaction and experiential trust, with the of a highly spirited environment (Tumanan latter two components leading to experiential & Lansangan, 2012), enjoying the new loyalty. In short, international research increasingly environment and ambience of relaxation focused on multi-dimensional framework to (Kang, Tang, Lee, & Bosselman, 2012), social develop understanding on intangible constructs interactions, business negotiation (Kim & surrounding customers’ experiences and their Jang, 2014) and being associated with social linkages to constructs in consumers’ behavior, leaders or being associated with the image of particularly customer’s loyalty. western cultures (Kang et al., 2012). In Thailand, academic research on coffee With regards to customers’ experiences in chain stores or café businesses have been coffee chain stores, researchers have examined accumulating among lobal publications as the interrelationship among the constituents well as in international ones. Most of the of customers’ experiences (Alan et al., 2016) locally published academic works examined and the mechanism through which customers’ consumers’ behaviors and perception of a experience could lead to repeated actions at particular chain (Zhang & Prasongsukarn, coffee chain stores such as purchase intention 2017), specific types of café within particular 62 Journal of Global Business Review locations and target segments and attributes on brand loyalty. The results of their of chain services such as price promotion, research suggested that emotion experience preferred timing of consumption, cleanliness should fit the perception of the customers’ (Saengsarun, 2007; Jitrapirom & Suksri, 2015; related to the brand, and that both self- Phetniam, 2015). These studies identified concept and lifestyles would most likely demographic profiles of the target respondents, have a positive influence on brand loyalty. and factors influencing their decision in café selection. Overall, findings suggested that Objectives of the Study target customers placed more weights on From the preceding academic works in convenience of store location, product Thailand, the internationally published works attributes, service process, ambience and are heading towards identifying customers’ atmospheric elements of stores and promotion individual traits such personality or self- (Saengsarun, 2007; Jitrapirom & Suksri, 2015; concept, which address the trend towards Phetniam, 2015). In terms of repurchase individual service customization. However, intention, Zhang and Prasongsukarn (2017) the locally published works tend to place less found that price promotion was the main emphasis on customers’ experiences and the driver of customers’ perception of food relationship with other widely studied constructs quality and service quality, which in turn such as perceived value, customers’ satisfaction influenced customer satisfaction and repurchase or customers’ loyalty. Furthermore, the majority intention. of the study focused on specific shop or Broader analysis of consumers’ behaviors in brand, allowing rooms for further study to be coffee chain stores were noted in the work conducted across various coffee chains. published in international journals by Udomkit Hence, there is a need to establish a broad and Mathews (2015) and Tangsupwattana conceptual framework to understand multiple and Liu (2018). More specifically, Udomkit aspect of customers’ experiences and the and Mathews (2015) examined how the mechanism through which such experiences correlation between consumers’ personality are connected to loyalty. More specifically, and the brand personality influenced their this study aims to address the following purchase decision. They found a significant questions: correlation among consumers’ personalities 1. What are key components of experiences and brand personalities on all five dimensions in the coffee chain businesses? namely sincerity, excitement, competence, 2. How does customer’s experience connect sophistication and ruggedness. However, to loyalty towards a particular chain? only competence was statistically significant 3. Is there any difference between the in influencing the purchase decision. For the experiences of male and female customers to work of Tangsupwattana and Liu (2018), the repeat visit in a particular coffee chain? relationship among emotional experience of This study proposes to contribute to the generation Y, symbolic consumption and brand literatures on customers’ experience in the loyalty was investigated. They hypothesized context of coffee chain stores by examining that the emotional experience influenced the preceding questions with the conceptual brand loyalty through three elements of framework by Wu (2017). The model hypothesizes symbolic consumptions namely actual self- that the influence of experiential quality concept, idea self-concept and lifestyles. In towards perceived value and experiential turn, symbolic consumptions had an impact Journal of Global Business Review 63 satisfaction. In turn, these two components experiential trust. The proposed conceptual are hypothesized to influence experiential framework is portrayed in figure 1, with each loyalty directly and indirectly through variable discussed in the literature review.

Interaction Quality H1a Perceived Value Gender H5c H2 H4a H6 Physical Environment H1b Quality Experiential H4b Experiential H5a Experiential H1c Quality Satisfaction Loyalty

Outcome H4c Quality H1d H3 H5b Experiential Trust Affective Quality

Figure 1 Conceptual Framework

Literature Review 2011; Hussein, 2018). As the customers go Experiential quality (EQ): through the entire process of purchase journey, In literature of hospitality and service marketing, such experience influences the customers’ service quality is often cited as one of the cognitive, emotional, behavioral, sensory and key elements of success in various types of social responses in all stages and through businesses. However, a few researchers argue various points of contacts, resulting in that service quality is often viewed as experience quality (Lemon & Verhoef, 2016). performance of services and measured from To understand customers’ assessment of the service providers’ perspective (Cole & experiential quality, Brady and Cronin (2001) Scott, 2004; Lemke, Clarke & Wilson, proposed a hierarchical service quality model 2011), and that services assessed from the proposing three primary dimensions of customers’ perspective should be measured experiential quality namely interaction quality, instead. Along this line of thought, the physical environment quality and outcome concept of experiential quality has been quality and further suggested that the model proposed as an alternative measurement of should be extended to incorporate measures customers’ assessment of services they in the context of industry and services tested. received (Lemke et al., 2011; Wu & Liang, In the context of coffee chain store, Wu 2009). By definition, experiential quality is (2017) proposed affective quality as the referred to as consumers’ subjective response fourth dimension to experiential quality. or judgement initiated by them on service Each of this component is discussed below. quality they experienced during the comprehensive Interaction quality (IQ): direct and indirect encounters with the The concept behind interaction quality (IQ) services rendered (Wu, 2017; Lemke et al., is based on the contact framework (Mersha, 64 Journal of Global Business Review

1990). Customers’ encounters with the service retail settings (Darden, Erdem, & Darden, systems in the form of face-to-face or remote 1983). In restaurant and hospitality settings, interactions could be identified as high studies showed that physical environment contact or low contact based on the degree of quality significantly influenced customers’ interaction and service customization to the ratings of their meals, ordering, purchases customers. According to Brady and Cronin and length of stay (Walter & Edvardsson, (2001), interaction quality refers to the 2012), revisit intention, purchase behavior customers’ perception of the quality of their (Baker, Parasuraman, Grewal, & Voss, 2002) interactions with the representatives of the and perception of brand image (Booms & service providers on attitudes behavior, Bitners, 1982; Nguyen & Leblanc, 2002). expertise and problem-solving, during the Hence, it is hypothesized that service delivery. One possible explanation H1b: Physical environment quality (PEQ) on the influence of interaction quality is has a positive influence on experiential quality. based on mimicking effect (Folkes & Patrick, Outcome quality (OQ): 2003). According to Folkes and Patrick According to Grönroos (1985), service outcome (2003), the mimic effect occurs when the is associated with what customers actually or customers unconsciously mirror the behavior eventually receive after the service encounter of the service provider. More specifically, if process, whereas outcome quality, a closely the service representatives appear to be linked term, refers to customers’ perception doing their job well and satisfied, then it is of favorability (Hui, Zhoa, Fan, & Au, 2004) likely that the customers would be satisfied and satisfaction towards the outcome of the in that interaction. Therefore, it is hypothesized service act (Wu, 2017). Earlier literature in that service quality conceptualized service quality H1a: Interaction quality (IQ) has a positive from the perspective of process quality influence on experiential quality. attributes, which include reliability, responsiveness, Physical environment quality (PEQ): assurance, empathy and tangibles (Cronin & Physical environment quality (PEQ) refers to Taylor, 1992). Researchers argue that measurement a constructed facility, encompassing both tools based on process quality alone could indoor and outdoor atmospherics, where not adequately explain overall service quality, service delivery occurs (Wu, 2017; Han, behavioral intention and satisfaction of Moon, & Hun, 2019). More specifically, customers (Powpaka, 1996), leading to potential physical environment quality covers a range model misspecification and resulting in low- of factors including atmosphere and aesthetics, predictive validity (Richard & Allaway, 1993). cleanliness, temperature, lighting, facility, They posited that service quality encompassed design and location (Wu, 2013). Researchers two key components, namely process quality in hospitality, retail and marketing acknowledge and outcome quality, and inclusion of the the influence of physical environment on latter resulted in higher explanatory power customers’ evaluation process (Bitner, 1992) and more accurate analyses (Richard & and various aspect of consumers’ behavior in Allaway, 1993) of the overall service quality a wide range of service setting. For example, assessed by consumers particularly in search store design, store atmosphere and physical or experience related industries such as attractiveness have been found to influence restaurants, movies, concerts, trains, subways store patronage intentions and stimulate and hair salons (Powpaka, 1996). Therefore, affective reactions in customers based on the following hypothesis is proposed Journal of Global Business Review 65

H1c: Outcome Quality (OQ) has a positive and tourism research. According to literature influence on experiential quality. review conducted by Lai, Hitchcock, Yang Affective quality (AQ): and Lu (2018), research works on consequences Affective quality (AQ) refers to the customers’ of service quality during 1984-1993 established emotional interpretation and reaction created the relationship among quality, satisfaction in response to the impression created by all and customers’ loyalty across various service stimuli at any one time (Wu, 2017). Such contexts such as retails, restaurants, to name emotional interpretation and reaction have a few. Over time, this quality-satisfaction- been conceptualized and operationalized by loyalty model has been extended with other Russell (1980), who proposed a spatial model variables such as value, image, trust, commitment, in which eight affective components could employees and brands. Following the be defined as a combination of pleasure and empirically research relationship, this study arousal. Researchers in consumer behavior posits that experiential quality has a direct has recognized the importance of customers’ influence on experiential satisfaction, as well affective responses during their interaction in as an indirect influence on experiential the service setting in explaining consumers’ satisfaction through the mediating roles of satisfaction and subsequent behaviors for perceived value and experiential trust. hedonic products and services (Russell & Furthermore, this study examines the influence Pratt, 1980) such as vacations and fine-dining of experiential satisfaction and experiential (Hirschman & Holbrook, 1982), since such trust towards customers’ loyalty. Each of services could not be reduced to concrete and these variables are discussed below. multi-attribute evaluations (Enrique, Mattila, Perceived value (PV): & Andreu, 2008). Furthermore, Duman and Perceived value is broadly defined as the Mattila (2005) studied customers’ emotional customers’ overall assessment of the results experiences and found that affective responses or benefits received in relation to total costs were key determinants of the perceived value which may include the price paid plus other of cruise services. Similarly, Slåtten, Mehmetoglu, costs associated with the purchase (McDougall Svensson, and Sværi (2009) found that the & Levesque, 2000). It may also be viewed as feeling of joy experienced by customers in a relative measure of the costs and other the winter park had a strong relationship with monetary aspects of services in relation to customers’ loyalty, underlining the importance the particular offerings. Hence, in this context, of understanding the customers’ emotional perceived value refers to the consumers’ interpretation and reaction created through overall assessment of what is received, impression during service experience. Therefore, relative to what is given (Zeithaml, 1988). In it is hypothesized that. the context of service industries, the relationship H1d: Affective Quality (AQ) has a positive between quality and perceived value has influence on Experiential Quality. been examined and validated by numerous The relationship among experiential quality, studies (Ladhari, Brun, & Morales, 2008). perceived values, experiential satisfaction, More specifically, perceived service quality experiential trust and experiential loyalty has demonstrated a high positive correlation To understand the connection between with perceived value as well as a significant experiential quality and experiential loyalty, positive influence on perceived value in Wu (2017) referred to existing empirical hospitality services (Hartline & Jones, 1996), results established in retail and hospitality retail settings (Baker et al., 2002), six services 66 Journal of Global Business Review industries namely spectator sports, participation Experiential satisfaction (ES): sports, entertainment, health care, long- Satisfaction is one of the core concepts in distance carriers and fast food (Cronin, consumer behaviors, marketing and businesses, Brady, Brand, Hightower, & Shemwell, 1997). which hold that satisfying customer needs is Therefore, it is hypothesized that the key to developing customer’s loyalty H2: Experiential Quality (EQ) has a positive (Hsin & Wang, 2011). By definition, customer relationship with Perceived value (PV). satisfaction refers to the state of fulfillment Experiential trust (ET): and customer judgement of the fulfilled state Trust has long been an important concept in (Oliver, 1997), while Kotler (2000) described business discipline and recognized as one of satisfaction as the feeling of contentment or the most essential factors in building good disappointment as a result of comparing the rapports and in establishing a long-term products’ perceived performance in relation relationship between customers and organizations to their expectations. It could also be associated (Ribbink, Riel, Liljander, & Streukens, 2004). with the result of “things not going wrong”, During customers’ product purchase or “fulfilling the needs and desires of consumers”, service journey, researchers suggest that “pleasure”, “delight”, or “evaluation of the customers will look for indication of quality quality of goods and services” (Fečiková, to reduce the level of uncertainty. When 2004). In the context of coffee chain stores, quality has been identified and established, experiential satisfaction refers to the emotional Coulter and Coulter (2002) argue that reaction to the satisfaction or dissatisfaction of customers’ comfort level would be raised, consumers based on service journey of leading to declining perception of risk and specific transactions (Bigne, Andreu, & contributing to the establishment of trust. Gnoth, 2005). From the empirical perspective, the importance In marketing and consumer behavior research, of experiential quality and experiential trust satisfaction could be formed through customers’ has been validated in a wide range of studies assessment of services against their expectation. ranging from electronic commerce (Grönroos, According to the expectancy-disconfirmation Heinonen, Isoniemi, & Lindholm, 2000), theory, customer satisfaction occurred if the healthcare (Lien, Wu, Chen, & Wang, 2014), perceived service quality was superior to pharmacies (Perepelkin & Di Zhang, 2014). their expectation (Oliver, 1980). In this In the context of coffee chain store, respect, various researchers contented that experiential trust is a form of trust that is perceived service quality was the primary earned through experiences of the services. determinants of customer satisfaction. For Furthermore, Wu (2017) purported that when instance, Kivela and John (1999) proposed a the customers perceived the organizations to comprehensive model for dining satisfaction be reliable, responsive and empathetic, they and return patronage and found that the would be inclined to view the service possibility of return patronage was dependent provider as having a high integrity, which upon customers’ satisfaction with impression, served as the foundation for experiential trust service quality, food quality, ambience and to be formed. Hence, it is proposed that comfort. Other researchers also reported that H3: Experiential quality (EQ) has a positive perceived service quality had significant relationship with Experiential trust (ET). influence on dining satisfaction (Ladhari et al., 2008; Yuksel & Yusel, 2002). In addition to service quality, McDougall and Levesque Journal of Global Business Review 67

(2000) argued that perceived value should be and experiential satisfaction is proposed as included as an additional determinant to follows: customer satisfaction in the service context. H4c: Experiential trust (ET) has a positive In their study of dentistry service, auto- influence on experiential satisfaction (ES). service, restaurant and hair stylist, they Experiential loyalty (EL): found that perceived value was a significant According to Oliver (1999), loyalty refers to determinant of customer satisfaction in line a deeply held commitment to repeat purchase with previous works conducted by Grönroos of preferred products or to repatronize (1985), Parasuraman, Berry, and Zeithaml services of choices consistently in the future, (1991) and Dabholkar, Thorpe, and Rentz leading to repetitive same-brand or same (1996). brand set purchasing or visits, regardless of In light of this evidence, it is hypothesized other influences with the potential to trigger that switching behaviors. Researchers and practitioners H4a: Perceived value (PV) has a positive contend that loyal customers tend to spend influence on experiential satisfaction (ES). more, advocate products or services and H4b: Experiential quality (EQ) has a positive willingness to pay premium prices for influence on experiential satisfaction (ES). products or services receive (Reichheld, With respect to the relationship between 1996; Heskett, Sasser, & Schlesinger, 1997). experiential trust and experiential satisfaction, In terms of conceptualization, customer trust has been identified as a key variable in loyalty has been commonly constructed as relationship marketing either between a three behavioral metrics of positive word-of- buyer and a seller (Doney & Cannon, 1997; mouth communication (Hartline & Jones, Ganesan, 1994; Ganesan & Hess, 1997; Morgan 1996; Mangold & Miller, 1999), WPM or & Hunt, 1994) or between a customer and a maximum amount of money a customer is provider (Garbarino & Johnson, 1999; Singh willing to spend on a product or service & Sirdeshmukh, 2000). In various service (Homburg, Koschate, & Hoyer, 2005) and setting such as banking (Hoq, Sultana, & RPI or the willingness to maintain the buyer- Amin, 2010), e-commerce (Shao Yeh & Li, seller relationship (Vazquez-Casielles, Suarez- 2009) and large service chain (Kantsperger Alvarez, & Del Rio-Lanza, 2009). & Kunz, 2010), trust has a significant impact From academics and practitioners’ perspectives, on customer satisfaction and customer loyalty. the antecedents of customer loyalty have More specifically, trust is considered important been extensively studied (Kandampully, in the service sector as it reduces the Zhang, & Bilgihan, 2015). In the context of perceived risk of the service outcome hospitality services, customer satisfaction, (Laroche, McDougall, Bergeron, & Yang, perceived value and customer trust have 2004). As the service provider delivered the been established as the antecedents of service successfully in terms of reliability customer loyalty and examined in various and acting in the best interest of the service settings (Choi & Kim, 2013; Cronin, customer, the customer would be satisfied Brady, & Hult, 2000), with a strong positive with the service performance and would be relationship (Ndubisi, 2007; Shahin & Rahim, more likely to stay in the relationship 2014; Gallarza et al., 2016; Fornell, Johnson, (Garbarino & Johnson, 1999; Kantsperger & Anderson, Cha, & Bryant, 1996; Santos & Kunz, 2010). Along this line of argument, Basso, 2012; Ball, Simões, & Machás, 2004; the relationship between experiential trust Garbarino & Johnson, 1999), Therefore, the 68 Journal of Global Business Review relationship among perceived value, experiential 2015). Therefore, this study proposes to test trust, experiential satisfaction and experiential gender as a control variable on experiential loyalty are hypothesized as follows: loyalty. The last hypothesis is proposed H5a: Experiential satisfaction (ES) has a below. positive influence on experiential loyalty (EL). H6: There is a significant difference H5b: Experiential trust has a positive influence between male and female in experiential on experiential loyalty (EL). loyalty. H5c: Perceived value (PV) has a positive influence on experiential loyalty (EL). Methodology Gender: Questionnaire and pre-test Apart from the preceding variable to examine To develop the instrument for this study, the the relationship among experiential quality, researchers adapted the measures for the perceived value, experiential trust, experiential constructs in the model, used in prior studies satisfaction and experiential loyalty, this by Wu (2017). The questionnaires comprised study proposed to identify whether there six sections, with the first four sections, were any differences among male and female covering the statements of interaction quality, customers in the hypothesized model. The physical environment quality, outcome quality reason for including gender into the model is and affective quality. In the fifth section, due to the mixed results on the role of questions relating to experiential quality, gender, reported in the literature. Studies experiential satisfaction, perceived value, showed that women have a higher preference experiential trust and experiential loyalty to consume caffeine compared to men and were tested. For all sections, a five-point scored higher on importance of motives such Likert-type scale ranging from 5 (strongly as “habit”, “social motives”, “taste” and “symptom agree) to 1 (strongly disagree) was used. The management”. On the other hands, Penolazzi, last section collected demographic information Natale, Leone, and Russo (2012) show that such as age, income level, gender and daily caffeine intake was significantly higher education. To test the validity of the for males, and that men consume more questionnaires, the pilot test was performed specialty than women (Van der Merwe among 40 respondents prior to the test & Maree, 2016). Nevertheless, Arnot, Boxall, period. and Cash (2006) and Giacalone, Fosgaard, Steen, and Münchow (2016) did not find any Sample Design and Data Collection significant differences between gender in The survey questionnaire was targeted at relation to preference of coffee consumption residents of Bangkok Metropolitan with two in a consumer test. Similarly, mixed results screening criteria, including the six months are observed in locally reported studies in minimum period of stay and a minimum of Thailand. Several studies of café in the three repeat visits to the same coffee chain provincial areas did not report any significant within the last three months (Suhud, Puter, & influence of genders towards coffee consumption Wibowo, 2017). This study does not limit the or purchase intention (Saengrun, 2007; Jitrapirom responses to customers of one particular & Sukri, 2015), whereas the results of premium coffee chain as in the work of Wu (2017), in coffee chain store in Bangkok showed that which the test was conducted among female was more likely to purchase from customers of Starbucks in Taiwan. By premium coffee chain store (Phetniam, Journal of Global Business Review 69 extending the target group to other coffee Table 1 Consistency of Scale Test (N = 40) chain, this study would be able to identify Cronbach’s whether the proposed relationship would be Variable Alpha applicable across the coffee chain stores. Interaction quality (IQ) 0.880 Due to limited time and manpower, the Physical environment 0.880 questionnaire was distributed online, using quality (PEQ) non-probability convenience sampling method. Outcome quality (OQ) 0.906 Target respondents were identified from the Affective quality (AQ) 0.878 researchers’ education network including Experiential quality (EQ) 0.798 friends from bachelor and master level and Experiential satisfaction 0.863 professional network in businesses and (ES) investment. Respondents were also asked to Perceived value (PV) 0.878 invite their friends in their network to Experiential trust (ET) 0.893 participate in the survey. In total, the Experiential loyalty (EL) 0.811 questionnaires were distributed to 606 target respondents. After screening the responses, only 408 responses could be used, reflecting Results the response rate of 67.3 percent. Sample profile The majority of the respondents was female, Data Analysis accounting for 58.3% of the respondents, while the remaining 41.7% were male. In Data Analysis was performed using SPSS. terms of age, over 35% of the respondents Firstly, Cronbach’s Alpha was performed on aged between 31 to 40 years old, followed by the pilot questionnaires. Secondly, correlation 21-30 (26.2%), 41-50 (22.8%), and more matrix was run to test to relationship among than 50 years old (15.7%) respectively. With research variables. Then, multiple regression regards to monthly income, 43.9% of the and single regression were performed to test respondents earned higher than THB 65,000 the hypothesized relationship among variables. baht per month (USD 2,100.-). When asked Finally, one-way ANOVA was run to test the about the coffee chain that visited more than mean-difference between male and female three times during the past 6 months, respondents. Starbucks topped the list, accounting for over

51% of the total responses. The remaining Reliability Test responses were fragmented among Café Cronbach’s Alpha Coefficient was used to Amazon (16.20%), Dean & Deluca (5.60%), test the reliability and validity of the Segafredo (3.40%), True coffee (2.50%), Black questionnaire used in the study. The results Canyon (2.2%) and other brands (19.10%). in Table 1 show that Cronbach’s Alpha When scoping the respondents who visited exceeds 0.7 for all questions, therefore branded coffee chain stores, over 60% of the confirming the validity of for each variable respondents paid repeated visits to international (Cronbach, 1951). brands over the past three months. Overall, the sample was balanced between gender and aligned with the monthly income in the upper middle range and age group in the mid-to-senior level working profile in line 70 Journal of Global Business Review with the broad customer segments for coffee chain and premium segment.

Table 2 Demographic Profile of the Sample (n = 408)

Age No. of Responses % Below 20 1 0.25% 21-30 107 26.20% 31-40 143 35.05% 41-50 93 22.80% More than 50 64 15.70% Monthly income Below 15,000 16 3.9% 15,001-25,000 48 11.8% 25,001-35,000 39 9.6% 35,001-45,000 49 12.0% 45,001-55,000 39 9.5% 55,001-65,000 38 9.3% More than 65,000 179 43.9% What brand of coffee chain store you visit regularly? Starbucks 208 51.00% Cafe Amazon 66 16.20% DEAN&DELUCA 23 5.60% Segafredo 14 3.40% True coffee 10 2.50% Black Canyon 9 2.20% Other Brands* 78 19.10% Gender Female 238 58.3% Male 170 41.7% Note *Recorded responses for other brands include Au Bon Pain, Blue Cup Coffee, The Coffee Club, Doi Chang Coffee, Coffee World, Coffee Bean and Tea Leaf, McCafé, Mezzo, Tom N Toms Coffee, Gloria Jean’s Coffees, Wawee Coffee

Descriptive Statistics deviation for most variables was below 1, Table 3 presents the descriptive information suggesting that the values in the statistical about the measurement items. A 5-point dataset are close to the mean of the dataset. Likert scale was used (1 = strongly disagree to 5 = strongly agree). The items mean were between 3.03 and 4.05, and the standard

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Table 3 Descriptive information on measurements

Construct Items Mean SD Interactive IQ1 Overall, I would say the quality of my interaction 4.05 0.77 quality with the employees is excellent IQ2 The interaction I have with the employees is of a 3.89 0.79 high standard IQ3 I feel good about the interaction I have with the 3.89 0.83 employees at the coffee chain store Physical PEQ1 I believe that the physical environment is excellent 4.04 0.79 environment PEQ2 The physical environment is of a high standard 4.01 0.81 quality I am impressed with the quality of the coffee 3.94 0.85 PEQ3 chain store's physical environment Outcome OQ1 I feel good about what the employees provide to 3.93 0.8 quality their customers OQ2 I always have an excellent experience while 3.74 0.89 staying at the coffee chain store OQ3 The quality of service I receive is excellent 3.9 0.81 Affective AQ1 4.1 Staying at the coffee chain store is arousing 3.49 0.96 quality AQ2 4.2 Staying at the coffee chain is delightful 3.75 0.86 AQ3 4.3 Staying at the coffee chain store is relaxing 3.76 0.92 AQ4 4.4 Staying at the coffee chain store is entertaining 3.42 0.95 Experiential EQ1 I believe that visiting the coffee chain store is 3.53 0.96 quality going to provide the customer with a great dining experience EQ2 The quality of the coffee chain store could be 3.33 1.06 considered superior when compared to other independent coffee shop EQ3 Staying at the coffee chain store is a pleasant 3.61 0.89 experience Experiential ES1 Staying at the coffee chain store goes beyond my 3.48 0.87 satisfaction expectations ES2 I think I did the right thing when I experienced 3.64 0.79 the service of the coffee chain store ES3 It is worth while to be at the coffee chain store 3.58 0.87 Perceived PV1 Compared to time I spend, staying at the coffee 3.61 0.82 value chain store is worthy PV2 Compared to the efforts I make, staying at the 3.56 0.82 coffee chain store is worthy PV3 I feel happy about my choice of staying at the 3.65 0.83 coffee chain store

72 Journal of Global Business Review

Table 3 (Continued)

Construct Items Mean SD Experiential ET1 The coffee chain store really takes care of my 3.68 0.85 trust needs as a customer ET2 I am sure that the employees of the coffee chain 3.6 0.93 store would do everything to satisfy my need ET3 I have great confidence in the employees of the 3.56 0.9 coffee chain store ET4 I believe that the price/ quality ratio offered at the 3.5 0.95 coffee chain store is very reasonable Experiential EL1 I will spread positive word-of-mouth about the 3.46 0.98 loyalty coffee chain store EL2 I want to continue as a customer of the coffee 3.71 0.91 chain store EL3 Even if close friends recommended another 3.03 1.17 independent coffee shop, my preference for the coffee chain store would not change

Data analysis Table 4 reports the results. According to the Pearson’s correlation matrix hypothesized relationship, Pearson’s correlation Before running regression analysis, the matrix supports positive relationship among correlation coefficient is checked to identify the variables at 5% level of significance. possible issues of potential multicollinearity.

Table 4 Correlation Matrix of Proposed Variables

IQ PEQ OQ AQ EQ ES PV ET EL IQ 1 PEQ 0.621* OQ 0.754* 0.730* 1 AQ 0.527* 0.596* 0.651* 1 EQ 0.456* 0.655* 0.594* 0.681* 1 ES 0.543* 0.638* 0.685* 0.707* 0.785* 1 PV 0.506* 0.585* 0.616* 0.678* 0.716* 0.823* 1 ET 0.636* 0.618* 0.715* 0.659* 0.673* 0.762* 0.741* 1 EL 0.485* 0.516* 0.594* 0.647* 0.666* 0.761* 0.731* 0.739* 1 Note *correlation is significant at P-value < 0.05 (1-tailed)) (N = 408) IQ = Interaction Quality, PEQ = Physical Environment Quality, OQ = Outcome Quality, AQ = Affective Quality, EQ = Experiential Quality, ES = Experiential Satisfaction, PV = Perceived Value, ET = Experiential Trust, and EL = Experiential Loyalty

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Regression Analysis analyses were performed. Statistical summary To test the hypothesized relationship, multiple and hypothesis testing are reported in table 5. linear regression and single linear regression

Table 5 Summary of Hypothesis Testing of All Constructs

Hypothesis Standardized Co-efficient VIF Results H1a IQ 0.091 2.381 Not supported H1b PEQ 0.404 2.311 Supported  EQ H1c OQ 0.105 3.468 Not supported H1d AQ 0.336 1.838 Supported H2 EQ  PV 0.668 1.00 Supported H3 EQ  ET 0.869 1.00 Supported H4a EQ 0.309 2.261 Supported H4b PV  ES 0.412 2.744 Supported H4c ET 0.167 2.440 Supported H5a ES 0.400 3.702 Supported H5b ET  EL 0.246 3.437 Supported H5c PV 0.270 2.634 Supported H6 G  EL -0.031 1.003 Not Supported

Firstly, to test if interaction quality, physical regression was also found F(1,406) = 335.431, environment quality, outcome quality and p < .05), with an R2 of .452. It was reported affective quality significantly predict experiential that experiential quality significantly predicted quality, a multiple regression was calculated. experiential trust (β = .869, p < .05). The results of regression indicated that the To test the influence of independent variables four predictors explained 56.4% of the on experiential satisfaction, a multiple regression variance (R2 = .564, F(4,403) = 130.174, p < .05). was calculated to validate if experiential It was found that physical environment quality, perceived value and experiential trust quality significantly predicted experiential significantly predict experiential satisfaction. quality (β = .40, p < .05), as did affective The results of regression indicated that the quality (β = .36, p < .05). Tests on the three predictors explained 77.8% of the assumption of collinearity indicated that variance (R2 = .778, F(3,404) = 427.253, p < .05). there was no issue of multicollinearity (VIF It was found that experiential quality (β = .309, for all variables are less than 10). p < .05) significantly predicted experiential The second step involved a single regression satisfaction as did perceived value (β = .412, to predict perceived value based on experiential p < .05) and experiential trust (β = .167, quality. A significant regression was found p < .05). Finally, a multiple regression was F(1,406) = 427.697, p < .05), with an R2 of .513. run to test if perceived value, experiential It was reported that experiential quality satisfaction, experiential trust, a dummy variable significantly predicted perceived value (β = .668, for gender significantly predict experiential p < .05). For the third step, a single regression loyalty. The results of regression showed that was calculated to predict experiential trust, the independent variables explained 65.2% based on experiential quality. A significant of the variance (R2 = .652, F(4,403) = 188.927, 74 Journal of Global Business Review p < .05). It was found that experiential (β = .246, p < .05). Results from one-way satisfaction (β = .400, p < .05). Significantly ANOVO also confirmed that there is no predicted experiential loyalty as did experiential significance difference between male and trust (β = .27, p < .05) and perceived value female respondents on experiential loyalty.

Table 6 One-Way ANOVA

Sum of Squares df Mean Square F p-value Between Groups 0.606 1 0.606 0.084 0.772 Within Groups 2920.313 406 7.193 Total 2920.919 407

Discussion influence of individualist or collectivist values. The continual growth in the coffee chain Recently, Oh, Yu, and Lee (2019) studied industry requires deeper understanding of the relationship between service quality and customers’ expectation in their experiences experiential quality in coffee chain stores and how such experiences could translate targeting respondents in the U.S. and South into experiential loyalty. Based on the Korea for cross-cultural comparison. They responses of 408 customers, this study shows found that interesting observations. Firstly, that physical environment quality and affective employee quality did not have any statistical quality were the two important determinants significance towards perceived value. They of experiential quality in the coffee chain argued that customers usually spent less time stores in Bangkok. These findings are at coffee chain stores, compared with the consistent with existing empirical evidence, restaurants where they have to sit, order and acknowledging the importance of experience eat. When customers ordered coffee on the related cognition in store setting. In particular, go, the interaction time with the employees. Alan et al. (2016) found that escape and Nevertheless, cross-cultural comparison showed entertainment or the feel-good components that quality of employees was more important and store-related cognitions, particularly to American customers, compared to Korean providing appealing, pleasant design and customers. environment, contributed to positive emotion, Apart from that, differences in culture may which mediated the relationship with store explain the differences in the importance of loyalty. Similarly, Wu (2017) found that physical environment. In their study, physical affective quality and physical environment environment quality was an important quality were the first and the second most determinant for Korea respondents, whereas important determinants of experiential quality, employee quality and food quality were while Han et al. (2018) reported that affective important factors for American respondents. drivers had a direct influence on brand For this study, the target customers paid loyalty among customers of coffee chain repeat visit to a range of coffee chain stores, stores in Korea. with a few in the mass market such as In contrast to the findings by Wu (2017), Amazon Coffee and Doi Chang, as opposed interactive quality and outcome quality did to the work of Wu (2017) where the study not have any influence on experiential quality. was conducted at Starbucks Taiwan. With One possible explanation might be due to the local coffee chain brands, it may be possible Journal of Global Business Review 75 that customers ordered coffee on the go, loyalty as evidenced by existing research in reflecting limited interaction time to assess marketing literatures. any meaningful contribution from the service In terms of the role of gender, this study does staff to experiential quality. not find any significant differences between In addition to the preceding observation, this male or female customers on experiential study reports that experiential quality has a loyalty towards coffee chain stores. The lack positive influence on perceived value. This of statistical significance contradicted with finding is consistent with the findings reported the work of Phetniam (2015), suggesting that by Wu (2017) and Oh et al. (2019) in the more female would purchase from premium context of coffee chain. In the work of Oh coffee chain. Despite the inconsistency, the et al. (2019), it is reported that customer lack of gender influence on purchase intention service experiences, namely food quality, of coffee chain was not uncommon. Several hedonics and recognition as significant works in Thailand did not find any statistical predictors of perceived values. Secondly, the significance on the influence of gender either results show that experiential quality has a (Saengrun, 2007; Jitrapirom & Sukri, 2015). positive influence on experiential trust. In the One possible explanation could be attributable context of coffee chain stores, Wu (2017) to the fact that our sample reflects the argued that the level of experiential quality at lifestyles of working individuals in Bangkok coffee chain store provided customers with area, where it is common for both male and higher level of confidence. Thirdly, experiential female to meet at coffee chain for business quality, perceived value and experiential trust meeting or casual discussion. positively influence experiential satisfaction. Overall, the results of this study support the Results show that perceived value is the most conceptual framework on the relationship important determinant of experiential satisfaction, among experiential quality, perceived value, followed by experiential quality and experiential experiential satisfaction, experiential trust trust. These findings are also consistent with and experiential quality on the studies related existing empirical evidence in coffee chain to Coffee Chain stores in Bangkok. At the stores (Han et al., 2018; Wu, 2017). Finally, same time, results of this study underlined the results of this study render support for the importance of customers’ experiences the empirical evidence on the influence of and affective dimension in line with the experiential satisfaction, perceived value and value-satisfaction-loyalty chain among prior experiential trust on experiential loyalty. studies in retail setting (Gallarza et al., 2016). Consistent with the existing empirical evidence, In the context of coffee chain in Bangkok, customer experiences demonstrate positive service providers should place greater emphasis influence towards satisfaction (Han et al., on service element with high impact on 2018), the work of Oh et al. (2019) supports physical environment quality and affective the relationship between perceived value and quality and continuously update changing customer loyalty. The work of Wu (2017) preferences on lifestyles experiences to create supports the relationship between experiential impact on the chain of experiential quality, satisfaction and experiential trust as the perceived value, experiential satisfaction, antecedents of experiential loyalty. This study experiential trust and experiential loyalty. extends the hypothesized relationship from the model of Wu (2017) to test the influence of perceived value as antecedent for experiential 76 Journal of Global Business Review

Limitations & Recommendations behaviors. To the best of the researchers’ In terms of limitation, this study is based on knowledge, there has not been much research residents of Bangkok and could not be on brand switching within coffee chain generalized to other metropolitan cities in stores. Applying the literatures from brand Thailand due to potential differences in switching literatures may help provide insightful demographic and lifestyles of population in information for the researchers and practitioners those areas. Within the context of Bangkok in this area. customers who made repeat visits to the same stores over the past three months, References results of our study offer several insights. Alagöza, S. B., & Ekici, N. (2014). Experiential Firstly, customers’ experience in coffee chain marketing and vacation experience: stores is driven by store atmospheric and The sample of Turkish airlines. In The feel-good components while using the 10th International Strategic Management services at coffee chain stores. This finding Conference. Rome, Italy: Science Direct. underlines the trend of coffee consumption in Alan, A. K., Kabaday, E. T., & Yilmaz, C. coffee chain stores as lifestyles experiences as (2016). Cognitive and affective constituents observed by academicians since the early of consumption experience in retail 2010. Secondly, customers’ experiences could service settings: Effect on store loyalty. lead to experiential loyalty by exceeding Service Business, 10(4), 715-735. customers’ expectation on services experience, Arnot, C., Boxall, P. C., & Cash, S. B. (2006). leading to satisfaction, recognition of values Do ethical consumers care about price? in the service proposition and confidence in A revealed 855 preference analysis of the experience of the coffee chain. They are fair trade coffee purchases. Canadian more likely to develop attachment and repeat Journal of Agricultural Economics, visits at the same stores. In terms of future 54(4), 555-565. research, two recommendations are offered Baker, J., Parasuraman, A., Grewal, D., & Voss, based on the results of this study. Firstly, to G. B. (2002). The influence of multiple understand the significance of experiential store environment cues on perceived quality, target respondents for future research merchandise value and patronage may focus on high-end coffee stores, targeting intentions. Journal of Marketing, at a particular segment of customers. Such 66(2), 120-141. niche stores may offer unique proposition on Ball, D., Simões, C. P., & Machás, A. (2004). customers’ involvement, engagement or co- The role of communication and trust creation to influence customers’ experience. in explaining customer loyalty. European Such insights may offer deeper level of Journal of Marketing, 38(9/10), 1272-1293. understanding of customers’ experience beyond Basil, M., & Basil, D. Z. (2009). Reflections the coffee chain segment. Secondly, although on ultra fine dining experiences. In this study addresses the determinants of A. Lindgreen, J. Vanhamme & M. B. coffee chain, the potential issue of brand Beverland (Eds.), Memorable customer switching had not been looked into. Within experiences: A research anthology this sample, it is observed that customers had (pp. 135-148) Cornwall, UK: Gower. been using a wide range of coffee chains, reflecting the possibility of brand switching Journal of Global Business Review 77

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