Retailer's Innovative Differentiation Method Based on Customer Experience: Focusing Mediating Effect of Omni-channel Shopper Type

Purpose: The purpose of this study is to examine the relationship between customer satisfaction and customer attitude by focusing on the mediating effect of Omni-channel shopper type. Methodology/Approach: A survey questionnaire was conducted by the consumer who purchased fashion clothing at SPA brand store in Daegu, Korea. Total of 364 survey responses were collected for data analysis. Findings: The study found that customer experience has been stimulated by experiential providers. It was also found that customer experience positively influenced on store attitude. Research Limitation/implication: This study limited the retail stores to SPA brand stores. Therefore, there had limitation in generalizing the results of this study in other types of retail industry. Originality/Value of paper: The study will be of benefit to both the scholars and marketing practitioners in terms of moderating effect of Omni-channel shopper types on consumer satisfaction. Category: Research paper


INTRODUCTION
Customer experience is an abstract concept.It is the collection of processes that companies use to track every interaction between customers and the organizations throughout the customer lifecycle.Organizations are trying to optimize interactions from the customer's perspective to obtain and enhance customer loyalty.To manage customer experience, companies need to develop a strategy that encompasses the totality of customer interactions.These companies are putting the customer at the forefront of their marketing strategy instead of focusing on the product's functional features and benefits.Increasingly, companies mine customer experience when creating a new marketing strategy.These days, the customer experiences not only include interactions through traditional offline channels, but also online channels such as website, social media, and other communication mediums.According to Schmitt (1999), traditional marketing and business concepts provide little guidance for capitalizing on the emerging experiential economy: "Traditional marketing was developed in response to the industrial age, not the information, branding and communications revolution we are facing today." Omni-channel is a cross-channel business model that companies are increasingly using to enhance the customer experience.This approach includes channels such as physical locations, FAQ webpages, social media, live web chats, mobile applications and telephone communication , and even customer's pre-purchase shopping behaviours (Wasserman, 2015;Fallon, 2014;Dholakia, Zhao and Dholakia, 2005;McGoldrick and Collins, 2007).
Consumers no longer purchase products or services solely for its features and benefits.They want something more ethereal, that they can enjoy product and services to enrich their life.That something is the customer experience.In particular, Schmitt (1999) takes issue with the features and benefits approach of traditional marketing: "In traditional model, consumers are thought to go through a considered decision-making process, where each of the features or characteristics of a particular product or service are seen to convey certain benefits, and these are all assessed by the potential purchaser either consciously or unconsciously".
The customer experience was introduced by Holbrook and Hirschman's empirical study of consumption in early 1980s and a theoretical framework for customer experience has been established in late 1990s (Holbrook and Hirschman, 1982;Pine and Gilmore, 1998).Schmitt (1999) detailed five different types of experiences, also known as Strategic Experience Modules (SEMs), which include sense, feel, think, act, and relate.He emphasized that they are becoming increasingly important to consumers' perceptions of brands.
Since companies or marketers need to not only understand what types of experiences they want to provide to their customers, but also come up with effective means to manage customers' experience, understanding antecedent factors that affect customer experience is critical (Lee, 2006).However, empirical studies that investigated the relationship between customer experience and antecedent variables in the retail environment are scarce.Recently, several studies have examined this relationship, but most focused on conceptual models, falling short of explaining the causal relationship between customer experience and antecedent factors (Verhoef, et al., 2009;Grewal, Levy and Noci, 2009;Lee, 2011).Therefore, studying the relationship between the customer experience and the antecedent factors (i.e., experience providers) in the retail environment is vital.
Previous studies focusing on the relationship between customer experience and consumer behaviour outlined store attitude and customer satisfaction as the outcome variables of customer experience (Chiu, et al., 2012;Kuo, Hu and Yang, 2013;Srivastava and Kaul, 2016).
Thus, the purpose of this study is to establish the concept and antecedent variables of the customer experience in retail store, and then sought to verify the relationship between them.We also examined the effect of the customer experience on customer satisfaction and store attitude, which are outcome variables of customer experience.Finally, the mediating role of Omni-channel shopper type in the customer experience and store attitude relationship was investigated.Meyer and Schwager (2007) defined customer experience as an internal response or a personal response that could be directly or indirectly linked to the company.Gentile, Spiller and Noci (2007) demonstrated that customers have a memorable experience when they are stimulated by unique experiences, all senses, emotions, relationships, and physical aspects.Therefore, they defined the customer experience as being generated not only by the customer's personal value but also by the contribution of the experience the company provides.Kotler, et al. (2009) mentioned that customer experience is adding value for customers purchasing products and services through customer engagement by managing all aspects of the encounter.Schmitt's study (1999) is the most representative in the field of customer experience research.He classified customer experience into five dimensions: sensory, emotional, thought, behavioural, and relationship experiences.Using Schmitt's five dimensions, Srivastava and Sharma (2013) studied the mediating role of customer satisfaction in the relationship between the social interaction and convenience of customer experience.Rose, et al. (2012) divided customer experience into cognitive and emotional experiences.They stated that cognitive experiences are associated with thinking and mental processes, and emotional experiences are related to the moods and feelings of human.In other words, the cognitive experience is the judgment or assessment that they make when searching and buying online products, and the emotional experience is form of various emotions obtained from the experience while searching and buying products online.

Experience Producers
A study of the antecedent variables affecting customer experience in the retail environment has been established as a systematic conceptual model by Schmitt (1999;2003), Grewal, Levy andNoci (2009), andVerhoef, et al. (2009).Schmitt (1999) proposed the alternative framework that is based on two elements: Strategic Experience Modules (SEM), and ExPros.The SEM refers to different types of experiences, and ExPros, which is short expression for experiential providers, are the various agencies that deliver different types of experiences.ExPros include communication, verbal identity and signage, product presence, cobranding, spatial environment, electronic media, and people.Experience marketing is the principle of creating products and services that take into account all the elements of this framework.The five different types of experiences or SEM are sense, feel, think, act, and relate.Grewal, Levy and Noci (2009) summarized the antecedent factors that influence customer experience into five categories: promotion, price, supply chain, location, and product.Verhoef, et al. (2009) also identified six antecedent variables after reviewing previous studies on brand experience, service experience, and retail experience.The six variables that he proposed are were 1) a social environment (e.g., reference group, employee, and customers), 2) a service interface (e.g., service staff, technology, and customer customization), 3) retail store atmosphere (e.g., design, scent, and temperature), 4) an assortment (e.g., diversity, uniqueness, and quality), 5) price (loyalty program, and promotion), and 6) situational factors (e.g., store type, and location).These factors can serve as independent variables for customer experience in retail stores.

Store Attitude
There are two semantic elements in the etymology of the term 'attitude'.Both originated from Latin 'aptus', one of which refers to fitness or ability as an aptitude.The other one is used in art and refers to the attitude or form of sculpture (Allport, 1935).However, in social science, the attitude is an external expression that represents one's own thoughts or feelings about an object, which is a consistent tendency of reaction (21 st century political science).Bem (1970) defined attitudes as positive or negative emotions of things, people, and issues.Fishbein and Ajen (1975) defined attitudes as evaluative beliefs of individuals on the object, and emphasized the evaluation aspect between attitude object and attitude.
If the definition of attitude from the previous studies is applied to the store, the store attitude can be said to be a positive or negative emotion of the consumer at the store.

Customer Satisfaction
Since customer satisfaction is the central tenet of marketing research, it has been widely studied in the field of service marketing.Most marketing practitioners and scholars have assumed that customer satisfaction as a result of a customer behavioural pattern positively affect business outcomes (Luo and Homburg, 2007;Horváth and Michalkova, 2012;Vykydal, Halfarová and Nenadál, 2013).Churchill and Surprenant (1982) described satisfaction as a result of compensation for buyer's purchasing costs in relation to expected outcomes.It is argued that satisfaction is an emotion of people's pleasure or disappointment in comparison to perceived outcomes of a product (Kotler, et al., 2009).The American Marketing Association (AMA) defined customer satisfaction as 1) the degree that company's products and services meet or exceed customer expectations, and 2) good evaluation by the end consumer or decision maker after purchase.Lee and Lin (2005) also regarded satisfaction as a function of perceived outcomes and expectations.This indicates that customer's satisfaction is increasing as the outcome exceeds the customer's expectations.Otherwise, the customer may switch easily to buy another product or service.However, very satisfied customers will be much less likely to switch to other products or services.The high satisfaction and pleasure create an emotional connection to the brand, which in turn, leads to high customer loyalty.

Omni-channel and Shopper
Before the advent of the Omni-channel, one-stop shopping was way one made a purchase through only one specific channel.Recently, however, it has become possible to enjoy shopping from various distribution channels such as mobile shopping with smart devices, online stores, offline stores, or TV-home shopping.
The diversification of distribution channels has created a crossover shopping environment.This is referred to as an Omni-channel shopping which enables shoppers to move between online and offline distribution channels.As a result, the Omni-channel shopper, who is able to freely switch between offline and online stores, has emerged as a formidable force.There are two typical types of Omni-channel shoppers: showroomer and reverse showroomer.Showroomer is a consumer who searches product information offline and purchases the product online (Kim, Lee and Yoo, 2016).It is no wonder that shoppers check quality, colour, and size of the product directly at offline stores, and buy it online after comparing the prices from different websites.Reverse showroomers, who has shopping behaviour of buying the product offline after browsing it online, are increasing as well.
According to Harvard Business Review, only about a quarter of social media users in North America and the U.K. said that they are regularly showrooming, while the rate of reverse showrooming was over 40 percent of social media users.Also, according to the 2013 Harris poll, nearly half of Americans experienced showrooming, while close to 70 percent experienced reverse showrooming (Park, 2014).
Both the showroomer and the reverse showroomer visit offline store, but their purpose is different.Showroomer visits offline store just to see and feel the product, but reverse showroomer visits offline store for actual purchase.Thus, it can be inferred that they are more likely to pursue different empirical factors since the search and purchase channels are different.

METHODOLOGY
As previously mentioned, the main objective of this study is to validate the relationship between 1) customer experience and store attitude, 2) customer experience and customer satisfaction, and examining the mediating role of Omnichannel shopper type in customer experience and store attitude relationship.
In order to achieve these objectives, this study used a collection of data through a survey instrument and structural equation modelling using AMOS 20.0.

Research Model
The conceptual model for this study is depicted in Fig. 1.

Hypotheses
Based on the above discussion, the following hypotheses were derived from the research model: H1: The experiential provider will have a positive impact on the customer experience.
H2: Customer experience will have a positive impact on store attitude.
H3: Customer experience will have a positive impact on customer satisfaction.
H4: Customer satisfaction will have a positive effect on store attitude.
H5: The reverse showroomer type consumers will have more influence on the store attitude than the showroomer type consumers.

Data Collection
In order to test the hypotheses of this study, we conducted a quantitative survey based on the questionnaire.The survey questionnaire was conducted on customers who purchased fashion clothing at the SPA clothing brand stores in Daegu, Korea.A total of 364 items were used for the final data analysis except for the questionnaires that were not properly answered during the survey.

Variables and Operational Definitions
Variables and operational definitions that were used for this study are listed in Tab. 1.

DATA ANALYSIS & RESULT
In order to test the validity of the scale, factor analysis was performed using AMOS 20.0., and the reliability and validity tests were divided into internal consistency, convergence validity, and discriminant validity.The validity test for internal consistency was based on two values, the Cronbach alpha coefficient derived from SPSS 18.0., and the item-to-total correlation coefficient between the individual items of the measurement and the total mean score.

Confirmative Factor Analysis
The variables used in the confirmative factor analysis showed that the goodness of fit indices were satisfactory and acceptable.The Cronbach alpha coefficient ranged from 0.759 to 0.951, which was above the reference value of 0.6, and the item-to-total correlation coefficient also ranged from 0.714 to 0.946, which was higher than the reference value of 0.6, indicates internal consistency.The AVE (Average Variance Extracted) value ranged from 0.597 to 0.801, which is higher than the reference value of 0.5, so it can be judged that there exists convergence validity.The details are shown in Tab. 2 below.Goodness of Fit Indices: χ 2 (df = 362) = 629.790(p = .00),RMR = 0.084, RMSEA = 0.085, GFI = 0.899, AGFI = 0.870, NFI = 0.937, IFI = 0.972, CFI = 0.972, PNFI = 0.779, PGFI = 0.700

Reliability Test
Tab. 3 shows the results of the analysis of discriminant validity.Since the square value of the correlation coefficient is smaller than the AVE, the hypothesis of this study is valid.The diagonal is the scattered extraction value, the value with ** is the correlation coefficient, and the value in () is the square of the correlation coefficient
In order to verify the effect of Omni-channel shopper type on the relationship between customer experience and store attitude, Omni-channel shoppers were classified into two groups: showroomer (n = 109) and reverse showroomer (n = 106).As a result of the hypothesis test, H5 showed that there was a statistically significant difference between the groups at the significance level of 0.01 with ∆χ 2 = 6.78, and the standard path coefficient (0.36) of the reverse showroomer group was higher than that of the showroomer group (0.22).Thus, the hypothesis H5 was adopted.

CONCLUSION
To survive in today's retail environment, companies need more than offer competitive price or innovative products.Perforce to say, it is not easy to garner customer enthusiasm from consumers even with lower prices and excellent product quality.Gilmore and Pine (2002) posits that the experience economy is the rightful successor to the agrarian economy, the industrial economy, and the service economy.Schmitt (1999) also predicted that the experience economy would set marketing trends: "the phenomena (the omnipresence of information technology, the supremacy of the brand, and the ubiquity of communications and entertainment) represent the early signs of an entirely new approach to marketing, if not to business as a whole.These phenomena provide the outlines of a type of marketing and management driven by experience.And within a short period of time, this new approach will replace the traditional approach to marketing and business".As both scholars predicted, an increasing number of companies are quickly realizing that the rules of competition are changing by the day.Price and product quality remain important, but customer experience is starting to emerge as the key factor in assessing customer purchase patterns.In fact, the "new" factor may be outperforming traditional variables.It goes without saying that companies who fail to focus and deliver superior customer experience is bound for unprofitability.
The purpose of this study was to examine the mediating role of Omni-channel shopper type in relationship between the customer experience and store attitude.
The second objective of this study was examining the effect of the customer experience on customer satisfaction and store attitude.To obtain those objectives, we formulated hypotheses after constructing a research model based on antecedent variables of customer experience.Based on the findings, we drew practical implications.
First, experiential providers influenced customer experience.Therefore, the retailer or marketing practitioner will need to establish effective experiential providers to offer a more satisfying experience for their customers.
Second, customer experience, (hedonic, economic, symbolic, and relational experiences), have a positive effect on store attitude.If customers are satisfied with the store attitude while they browse, compare, and purchase the products, it can lead to pleasant customer experience.In other words, customer experience proved to be an important factor in determining customer satisfaction and store attitude.
Finally, we ascertained that the reverse showroomers greatly influenced the relationship between the customer experience and the store attitude whereas it was less the case with the showroomers.Therefore, in order to inculcate the most favorable store attitude to customers, creating experience-stimulating shopping environment for the reverse showroomers can be said to be effective.

Table 1 -
Operational Definitions and Measurement of Variables

Table 2 -
Results of Confirmative Factor Analysis

Table 3 -
Results of Discriminant Validity Test

Table 4 -
Results of Hypotheses Testing

Table 5 -
Adjustment Effect according to Omni-channel Shopper Type Omni-