This study established the linkages between experiential marketing theories and real world practices in Taiwan’s luxury industry. The aim of this study was to help luxury marketers identify which strategic experiential modules (SEMs) are most effective

1. An Investigation of Experiential Marketing in Taiwan’s Luxury Industry台灣精品業體驗行銷策略之研究 Samuel Krushnisky r97749013 National Taiwan University Dr. Chou, Dr. Hsu, Dr. Hsieh 7/22/10

2. Agenda 2

3. Introduction 1.1 Motivation 1.2 Research Objective and Problem Statement 1.3 Taiwan Luxury Market Background 3

4. 1.1 Motivation 4

5. 1.2 Research Objectives: Problem statements What is role of experiential marketing in luxury industry in Taiwan? Is there a linkage? What experiential marketing activities are being used? Which factors of experiential marketing have higher influences on customers’ purchases. for different customer segments in Taiwan’s luxury industry. How does the luxury marketing activities in Taiwan fit into Schmitt’s (1999) proposed Strategic Experiential Models (SEMs). How does Taiwanese cultural preferences influence the SEMs used for experiential marketing? 5

6. 1.2 Research Objectives (2) Explore and understand the role of experiential marketing and the use of strategic experiential modules (SEMs) used by luxury brands in Taiwan. Provide blueprint for new graduates of marketing and business entering the luxury industry in Taiwan. 6

7. 1.3 Background: Taiwan’s Luxury Industry Taiwan’s luxury market accounted for sales of nearly US$1 billion. It is estimated to be 2-3% of the entire Asian market in 2006 (see figure 1). Leading luxury brands have subsidiaries. Smaller luxury and premium brands use distributors: Bluebell, Dickson Concepts, Eternal, Imagenix and Joyce Boutique 7

8. 1.3 Background: Taiwan Luxury Market size Source: Chadha and Husband (2006) 8

9. 1.3 Background: Taiwan’s Luxury Market (2) Taiwan is currently in stage four, “Fit In,” of the Spread of Luxury Model Source: Chadha and Husband (2006) 9

10. 1.3 Background: Taiwan’s Luxury Customers Source: Allers (1990); Vigeneron and Johnson (1999); Chadha and Husband (2006, p.131) 10

11. 1.3 Background: Luxury Department Stores 11 Breeze Center Mitukoshi A9, A11 The Living Mall Formosa Regent

12. 1.3 Background: Luxury Department stores 12 Taipei 101 Bellevita Sogo

13. 13

14. Chapter 2: Literature Review 2.1 Luxury Definition 2.2 Experiential Marketing 2.2.2 Definition and characteristics of experiential marketing 2.2.1 Four zones of experiential marketing 2.2.3 Strategic Experiential Modules (SEMs) 14

15. 2.1 Luxury Definition: Luxury Brand Index, 5 Dimension 15 Source: Vigeneron and Johnson (1999)

16. 2.2 Experiential Marketing: Characteristics create a personalized memorable service for the guest engaging all five senses. Source: Schmitt (1999) 16

17. 2.2 Experiential Marketing: The Progress of Economic Value Source: Pine and Gilmore (1998) 17

18. 2.2 Experiential Marketing: Four Realms of an Experience 18 Absorption Passive participation Active Participation Sweet Spot Immersion Source: Pine and Gilmore (1998)

19. 2.2.3 Experiential Marketing: Strategic Experiential Modules (SEMs) Source: Schmitt (1999) 19

20. Chapter 3: Research Methodology 3.1 Research Method Philosophy 3.2 Research Process 3.3 Selection of Participants 3.4 Case Study Prototype 20

21. 3.1 Research Method: Research Method Philosophy In-dept understanding instead of just surface level observations. Previous research on experiential marketing focused on consumers research rather than luxury brands provider that create the experiences Few academic research about luxury marketing. Multiple cases used to follow replication logic and increase validity of the study 21

22. 3.2 Research Process, Structure and Design Multi-case study 22 Source: Yin, 2009, p.57

23. 3.3 Selection Participants Preparation for data collection Identified luxury brands through: academic writing, luxury books, industry reports (Bain and Co., Interbrands), fashion magazines The brands have been existence for more than 10 years in Taiwan. The potential companies operated at least one store in Taipei. The stores are located in the luxury store areas mentioned in the background. 23

24. Key to interview case companies 24 Source: adopted from Fionda and Moore (2009)

25. Case Study Prototype Overview of the case study relevant readings Field procedures Human subjects protection Case study questions Level 2 and Level 3 for multi-case study exploratory qualitative study (Yin, 2009, p.87) Pilot Cases Just Diamond, Marketing PhD students, Luxury Consumers 25

26. Chapter 4:Findings and Analysis 4.1 Taiwan Experiential Marketing and Classification of marketing activities 4.3 Ranking of SEMs 4.4 Experiential marketing and SEMs used for different customers 4.5 Taiwanese culture preference for RELATE marketing 26

27. 4 Key Findings Luxury brands in Taiwan use all five experiential marketing strategies. For luxury marketers in Taiwan, the order of importance of the SEMs were: RELATE, ACT and FEEL, SENSE, and THINK. SEMs thought effective for VIPs were ACT, FEEL, RELATE. SEMs thought effective for Ordinary customers, SENSE, FEEL RELATE marketing is even more critical in Taiwan than Europe 27

28. 4.1 Finding 1: SEMs in Taiwan’s luxury industry 28

29. Finding 2: Ranking of SEMs 29

30. Finding 3: SEMs for different customer segmentation 30

31. Finding 4: Taiwanese culture preference for RELATE and ACT marketing Taiwan’s luxury consumers are first or second generation consumers compared to European customers that have been consuming luxury products for three to four generations. Taiwan’s consumers were not as attached to the brand as they were attached to their salesperson, salesperson was their friend and personal consultant 31

32. Chapter 5: Discussions 5.1 Discussions 5.2 Managerial Strategic Implications 5.3 Conclusion 5.4 Future Research 5.5 Research Contribution 32

33. 5.1 Discussions Findings support Pine and Gilmore’s theory of experiential marketing Schmitt (1999) proposed 5 SEMs were being used in luxury brands. ACT and FEEL marketing played a greater role in the creation of experiences, while THINK marketing played a smaller role. Majority of the representative companies ranked RELATE marketing as their top priority with any customer group 33

34. 5.1 Discussions (2) SEMs could be matched to several of Vigneron and Johnson (1999)’s luxury brand index definitions. Through classifying the different marketing activities of luxury brands in Taiwan, research can potentially link SEMs marketing activities to Pine and Gilmore’s (1998) experiential zones 34

35. 5.2 Strategic Implications for Luxury Marketers Taiwanese luxury marketers need to link a majority of their marketing communications to RELATE marketing Taiwanese luxury marketers can move their ordinary customers further up the value chain of luxury consumption using experiential marketing Identified which marketing communications to chose when marketing to a specific customer segment. 35

36. 5.3 Conclusion Taiwan’s luxury goods industry uses all five experiential marketing modules Industry experts ranked SEMs from highest to lowest: RELATE then ACT and FEEL and SENSE and THINK RELATE, ACT and FEEL are linked more to cultivating brand loyalty and higher spending. SENSE and RELATE marketing with ordinary customers, and RELATE, ACT and FEEL with VIP customers. 36

37. 5.4 Future Studies Further research should seek the replicate these findings through a mixed method approach Additional luxury brands in Taiwan can be interviewed to see if these findings hold true for them Investigating experiential marketing cross-culturally would provide insight into the culture differences Investigate the link between different marketing actions of luxury brands with characteristics of luxury brands 37

38. 5.5 Academic Contribution Findings replicate Pine and Gilmore’s (1998) Progression of economic value Identified the SEMs that are employed by Taiwan’s luxury marketers Links experiential marketing to Vigneron and Johnson’s (1999) luxury brand index 38

39. 5.5 Academic Contribution (2) Tests experiential marketing in practice and replicates recent academic efforts Link luxury brands with Pine and Gilmore’s (1998) experiential marketing model This study has contributed to the growing body of qualitative research conducted on luxury brands 39

40. Appendix 40

41. Luxury Definition: Brand identity Prism EXTERNAL FACETS INTERNAL FACETS British Heritage and International Comfort able Elegant British Excellence Masculinity Luxury Craftsmanship Adventuress Wealthy globe-trotting Motoring and Travel English-educated elite Status British belonging Well-educated Gentleman’s club Classic English lifestyle Luxury leather goods English identity and eccentricity feel the passion, British Heritage Traditional Successful Gentleman Traditional Aristocratic PHYSICAL PERSONALITY RELATIONSHIP CULTURE REFLECTION SELF-IMAGE Source: Kapferer and Bastien (2009) p. 122 41

42. Case Study Prototype Questions General Questions How long have your company been established in Taiwan? What characteristics differentiate your company as a luxury brand? What type of operations does your company have in Taiwan? (business model, subsidiary, distributor, or licensee) What marketing actions and investments do you invest in to protect the brand in Taiwan? Who decides the marketing initiatives? Is there a brainstorming session or is strictly dictated from headquarters? How does the local culture affect the marketing done in Taiwan? Experiential Marketing Does your customers buy the products because of the functionality or because of the experiential factors or other reasons? Does the company try to offer a unique experience to each customer? If so, what they do? If not, what type of customers do they offer a unique experience to? Can you tell me what does “experiential marketing” mean to you? Does your brand compete using experiences against other brands? Describe a marketing campaign that was put into place in the last 6 months, aimed directly at improving customer’s experience; does the campaign have a name? What is the planning process for creating experiential marketing and how did it work? What were the original goals and target customer segment for the marketing campaign to start? Was this practice supported by the store’s budget or by headquarters’ budget? What are the designs for measuring these techniques, and who is doing the evaluation? Can you tell me what does “experiential marketing” mean to you? Does your brand compete using experiences against other brands? Describe a marketing campaign that was put into place in the last 6 months, aimed directly at improving customer’s experience; does the campaign have a name? 42

43. Case Study Prototype Questions What is the planning process for creating experiential marketing and how did it work? What were the original goals and target customer segment for the marketing campaign to start? Was this practice supported by the store’s budget or by headquarters’ budget? What are the designs for measuring these techniques, and who is doing the evaluation? Which strategic experiential modules SEMs do experiential providers engage? Who initiates these experiences? Strategic Experiential Modules (SEMs) Do you use different SEMs to market and sell different products( ie. leather goods, watches and jewelry, fashion, accessories?) Why? If you have to rate the five SEMs SENSE, THINK, FEEL, ACT and RELATE from 1 to 5 in order of importance, how would you rate them and why? Do you use a certain combination with certain individuals? If so, how is this done? How do you use SENSE to market your products? Do you create a memorable scent in the store to attract customers? Why or why not? Do you play music in the store? Why or why not? Do you try to help the customer solve a problem? If so, how do you accomplish this? If not, why not? Can you list some examples? Do you market an alternative way of living? If so, how do you accomplish this? If not, why not? How do you try to alter the way the customer feels when they enter your store? If so, what are some examples? What feelings are you trying to trigger? What feelings are you trying to trigger in your marketing communication? Why? Can you give me some examples? Are they aligned with the same feelings you give to customers when they enter your store? Why? Do you market your products so your customers will be associated with higher social status? Is this any different when the customer buys a lower-priced item, such as a keychain? Do you market your most expensive products to show your customers that they have not reached the highest pinnacle? 43

44. Thanks for your time! I appreciate you giving me an opportunity to attend NTU, learn from some of the finest professors, challenging me and giving me the opportunity to go on exchange. May God richly bless you and stay in touch. 44