“Determining the impact of experiential marketing on consumer satisfaction: A case of India’s luxury cosmetic industry”

ARTICLE INFO Rati Dhillon, Bhawna Agarwal and Namita Rajput (2021). Determining the impact of experiential marketing on consumer satisfaction: A case of India’s luxury cosmetic industry. Innovative Marketing , 17(4), 62-74. doi:10.21511/im.17(4).2021.06 DOI http://dx.doi.org/10.21511/im.17(4).2021.06 RELEASED ON Friday, 05 November 2021 RECEIVED ON Tuesday, 21 September 2021 ACCEPTED ON Wednesday, 27 October 2021


INTRODUCTION
With the day-by-day expanding market size and reach of the industry, the idea of experiential marketing is gaining its grounds (Ueacharoenkit, 2013). Experiential marketing is identified as the strategy wherein using the perceived emotional value of consumers, a compelling experience of a product is created th7at is associated with its intangible aspects in a customer's psyche (Albatati et al., 2016). The premiumization trend in the Indian cosmetic sector is moving at a fast pace. This is backed by the ability and willingness of Indian consumers to spend money on superior quality and exclusive goods. Consumerism in the Indian luxury cosmetic industry is making a shift towards ethical and conscious consumption that is driving the industry (Sharma, 2019). The growth is further fueled by the increase in internet penetration, which has opened up the Indian markets to international brands. Moreover, an increase in awareness and consciousness about luxury cosmetics from exposure to beauty brands across the globe is driving the consumers in India (DtNext, 2020).
This shift in consumer preference and the growth of the e-commerce industry have resulted in motivating consumers to have a more personalized experience in every purchase. Luxury cosmetics is the in-dustry based majorly on experience and it requires the engagement of consumers. Despite this, a few studies have focused on exploring the concept of experiential marketing wherein the sole purpose is to provide a memorable experience to the consumer. Experiential marketing helps in creating a better brand image, earning consumer loyalty, retaining consumers, and even attracting new ones. Thus, it is essential to examine the role of experiential marketing. Hence, this study would focus on bridging the existing knowledge gap in modern marketing strategy contribution in influencing consumer satisfaction by assessing Indian consumers' perception of luxury cosmetics.

Overview of the Indian cosmetic industry
The personal care and cosmetic industry are among the fastest-growing consumer-based industries in India. In a report published by Euromonitor International, the luxury or premium beauty and personal segment in India was estimated to be around $774 million in 2018 (DtNext, 2020). With the rise in the middle class and rich people's disposable income, the scope of market size will reach up to USD

Introduction to the experiential marketing concept
In the modern competitive digitalized business environment, consumers are enriched with information about different products and services even before their purchase (Reinartz et al., 2019). In these situations, to have a positive attitude of consumers and attract consumers, industries need to adopt innovative strategies (Balakumar & Swarnalatha, 2015). As traditional marketing strategies do not provide real-time exposure to consumers, the likelihood of having a favorable perspective is limited (Dwivedi et al., 2021;Lockett, 2018). Thus, to create an experience and manage consumers demand, marketers have focused on using experiential marketing. This technique is identified as the marketing concept focused on providing consumers with the live experience of services and products at the inquiry stage (Schmitt, 2011). Experiential marketing focuses on supplying the factors which contribute towards developing the company's experiential offering side by providing consumers access to products before purchase (Urdea et al., 2021). Targeting the consumer experience, this marketing provides sensory, rational, and emotional cognitive-behavioral value. Experiential marketing creates a brand image using consumer perception of products or services rather than physical products (Aronne & Vasconcelos, 2009). This allows companies to generate consumer satisfaction by enabling them to acquire different perceptions from the competitive product and a feeling of niche during the consumption process (Wu & Lee, 2016). Further, experiential marketing engages the factors of sense, feel, act, think, and relate and contributes towards building relationships, increasing loyalty, stimulating purchase, creating memories, and developing positive perception (Datta, 2017; Smith & Hanover, 2016). Thus, experiential marketing is an important marketing concept in this competitive environment to create a segment for a niche among consumers and help them obtain a competitive advantage.

Advantages of experiential marketing in the cosmetic industry
Experiential marketing involves participation as a measure to connect with consumers through memorable experiences (Nyberg & Soini, 2017 . Experiential marketing is furthermore important in the cosmetic industry as it creates an effective, sensory, intellectual, and behavioral experience that can be controlled by the firm (Labenz, 2019;Xu, 2020). This is unlike traditional or social media marketing where brand image is influenced by outside sources of peers, celebrities, friends, and family (Mohasoa, 2014). Experiential marketing creates a strong relationship between brand personality and cosmetic brand experience leading to the creation of loyal customers based on consumer satisfaction. This creates trust by delivering a luxury cosmetic brand experience to achieve greater consumer loyalty (Ueacharoenkit, 2013). Furthermore, experiential marketing attracts brand enthusiasts by building hype through space and experience marketing in real-time. Thus, experiential marketing creates a brand experience by providing a memorable experience, relevance, brand engagement for the affective, sensory, intellectual, and behavioral experience.

Importance of consumer satisfaction
Customer satisfaction is a means to measure the happiness of the consumers based on the service, product, and capabilities of the firm ( . Even, a satisfied consumer leads an organization to meet important customer requirements and identify distinct patterns or gaps in the products thus motivating them to innovate and differentiate their product (Ilieska, 2013). Furthermore, as the cost of acquiring new customers is more than retaining them, thus, derivation of the customer helps in maintaining the existing customers and drive customer loyalty (Uncles et al., 2003). Customer satisfaction is further important for firms as it is influenced by the service, product, personnel, and image value of products that are generated through unique and differentiated customer experiences (Angelova & Zekiri, 2011;Pei et al., 2020). This helps firms create a better customer experience and enables them to develop sustainable and long-term competitive advantages (Accenture, 2015; Cheraghalizadeh et al., 2021). Thus, customer satisfaction derivation for an organization serves as the means of influencing consumer loyalty, improving business performance, identifying strengths and weaknesses of the product, creating differentiated customer experiences, and generating long-term competitive advantage and innovation.
1.5. Empirical review: Relationship between experiential marketing and consumer satisfaction Zena and Hadisumarto (2012) analyzed 80 respondents to identify the impact of experiential marketing on service quality, customer satisfaction, and customer loyalty using SEM analysis on data gathered quantitatively. The findings suggest that experiential marketing campaigns impact customer satisfaction and also develop a competitive advantage for the firm. Further, Kanopaite (2015) used responses gathered from 243 respondents who experienced experiential marketing to show that the sense, feel, and act experiences of the consumers significantly impact customer satisfaction. The results also reveal the presence of a twoway relationship between satisfaction and retention of consumers generated through experiential marketing. Fatmawati et al. (2017) examined the relationship between experiential marketing and consumer satisfaction by surveying 100 customers using a quantitative approach. The results of the study reveal that the variables of experiential marketing, specifically those of sense, think, feel, act, and relate, have a significant influence on customer satisfaction and in turn influence customer loyalty as well. In addition, Ishara and Gayathree (2020), encompassing 205 survey participants' responses, quantitatively assess the role of experiential marketing in retaining customers. The findings suggest that experiential marketing uses a customer-centric approach that appeals to the emotional and cognitive senses of the customer, which affect customer satisfaction. Finally, Sharma et al. (2020) surveyed 120 respondents using an online survey to reveal that experiential marketing has a positive impact on customer satisfaction and retention. The empirical studies, thus, point to the presence of a positive relationship between experiential marketing and customer satisfaction.

AIM AND HYPOTHESES
The study aims to determine the impact of experiential marketing on the consumer satisfaction of the Indian luxury cosmetics consumers.
Based on the aim, the hypotheses of this study are as follows: H 0 : Experiential marketing does not have a significant influence on the consumer satisfaction of the Indian luxury cosmetics consumers.
H 1 : Experiential marketing has a significant influence on the consumer satisfaction of the Indian luxury cosmetics consumers.

METHODOLOGY
The current study used structural equation modeling (SEM) to examine experiential marketing's influence on consumer satisfaction. It is a set of statistical techniques that are used to measure relationships between observed and latent variables and analyze them. SEM technique finds its place in social science as it is both confirmatory and exploratory (Rahman et al., 2015). As this analysis helps in adding more value to the results with the associated technicality and the linkage building, thus, this method is suitable for this study. Thus, for estimating or establishing relationships between variables the steps followed in SEM analysis include model specification, model identification, model estimation, model evaluation, and modification to improve the reliability andstability (Fan et al., 2016). With this, the present study uses a quantitative data type of primary study to examine the perception of respondents. Herein, the variables considered for the impact examination are the experiential marketing aspect with the inclusion of sense, relate, act, think, and feel components and consumer satisfaction with overall service quality, perceived expectation-actual performance, and individual experience and service quality. The data is collected using purposive sampling from 820 consumers purchasing luxury cosmetics from stores in the Delhi NCR region with the help of a close-ended structured questionnaire. The questionnaire is formulated such that the initial section consists of demographical characteristics and background knowledge of consumers about experiential marketing. Further, the inferential section consists of statements measuring the respective variables' linkage. With the collected data, the perception of consumers is analyzed using frequency analysis for demographic and background analysis followed by SEM with the help of SPSS AMOS software. As the assessment of the dataset is done using the Cronbach's alpha test and the model is also evaluated, thus, the results derived are ethical, valid, and reliable.

DATA ANALYSIS
The data were gathered from the 820 respondents. The demographic analysis allows understanding the background of the survey respondents. In this respect, Figure 1 presents the frequency chart for the respondents. Further, the examination of income depicts that about 41.6% have income up to Rs. 2,000,000, 39.1% visit stores very often, and 37.8% are married.
The background analysis of the respondents is conducted to understand the level of knowledge of respondents on the subject and the parameters under study. In this respect, the respondents were asked to rate premium cosmetic brands on parameters of known and used, known but not used, not known. The results are presented in Figure 3. Herein, maximum consumers state that about 37.4% use luxury cosmetic products every day, 43.8% think that it is somewhat important, and 47.3% would recommend purchase from the luxury cosmetics store. Figure 6 suggests that the majority of respondents strongly agree that the luxury cosmetic brands have integrity and reputation (38.5%) while 39.5% agree to the contributors of staff support, and 36.1% -store locations.
Further, the majority of respondent agrees that there is the influence of product quality (38.3%), product availability (39%), and after-sale service (34.1%) on luxury cosmetics consumers' perception. The background survey thus re-    veals that most respondents either know or have used or know or have not used luxury cosmetic brands, they use the products every day, deem it to be somewhat important, would recommend it, strongly agree to integrity and reputation, while agreeing to staff support and store locations, product quality, product availability, and after-sale service contributors of the luxury cosmetic brands.
Data gathered for inferential analysis is used to determine the effective model for building in the linkage between experiential marketing and consumer satisfaction. The statements are coded and path-based analysis was developed between the selected variables. For factor analysis, experiential marketing is divided into the categories of sense, feel, think, act and relate and three aspects of consumer satisfaction of overall service quality (OSQ), individual experience and service quality (IESQ), and perceived expectation-actual performance (PEAP). A path-based analysis is built using experiential marketing and consumer satisfaction as latent variables. Further, the variables like sense, act, feel, think, and relate are included as factors leading to define the experiential marketing for luxury cosmetics stores of India while OSQ, IESQ, and PEAP contribute to measuring consumer satisfaction. Herein, SEM analysis helps in computing the value of variables as per their factors and building the linkage between experiential marketing and consumer satisfaction (Figure 8).

Figure 8 establishes the linkage between variables.
Based on this model, initially, the examination of the model fitness and reliability is done followed by the impact assessment using the significance value.

RESULTS
Before the assessment of the model, it is required to examine the efficiency of the model. Thus, for the preliminary analysis, the reliability and validity test is conducted to reveal the presence of stability among the relationship between variables. The findings of the test are reported in Table 1. It shows the result of Cronbach's alpha values for the statements of experiential marketing and consumer satisfaction. These values are more than 0.7. Thus, they are efficient to be considered in the model. Further, as AVE > 0.5, ASV < AVE, and MSV < AVE, all constructs are valid too. Hence, for the selected latent variables, reliability and validity tests show the presence of stability in the relationship. This depicts that the results derived from the analysis are consistent enough to determine generalized results.

DISCUSSION
With the identification of constructs efficiency, the examination of model adequacy is required. Herein, the derivation of the optimal form of the model is based on determining the efficiency of the model using different absolute and incremental indices. Based on the model stated in Figure 8, the comparison of model fitness has been drawn with recommended value (Table 2). Thus, modification in the model is required for deriving an efficient model. Herein, using the modification index, the covariance between error terms is established, and based on that optimal model is formulated. With this, the modified model fitness indexes are stated in Table 3. Building on the adequate model, the influence of experiential marketing could be derived on consumer satisfaction. Herein the hypotheses are tested at the 5% level of significance wherein the z-value of the model is 1.96. The results of the analysis are shown in Table 4.
It is shown that the standard error value for the linkage between consumer satisfaction and experiential marketing is 0.04, which is low, hence the level of biasness in the computation of the results is low. Further, the CR value and the p-value of the model help in having the assessment of the hy-

CONCLUSION
With the shift in the business market towards digitalization, the adoption of innovative strategies by industries has been prevalent. The availability of information, better exposure, and demand for more personalized experience motivated businesses to focus on consumer experience and earn their loyalty. Experiential marketing has been identified as the strategy of using the perceived emotional value of consumers to create a compelling experience of a product. It also creates a better brand experience, enhanced brand relevance, and provision of intellectual and behavioral consumer experience. The lack of empirical evidence on the impact of experiential marketing in the context of the luxury cosmetic industry in India served as a basis to undertake this study. The study of consumers revealed a positive impact on consumer satisfaction.
In India, however, experiential marketing is still in a nascent stage. The concept is novel yet immensely beneficial for companies as its principal aim is to communicate rather than direct their behavior. Not only do experiential marketing methods create memorable experiences, but they also give them unexpected ones. This prompts positive behavior on their end, as they tend to spread their pleasant experiences through word of mouth. Considering the luxury cosmetics space, it has been highlighted before that primary evidence on the phenomenon is lacking. Moreover, the phenomena of brand experience and the emotional responses to luxury cosmetics itself are underexplored. Evoking emotional responses is critical in creating a product's experience today, particularly of luxury goods, for differentiation from other brands. Since the chief aim of experiential marketing is to create such an emotional response, it is indispensable to luxury cosmetics today, which has been established in this study through primary findings.
This study, however, faced some limitations. Studying experiential marketing and its benefits from the side of the companies would have provided another dimension and strengthened the findings. Moreover, a wider sample population could have been reached, i.e across the country, as consumer preferences tend to change with demographics. Therefore future research in this subject can take into consideration these limitations to manoeuver their study strategy accordingly.