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The SWIPE Strategy of Experiential

Marketing Mix: A Case Study of


GERAGEM

Minghui Qian, Yanhong Liu


School of Information Resource Management, Renmin University of China, Beijing,
100872, China
School of Business, Renmin University of China, Beijing,100872, China
mhqruc@gmail.com

This paper is mainly about the experiential marketing mix strategy. It sums up the distinguishable
characteristics of experience and experiential marketing using deductive and inductive methodology
based on literature review and in-depth interviews, generalizes the strategy of experiential marketing
mix, namely SWIPE, in comparison to the traditional and classic 4P marketing mix, and verifies the new
strategy with a typical case study of GERAGEM, a Korean company.
Keywords: experience, experiential marketing; marketing mix; experiential marketing mix

According to the distinguishable characteristics of ve the established goal, it is necessary to combine


experience and experiential marketing, the paper these variables effectively. Although there are many
generalizes the SWIPE strategy of experiential controllable marketing variables, so far the greatest
marketing mix, namely Situation (S), Word of Mouth impact on the marketing mix is 4P, summarized by
(W), Interaction (I), Price (P) and Experience (E), McCarthy (1960) in his book Basic Marketing:
and verifies the new strategy with a typical case study product, price, place and promotion. Since then, 4P is
of GERAGEM, a Korean company. widely recognized and used in research and practice
areas.

1. RESEARCH ON MARKETING MIX


Marketing mix is still a hot topic in marketing
Marketing mix is not only an important concept in theory Scholars have made great efforts to the
modern marketing theory, but also is an effective tool to research not only on expanding the depth and width
develop marketing strategies. In 1953, Neil Borden took of each element of marketing mix, but also on
the lead in proposing the term “marketing mix”, applying the combination of the mix. Particularly,
meaning that the market need influenced by much attention has been paid to the evolution, cha-
marketing variables to some extent. In order to achie- nges and new combinations of marketing mix in the

Journal of Chinese Marketing, 78


Vol.2 No.1 (April 2009), 78-87
field of industry research and marketing paradigm. ible, but experiences are memorable.” “ Buying a
kind of experience is to spare time on enjoying a
More importantly, marketing mix is not only an series of memorable events supplied by companies,
important tool to guide companies to do marketing like drama performance, and customers are person-
practice step by step, but also the most common and ally on the scene.”
widespread tool to attract many researchers to study
it. Chiara Gentile, Spiller. Nicola and Noci. Giuliano
(2007)defined customer experience in terms of the
evolution of the relationship of company and
2. CURRENT RESEARCH ON EXPER
customer. They mentioned, “The customer experience
IENTIAL MARKETING
originates from a set of interactions between a
2.1 Differences between Experience and Product / customer and a product, a company, or part of its
Service organization, which provoke a reaction. This experi-
Alvin Toffler, an American futurist, showed in his ence is strictly personal and implies the customer’s
book Future Shock (1970) that experience economy involvement at different levels (rational, emotional,
would be the latest wave of development, after the sensorial physical and spiritual). Its evaluation
evolution of agriculture economy, industry economy depends on the comparison between a customer’s
and service economy. Joseph Pine Ⅱ and James H. expectations and the stimuli coming from the
Gilmore, cofounders of Strategic Horizons LLP, interaction with the company and its offering in
published the book The Experience Economy: Work correspondence with the different moments of contact
Is Theatre and Every Business a Stage by Harvard or touch-points”.
Business School Press in April 1999. Since then,
“experience” as an economic term has been widely The experience ( Wang Tao, Cui Guohua, 2004)
focused on. is a nice and memorable feeling for the customer who
is a necessary member to participate, design and
Joseph Pine Ⅱ and James H. Gilmore (1998) engage in the whole sales process in the consumption
believed that “an experience occurs when a company situation provided by the company.
intentionally uses service as the stage, and goods as
props, to engage individual customers in a way that Experience, according to Zhang Shiju (2005),
creates a memorable event”. Only when a customer could be defined on two facets. In terms of
would like to pay for the experience, could it be consumers, experience is a nice feeling after
considered as a kind of economic offering. They also customer experienced or purchased. In terms of
mentioned that experience is the fourth economic company, experience is an economic offering of
offering after commodities, goods and services, and is them.
also “a distinct economic offering, as different from
services as services are from goods”; “Commodities
are fungible, goods are tangible, services are intang-

Table 1 Comparison on Product, Service and Experience

Product Service Experience

Form of Goods Tangible Intangible Memorable


Attributes of Goods Homogeneity Heterogeneity Completely personalized
Transfer of Goods Separated progress of Simultaneous progress of Simultaneous progress of

Journal of Chinese Marketing, April 2009 / 79


production, distribution production, distribution and production, distribution
and consumption. consumption and consumption, and to
continue the process after
the consumption.
A kind of process or A kind of process,
Characteristic of Goods A kind of goods
activity influence or feeling
To achieve the sale in the To achieve the sale in and
Realization of Value of
Factory production interactive exchange after the interactive
Goods
process exchange process
Experience does not
The exchange does not
The exchange involved the belong to the provision of
Ownership of Goods involve the transfer of
transfer of ownership experience, but belongs
ownership
to every consumer
Source: Concluded by this researcher after referring to relevant literature.

Observing from the definition of "experience" by production, distribution and consumption. In this
scholars, both domestic and abroad, and the contrast sense, experience and service are similar, because the
between experience and traditional economic offering process of their production, distribution and consum-
or service (shown in Table 1), we can see that ption are both simultaneous. However, the difference
experience, as a special economic offering, is differe- is that various feelings developed in the course of
nt from product and service in the following aspects: experience do not finish along with the end of consu-
mption, and still continue after the consumption.
First, considering the form of goods, products are
tangible entities while services, whether associated Forth, considering the characteristic of goods,
with products or not, are intangible activities and product is a physical entity, while service is an
processes. Experience, on the other hand, is the activity or a process, and experience is an integration
memorable feeling and psychological process. Of of process, impact and feeling.
course, many services are intrinsically a kind of
experience. However, the latter emphasizes more on Fifth, considering the way to bring value of goods,
the unforgettable experience and feeling of customers products have had the value after being produced in
and also on the effect of being apperceived. factories, and transfer the value through exchange
process. The value of service is realized in the pro-
Second, considering the attribute of goods, cess of exchange, and the value of experience is reali-
products provided by companies usually are homo- zed in and after the process of interactive exchange.
geneous. Services, due to variation of service
providers, are heterogeneous. Experience, however, Sixth, considering the ownership of goods, the
is based on the personal background, experiences, exchange of products transfers a tangible product
understanding and recognizing of customers and from producers to consumers, which involves the
consumers, and is therefore totally personalized. transfer of ownership. Service is an activity or a
process provided by producers or dealers, which does
Third, considering the transfer of goods, products not involve the transfer of ownership. However,
are produced for consumers’ selection and consu- experience is consumer’s seeing, feeling and thinking
mption, and the process of production, distribution elements stimulated by producer or dealer, which
and consumption is separated. In the course of varies varying from person to person, and belongs to
service providing, it is a simultaneous process of each consumer only.

80 / Journal of Chinese Marketing, April 2009


In short, experience is a completely intangible that "act" in such environment, during which the
process, effect and feeling which is far beyond customers will gain memorable experience due to
product or service and has to take the use of product active participation, and will pay a premium for
or service as a carrier. Experience begins from the pleasure.
interactive process between experience maker (comp-
anies) and subject (customer), and still continues Yuan Yue (2005), a member of Lingdian
whether the interaction is finished or not. Investigation Company, stated that in experiential
marketing, namely the SHUP method, the emotional
2.2 The Difference between Experiential Marke- behavior of every person consists of four elements:
ting and Traditional Marketing seeing, hearing, using and participating, where the
In the article Welcome to the Experience Economy customers' feeling, both sensational and behavioral,
published in the Harvard business Review (1998), are emphasized.
and the book The Experience Economy, Joseph Pine
Ⅱ and James H. Gilmore interpreted consumption Schmitt (1999) thought that traditional marketing
characteristics in experience economy, though they has four key characteristics: focusing on product
didn’t put forward the concept of experiential features, performance and efficiency; narrowly
marketing. Bernd H. Schmitt (1999) definitely defining the product category and competition;
brought forward the concept of experiential customers are rational decision makers; marketing
marketing in his book Experiential Marketing. He methods are analytic, quantitative and spoken.
thought that experiential marketing is an experience- However, four key characteristics of experiential
oriented marketing and management model, the marketing are: focusing on customer experience,
methodology of marketing should be redefined and testing consumer situation, customers are rational and
redesigned in terms of the following five elements, emotional, many methods and sources can be used.
sense, feel, think, act and relate.
Comparing the above scholars point of views in
According to Chinese researchers Wang Tao and the definition and key characteristic analysis of
Cui Guohua (2004), experiential marketing refers to experiential marketing, we can draw the following
the company's creating an atmosphere and designing conclusions about differences between experiential
a series of events so that the customers become actors marketing and traditional marketing:

Table 2 Differences Between Experiential Marketing and Traditional Marketing

Traditional Marketing Experiential Marketing


Theoretic base Customer is rational. Customer is both rational and emotional.
Pay attention to product or service
Attention Pay attention to customer experience.
feature, quality and level.
Marketing One way communication from company Interactive communication between
Communication to customer. company and customer.
Recipient or passive participant (a certain
Role of Customer Leading actor (absolute initiative).
degree of interaction)
Source: Concluded by this researcher after referring to relevant literature.

Journal of Chinese Marketing, April 2009 / 81


2.2.1 Different Theoretical Base round-way information flow, focuses on the
Traditional marketing believes that customers are consumption atmosphere cultivation, and integrates
emotional, and customers buy products or services in and respreads marketing information by two-way
order to meet their materialistic needs. However, interaction.
experiential marketing breaks the traditional
"rational" assumptions and considers that the custom- 2.2.4 Different Role of Customers
mer is both a rational and emotional purchaser, As for traditional marketing, customer is a recipient
focusing on meeting their emotional and personalized or a participant for product or service, Despite certain
demand. degree of interaction, they are often passive recipient
of economic offering. Experiential marketing, how-
2.2.2 Different Attention ever, emphasizes the active participation of customer.
Traditional marketing emphasizes on the features, Experience as an economic offering can be trans-
quality and level of products and services, and uses ferred to customers only when they actively engage
these strategies in the hope of developing competitive in the process of experience activities.
advantage for corporations; Experiential marketing,
however, focuses on providing customers an unfor- 2.3 Traditional Marketing 4P Reflected in Experi-
gettable experience, and arising a fun, pleasurable entail Marketing
and emotional atmosphere in the consumption As we learned from the above analysis, research on
process, thus encouraging customers to pay “trans- experience and experiential marketing are customer-
ferring value” for the "experience". In comparison, focused, based on the assumption that the consumer
the former emphasizes particularly the satisfaction of is both rational and emotional. Based on this
consumption result, and the latter emphasizes assumption, 4P in experiential marketing should be
particularly the satisfaction of consumption process. reinterpreted with new appeals. We can find the
effective combination of marketing variables in
2.2.3 Different Marketing Communication experiential marketing by analyzing value appeals
As for traditional marketing, marketing commu- applying to traditional 4P mix (See Table 3).
nication, whose information only flows from the
company to customer, pays more attention to the 2.3.1 Product
promotion of price, quality and function. In this In traditional marketing, product value achieves
process, information is a one-way flow. Company customer’s awareness by communication. Therefore,
plays a leading role in this communication process. the product strategy focuses on gathering product
Experiential marketing, however, emphasizes the function which is easily communicated to and

Table 3 Comparison of 4P in Traditional Marketing and Experiential Marketing

Traditional Marketing Experiential Marketing


Product To meet customers’ material needs by To satisfy customers by their identification
aggregated function of product. with their experience.
Price Cost-effectiveness of product or service. Customer value experience
Place To establish distribution network To provide interactive sites
Promotion Awareness and dissemination of product
Results by word-of-mouth
or service.
Source: Concluded by this researcher after referring to relevant literature.

82 / Journal of Chinese Marketing, April 2009


recognized by customers. In experiential marketing, strategy rather remains the store terminals or contacts
product value is cognized and accepted through than an interactive situation which is to serve for
interactive experience, therefore, the product strategy customer experience.
focuses on product function that allow customers to
accept product features in mind. In this sense, it is 2.3.4 Promotion
important to add product features or improve cust- In traditional marketing, promotion strategy is to
omer impression of product function by creating attract the attention of customers. The fundamental
unforgettable atmosphere. purpose of promotion is communication, to help
customers better understanding the value of products.
2.3.2 Price In experiential marketing, promotion strategy is
In traditional marketing, pricing strategy is adopted to mainly to realize the recommendation among custom-
achieve cost-effectiveness. The more features, the mers through word-of-mouth. The fundamental
better function, the lower cost, then the better value purpose of promotion, in this condition, is to end
for money. This pricing strategy also needs to selling with customer satisfaction.
compare between rivals. In experiential marketing,
pricing strategy is developed by customer expe-
3. EXPERIENCE MARKETING MIX
rienced value. The longer the customer experiences,
STRATEGY AND ITS MAIN ELEM-
the higher degree the customer satisfies, and the more
ENTS
money the customer would be willing to pay.
In comparison with traditional 4P marketing mix
2.3.3 Place strategy, according to the distinguishable characteri-
In traditional marketing, place strategy is to cover stics of experience and experiential marketing, this
more customers, so the place design emphasizes the paper generalizes five main elements SWIPE strategy:
coverage of channels network and the vitality of Situation (S), Word of Mouth (W), Interaction (I),
terminal channel, which can be built in virtue of Price (P) and Experience (E), which should be
community channels. In experiential marketing, place included in the experiential marketing mix.

Figure 1 The SWIPE Strategy of Experience Marketing Mix

Satisfaction of self-demand

Experience

Customer Value Experience Price Word of Win-win Choice


Experiential
mouth
marketing
Mix

Interaction Situation
Two-way Communication Stage of Experience

Source: Concluded by this researcher after referring to relevant literature.

Journal of Chinese Marketing, April 2009 / 83


3.1 Experience not only can provide a unique and memorable experi-
Experience is the most basic element in the expe- ence for customers, but also can wake their potential
riential marketing mix. As 4P’s product, it describes demand and buying desire.

the offering by companies. According to Schmitt


(1999), there are five kinds of experience, including 3.4 Interaction
feeling, emotional, thinking, action and relationship. Interaction, an essential element of experiential mar-
However, the experience recognized by customers keting, refers to two-way communication between
can not be clearly divide into the above five forms, companies and customers. Interaction aims to build a
but a combination of them. Therefore, companies relationship of mutual assistance, demand and need
should use a mixture of experience to expand its by way of communication and exchanges, so as to
result and strive to create a comprehensive experie- practice experiential marketing. In the stage of
nce including feeling, emotion, thinking, action and situation, the staff, at the scene, is either a "director"
relationship. or an "actor”. To present a vivid and true “drama”
and convey the theme, customers should be lured into
the designed event devotedly and made into a real
Experience, with multiple forms, can exist in
“actor”. Only when customers deeply participate in
product and service, or exist as an individual comm-
the process of the designed event, can they really
odity. Therefore, experience, as an element of the
engage in the situation, and become aware of the
marketing mix strategy, can be a distinct means and
value of experience.
method of marketing, and play its role through any
element of experiential marketing mix. However, the
most important thing is that experience must have the 3.5 Word of Mouth
core function of satisfying customer self-needs and Word of mouth is an integral element of experiential
realizing their self value. marketing mix. The appeal of experience offering is a
process, an influence and a feeling, which is built on
the satisfaction of the customer’s emotional demands.
3.2 Price
Therefore, in the situation stage, if customers are
Price allows customers to pay for their "experience",
willing to spread healthy and positive word-of-mouth,
which is a basic character different from traditional
they will be encouraged to be an "actor" or a
marketing. In experiential marketing, experience is a
"director" to convey information to more customers.
necessary part of economic offering. More impo-
This is often more realistic and effective than the
rtantly, the pricing of experience is not limited to the
traditional mass media.
cost, but customer value oriented. Under this conditi-
on, pricing is flexible. The core of pricing strategy
should make customers accept higher value awa- 4. CASE STUDY ON CERAGEM EXP-
reness of their offering, rather than increase the cost ERIENTIAL MARKETING
effectiveness. CERAGEM Co., Ltd, established in 1998 in Korea, is
now the largest provider of high quality thermal
3.3 Situation massagers. CERAGEM offers an opportunity for
Situation is an “experiential stage” for customers. It customers to experience a CERAGEM thermal mass-
can be designed as a realistic scene or as a virtual ager free of charge at any of their retail distribution
world. With this stage, corporations can take use of centers located throughout the world. Since entering
many props to set off an interactive, fun, under- into Chinese market in 2001, CERAGEM has built its
standing and respectful atmosphere, even a living and manufacturing factory and research institute in the
cultural atmosphere to raise customers’ interest and cities of Yanji and Tianjin, opened a Beijing Office
effectively communicate with corporations. Situation and set up more than 1700 product experiential

84 / Journal of Chinese Marketing, April 2009


centers in about 30 provinces, cities and munic- arch and follow-up research. We believe CERAGEM
ipalities. CERAGEM has developed a long-term, is a typical case to validate the new framework of
comprehensive after-sales service system, created a experiential marketing mix (See Figure 2).
distinctive model of free experiential marketing and
achieved remarkable success in the Chinese market. 4.1 Product experience of CERAGEM
CERAGEM product is a kind of automatic thermal
From September to October 2007,a research massagers that combines massage and Ceragem
team from the Marketing Research Center of China pressure™ with Radiant Infrared heat, emitted through
(MRCC) visited CERAGEM’s Beijing Office and jade and Epoxy Carbon Panel for an overall rejuv-
several experiential centers in Beijing, Shanghai, enation. CERAGEM set up many experiential centers
Guangzhou, Shenyang and Chengdu. They collected to supply a place for target consumers to get a free trial
much useful and detailed first-hand material about of their product so that in a long term customers are
CERAGEM’s free experiential marketing by virtue willingly pay premium value on the basis of
of extensive deeply interviews, questionnaire rese- experience.

——Customer
• Uniform price
• Warm home;
throughout the
• To Miss children;
country;
• Free forever;
• Limited sales
• Long life and healthy ——Customer
period;
wish;…… • To keep healthy;
• To bring healthy
——Staff member • To release regret;
back home;
• To purse love;…… • To deliver love and
• To buy after
——Company kindness; ……
recognization;
Satisfaction of self-demand • To earn money;
• Decision making
• To realize social ——Staff member
by the whole Experience
responsibilities; …… • To get reward……
family;
Customer Value CERAGEM
Price Word of Win-win Choice ——Campany
Experience Experiential Mouth
• To attract more
Marketing Mix
experience customers;
• To earn more money;
Interaction Situation • To better reward
Two-way Communication Stage of Experience
society;……

• Service teacher
• Site:experience center;

class; • Prop:- automatic thermal massagers;


-Friendly call;
• Experience
-Inspired slogan;
customer story;
-Indebted song;
• Customer
-Impressive activities;
communication;
…… • Actor:-Manager;
-Service teacher;
-elder customer;……
Source: Concluded by the researchers.

Journal of Chinese Marketing, April 2009 / 85


In the course of CERAGEM product experience, short, three to four times a year, each less than a
three facets of emotional needs are met: First, in week’s time. This unique sales policy hoists the
terms of customer, CERAGEM introduces traditional appetite of customers who are urged to release their
Korean culture—— calling "Dad" and "Mom" to the long, strong emotional needs in a limited period, and
elder, which narrows the gap between buyers and speed up or shorten their decision-making process.
sellers, locking the complex emotional needs of the
elder who often miss their children, pursing good CERAGEM’s long-term free experience is to ena-
health and saving more money, and becoming an ble customers to purchase products after fully receivi-
effective way for them to enjoy their bore and lonely ng the product value. For customers who can afford it,
lives. Second, in terms of staff member, they are they still keep a degree of satisfaction after paying a
strongly identified with CERAGEM culture and premium price to buy products. However, for customers
responsibility. They regard “service teacher” as a work who can not afford it, their psychological pressure may
of “pursuing love” to achieve "self-realization needs," be increased with the long term free experience, so they
the highest state. Third, in terms of corporation, any will do their utmost to reward the company.
companies are to be for profit, and we can learn the
social responsibilities of CERAGEM from their 4.3 Situation Stage of CERAGEM
strategies of long-term free trial experience, from their CERAGEM experience center is a stage to supply
ideas of taking care of the elderly, and from their free thermal massagers, to deliver the company’s
vision of providing a happy and healthy lifestyle. healthy idea, to show its kinds of products and to feel
its love of culture. At this stage, customers could
4.2 Experience Value of CERAGEM experience a quality thermal massage machine, hear
The pricing and selling policy of CERAGEM is the long-hoped call of “Dad” or “Mom” and inspire
considerably strict. Being a retail distributor, it is thankful slogans and songs. Managers, service
necessary to abide by the company’s sales policy, to teachers and elderly customers counterchange their
pay a high deposit, and to accept the company's strict roles between "director" and "actor" through these
control and supervision. props on the stage, presenting the CERAGEM stories
day by day, month by month and year by year.
According to the sales policy of CERAGEM,
“customers only can purchase products after at least 4.4 Emotional Interaction of CERAGEM
one month of experience. A newly opened experience In the stage of CERAGEM situation, managers of
center does not be permitted to sell products in less experiential center, service teachers and elderly
than three months”. It means that experience centers customers respect, love and help each other, contin-
can not sell their products to a customer who has not uously presenting moving stories: service teachers
experienced for more than one month, even if the earnestly prepare for every healthy course, customers
customer catches up with the “marketing period”. introduce their own experience and managers caref-
Similarly, the newly opened center also can not sell ully take care of older customers as their child-
their products even if it catches up with the “mar- ren……which portrays a picture of harmonious
keting period” in less than three months. This policy CERAGEM family.
reflects its responsible attitude toward customers, and
will have a demonstrable effect. More importantly, it 4.5 Low-key Word-of-Mouth of CERAGEM
is easy to have a sense of trust for customers. As far as media selection is concerned, CERAGEM
avoids the so-called strong media such as television,
The sales policy also says that retail distributor newspaper, radio and internet, but has chosen a
can only sell products during an appointed marketing relatively low-key communication channel——word
period decided by the company. This period is very of mouth. Word of mouth is typically considered a

86 / Journal of Chinese Marketing, April 2009


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20080440467 )
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