The Charm of STARBUCKS:

How Do Dual Self Construal Influence Customer Experiences and Retention?

Abstract

By creating experiences firms intend to create distinct experiential value in the customers’ mind that builds retention. The self – retention links and the associations among perceived value- happiness -retention are well documented. However, the research from the perspective of dual self-construal theory is scant. This study proposes a model to examine the impacts of dual self-construal on customer experience and retention, and further to examine the moderating effects of gender, i.e. a moderated mediation model (MOME). ….

A sample of 413 valid questionnaires is used to test our model. Our analysis reveals four key findings. (1), The interdependent-self has a positive and indirectly (i.e., mediated by hedonic and utilitarian value) influences happiness, which in turn enhances retention. While the independent-self has a positive and direct impact on retention. (2) Hedonic value positively affects brand experience and happiness with the later having a positive influence on customer retention; (3) Customer value, brand experience and happiness fully mediate the relationship between the interdependent-self and customer retention. While the relationship between the independent-self and customer retention is not mediated. (4) Finally, gender moderates the mediating effects of experiential value in the relationship between self-construal and happiness and retention. These results offer important implications to both theory and practices.

Keywords: Dual self- construal, Hedonic/Utilitarian value, Brand experience, Happiness, Customer retention.

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1. Introduction In the book ‘‘Onward’’, the authors identify a ‘‘continuum of consuming

experiences.’’ These range experiences largely constructed by consumers to those developed by companies (Pine & Gilmore, 1999). Starbucks’ CEO Howard Schultz solemnly declared: “We are back to our core value that intensifies the experience for our customer.” For both practitioners and scholars understanding consumers and their consumption experiences with branded services, is one of the core tasks of marketing. This perspective leads to the notion of ‘‘experiential marketing’’ (Schmitt, 1999). In this study we take a novel perspective to understand brand experience from a dual self-construal perspective. Dual self-construal corresponds with individuals’ specific values, cognitions, emotions and motivations (Dixon & Robinson-Riegler, 2009).

Value lies in the hedonic and experiential elements surrounding the product and service that make up the experience of consumption itself (Schmitt & Zarantonello, 2013). Value delivered to the customer should ideally be driven both by experiential features (hedonic value) and by functional characteristics (utilitarian value) in order to increase the odds of a good market response. In terms of brand experience, brand experience is conceptualized as sensations, feelings, cognitions, and behavioral responses evoked by brand-related stimuli that are part of a brand’s design and identity, packaging, communications, and environments (Brakus et al., 2009). Steel, Schmidt, and Shultz (2008) found that brand experience have positive impact on consumer well-being. Kahneman, Diener, and Schwarz (2003) suggest that hedonic psychology maximizes human happiness (Ryan & Deci, 2001). As such, we propose a conceptual model to examine the relationships among experience value, happiness, and customer retention in the context of dual self-construal. This research makes three distinct contributions:

(1) This study is among the first to examine the relationships among dual self-construal, experience value, happiness and customer retention.

(2) Based on dual self-construal perspective, this study examines the different roles of independent-self and interdependent-self in a customer service experience. In particular we test the mediating effects of service experiences between the dual construal of self and happiness.

(3) The study examines the moderating effects of gender on the aforementioned relationship.

The remainder of the paper is organized as follows. In the next section, we present the theoretical background and our proposed model with hypotheses. Next, we describe the research methods and test the hypotheses. After presenting our results, we conclude with a discussion and the managerial implications.

2. Literature Review 2.1 Customer Retention

Figure 1 shows our conceptual framework. Customer retention refers to the intention to repurchase or continue a relationship with a service firm (Bolton, Kannan, & Bramiett, 2000; Gerpott, Rams& Schindler, 2001; Jones, Mothersbaugh, & Beatty, 2000). Customer retention is critical because long-term customers buy more, bring in new customers, take less of the service providers’ time, and are less sensitive to price (Reichheld, 1996; Reichheld & Sasser, 1990).

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2.2 Dual Self-Construal

At the center of experience is the self: a continually developing sense of awareness and agency that guides action and takes shape as the individual, both brain and body, becomes attuned to the various environments it inhabits (Markus & Kitayama, 2010). Every individual-self integrates independence and interdependence to varying degrees (Fiske, Kitayama, Markus, & Nisbett, 1998; Greenfield, 2009; Triandis, 1995). An independent self-construal refers to how people define themselves by how they differ from other people and by the extent to which they are not influenced by a specific situational or interpersonal context (Markus & Kitayama, 2010). Its conceptual elements emphasize: (a) internal abilities, thoughts and feelings; (b) being unique and expressing the self; and (c) realizing internal attributes and promoting one's goals (Markus & Kitayama, 1991; Singelis, 1994). An interdependent self-construal leads people to define themselves through their social relations, their communal or societal roles, and there dependence on other people or on specific contexts(Markus & Kitayama, 2010). Different levels of interdependent and independent self-construal are present in a person’s self-concept regardless of their cultural background (Singelis, Bond, Sharkey, & Lai, 1999). What differs is the extent to which the independent or the interdependent self-construal consistently dominates the other (Hannover & Kuhnen, 2004). When those with a higher interdependent construal of self engage with an experience, they may make an effort to stay in their social role (Fukuoka et al., 2005). The interdependent self-construal emphasizes: (a) external, public features such as status, roles, and relationships; (b) belonging and fitting-in; (c) occupying one's proper place and engaging in appropriate action (Markus & Kitayama, 1991; Singelis, 1994; Singelis & Sharkey, 1995).

Under a Chinese notion of dual self-construal, Lu and Yang (2006) argue that the social-oriented self retains the essence of the traditional Chinese self while the individual-oriented self represents the increasing influence of the Western culture in the process of societal modernization (Lu, 2003; Lu & Gilmour, 2004; Yang, 1996).

2.2.1 Self construal and Customer Retention

Kivetz, Urminsky, and Zheng (2006) found that individual differences predict customer retention tendencies. More precisely, higher dependency increases customers’ tendency to negative disconfirmation and lower retention. This infers that the interdependent self impacts negatively on customer retention (van Doorn et al., 2010). Thus, we propose the following hypotheses:

H1a: Interdependent self has a negative impact on customer retention.

H1b: Independent self has a positive impact on customer retention.

2.3Hedonic Value and Utilitarian Value

Customer value has two major sources: hedonic value and utilitarian value (Carpenter, Moore, & Fairhurst, 2005). Past research suggests that consumers expect retailers to deliver both utilitarian and hedonic value during the shopping experience (Babin, Darden, & Griffin, 1994; Mathwick, Malhotra, & Rigdon, 2002). Hedonic value refers to an overall assessment of experiential benefits and sacrifices; such as, entertainment and escapism (Overby & Lee, 2006). Consumers often search for an appreciation of the experience rather than focusing simply on the task at hand (Babin et al., 1994). Within this stream of research, researchers note the increasingly important role of hedonic value as retailers and service firms try to respond to consumers’ desire for entertainment and excitement within the consumption experience (Sit, Merrilees, & Birch, 2003). Utilitarian value refers to an overall assessment of an offers’ functional benefits and sacrifices (Overby & Lee, 2006).

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Utilitarian value is relevant for task-specific use; such as, purchase deliberation (Hoffman & Novak, 1996). Therefore, utilitarian value may be most relevant in explaining shopping trips described by consumers as “an errand” or “work” where they are happy simply to “get through it all”. Consumers who are interested in utilitarian value are concerned with making purchases in an efficient and timely manner to achieve their goals with a minimum of irritation (Childers, Carr, Peck, & Carson, 2001).

Self Construal and Hedonic/Utilitarian Value

Chun, Lee, and Kim (2012) state that positive self-image has a positive direct impact on hedonic enjoyment and utilitarian usefulness. This indicates the perceived value of a product as a tool for self-identification. Individuals have a range of hedonic responses and these predicate, for example, individuals’ choice of food (Escalas & Bettman, 2005). Self-licensing helps to explain all kinds of hedonic consumption. Self-licensing contends that people are more likely to choose hedonic goods when the decision context allows them to justify the consumption (Khan & Dhar, 2006; Kivetz & Simonson, 2002; Kivetz & Zheng, 2006). This relates the self-concept to the notion of hedonic consumption. Utilitarian value emphasizes self awareness towards the choices surrounding one’s behavior (Piamphongsant & Mandhachitara, 2008). Hahn and Kean (2009) find that both the independent and interdependent self have a positive influence on utilitarian value. The above leads to the following hypothesis:

H2a: Interdependent self has a positive impact on hedonic value.

H2b: Interdependent self has a positive impact on utilitarian value.

H3a: Independent self has a positive impact on hedonic value.

H3b: Independent self has a positive impact on utilitarian value.

2.3 Brand Experience

As aspect of experiential value refers to the specific sensation triggered by specific brand-related stimuli (Brakus, Schmitt, & Zarantonello, 2009). Prahalad and Ramaswamy (2004) suggest an approach where the brand becomes the experience; an affirmation supported by other studies which also highlight the central role of experiences in the brand-building process (Payne, Storbacka, Frow, & Knox, 2009; Simmons, 2009). When consumers search for, shop for, and consume the brands, they are exposed to utilitarian product attributes. However, they are also exposed to various specific brand-related stimuli, such as brand-identifying colors (Bellizzi & Hite, 1992; Meyers-Levy & Peracchio, 1995), shapes (Veryzer & Hutchinson, 1998), typefaces, background design elements (Mandel & Johnson, 2002), slogans, mascots, and brand characters (Keller, 1987). In the other words, experiences may include specific feelings, not just an overall liking. At times, experiences may result in general evaluations and attitudes (e.g., “I like the experience”). However, the overall attitude toward the experience captures only a small part of the entire brand experience.

Hedonic/Utilitarian Value and Brand Experience

Brand values are understood in context whether they are hedonic or utilitarian (Chitturi et al., 2008). High customer experience refers to customers’ understanding of hedonic and utilitarian value-in-use (Lemke, Clark, & Wilson, 2011). Hedonic value is more personal and subjective as compared to utilitarian value, and is often the result of fun and playful experiences (Holbrook & Hirschman, 1982). Utilitarian value refers to the consumers’ evaluation of whether the outcome of a shopping experience was successful in terms of satisfying the need that stimulated the shopping trip (Holbrook & Hirschman, 1982). Hence, we hypothesis:

H4a: Hedonic value has a positive impact on the brand experience.

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H4b: Utilitarian value has a positive impact on the brand experience.

2.4 Happiness

Happiness refers to: “feeling good – enjoying life and wanting the feeling to be maintained” (Layard, 2005). Myers (2004) calls it, “a high ratio of positive to negative feelings”. These definitions of happiness are the simplest, based on positive feelings, and are the closest to the traditional Benthamite meaning. That is, marketing was studied for its relationships with “quality of life”; most often via measurable economic indicators (Reynolds, 1978). Others take a slightly broader view, using the term subjective well-being to encompass both an affective evaluation of oneself at present, as well as a rational evaluation of satisfaction with one’s life a whole (Diener, 1984; Prycker, 2010). This notion refers to the evaluation of individuals concerning their lives in terms of satisfaction and affective reactions (Argyle, 2001; Diener, 2000). Khan and Hussain (2013) refer to feeling happier as one of the greatest unmet challenges of modern consumption.

Hedonic Value and Happiness

A parallel research stream examines how hedonic value is a determining factor of well-being. Most studies in hedonic psychology argue well-being is subjective (Joshanloo, 2010). Huta and Ryan (2009) demonstrate that people with high levels of hedonic value experience the greatest sense of well-being (McGregor & Little, 1998; Ryan & Deci, 2001; Seligman, 2002). Carroll and Ahuvia (2006) suggest that the more hedonic a brands is the more it tends to be more loved. The above literature asserts that that hedonic value has positive impact on happiness. Therefore, we hypothesize:

H5: Hedonic value has a positive impact on happiness.

Brand Experience and Happiness

The greater the level of an individual’s brand experience, the higher their affective commitment towards the brand (Iglesias, Singh, & Batista-Foguet, 2011). Prior research also finds that brand experience has a positive impact on consumer well-being (Diener & Biswas-Diener, 2002; Frederick & Loewenstein, 1999; Steel, Schmidt, & Shultz, 2008). Consequently, providing brand experience a firm increases the probability that they will increase customers’ happiness during consumption. This leads to:

H6: Brand experience has a positive impact on happiness.

Brand Experience and Customer Retention

Effective experience is the key to building customer retention since experience represents the service brand. It is only those firms that deliver the right experience to customers that will succeed in the global marketplace (Seddon & Sant, 2007). Grewal, Levy, and Kumar (2009) and Terblanche and Boshoff (2004) both demonstrate that the outcome of experience quality influences retention. Hence, we hypothesize:

H7: Brand Experience has a positive impact on retention.

Happiness and Customer Retention

A consumer is likely to consider both the quality of a particular brand as well how well it can satisfies their emotional needs. Emotional value towards a brand associates with positive feelings (e.g. a sense of happiness and pleasure) and this increases consumers’ intention to repurchase the brand (Stauss & Neuhaus, 1997; Yu & Dean, 2001). Consumers who feel happiness and are pleased with their brand purchase may repurchase even when provided with other options (Kumar, Kim, &

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Pelton, 2009; Lafferty, 2001; Lee, Kim, Pelton, Knight, & Forney, 2008). Nasermoadeli, Ling, and Maghnati (2013) also find that emotional experiences relate positively to repurchase intention. The literature shows that the emotional value of happiness is a significant predictor of customer retention. Hence:

H8: Happiness has a positive impact on customer retention.

3. Methodology

3.1 Measurement of Constructs

Self Construal

Self-construal divides into two dimensions, i.e., interdependent self and independent self (Lu & Gilmour, 2007). We adapted 7items to measure self-construal from the abbreviated version of Lu and Gilmour’s (2007) independent and interdependent-self scale (IISS). Respondents, as customers of Starbucks, gave responses on a seven-point Likert type scale, ranging from 1 (strongly disagree) to 7 (strongly agree).

Hedonic/ Utilitarian Value

Customer value divides into both hedonic value and utilitarian value. Items to measure both of these values were adapted from Voss, Spangerberg, and Bianca (2003). Each value was measured with three items. The respective sample items are as follows: (1) Starbucks experience is not delightful/ delightful to me (hedonic); (2) Starbucks experience is practical/impractical to me (utilitarian).

Brand Experience

Brand experience refers to the sensory, affective, intellectual, behavioral, and social response to specific brand-related stimuli. Three items to measure brand experience items were adopted from Brakus et al. (2009). The sample item of the brand experience at Starbucks is “Starbucks induces feelings and sentiments”.

Happiness

Happiness refers to the evaluation by individuals concerning their lives in terms of satisfaction and affective reactions (Argyle, 2001; Diener, 2000). Items for happiness were adapted from a Chinese happiness inventory by Chang, Lu, and Pan (2012). Respondents rated the three items on a seven point scale (1 = strongly disagree, 7 = strongly agree). The sample item for the happiness from Starbucks’ experiences is “all of the Starbucks experience was pleasure to me”.

Customer Retention

Customer retention refers to intention to repurchase or repeat a purchase. The three items that measured customer retention were adopted from Liu and Wu (2007). The sample item is as follows: (1) I will maintain relationship with Starbucks within the next six months. All constructs were measured on a 7 point Likert scale, except utilitarian and hedonic value, which were measured on a 7 point semantic differential scale.

3.2. Reliability and Validity

We then followed Fornell and Larcker’s (1981) approach to assess the reliability and validity of the measures. First, we tested for uni-dimensionality. All the items had significant loadings (λ) on their respective constructs (i.e., greater than .5) and all the t values were significant in the confirmatory factor analysis (CFA). In addition, all composite reliabilities were greater than .70, and all average variance extracted (AVE) estimates were greater than .50.These results reveal that the

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instrument had a fair convergent validity (Anderson & Gerbing, 1988). Table 1 summarizes the results of CFA while Table 2 shows the means, standard deviations, and correlation matrix of the constructs.

We used two methods to test discriminant validity. First, with CFA analysis, we found significantly lower χ2 values for the unconstrained model as compared with those of the constrained model (i.e., where the estimated correlation parameter (phi, φij) was constrained to 1.0). This provided fair evidence of discriminant validity (Anderson and Gerbing, 1988). Second, since the correlations between each pairs of constructs were less than the square root of AVE of each respective factor this indicated satisfactory discriminant validity (Fornell & Larcker, 1981) (Table 2). Overall this means the measures used in this study had both good reliability and validity.

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Tables 1 and 2

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3.3 Data Collection

We pilot tested the questionnaire with a sample of 33 subjects who had patronized Starbucks at least once within six months. We made small modifications to item phrasing to ensure all items were readily and consistently understood (Malhotra, 2010).

For the main data collection we followed quota sampling. Customers were intercepted as they left Starbucks in sites in Kaohsiung City (Taiwan) between 21st and 26th of 2014. A total of 485 questionnaires were collected this way and after invalid responses were removed we had 413 questionnaires for analysis (a valid response rate of 85.2%). Table 3 shows detailed demographics of the respondents. There is an even distribution of gender (Male = 52.8%), a majority are aged 25 to 34 (35.4%) and a high proportion have a college or university degree (50.8%). Respondents’ monthly disposable income is under NTD35,000 (48.2%). The majority are with friends (45.3%) and a small number come alone (12.1%). They come to Starbucks to chat with friends (38.3%), reading or surfing the Internet (14.0%) or to take a rest (10.9%). The average spend is NTD 101~201.

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Tables 3

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3.3 Analytical methods

In this research, we utilized SPSS 22.0 and AMOS 18.0 software for analysis of the descriptive statistics, reliability and validity analysis, confirmatory factor analysis (CFA), and structural equation modeling (SEM).

4. Results

4.1 Hypothesis Testing

The objective of this study is to examine the antecedents and consequences of experience value in retail services from a self-construal perspective. We conducted structural model tests with AMOS 18.0. The results in Table 4 and Figure 2 show that different self-construal plays distinct roles in customer experiences, and this leads to customer retention via different paths. Table 4 shows our data has a good fit to the model (e.g.χ2/d.f. = 1.79, GFI = .93, AGFI = .90, NFI =.94, CFI = .97, RMSEA= .04,

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Hoelter .05 = 270, Hoelter .01 = 288) (Bagozzi & Yi, 1988; Hair, Anderson, Tatham, & Black, 1998; Hu & Bentler, 1999).

Table shows the structural model estimates (note: all the path coefficients are standardized). Since the paths between interdependent self and customer retention (β = -.05, t-value = -.86), independent self and hedonic value (β = -.09, t-value = -1.27), independent self and utilitarian value (β = .02, t-value = .05) are not statistically significant then H1a, H3a, and H3b are not supported. However, interdependent self has a significantly positive impact on hedonic value (β = .34, t-value = 4.47) and utilitarian value (β = .16, t-value = 2.26) and thus H2a, H2b are supported. Hedonic value has a significantly positive influences on both brand experience (β = .48, p < .001) and happiness (β = 0.18, p < 0.001); i.e., H4a and H5 are supported. As utilitarian value has a significant impact on brand experience (β = .29, p < .001) then H4b is supported. In addition, brand experience has a significant and positive impact on happiness (β = .53, p < .001) and on customer retention (β = .28, p<.001) then H6 and H7 are supported. Happiness, moreover, has a significant and positive impact on customer retention (β = .37, p < .001) and therefore H8 is supported. Table4 also shows the R2 values, which indicate that the predictors account for 40.7%, 32.1% and 38.1% of the variation in happiness, brand experience and customer retention, respectively.

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Table 4 and Figure 2

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4.4 Test of the mediation of customer value and BE

We followed Baron and Kenny’s (1986) approach to examine the mediating effects of customer value and happiness on the relationship between dual self-construal and customer retention. We first checked the direct effect of dual self-construal on retention, and found that this was significant (β = .16, t-values = 2.27 and 2.35) (see Model 1 in Table 4). The model 2 in Table 4 indicates that dual self-construal has significant effects on both the hedonic value and utilitarian value. The latter, in turn, have significant impacts on brand experience and retention. We then added the paths from customer experience and happiness to customer retention into our model. Model 3 in Table 4, (i.e. the proposed model)), we find this new path of independent self to retention is significant (β = .20, p < .01), while the path from interdependent self to retention becomes insignificant (β = -.05, t-value =.86, p >.1). Meanwhile, the paths from customer experience and happiness to customer retention remain significant. We then examined and found the total effect of interdependent self on retention in both models was unchanged. Overall, this shows customer value, brand experience and happiness fully mediate the relationship between interdependent self and retention. This mediating effect, however, is not present for an independent self-construal.

4.5 The Modertating Effect of Gender

We anticipated effects driven by gender and Table 5 shows this differences exist. After controlling for other antecedents (e.g., happiness and brand experience) and interdependent female will not patron the café revisit Starbucks by herself in the near future (a consecutive visit) (H1a:β_female = -.17**) while an independent female would (H1b:β_female = 0.24**). Interdependent males and females have a similar for hedonic value (H2a: β_female = .35***; β_male = .31**, ns.). However, hedonic value has a significantly great positive influence on happiness for interdependent males than females (H5: β_male = .38*** > β_female = .02). The independent female and male have opposite views on utilitarian value (H3b: β_female

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= .20**, β_male = -.22**).

Female customers draw value from brand experiences than readily than males do (H4a: β_female =.52** > β_male =.44**). Female customers also obtain more happiness than males from brand experience (H6: β_female = .66** > β_male = .39**). Females are more likely to repatronize Starbucks than males (H7: β_female = .66** > β_male = .39**). However, when both the male and female have a sense of happiness then they both are willing to repatronize the café (H8: β_male=0.39**, β_female = 0.31**, ns.).

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Table5

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5. Discussion and Conclusion

Self construal, hedonic/ utilitarian value and customer retention

We reveal that interdependent self has a positive impact on hedonic and utilitarian value. This is consistent with Chun et al.’s (2012) research. It is important to note those with an interdependent self-construal desire both hedonic and utilitarian value; but hedonic value (H2a: β = 0.34***) more important than utilitarian value (H2b: β = 0.16**). Interdependent males, however, consider utilitarian value (H2b: β_male = .38***) is slightly more important than hedonic value (H2a: β_male = .31**). Conversely, interdependent female consider only hedonic value as crucial (H1a: β_female = .35***). This study, moreover, demonstrates the association between interdependent self and customer retention is not significant (H8a: β = -.05). This contradicts van Doorn et al.’s (2010) findings. For male consumers, an interdependent self-construal influences customer retention by way of the hedonic or utilitarian value, which in turn sustains the relationship with the brand. By contrast, under the same circumstances, interdependent females understand a negative impact on retention (H8a: β_female = -0.17). This implies that interdependent female are higher dependency customers and this follows van Doorn et al. (2010). In addition, our findings indicate that hedonic or utilitarian value are not associated with independent self (H2a: β = -.09, H2b: β = 0.02). This study shows a significant relationship between independent self and customer retention (H8b: β = .20***). This suggests that independent self-construal is not so concerned with hedonic or utilitarian value as they are likely to pursue leisure time alone.

Hedonic/ utilitarian value, happiness and brand experience

Our findings indicate that hedonic value has a positive impact on brand experience; similarly, utilitarian value has a positive impact on brand experience too. These findings are in line with results of previous studies (Holbrook & Hirschman, 1982; Lemke et al., 2011). We can confirm hedonic value is more considerable crucial than utilitarian value in creating brand experience. We find, moreover, that increases in hedonic value associate with rising happiness (H4: β = .18***) thereby supporting the findings in of Ryan and Deci (2001). Hedonic value only has a positive influence on happiness for interdependent males (H4: β_male = .38**). The findings of our study have implications for the relationships among happiness, brand experience and customer retention. Brand experience has positive influence on happiness (H5: β = .53***) which is consistent with Steel et al. (2008). Happiness has positive impact on customer retention (H7: β = .37***) and this aligns with prior research (Nasermoadeli et al., 2013). Brand experience has positive impact on customer retention (H6: β = .28***) which is consistent with the previous research (Grewal et al., 2009; Terblanche & Boshoff, 2004). In other words, we confirm that brand experience leads to happiness and customer retention, and happiness also acts as a partial mediator between brand experience and customer retention.

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5.1. Theoretical implications

Our findings reveal three theoretical implications. First, we expand understanding of customer value and brand experience to include the notion of dual self-construal. Hedonic, utilitarian value, happiness, and brand experience completely mediate the relationship between interdependent self and customer retention. There are gender differences so that hedonic value only partially mediates the relationship between interdependent females and customer retention. There is mediating effect in the relationship between independent self and customer retention. This shows that hedonic, utilitarian value, happiness and brand experience are critical for customer retention. Our results also show that those who have a highly independent self-construal prefer unique brand personalities and tend to self-immersion in cafés in their leisure time.

Second, hedonic value is a key factor that triggers both brand experience and happiness. Utilitarian value only leads to brand experience for interdependent males. Service firms should offer more attractive hedonic rather than utilitarian experiences to those customers with are interdependent.

Third, happiness and brand experience can contribute more to customer retention for those customers with an interdependent self. Between these two drivers of customer retention, the importance of happiness is more critical than brand experience for interdependent male while for the reverse is true for interdependent females.

5.2 Managerial implications

This study reveals a number of managerial implications. First, this study confirms that hedonic value is critical for creating brand experience and happiness for customers with an interdependent self-construal. In order to increase hedonic value, firm should develop novel event for those customers with an interdependent self-construal. This is particularly true for female customers. For example, service firms should provide interesting products periodically and interactive activities like DIY events, which are effective ways to nurture a sense of happiness that leads customer to stay in the relationship. In this study, utilitarian value is shown as the antecedent of the brand experience for the interdependent male self. Perception of utilitarian value can be strengthened, for instance, by layout design to differentiate spaces; such as, relaxing sofa for chatting with friends and formal conference rooms for business. Second, independent self-construal influences neither hedonic nor utilitarian value. While utilitarian value actual reduces retention for independent males it is an effective way to appeal to independent females. This infers the importance of gender segmentation. Third, by creating a happy atmosphere stores can appeal to males. For example, when customers experience belongingness and togetherness with family, they may feel happier. These days, increasing numbers of restaurants focus on family reunions. It is not always easy for chain stores to create such warm, soft and comfort element of happiness that is the key to charm the customer. According to Brakus, Schmitt, and Zarantonello (2009), brand experience are multidimensional, including sensations, feelings, and cognitions. As such, we recommend service firms should offer more comprehensive experiences in order to increase customer retention. Enhancing the sensory brand-stimuli (e.g. specific smells and sample to eat) attribute to higher customer retention. Thus, service firms must create a happy atmosphere first and then build brand experiences subsequently.

5.3 Limitations and Future Research

By testing the hypotheses with a specific chain café in a specific format, several limitations arise. First, despite the fact that Starbucks is an excellent example that has created a favorable customer experiences (Verhoef et al., 2009), a wider variety of retailers could be included in future research in order to generalize the

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findings of this study. Studies could also usefully compared out findings with those of different cultures. While we test some mediators others could usefully be identified and examined in the context of our model.

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Table 1 The Measurement Model: Constructs and Items Dimension/Items λ CR AVE α Self Construal (SC) Interdependent Self (IT) .73 .53 .72

Once you become a member of the group, you should try hard toadjust to the group’s demands.

.508

I believe that the family should be a life unit. .786

I believe that the success and failure of my family is ultimatelyrelated to my self-identity.

.764

Independent Self (ID) I believe that people should fully realize their potential. .834 .84 .57 .83

I believe that people should fully live up to their capabilities in any circumstances.

.846

I believe that people should try hard to satisfy their interests. .737

I believe that once a goal is set, one should do one’s best to achieve it. .554 Hedonic Value (HV) .87 .70 .87

Starbucks experience is not delightful/delightful to me. .873

Starbucks experience is not thrilling/thrilling to me. .754

Starbucks experience is enjoyable/unenjoyable to me. .876 Utilitarian Value (UV) .87 .70 .86

Starbucks experience is functional/not functional to me. .712

Starbucks experience is necessary/unnecessary to me. .877

Starbucks experience is practical/impractical to me. .892 Happiness (HA) .96 .89 .96

All of the Starbucks experience was pleasure to me. .909

Starbucks experience is pleasure. .967

I feel satisfied with Starbucks experience. .951 Brand Experience (BE) .81 .59 .81

Starbucks induces feelings and sentiments. .825

Starbucks is an emotional brand. .746

I engage in a lot of thinking when I encounter Starbucks. .722 Customer Retention (CR) .94 .84 .94

I will maintain relationship with Starbucks within the next six months. .828

I will maintain relationship with Starbucks within the next one year. .966

I will maintain relationship with Starbucks within the next two years. .945 Notes: CR = Construct Reliability; AVE = Average Variance Extracted; α= Cronbach’s Alpha;

All loadings are significant at p<0.05.

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Table 2Correlation Matrix of Constructs IT ID HV UV HA BE CR IT Interdependent Self (.73) ID Independent Self .517 (.75) HV Hedonic Value .267 .078 (.84) UV Utilitarian Value .145 .106 .286 (.84) HA Happiness .29 .135 .46 .304 (.94) BE Brand Experience .295 .057 .524 .374 .625 (.77) CR Customer Retention .227 .239 .388 .316 .563 .504 (.92)

Note: The values of the diagonal are the squared root values of AVE (√AVE).

Table 3 Description of Sample

Demographic Variables Frequency (N = 413)

Percentage (%)

Gender Male 195 47.2

Female 218 52.8

Age

Under 24 68 16.5

25-34 146 35.4

35-44 103 24.9

45-54 62 15.0

55 and above 34 8.2

Education

Junior high school 3 .7

High School 72 17.4

Junior College 66 16.0

College/ University 210 5.8

Graduate School 61 14.8

Disposable Income

(per month)

Under NTD $ 20,000 97 23.5

NTD $20,000~35,000 102 24.7

NTD $35,001~50,000 80 19.4

NTD $50,001~65,000 40 9.7

NTD $65,001~80,000 41 9.9

NTD $80,001~100,000 21 5.1

More than NTD $100,000 29 7.0

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Table 4Results of Proposed Model and Mediators tests

Model 1: Direct model Model 2: Full mediated model

Model 3: Proposed model Hypothesis relationships Estimate t-value Estimate t-value Estimate t-value Supported? H1a Interdependent self →Customer Retention .16 2.27 -.05 -.86 NS H1b Independent self →Customer Retention .16 2.35 .20 3.44 Supported H2a Interdependent self →Hedonic Value .35 4.78 .34 4.47 Supported H2b Interdependent self →Utilitarian Value .15 2.91 .16 2.22 Supported H3a Independent self →Hedonic Value -.10 -1.44 -.09 -1.27 NS H3b Independent self →Utilitarian Value .02 .35 .02 .25 NS H4a Hedonic Value →Brand Experience .48 8.67 .48 8.67 Supported H4b Utilitarian Value →Brand Experience .29 5.38 .29 5.37 Supported H5 Hedonic Value →Happiness .18 3.38 .18 3.34 Supported H6 Brand Experience →Happiness .53 8.82 .53 8.83 Supported H7 Brand Experience →Customer Retention .27 4.21 .28 4.43 Supported H8 Happiness →Customer Retention .39 6.47 .37 6.26 Supported SMC Utilitarian Value- R2 .03 .03 Hedonic Value-R2 .10 .09 Happiness-R2 .41 .41 Brand Experience-R2 .32 .32 Customer Retention-R2 .35 .38 Fit Indices: Chi-square 173.31 458.95 351.17 Chi-square/d.f. 4.23 2.10 1.79 GFI .96 .91 .93 AGFI .88 .89 ,90 CFI .95 .95 .97 RMSEA .09 .05 .04

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Table 5Moderating Effects of Gender (Results of Sub-group Analysis) Male Female

Paths Standardized Estimate t-value Standardized

Estimate t-value

H1a Interdependent self→ Customer Retention .07 .703 -.17*** -2.30 H1b Independent self→ Customer Retention .12 1.25 .24** 3.31 H2a Interdependent self → Hedonic Value .31** 2.57 .35*** 3.75 H2b Interdependent self → Utilitarian Value .38*** 3.09 .03 .31 H3a Independent self → Hedonic Value -.07 -.63 -.06 -.72 H3b Independent self→ Utilitarian Value -.22* -1.82 .20** 2.23 H4a Hedonic Value → Brand Experience .44*** 3.54 .52*** 6.83 H4b Utilitarian Value → Brand Experience .26*** 3.41 .30*** 3.97 H5 Hedonic Value →Happiness .38*** 5.07 .02 .22 H6 Brand Experience →Happiness .39*** 5.05 .66*** 6.95 H7 Brand Experience →Customer Retention .23*** 2.68 .39*** 4.02 H8 Happiness →Customer Retention .39*** 4.84 .31*** 3.69 SMC Utilitarian Value-R2 .084 .037 Hedonic Value-R2 .071 .103 Happiness-R2 .426 .441 Brand Experience-R2 .275 .363 Customer Retention-R2 .426 .447 Fit Indices: Chi-square 323.37 315.62

Chi-square/d.f. 1.65 1.61 GFI .861 .886 AGFI .821 .853 CFI .957 .961 RMSEA .058 .053

Notes: Standardized estimates are shown; **: p < 0.05, ***: p < 0.01.

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Figure 1. The Conceptual Model

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(A). AllSample

(B). Female Group

(C). Male Group

Figure 2. SEM Results

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