Keywords

Strategy, Experiential Marketing, Customer Loyalty, Repurchase Intention, Word-of-Mouth.

Introduction

Number of domestic passenger in December 2019 increased by 5.26% compared to November 2019 of 6,630,000. The increase in passengers did not occur in 2020, due to COVID-19 pandemic in Indonesia. The number of domestic passengers from January to April 2020 was 17,500,000 compared to the same quarter in 2019, and it decreased by 27.67%. In May 2020, it decreased by 89.62% compared to April 2020. The number of passengers in May 2020 was 87,000 passengers (BPS, 2020).

The continued decline in the number of passengers can affect the survival of the airline. Airline companies need to use the right strategy to increase the number of passengers. In determining the strategy, it is necessary to know the needs and desires of consumers. In the COVID-19 pandemic conditions, the needs and desires of consumers on flights are safety and health so as not to be infected by the COVID-19 virus. The company prevents transmission of the COVID-19 virus by carrying out different service procedures. From check-in to in-flight, other service procedures are undertaken such as passengers must take a rapid test before boarding the flight and the seat arrangement on the plane are distanced. Different service procedures in new normal conditions lead to experiential marketing for consumers. Experience in using aviation services in the new normal era is expected to be positive, meaning that consumers believe the procedures applied can prevent transmission of the virus. If consumer confidence in service procedures is positive, it will affect the occupation of the flight.

Experiential marketing is essential for maintaining and expanding consumers. The objective of experiential marketing is not only for customer loyalty and repurchase intention but also a means of company promotion and creating consumer word-of-mouth. The benefits of creating positive word-of-mouth are making consumers willing to become marketers for the company. In the end, it can increase the use of aviation services in the new normal era.

Previous research showed that experiential marketing is indirectly affected customer loyalty (Muhammad & Artanti, 2016; Ozturk, 2015; Wu & Tseng, 2015; Zena & Hadisumarto, 2013). Muhammad & Artanti (2016) showed that experiential marketing had an indirect effect on word-of-mouth. Meanwhile, Markovic et al. (2018) proved the effect of customer perceived ethicality on positive customer word-of-mouth through customer loyalty. Sotiriadis (2017) explained that word-of-mouth and loyalty was influenced by behavioral intentions. The results of previous researches indicated that experiential marketing affected customer loyalty and word-of-mouth.

Repurchase intention emerged when experiences and emotions are formed in experiential marketing (Same & Larimo, 2012). Aron (2006) and Araci et al. (2017) proved that experiential marketing had an indirect effect on repurchase intention. Jeon (2013) showed experiential marketing influenced revisit intention through customer satisfaction and loyalty (Karadeniz et al., 2013). The results of previous researches indicate that experiential marketing had an indirect effect on repurchase intention.

Based on the above phenomena, research on experiential marketing's effect on word-of-mouth was conducted both directly and indirectly through loyalty and repurchase intention. This research's contribution is that experiential marketing is not only a tool to create customer loyalty and repurchase intention, but also expected to be a promotional media through word-of-mouth.

Literature Review

A brand name on a product, logo, advertisement, and pamphlet distribution is not sufficient to create an experience for the customer. Customers understand the importance of brand communication channels that are in harmony with customers' daily lives (Araci et al., 2017). Therefore, marketing strategies that can reflect sensory experiences (SENSE), affective experiences (FEEL), creative cognitive experiences (THINK), physical experiences, behaviors and lifestyles (ACT), and social-identity experiences that result from relating to a reference group or culture (RELATE) are needed (Schmitt, 1999). Holbrook & Hirschman (1982) describe experience as a personal occurrence, often with important emotional significance, found on the interaction with stimuli, which are the products or services consumed. Schmitt (1999) affirms that experiences involved the entire living being. Experiential marketing is the process of identifying and satisfying customer needs and aspirations profitably, engaging them through two-way communications that bring brand personalities to life and add value to the target audience (Smilansky, 2017). Experiential marketing is also defined as a memorable experience that goes deeply into the customer's mind and affects consumer action (Kim & Huh, 2007; Ozturk, 2015). Based on this definition, it shows that experiential marketing can add value to consumers by causing repurchases.

In addition, experiential marketing generates loyalty; repurchase intention, and word-of-mouth (Same & Larimo, 2012).

From behavior theory point of view, an experience will encourage the emergence of attitudes, norms, and behavioral control to do something (Azjen, 1991). The positive intention will arise if the customers get the expected experience and even exceed their expectation. The positive attitude of customers is reflected by the citation of their experience with the product or service in positive words and their recommendation. They want to get the same experience again and willing to pay more if necessary. In case of an unwanted situation, they do not try to find alternative products or services and do not complain to other parties.

Meanwhile, customers’ negative intentions are reflected through their negative talk about the business, moving and complaining to other businesses, and choosing fewer businesses. Customers’ positive or negative intention is created by the experience they gain. Therefore, it is necessary that sensory experience, thought experience, action experience, and related experience become factors determining consumer behavioral intentions (Zeithaml et al., 1996).

Experiential marketing influences loyalty and repurchase intention. It directly affects customer loyalty, as reflected on the research conducted by Lin et al. (2009); Kusumawati (2011). Meanwhile, experiential marketing also influences repurchase intention. Previous studies have shown that experiential marketing carried out by companies has an impact on consumers’ repurchase intention (Same & Larimo, 2012). Moreover, experiential marketing can directly or indirectly affect word-of-mouth (Alagöz & Ekici, 2014; Suhaily & Soelasih, 2018). Therefore, this study focuses on experiential marketing, customer loyalty, and repurchases intention and how they affect word-of-mouth. Figure 1 illustrates the suggested conceptual model.

Experiential Marketing

The experiences consumer received from purchasing a product or service will shape their attitudes. Companies hope that consumers formed positive attitudes, because it will increase their in designing experiential marketing. Experiential marketing felt by consumers is the basis for shaping consumer attitudes. (Kim & Huh, 2007; Vallerand et al., 1992) Positive consumer attitudes lead to positive actions such as loyalty, repurchase intention, and word-of-mouth.

While many researchers focusing on customer experiences used the generic scale of experience economy created by Pine et al. (1999). A study conducted by Ali et al. (2016) showed that the pleasant experience consumers feel has more substantial influence in creating customer loyalty compared to customer satisfaction. The extraordinary experience felt by customers is supposed to create a positive attitude which resulted in behavioral changes (Skandalis et al., 2019). Skandalis et al. (2019) propose that the development of a marketing strategy have to be based on experience to address the dimensions of daily and structural consumption behavior in light of post-modern consumer culture. It shows that superior customer experience becomes the basis for developing corporate strategy.

Customer Loyalty

Customer loyalty occurs when customers choose certain products without thinking of using alternative products from other companies and also when they repeatedly buy certain products or services over a relatively long period of time. Customer loyalty is defined as a commitment to continue to buy the preferred product or service consistently regardless of situational factors and marketing efforts that can result in switching behavior (Chiguvi & Guruwo, 2016). Customers’ positive experiences encourage them to buy and repurchase goods or services they choose.

Customer loyalty will result in a positive relationship between companies and consumers. It is formed by ongoing satisfaction from customers accompanied by emotional ties with service providers that produce a will and consistency in relation to preferences, protection, and premiums (Rai & Medha, 2013). Furthermore, Vallerand et al. (1992) suggest the theory of reasoned action which proposes that, after attitude assessment, it is necessary to assess subjective norms and perceptions of behavioral control which will influence certain behaviors. The above factors are believed to influence the customer loyalty.

Based on the reasoned action theory (Sheppard et al., 1988), experiential marketing needs to be considered because it will shape consumers' attitudes. Studies conducted by Suhaily & Soelasih (2018), Alagöz & Ekici (2014) showed that experiential marketing directly affects customer loyalty. Indications of commitment are measured by repeat buying, repurchase intention, and recommendations (Chen & Liu, 2017). It indicates that consumer loyalty affected by experiential marketing.

Wahyuningtyas et al. (2017); Zena & Hadisumarto (2013) showed that experiential marketing influences customer loyalty through customer satisfaction. Furthermore, experiential marketing directly affects customer loyalty (Kusumawati, 2011; Lin et al., 2009).

On the other hand, Nurcahyo (2016) showed that experiential marketing does not directly affect customer loyalty which is in direct contradiction to Kusumawati (2011) and Lin et al. (2009). Based on the previous studies above, it raises hypothesis one.

H1 Experiential marketing has a positive impact on customer loyalty

Repurchase Intention

Hume et al. (2007) showed that factors such as emotional attainment and show experience influence consumers’ repurchase intention. Companies can focus on its target market so that their experiential marketing strategies are suitable for the pandemic. If the experience received by consumers is positive, they will repurchase the product or service.

Same & Larimo (2012) showed that passengers experience have a positive impact on repurchase intention of airlines. Meanwhile, Yeoh & Chan (2011) study on low-cost carriers indicated that repurchase intention occurs due to the price compared to satisfaction of the service quality, so that passengers are aware of the minimum experience they will gain.

H2 Experience marketing has a positive impact to repurchase intention

Experiential Marketing, Customer Loyalty and Repurchase Intention

Experiential marketing has both direct and indirect effects on repurchase intention through customer loyalty (Alagöz & Ekici, 2014; Suhaily & Soelasih, 2018). Chen & Liu (2017) prove that consumers experience resulted in continuous repurchase leads to customer loyalty. Customer loyalty needs to be built by the company.

In addition, Ahmad et al. (2016) showed that customer loyalty influences repurchase intention. Customer loyalty can be created directly from experiential marketing and the mediation of customer satisfaction (Kusumawati, 2011; Lin et al., 2009).

H3 Customer loyalty has a positive impact to repurchase intention

H4 Experiential marketing has a positive impact to repurchase intention through customer loyalty

Experiential marketing, customer loyalty, repurchase intention and word-of-mouth

Word-of-mouth refers to the extent of which customers give information to friends, coworkers, and relatives about products or services that meet their needs. Dissatisfied customers will transfer their dissatisfaction to potential customers. It is recommended that satisfied customers also transfer their satisfaction to potential customers. Marketing not only provides information to consumers but also experiences that can evoke emotions and feelings.

Consumer’s unforgettable experiences affect their behavior. Positive impressions encourage consumers to share their experiences with others. Repurchasing shows consumer loyalty towards goods or services. According to McIlroy & Barnett (2000), loyalty is customers’ commitment to do business with certain organizations, to buy goods or services repeatedly, and to recommend them to their colleagues.

Previous research conducted by Suki (2014), Curras-Perez & & Sanchez-Garcia (2016), Ahmadi (2019), Siqueira Jr et al. (2016) proves that passenger satisfaction has an influence on word-of-mouth. Park & Park (2015) study on marketing-based experience on FEEL and ACT dimensions found that word-of-mouth influences emotional responses. Triantafillidou & Siomkos (2014) showed that consumer experience in community, challenge, and learning affects word-of-mouth behaviors. Moreover, Triantafillidou & Siomkos (2014) suggested that companies should focus on designing pleasurable, social, educational, and fantastic experiences to reduce consumers’ boredom. Loyalty influences word-of-mouth and it is affected both directly and indirectly by repurchase intentions (De Matos & Rossi, 2008; Buhalis et al., 2020).

Furthermore, Wen & Chi (2013), Osakwe et al. (2016) showed that repurchase intentions influence word-of-mouth. Consumers first purchase experience can lead to offline and online word-of-mouth, which affect repurchase intention (Jacobsen, 2018). The previous studies above became the basis of hypotheses four to six.

H5 Experiential marketing has a positive impact on word-of-mouth

H6 Customer loyalty has a positive impact on word-of-mouth

H7 Repurchase intention has a positive impact on word-of-mouth

H8 Customer loyalty has a positive impact on word-of-mouth through repurchases intention

H9 Experiential marketing has a positive impact on word-of-mouth through customer loyalty and repurchases intention

Methodology

This study analyzed 799 passengers using both full services and LCC airlines in Indonesia. The data were collected using a purposive sampling method. The criteria of the respondents were that they have used the airlines for at least three times. The data were retrieved using Google Form administered through Instagram, Facebook, LINE, and WhatsApp and collected between February-May 2020. There were 52.3% female respondents. There were also 66.1% of them who were in the age of 16-35 years, and 45.6% of the respondents use airlines to tourist destinations.

Experiential marketing variables were developed from Schmitt (1999); Alagöz & Ekici (2014); Chen & Hsieh (2010). Araci et al. (2017) model were used to measure repurchase intention. Instruments to measure customer loyalty were adopted from Chen & Liu (2017). The word-of-mouth variables were developed from Ahmadi (2019). Interval scale between 1-6 was used in this study. The scale was used to avoid neutral answers (Agung, 2011).

Data reliability and validity were tested using composite reliability (CR), average variance extracted (AVE), and confirmatory factor analysis (CFA). Data reliability is a conceptual correlation between a measurement and itself (Peter, 1981). Convergent Validity used with the definition of an instrument to measure the variables (Hair et al., 2010). Threshold score loading factor (CFA), CR and AVE minimum was 0.5.

The results of validity test showed that the experiential marketing lowest value was 0.55, and 0.89 at its highest. Repurchase intention variables was between 0.85-0.90, customer loyalty confirmatory factor analysis values (CFA) was between 0.72-0.88 and word-of-mouth values were in the range of 0.85-0.91. CFA value of each indicator per variable above was greater than 0.5, meaning that the variables were valid.

Table 1 presents that all instruments were valid because they can be used to measure variables with a CFA value above 0.5; CR and AVE indicated reliability value above 0.5 (Hair et al., 2010). After testing the validity and reliability, the structural model was tested (Suki, 2014).

Table 1 Validity and Reliability Analysis
Indicators	CFA	CR	AVE
Sense	-	0.9	0.57
Sense1	0.78	-	-
Sense2	0.75	-	-
Sense3	0.75	-	-
Sense4	0.82	-	-
Sense5	0.78	-	-
Sense6	0.76	-	-
Sense7	0.65	-	-
Think	-	0.89	0.57
Think1	0.77	-	-
Think2	0.55	-	-
Think3	0.72	-	-
Think4	0.86	-	-
Think5	0.74	-	-
Think6	0.85	-	-
Feel	0.92	0.65	-
Feel1	0.84	-	-
Feel2	0.88	-	-
Feel3	0.79	-	-
Feel4	0.88	-
Feel5	0.78	-	-
Feel6	0.66	-
Act	-	0.95	0.73
Act1	0.82	-	-
Act2	0.84	-	-
Act3	0.86	-	-
Act4	0.89	-	-
Act5	0.87	-	-
Act6	0.83	-	-
Act7	0.86	-	-
Relate		0.92	0.7
Relate1	0.83	-	-
Relate2	0.8	-	-
Relate3	0.83	-
Relate4	0.85	-	-
Relate5	0.88	-	-
Loyalty	-	0.86	0.67
Loyalty1	0.88	-	-
Loyalty2	0.72	-	-
Loyalty3	0.84	-	-
Repurchase Intention	-	0.93	0.77
Repurchase Intention1	0.85	-	-
Repurchase Intention2	0.88	-	-
Repurchase Intention3	0.9	-	-
Repurchase Intention4	0.87	-	-
Word-of-mouth	-	0.94	0.79
Word-of-mouth1	0.89	-	-
Word-of-mouth2	0.91	-	-
Word-of-mouth3	0.91	-	-
Word-of-mouth4	0.85	-	-

The structural model test showed (Table 2) the results of the Comparative Fit Index (CFI), Normed Fit Index (NFI), Non-Normed Fit Index (NNFI), Root Mean Square Error of Approximation (RMSEA), Parsimony Normed Fit Index (PNFI) and Incremental Fit Index (IFI) were eligible because the value were beyond the recommendation (Bentler, 1990; Suki, 2014).

Table 2 Goodness-of-Fit Indices for Structural Model
	χ2	df	χ2/df	CFI	GFI	NFI	NNFI	RMSEA	PNFI	IFI
Recommended values	N/A	N/A	< 3.0	>0.9	>0.9	>0.9	>0.97	<0.08	>0.5	>0.99
Model values	3295,92	808	4	0.99	0.83	0,99	0.99	0.06	0.93	1

Results and Discussion

Hypothesis was tested using partial and simultaneous structural equation models.

Table 3 shows the most significant value was in the effect of experiential marketing on customer loyalty. Positive experiential felt by consumers had an impact on loyalty. Airline companies could improve their strategy by providing experiential marketing to consumers, which was designed by the company could lead to consumer attitude. It was in accordance to the theory of reasoned action (Azjen, 1991), where attitude could lead to consumer loyalty. Experiential marketing, which consists of sense, think, feel, act, and related (Schmitt, 1999), is the basis for companies to develop strategies to improve service to consumers during the pandemic. Consumers who believed in air transportation would still be following the health protocol, which was felt as experiential. The results of the H1 test were consistent with the research conducted by Suhaily & Soelasih (2018); Alagöz & Ekici (2014); Kusumawati (2011) and Lin et al. (2009).

Table 3 Results of Partial Hypothesis
	Hypothesized	Standardized path coefficients	t-value	Results
H1	Experiential marketing → customer loyalty	0.85	24.85	Supported
H2	Experiential marketing → repurchase intention	0.48	10.93	Supported
H3	Customer loyalty → repurchase intention	0.5	11.05	Supported
H5	Experiential marketing → word-of-mouth	0.03	0.59	Not → supported
H6	Customer loyalty → word-of-mouth	0.51	7.87	Supported
H7	Repurchase intention  → word-of-mouth	0.43	5.45	Supported

Experiential marketing had a direct influence on repurchase intention which was shown in the H2 test results. The experiences designed for consumers creates attitudes (Kim & Huh, 2007), which finally led to repurchase intention. The results of the study resembled the research conducted by Same & Larimo (2012). The H5 test results showed that experiential marketing had no direct effect on word-of-mouth. The results of this study did not support the research conducted by Park & Park (2015) and Siqueira Jr et al. (2016).

Experiential marketing influence on word-of-mouth required a mediating variable. The mediating variables in this study consisted of customer loyalty and repurchase intention. Customer loyalty affected word-of-mouth higher than repurchase intention. It was indicated by the customer loyalty coefficient of 0.51, while the repurchase intention was 0.43. Loyal consumers were willing to give positive word-of-mouth, which was useful for the company. Information given by consumers in the form of positive testimonials would be a reference for other consumers. Finally, consumers' word-of-mouth could influence people's desire to use the recommended flights to increase the number of airline passengers.

When consumers were loyal, their repurchase intention and word-of-mouth would be created. The H3 test results showed that there was an influence of customer loyalty on repurchases intention. These results resembled the research conducted by Ahmad et al. (2016). In addition to repurchase intention, customer loyalty also directly affected word-of-mouth, which is shown in the H6 test results. If consumers are loyal, they are willing to do word-of-mouth voluntarily. The actions of consumers in doing word-of-mouth were beneficial for companies marketing. The results of the H6 test were in accordance with the research conducted by De Matos & Rossi (2008).

The emergence of repurchase intention will directly led to word-of-mouth, meaning that if a consumer has made a purchase more than once, voluntarily, the experience they received would be shared with others. Especially with the rapid development of technology and social media, it is easier for consumers to inform others. Information provided to consumers when purchasing more than once was positive information to increase consumer confidence in the company. This result was proven by the H7 test, showing that repurchase intention directly affected word-of-mouth. This study's results were similar to the research conducted by Wen & Chi (2013) and Osakwe et al. (2016).

The results of the simultaneous regression equation on the effect of experiential marketing and customer loyalty on repurchase intention were as follows:

This equation showed that repurchase intention was influenced by customer loyalty and experiential marketing, indicating that the estimated value was better and t-value for customer loyalty was 11.05. Experiential marketing was 10.93, where the t-value was beyond 1.96, a significance value of 5%. The R² value was 0.90, meaning that repurchase intention could be explained by customer loyalty and experiential marketing by 90%, the remaining 10% was a variable that was not studied. The results of this study supported the research conducted by Suhaily & Soelasih (2018) and Alagöz & Ekici (2014).

Word-of-mouth was influenced by repurchase intention and customer loyalty, while experiential marketing did not affect word-of-mouth. It was shown in the equation below.

The result of the equation above indicated that the t-value of repurchase intention was 5.45, with an error standard of 0.08, meaning that repurchase intention influenced word-of-mouth. Customer loyalty showed a t-value of 7.87 with an error standard of 0.065, where the t-value was more significant than 1.96 with a significance value of 5%. There was an effect of customer loyalty on word-of-mouth. It was different from the experiential marketing value indicated by the t-value of 0.59 or less than 1.96, meaning that there was no effect of experiential marketing on word-of-mouth.

At an R2 value of 0.91, it means that word-of-mouth could be explained by the repurchase intention, customer loyalty, and experiential marketing by 91%. In comparison, the remaining 9% were explained by variables that were not examined. Previous studies have not shown the effect of experiential marketing on word-of-mouth through the mediating variables of customer loyalty and repurchase intention. The results of this test were a novelty in this study.

The total effects on the mediation variable could be seen in the following Table 4.

Table 4 Results of Simultaneous Hypothesis
	Hypothesized	Total effects	t-value
H4	Experiential → marketing → customer loyalty repurchase intention	0.91	26.24
H8	Customer loyalty → repurchase intention → word-of-mouth	0.73	14.16
H9	Experiential marketing → word-of-mouth       → Customer loyalty → repurchase intention	0.86	25.7

Table 4 presents the simultaneous test of hypothesis H4 which explained that experiential marketing affected repurchase intention through customer loyalty value of 0.91 and a t-value of 26.24. Customer loyalty affects word-of-mouth through repurchase intention value of 0.73 and a t-value of 14.16 shown on H8. Experiential marketing influenced word-of-mouth through customer loyalty and repurchase intention on H9 with the value of 0.86 and t-value of 25.70. Overall, the simultaneous test results had a greater effect on the total effect value.

The results of this test indicated the importance of experiential marketing in airlines. In designing experiential marketing, companies need to create a uniqueness which was different from the others, so that it became something attractive for the passengers. The positive perceptions and attitudes in consumers were realized by experiential marketing, gave promotions in the form of word-of-mouth. Although experiential marketing had no direct effect on word-of-mouth, it influenced repurchase intention and passenger loyalty indirectly and it also improved word-of-mouth.

The simultaneous test results indicated that experiential marketing indirectly affected word-of-mouth, if it was mediated through customer loyalty and repurchase intention. In contrast, experiential marketing did not directly affect word-of-mouth. Overall, the simultaneous effect has a higher in value than the partial one. These results suggested that companies need to pay attention to customer loyalty and repurchase intention when designing experiential marketing. The word-of-mouth that occurred would provide additional value for the company because positive communication made by consumers would affect the desire of other consumers to use the same flight services. The results showed that the strategy in designing consumer experience was essential, especially during the pandemic.

The strategy to maintain consumers in the COVID-19 pandemic by providing flight procedures that minimized contact with officers during the check-in and post-flight processes was essential. Moreover, in-flight services gave passengers confidence that the aircraft was safe from the virus contamination. All of these strategies could be explained by the independent process carried out by passengers from information search, ticket booking, check-in, and post-flight in systemized baggage collection mechanism with machines without direct contact with officers. The flight procedures accepted by consumers made their experiences influenced their behavior, as stated by Vallerand et al. (1992); Ali et al. (2018), and Skandalis et al. (2019). Table 4 presents the value of the total effect using the mediating variables. Experiential marketing affected repurchase intention through customer loyalty with the value of 0.91 and a t-value of 26.24. Customer loyalty had an impact on word-of-mouth through repurchase intention with the value of 0.73 and a t-value of 14.16. The experiential marketing variable indirectly affected word-of-mouth through customer loyalty and repurchase intention with the value of 0.86 with a t-value of 25.70.

Conclusion

Hypothesis test results indicated that experiential marketing had no direct effect on word-of-mouth. Word-of-mouth is indirectly affected by customer loyalty and repurchases intention. Therefore, companies need to pay attention to consumers experiential. Meanwhile, the experience that consumers feel will create loyal customers.

The loyalty formed leads to repurchase intention, in which consumers who are loyal and repurchase would cause communication in the form of word-of-mouth. Customers’ positive word-of-mouth can maintain and increase company’s market share.

Therefore, experiential marketing must become a concern for companies to create repurchase intention. Repurchase intention will increase a company market share and it can be used as a corporate strategy. Airlines have to pay attention to experiential marketing as long as passengers use their service because the perceived experience will cause consumers to repurchase. Moreover, the competition between airlines in Indonesia is high, so it is necessary to emphasize the customers experience and to have a different value compared to other airlines.

The novelty results in this study proved that the designed experiential marketing caused loyalty and repurchase intention, which resulted in word-of-mouth of airlines in Indonesia. Airline companies could develop an independent flight process strategy to create consumer experience during the COVID-19 pandemic.

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