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Shopper marketing: A new challenge for Spanish community pharmacies
Research in Social and Administrative Pharmacy j (2014) j–j
Original Research
Shopper marketing: A new challenge for Spanish community pharmacies Diana Gavilan, Ph.D.a,*, Maria Avello, Ph.D.b, Carmen Abril, Ph.D.b a
Departamento de Comercializacio´n e Investigacio´n de Mercados, Facultad de Ciencias de la Informacio´n, Universidad Complutense de Madrid, Avda. Complutense s/n, 28040 Madrid, Spain b Departamento de Comercializacio´n e Investigacio´n de Mercados, Facultad de Ciencias Econo´micas y Empresariales, Universidad Complutense de Madrid, Madrid, Spain
Abstract Background: Changes that have occurred over the past few decades in retailing and in the health care sectordnamely, a drastic reduction in drug profit-margins, and a more critical use of health services by patientsdhave created a scenario characterized by rising competitiveness. This new context is necessitating community pharmacies (hereafter, pharmacies) to improve their business model through new strategies. Shopper marketing has proven invaluable in other retail settings and therefore, could be a critical element for new practices in pharmacies. Objectives: First, to analyze how shopping experiences in pharmacies based on new practices in shopper marketing affect shopping behavior. Second, to study the mediating effect of customer satisfaction on the relationship between shopping experiences and shopping behavior. Methods: A self-reported questionnaire was developed to measure four concepts: hedonic experience (enjoyable), functional experience (goal-oriented), customer satisfaction and shopping behavior. Data were collected from 28 different pharmacies dispersed throughout Spain. Structural equation modeling (SEM) was used to test the relationships in the theoretical model. First, the measurement model was estimated to assess model fit, reliability, convergent and discriminant validity. Then, the parameters of the structural model were estimated and the mediation effects were subsequently tested. Results: Functional experience and hedonic experience each significantly and positively correlate with consumer satisfaction and with customer shopping behavior (purchases and loyalty). Moreover, the effects of each type of experience on shopping behavior are partially mediated by customer satisfaction. Conclusions: The results suggest that even in Spanish pharmacies, which have traditionally been considered as strictly functional retailers, ensuring customer satisfaction and enhancing shopping behavior now demand more than just functional experiences. Moreover, a customer’s experience at a pharmacy can itself trigger a shopping cycle; therefore, pharmacists should consider prioritizing investments in hedonic experiences. Ó 2014 Elsevier Inc. All rights reserved. Keywords: Pharmacy; Shopper marketing; Experience; Customer satisfaction; Shopping behavior
* Corresponding author. Tel.: þ34 91 394 2547; fax: þ34 91 394 24 79. E-mail address: [email protected] (D. Gavilan). 1551-7411/$ - see front matter Ó 2014 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.sapharm.2014.02.008
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Introduction It is often said that medicines are not ordinary products and that their buyers must ask experts (i.e., pharmacists) for advice; thus, pharmacies are not considered to be ordinary retail businesses. Furthermore, retail pharmacies vary dramatically among countries. The differences are due to three major legislative issues: first, whether or not the pharmacy owner must be a pharmacist; second, the geographic criteria that dictate where pharmacies can be located; and lastly, the authorized channels for distribution of over-the-counter (OTC) drugs.1 This complex legislation stems from the dual role of pharmacies: they are retail businesses as well as providers in public health care systems.2 From the retail business perspective, studies on pharmacies have traditionally focused on functional aspectsdnamely, service quality in terms of the clinical expertise and the advice provided by pharmacists to their customers. The services that pharmacies provide are associated with their differentiation and to their customers’ satisfaction and perception of value.3–5 Several changes that have occurred over the past few decades in the health care sector, in retailing and in the global marketplace have created a scenario characterized by increasing competitiveness.6 More and more independent pharmacies are suffering from drastic losses in drug profit margins because of the commercial aggressiveness of encroaching retail pharmacy chains. Furthermore, patients are becoming better informed, using health services more critically and seeking the “best value for money.”7 This new context has forced pharmacy managers to focus on differentiating their pharmacies and on improving their business model through the implementation of new competitive strategies. Recent literature has identified shopper marketing8,9: as an efficient strategy to increase sales. Shopper marketing is the set of all marketing activities that influence an individual who is in the shopping mindset and mode in order to deliver a satisfactory shopping experience or a “seamless shopping experience” in words of Shankar.6 From an operational standpoint, new practices in shopper marketing.2 include the extension of the product inventories into OTC drugs and wellness products, the redesign of the shop layout, the incorporation of category management and the improvement of merchandising.10 Consequently, pharmacy owners are endeavoring to transform their stores to provide
shoppers with just such an experience11done that combines both functional and hedonic elements. Given the unique objectives of pharmacies based on their dual role as retail businesses and health care providers, they must now consider whether to apply some of the aforementioned new practices in shopper marketing. Thus, an important challenge for researchers is to ascertain the extent to which these new practices could prove valuable for pharmacies. The study model of the present research is based on shopper marketing applied to pharmacy retailing. The study focused on clients that go to pharmacies as purchasers, regardless of whether they actually consume the products that they purchase. Certain critical aspects were considered. First, providing a shopping experience in the pharmacy remains a challenge. Albeit shopping at other types of retail locations has evolved from a functional activity to an experience,12 this shift in shopping patterns currently does not represent a true advantage for most pharmacies, which remain strictly functional. Even though pharmacies sell other products besides prescriptions (wellness, beauty, etc.), shopping at pharmacies is not yet perceived as an enjoyable experience.13 Second, a key aspect of shopper marketing is the relevance of in-store touch points. Touch points in the shopper marketing literature refer to internal interfaces of the pharmacy with customers during a transaction; for instance, point of sale material, leaflets, merchandising, TV screens or customized bags. Touch points are critical for reaching and influencing in order customers to trigger the shopping cycle; indeed, it is not surprising that many shopping decisions are made inside the store.14 However, pharmacy shoppers when buying prescriptions, also called negative goods, usually decide what to purchase before entering the store. Given that pharmacies are retail destinations as well as health care providers, researchers are interested in studying the extent to which in-store activities could enhance purchases of nonprescription itemsdduring what Huang et al15 have called the “moment of truth.” The study presented here had two objectives: First, to analyze how shopping experiences in pharmacies based on new practices in shopper marketing affect shopping behavior. Second, to study the mediating effect of customer satisfaction on the relationship between shopping experiences and shopping behavior. The authors believed that an understanding of the role of new practices based on shopper
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marketing in Spanish pharmacies would enable pharmacists to develop the hedonic side of the shopping experience in their stores in order to increase their sales. They also considered that testing the mediating effect of customer satisfaction on the relationship between shopping experience and shopping behavior would demonstrate the value of shopper marketing. The paper is organized as follows. First, the Spanish pharmacy sector is briefly described. Second, an overview of the literature on experiences and innovation in shopper marketing from other sectors is provided. Third, the research model and methodology of the present study are outlined. Fourth, the main results are reported and the principal conclusions are explained. Finally, specific contributions of the research are provided, the limitations of the study are outlined and directions for future lines of research are described.
Literature review Spanish pharmacies Among European countries, Spain ranks third (after Belgium and Greece) in pharmacy to inhabitants ratio: it has one pharmacy to serve 2159 inhabitants (21,500 pharmacies in total). In fact, 98.9% of the Spanish population has at least one pharmacy within 800 m from home.16 In the Spanish model of pharmaceutical retailing, the pharmacy is a privately-managed public service whose owner must be a pharmacist. However, pharmacists in Spain are limited to only one license; therefore, there are no retail pharmacy chains such as Boots or Lloyds in the UK. Furthermore, in order to ensure that all citizens have a pharmacy close to their home, the Spanish government legally dictates the locations of pharmacies according to demographic criteria. Lastly, pharmacies are the only location in Spain where OTC drugs can be legally sold. The standard Spanish pharmacy offers prescription drugs and myriad health care products in an average retail space of less than 50 m2. Prescription drugs account for 70% of sales revenues, and health & beauty products (baby food, cosmetics, etc.), and OTC (over the counter) items, account for the remaining 30%. An average Spanish pharmacy has annual sales revenue of V500,000 ($690,000) and has three employees; usually two pharmacists and one assistant. This implies a low concentration of sales and low bargaining power in a highly fragmented industry in
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which the owner is both a technical professional and an entrepreneur. From a marketing perspective, sales performance in pharmacies is complex, due to the limited space for product exhibition and the requirement of a counter for dispensing drugs. Customers often stand in line to fill their prescriptions which leads to a rather uninspiring shopping experience: wait, be served, and pay.17 However, a few Spanish pharmacies have begun to enhance hedonic experiences for customers, innovating to create product awareness and to trigger shopping among these shoppers.18 This work has included improving store layout and ambience (e.g. aisle placements and shelf positions of products), and offering non-medical (wellbeing) products (e.g. for nutrition, skincare, etc.). Shopper marketing The past few years have witnessed a renewed interest in shopper marketing: efforts by retailers to understand consumer purchasing-behavior and then exploit the acquired knowledge to enhance their business.9,14 Shopper marketing starts long before shoppers enter a store. It encompasses the challenge of drawing consumers into the store, and focuses on the key touch points that influence shopper decision-making throughout the entire shopping cycle, as well as on post-purchase actions to ensure that customers return for future purchases.19 Among the most important approaches in shopper marketing is to provide customers with a “seamless shopping experience.”6 Creating such experiences have become paramount in today’s retail environment. Indeed, retailers from all sectors have embraced the idea of delivering a differentiated and outstanding consumption experience across the multiple channels of a retailer and through in-store and out-of-store activities.6 In fact, consumer demand is gradually shifting from product to experience,12 and from rationale to feeling and fun.20 To guarantee the efficacy of their retail strategies, stores should focus on offering and managing a pleasant shopping experience that includes every point of contact between the customer and the business.18 As goods and services become increasingly commoditized,21 experience has become the primary instrument for differentiation among retailers.22 Organizations that wish to compete by providing their customers with satisfactory experiences must orchestrate all the clues that these customers detect during the buying process.23
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Experiences are holistic in nature and involve the shopper’s cognitive, affective, social and physical response to the retailer.24 The relevant literature distinguishes between the functional side and the hedonic side of the shopping experience. Most of the elements that contribute to each side are under the retailer’s control, including service interface, store layout and design, store ambience, product assortment, price, etc.12,25–29 Despite the value placed on shopper experience across retail sectors, most retail pharmacies have been quite late in grasping the importance of this concept, as they have not considered the aforementioned shift in shopping priorities to be advantageous to their case. Indeed, as pharmacies have traditionally been presumed to deal strictly with functional product shoppers, their focus on the shopping experience was on functionality; there was no place for enjoyment, and no possibility that their customers could buy for fun.13 Retail pharmacies have extensively studied customer perceptions of the functional side of the shopping experience. This side is based on processing of rational and analytical information,22 and deals with shopping efficiency and with making an accurate and suitable product choice based on logical assessment of information on product performance and functionality.30 In a study on Japanese pharmacies, Kamei et al.31 showed that convenient opening hours, short waiting times (for prescriptions to be filled), and good information management were the most important factors for customers when choosing a pharmacy. A similar study on customer perceptions of pharmacies in Singapore emphasized the importance of short waiting lines (for prescriptions to be filled), accurate dispensing of medicines, and pricing.32 In contrast, Holdford and Schulz33 found that pharmacy clients in the USA were less concerned with what they received (e.g. medicines or advice) than with how the services were delivered (e.g. friendly service), even when the technical quality was low. Their results reflected the relevant development of the hedonic side of the shopping experience, characterized by providing customers with heightened arousal, enjoyment, adventure and entertainment.12,27 For retailers, their customers’ shopping activities must often combine both functional and hedonic attributes, as the absence of either side compromises the overall shopping experience.34 Thus, the authors of this study envisioned that analyzing both sides of the shopping experience at Spanish pharmacies would offer new insight
into this business, which has traditionally been managed and studied from a purely functional perspective. Customer satisfaction Initially, scholars defined satisfaction as an emotion-based response elicited during a consumption experience.35 However marketing researchers have long since recognized that such responses could be elicited in other contexts, such as shopping.36 Satisfaction is the first emotion to receive scrutiny in post-purchase behavior research and is a vital outcome of marketing activity,37 as it has been found to significantly affect all stages of the consumer’s decision-making process, the consumer’s attitude and behavioral intentions, and customer retention.38–40 Providing satisfaction is crucial to achieving customer loyalty as well as profitability.41 Indeed, customer satisfaction data could markedly influence analysts’ earnings forecasts, and could be used as a proxy for non-financial information to evaluate a business or to increase the robustness of financial analyses.42 Pursuing customer satisfaction is a critical goal for retail pharmacies, given the fierce competition among pharmacies as they vie for customers, for whom the cost of switching from one pharmacy to another may be insignificant. Customer satisfaction is complex and requires further investigationdnamely, to comprehend how consumers can be engaged, aroused and entertained through product assortment, service and atmosphere.43 During the overall shopping experience, retailers strive to induce certain desirable emotions in their customers, while trying to minimize negative affective responses that may arise from undesirable conditions, such as waiting, crowding, etc. Upon entering a shop, customers may experience a vast array of emotions, from excitement, joy or interest to anger, frustration or simply boredom. However, once the shopping experience has ended, the customer’s level of satisfaction emerges as the global output of the experience. Based on the previous, we propose the following two hypotheses: H1a: For customers shopping at pharmacies, their functional experience will positively influence their level of satisfaction. H1b: For customers shopping at pharmacies, their hedonic experience will positively influence their level of satisfaction.
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Shopping behavior The relationship between customer satisfaction and shopping behavior has been widely studied in marketing.44 The overall shopping experience directly affects customer satisfaction and in turn, retail performance. Customer satisfaction has been shown to be a reliable predictor of shopper patronage behavior in the retail sector,45 as it leads to consumer-desired patronage in the form of loyalty.46–48 Thus, as with any other retailer, pharmacies must focus on how to improve customer satisfaction, which is associated with a service provider’s ability to get its customers to say positive things about the provider, recommend the provider to other consumers; remain loyal, repurchase from the provider,18,48 spend more money or purchase more items per shopping visit,27 and pay price premiums. There is also evidence in other retail contexts that the shopping experience directly impacts shopping patterns. The shopping experience could trigger a shopping cycle, thus increasing the number of decisions that the shopper must make inside the store. The functional shopping experience influences shopping behavior by providing customers with ideas, suggestions and pricing information on potential future purchases.27,49 However, this behavior is also shaped by sensory inputs, which are a strong component of the hedonic shopping experience.50 Background music, color, smell and lighting can each alter a customer’s interest in the product assortment and consequently, influence their shopping behavior.6 Therefore we propose the following hypotheses: H2a: For customers shopping at pharmacies, their satisfaction will mediate the relationship between their functional experience and their shopping behavior. H2b: For customers shopping at pharmacies, their satisfaction will mediate the relationship between their hedonic experience and their shopping behavior. Fig. 1 shows the theoretical model of the study: the hypotheses and their relationships.
Methods Survey A self-reported questionnaire was developed for Spanish pharmacy customers, in order to measure
Fig. 1. Theoretical model of the study.
the following four concepts: hedonic experiences, functional experiences, customer satisfaction and shopping behavior. To measure functional and hedonic experiences, a set of survey statements on retail experience from Diep and Sweeney51 were chosen, adapted to the pharmacy business, and then translated into Spanish. The functional experience at the pharmacy (four statements) was based on convenience, waiting time and product availability, whereas the hedonic experience (four statements) was based on the attractiveness of the pharmacy retail environment, and on the customer’s level of enjoyment while shopping. It is interesting to highlight that we have included “giving good health advice” as a hedonic experience. The reason is that “giving a good health advice” is not just a simple and plain answer to a problem. A “good health advice” considers the personal circumstances of the customer what makes the advice very much customized. This fact makes the client reassured, beloved and cared, thus producing an experience beyond functionality. Respondents were asked to indicate their level of agreement on a five-point Likert scale, scored from 1 (completely disagree) to 5 (completely agree) (Table 1). Customer satisfaction was measured by two items adapted from Westbrook35 that cover both the cognitive and emotional sides of the concept, according to the theoretical framework of customer satisfaction studies. These items are: “On the whole, you are ____ with this pharmacy,” scored on a five-point Likert scale (from 1 [not at all satisfied] to 5 [very satisfied]); and “This pharmacy leaves you with a ____ feeling,” scored similarly (from 1 [very unpleasant] to 5 [very pleasant]). Shopping behavior was measured using two variables that reflect the shopper patronage: the number of products bought during the trip to the pharmacy (besides prescriptions); and the frequency of trips there.52 The reason for using number of products sold per visit rather than amount of money
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Table 1 Questionnaire items: functional experience and hedonic experience Functional experience F1: This pharmacy has convenient opening hours. F2: I don’t have to wait in this pharmacy. F3: This pharmacy always carries the products that I am looking for. F4: This pharmacy offers good value for money. Hedonic experience H1: This pharmacy is a pleasant shop. H2: This pharmacy is an attractive shop. H3: The pharmacy staff gives me good health advice. H4: I feel good when I come to this pharmacy.
spent per visit was to avoid the bias mentioned by Campo et al.,53 who found that product purchasing measured in dollar terms depends on buying power (as measured by certain socio-demographic variables). The frequency of trips to the pharmacy was scored according to a five-point Likert-type scale, ranging from 1 (rarely shop there) to 5 (very often shop there). The count variable “number of products bought per visit” was categorized using visual binning54 into 5 categories prior to the analysis. Five demographic questions were included in the questionnaire (Table 2). The questionnaire was examined by a panel of experts to evaluate content validity and to ensure the accuracy of the text translations. To verify the clarity of the questions and gain feedback on the length of the questionnaire, it was further tested in a group of 25 customers. Sampling and data collection procedures The authors initially contacted a convenience sample of 90 pharmacies selected based on a common element; they all had introduced more than one in-store practice of shopper marketing. In addition to medicines, these pharmacies offered a range of toiletry, cosmetic and health care products, although they differed in size and atmosphere (e.g. interior design, etc.). Twenty eight pharmacies dispersed throughout Spain agreed to participate within the study time frame. Each pharmacy enrolled in the research to obtain the Table 2 Questionnaire items: Shopping behavior Shopping behavior SB1: Number of products bought during the visit SB2: Frequency of visits
study results, and agreed to gather a random sample of 100–150 completed questionnaires from among its clients over a period of 10 days, devoting one employee to the process. The pharmacy employees were trained in order to properly understand the questionnaire. They used the following rule to randomly select study participants from among their clients: Ask the nth (fourth, fifth, etc.) client every hour. The questionnaire was self-administered by the respondents, who completed it alone and while standing. The conditions under which the data were collected, and the need to facilitate collaboration, obligated the authors to minimize the length of the questionnaire. The respondents spent an average of approximately 3 min to complete the survey. After the completion of the questionnaire participants received as a reward a free product sample. The data were collected in March 2012: these comprised 3602 questionnaires, of which 3337 were complete and therefore, were used in the study. Data analysis Structural Equation Modeling (SEM) was performed to test the hypothesis using SPSS AMOS 19.0, with a maximum likelihood estimation method. The measurement model was first estimated to assess factor structure, reliability, convergent validity and discriminant validity. Subsequently, the parameters of the structural model were estimated and the mediation effects were tested. Results Respondent demographics The respondents’ demographics (gender, age, educational level and household size) are listed in Table 3. Results of the measurement model The means, standard deviations, and correlation matrix are shown in Table 4. All variables correlate significantly in the predicted direction. The measurement model is depicted in Fig. 2. Reliability of the subscales of the model was acceptable, as the coefficient alpha estimates ranged from 0.783 to 0.87955 (Table 5). The composite reliability estimates55 ranged from 0.75 to 0.89, and all the variance-extracted estimates,56 ranged from 0.58 to 0.79. All the reliability measures exceeded the recommended thresholds.56 Convergent validity was assessed
Gavilan et al. / Research in Social and Administrative Pharmacy j (2014) 1–12 Table 3 Summary of the statistics from the data set (N ¼ 3337) Percentage Gender Male Female Age (years) !20 21–30 31–55 O55 Educational level University degree Vocational school Secondary school Primary school Household size (# people) 1 or 2 3 4 O4 Distance from home to pharmacy 0–199 m 200–499 m 500 m–2 km O2 km
26.6 73.4 1.9 18.4 46.3 33.4 21.2 20.3 31.8 26.7 48.6 24.8 17.9 8.7 23.1 14.5 42.4 20.0
for the measurement model by determining whether each indicator’s estimated maximum likelihood (l) loading on the underlying construct was significant.57 All confirmatory factor loadings exceeded 0.751 and were significant (P ! 0.001). Standardized values and unstandardized values with standard errors are also provided in Table 5. Discrimination between the constructs was evident, because the average variance-extracted (AVE) estimates, ranging from 0.58 to 0.79, exceeded all squared phi correlations between constructs,58 which ranged from 0.14 to 0.41. Results of the structural model As the measurement model proved satisfactory, the structural model was then estimated (see
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Fig. 3). All the fit indices59 were above the recommended thresholds60,61 indicating respectable fit: c2 ¼ 233.14; df ¼ 48; (P ! 0.01); Comparative Fit Index (CFI) ¼ 0.972; Tucker–Lewis Index (TLI) ¼ 0.961 and Root Mean Square Error of Approximation (RMSEA) ¼ 0.06 with a 90% confidence interval of 0.04–0.07. Assessment of the hypothesized relationships Functional experience and hedonic experience each positively and significantly influenced customer satisfaction, as had been predicted. Interestingly, the hedonic experience had the strongest influence on customer satisfaction (standardized path coefficient ¼ 0.461; P ! 0.01); it was stronger than the influence of functional experience (standardized path coefficient ¼ 0.247; P ! 0.01). Therefore, H1a and H1b are supported. Next, in accordance with the “causal steps approach” by Baron and Kenny,62 the potential mediation effect of customer satisfaction on consumer behavior was ascertained. The direct and indirect effects were tested for significance using the Bootstrap estimation procedure (Bootstrap sample of 2000) in two parts: a basic model postulating a direct relationship between each predictor (functional experience and hedonic experience) to the criterion (shopping behavior) in the absence of mediators; and a mediation model that posits the relationship between each type of experience and the shopping behavior, as mediated by customer satisfaction. As shown in Table 6, the direct paths between functional experience and shopping behavior, and between hedonic experience and shopping behavior were statistically significant (b ¼ 0.306, P ! 0.001; and b ¼ 0.478, P ! 0.001, respectively). These results satisfy Baron and Kenny’s62 first step of testing mediation. When the mediator was added to the model in order to evaluate the indirect effects of functional experience and of hedonic experience on
Table 4 Means, standard deviations and correlations among the constructs Construct
Mean
Standard deviation
Functional experience
Hedonic experience
Customer satisfaction
Shopping behavior
Functional experience Hedonic experience Customer satisfaction Shopping behavior
3.6 3.7 3.9 3.1
1.3 1.1 2.6 2.0
1 0.48** 0.36** 0.53***
1 0.53*** 0.62***
1 0.63***
1
**P ! 0.01, ***P ! 0.001.
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Fig. 2. Measurement model of the study.
shopping behavior, the magnitude of the association was reduced but remained significant (b ¼ 0.249, P ! 0.01; and b ¼ 0.300, P ! 0.01 respectively). These results are consistent with a partial mediation of customer satisfaction on consumer behavior. Therefore, H2a and H2b are supported. Discussion In the study presented here, the extent to which functional experiences and hedonic experiences
could each influence customer satisfaction and shopping behavior (purchases and loyalty) in pharmacies in Spain was assessed. Data collected from pharmacy customers were analyzed, and a theoretical model to understand the relationships among these factors was deviseddnamely, to determine how the effect of each experience on shopping behavior might be mediated by customer satisfaction. The primary aim was to demonstrate, using empirical evidence, that a seamless shopping experience incorporating functional and hedonic
Table 5 Results of the confirmatory factor analysis Construct
Item
Standardized factor loading
Unstandardized factor loading (standard error)
t
Cronbach alpha
Construct reliability
Average variance extracted
Functional experience
F1 F2 F3 F4 H1 H2 H3 H4 CS1 CS2 SB1 SB2
0.796 0.850 0.805 0.752 0.751 0.806 0.815 0.821 0.863 0.909 0.801 0.729
1.00 1.15 1.05 1.05 1.00 1.19 1.19 1.15 1.00 1.03 1.00 0.907
– 28.436 26.851 24.764 – 25.102 25.386 25.555 – 25.908 – 19.208
0.832
0.89
0.62
0.875
0.87
0.64
0.879
0.88
0.79
0.783
0.75
0.58
Hedonic experience
Customer satisfaction Shopping behavior
(0.00) (0.04) (0.04) (0.04) (0.00) (0.04) (0.05) (0.04) (0.00) (0.04) (0.00) (0.04)
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Fig. 3. Structural model of the study.
elements is crucial in Spanish pharmacies, despite their reputation as being strictly functional retailers. For years pharmacies have been seen as mere sellers of prescription drugs, rather than as retail setting in which customers could be entertained while shopping for medicines and other products. The findings reported here suggest that pharmacies in Spain can no longer rely on their traditional business model. In order to prosper in today’s business environment, they must seek to provide their customers with a complete shopping experience that also includes hedonic elements.
Table 6 Mediation effects
Partial mediation: functional experience, customer satisfaction, shopping behavior Partial mediation: hedonic experience, customer satisfaction, shopping behavior **P ! 0.01, ***P ! 0.001.
Direct effects without mediation
Direct effects with mediation
0.306***
0.249**
0.478***
0.300**
Functional and hedonic experiences are each important for customer satisfaction in pharmacies in Spain. The authors of this study posit that, in terms of management drivers, and despite being traditionally classified as functional retailers, these pharmacies are actually more similar to consumer goods retailers than has traditionally been perceived. Furthermore, it was determined that customers at these pharmacies obtain greater satisfaction from hedonic experiences than from functional ones. Thus, in order for these pharmacies to survive, they must evolve to include hedonic experiences for their customers, albeit without losing their functionality. The findings reported here empirically support the use of shopper marketing in pharmacies in Spain, the relationships between customer satisfaction and frequency of visit,18,48 and between customer satisfaction and number of products bought,27 that had been previously reported for other retail sectors. Finally, this study has also showndas hypothesizeddthat due to the partial mediating effect of customer satisfaction on shopping behavior, a customer’s experience at a pharmacy can itself trigger a shopping cycle. This appears to be an interesting finding since this is the first report of such an effect in the pharmacy literature. The results of the present work have direct implications for managers of Spanish pharmacies.
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These pharmacists should invest in improving hedonic experiences to provide their customers with a pleasant, attractive and amusing atmosphere. Recent efforts to improve business by some pharmacies in Spain (and many other countries) that are focused on functional aspects (extending their opening hours, reducing waiting times or ensuring that products are in stock) are simply not enough to guarantee their survival. One major element in shopper marketing is to improve the ambience of a store by changing its layout, controlling atmospheric variables (e.g. lighting, aromas and music), redecorating it and/ or introducing new promotionsdall of which can be applied to pharmacies. Another interesting possibility is to separate products according to categories traditionally used by other types of retailers (e.g. supermarkets): for instance, to create a dedicated wellness space for wellbeing products. In this sense, pharmacies in Spain should try to position their business in health care and wellbeing, in addition to the fulfillment of their traditional role in efficient treatment of illness.10 Most pharmacists in Spain have not considered shopper marketing because they assume that their customers come to the pharmacy only when they have an explicit need for a specific product. However the data indicate the contrary: that providing customers with positive hedonic experiences will lead them to buy more products per visit and to return to the store more frequently for future purchases. The introduction of shopper marketing in Spanish pharmacies should ultimately enable pharmacy owners to enjoy higher profits, employees to gain access to more attractive jobs, and customers to benefit from a greater selection of health and personal care items presented in a better layout. The present study had certain limitations. First, because of the circumstances under which the questionnaire was administered, the number of items for measuring some of the constructs had to be minimized. However, and as noted previously, the study was carefully designed to control biases during data collection. Second, the data used for the analysis were self-reported from pharmacy customers. Getting additional feedback from these customers, beyond the information from the data collected would have provided greater insight into their shopping experiences at the pharmacies. Thus, the authors suggest that managers of Spanish pharmacies use qualitative methods to conduct research about their customers’ shopping experiences. Finally, the limitations associated with the
cross-sectional nature of the study design should be taken into account. In terms of future research on pharmacies in Spain, the authors are planning to evaluate a broader scope of elements that are under the retailer’s control in order to seek a better understanding of the multiple factors both within and outside the retailers’ control that affect their customers’ experiences (e.g. the influence of other customers, the purpose of their shopping visit, etc.). The research model used in the present work could be applied to other traditional retail settings (e.g. banking services), and the results obtained could be compared with ours from the present study in order to assess any differences among sectors. Conclusion Pharmacies in Spain have long been considered as strictly functional retailers. In the last years the overall retail sector has undergone structural changes. This new context has required pharmacies to evolve in order to improve their business model through new practices such as shopper marketing that has proven to be efficient in other retail settings. Shopper marketing would allow pharmacies to provide their customers with a complete shopping experience including both functional and hedonic benefits in the same visit. The incorporation of shopper marketing would enhance customer satisfaction and shopping behavior. In conclusion, pharmacies in Spain need to face an important challenge: position their business in the health care and wellbeing sectors, in addition to the fulfillment of their traditional role in efficient treatment of illness. References 1. Report: “Los modelos de farmacia en la Unio´n Europea” Consejo General del Colegios Oficiales de Farmace´uticos, 2007. 2. Hamilton J, Tee S. The value-expectations relationship: connecting customer-perceived value with the expectations of pharmacy-offered services. Inf Manage 2010;47:1–18. 3. Hamilton J. Building a targeted pharmacy customer engagement approach. Int J Pharm Healthc Market 2009;3:320–332. 4. Slater S, Narver J. Intelligence generation and superior customer value. J Acad Market Sci 2000;28: 120–127. 5. Whittaker G, Ledden L, Kalafatis S. A reexamination of relationship between value,
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satisfaction and intention in business services. J Serv Mark 2007;21:345–357. Shankar V, Inman JJ, Mantrala M, Kelley E, Rizley R. Innovations in shopper marketing: current insights and future research issues. J Retail 2011;87:29–42. White L, Klinner C. Service quality in community pharmacy: an exploration of determinants. Res Soc Adm Pharm 2012;8(2):122–132. Deloitte Research. Delivering the Promise of Shopper Marketing: Mastering Execution for Competitive Advantage. New York: Deloitte Development; 2008. Neff J. Trouble in store for shopper marketing. Advert Age 2009;80:3–32. Gavilan D. De la farmacia al espacio de la salud. MK Marketing Ventas 2010;254:54–57. Deloitte Research. Global Powers of Retailing 2013. London: Deloitte Global Services; 2013. Holbrook M, Hirschman E. The experiential aspects of consumption: consumer fantasies, feelings and fun. J Consum Res 1982;9:132–140. Lundstro¨m C, Ch Borgeke. Shopper Mode. Shopper Marketing - From a Shopper Perspective [Master thesis]. Lund University; 2012. Deloitte Developments. Shopper Marketing: Capturing a Shopper’s Heart, Mind and Wallet. New York: Deloitte Development; 2007. Huang Y, Hui S, Inman K, Jacob AS. Capturing the ‘first moment of truth’: understanding unplanned consideration and purchase conversion using instore video tracking. J Market Res; 2012::12–101. Annual Report of Spanish Pharmacies, 2012. Aspime. Available at: http://www.aspime.es/divulgamos.asp; Accessed 15.05.13. Rafaeli A, Barron G, Haber K. The effects of queue structure on attitudes. J Serv Res 2002;5:125–139. Grewal D, Levy M, Kumar V. Customer experience management in retailing: an organizing framework. J Retail 2009;85:1–14. Wyner G. Shopper Marketing: how to engage and inspire customers at critical points in the shopping cycle. Market Manag 2011;(Spring):44–47. Srinivasan SR, Srivastava RK. Creating the futuristic retail experience through experiential marketing: is it possible? an exploratory study. J Retail Leis Prop 2010;9(3):193–199. Pine BJ, Gilmore JH. The experience economy. Harv Bus Rev 1998;76(6):97–105. Schmitt BH. Experiential Marketing: How to Get Customers to Sense, Feel, Think, Act, Relate to Your Company and Brands. NJ: The Free Press; 1999. Berry LL, Carbone LP, Haeckel SH. Managing the total customer experience. Sloan Manage Rev 2002; 43(3):85–89. Brakus JJ, Schmitt BH, Zarantonello L. Brand experience: what is it? How is it measured? Does it affect loyalty? J Market 2009;73:52–68. Verhoef P, Lemon KN, Parasuraman A, Roggeveen A, Schlesinger LA. Customer experience
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44. Cronin J, Brady MK, Tomas G, Hult M. Assessing the effects of quality, value, and customer satisfaction on consumer behavioral intentions in service environments. J Retail 2000;76:193–218. 45. Vijayasarathy LR. Shopping orientations, product types and internet shopping intentions. Electron Mark 2003;13(1):67–79. 46. Anderson EW, Fornell C, Lehmann DR. Customer satisfaction, market share, and profitability: findings from sweden. J Market 1994;58(3):53–66. 47. Caruana A. Service loyalty: the effects of service quality and the mediating role of customer satisfaction. Eur J Mark 2000;36:811–828. 48. Lumpkin JR, Hawes JM, Darden WR. Shopping patterns of the rural consumer: exploring the relationship between shopping orientations and outshopping. J Bus Res 1986;14(1):63–81. 49. Keng ChJ, Huang TL, Zheng LJ, Hsu MK. Modeling service encounters and customer experiential value in retailing: an empirical investigation of shopping mall customers in Taiwan. Int J Serv Ind Manag 2007;18(4):349–367. 50. Mitchell DJ, Kahn BA, Knasko SC. There’s something in the air: effects of congruent or incongruent ambient odor on consumer decision making. J Consum Res; 1995::229–238. 51. Diep VCS, Sweeney JC. Shopping trip value: do stores and products matter? J Retail Consum Serv 2008;15(5):399–409. 52. Pan Y, Zinkhan GM. Determinants of retail patronage: a meta-analytical perspective. J Retail 2006;86(3):229–243.
53. Campo K, Gijsbrechts E, Nisol P. Towards understanding consumer response to stock-outs. J Retail 2000;76(2):219–242. 54. Larson-Hall J. A Guide to Doing Statistics in Second Language Research Using SPSS. New York: Routledge; 2010. 55. Nunnally JC, Bernstein IH. Psychometric Theory. 3rd ed. New York: McGraw-Hill; 1999. 56. Hair JF, Black B, Babin B, Anderson RE. Multivariate Data Analysis. 7th ed. Upper Saddle River, NJ: Prentice Hall; 2009. 57. Anderson JC, Gerbing DW. Structural equation modeling in practice: a review and recommended two-step approach. Psychol Bull 1988;103:411–423. 58. Fornell C, Larcker DF. Structural equation models with unobservable variables and measurements error: algebra and statistics. J Mark Res 1991;18: 382–388. 59. Schreiber JB. Core reporting practices in structural equation modeling. Res Soc Adm Pharm 2008;4: 83–97, 2008. http://dx.doi.org/10.1016/j.sapharm. 2007.04.003. 60. Hu L, Bentler PM. Cutoff criteria for fit indexes in covariance structure analysis: conventional criteria versus new alternatives. Struct Equ Modeling 1999; 6(1):1–55. 61. Bagozzi RP. Causal Models in Marketing. New York: John Wiley & Sons; 1980. 62. Baron RM, Kenny DA. The moderator–mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. J Pers Soc Psychol 1986;51:1173–1182.
Original Research
Shopper marketing: A new challenge for Spanish community pharmacies Diana Gavilan, Ph.D.a,*, Maria Avello, Ph.D.b, Carmen Abril, Ph.D.b a
Departamento de Comercializacio´n e Investigacio´n de Mercados, Facultad de Ciencias de la Informacio´n, Universidad Complutense de Madrid, Avda. Complutense s/n, 28040 Madrid, Spain b Departamento de Comercializacio´n e Investigacio´n de Mercados, Facultad de Ciencias Econo´micas y Empresariales, Universidad Complutense de Madrid, Madrid, Spain
Abstract Background: Changes that have occurred over the past few decades in retailing and in the health care sectordnamely, a drastic reduction in drug profit-margins, and a more critical use of health services by patientsdhave created a scenario characterized by rising competitiveness. This new context is necessitating community pharmacies (hereafter, pharmacies) to improve their business model through new strategies. Shopper marketing has proven invaluable in other retail settings and therefore, could be a critical element for new practices in pharmacies. Objectives: First, to analyze how shopping experiences in pharmacies based on new practices in shopper marketing affect shopping behavior. Second, to study the mediating effect of customer satisfaction on the relationship between shopping experiences and shopping behavior. Methods: A self-reported questionnaire was developed to measure four concepts: hedonic experience (enjoyable), functional experience (goal-oriented), customer satisfaction and shopping behavior. Data were collected from 28 different pharmacies dispersed throughout Spain. Structural equation modeling (SEM) was used to test the relationships in the theoretical model. First, the measurement model was estimated to assess model fit, reliability, convergent and discriminant validity. Then, the parameters of the structural model were estimated and the mediation effects were subsequently tested. Results: Functional experience and hedonic experience each significantly and positively correlate with consumer satisfaction and with customer shopping behavior (purchases and loyalty). Moreover, the effects of each type of experience on shopping behavior are partially mediated by customer satisfaction. Conclusions: The results suggest that even in Spanish pharmacies, which have traditionally been considered as strictly functional retailers, ensuring customer satisfaction and enhancing shopping behavior now demand more than just functional experiences. Moreover, a customer’s experience at a pharmacy can itself trigger a shopping cycle; therefore, pharmacists should consider prioritizing investments in hedonic experiences. Ó 2014 Elsevier Inc. All rights reserved. Keywords: Pharmacy; Shopper marketing; Experience; Customer satisfaction; Shopping behavior
* Corresponding author. Tel.: þ34 91 394 2547; fax: þ34 91 394 24 79. E-mail address: [email protected] (D. Gavilan). 1551-7411/$ - see front matter Ó 2014 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.sapharm.2014.02.008
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Introduction It is often said that medicines are not ordinary products and that their buyers must ask experts (i.e., pharmacists) for advice; thus, pharmacies are not considered to be ordinary retail businesses. Furthermore, retail pharmacies vary dramatically among countries. The differences are due to three major legislative issues: first, whether or not the pharmacy owner must be a pharmacist; second, the geographic criteria that dictate where pharmacies can be located; and lastly, the authorized channels for distribution of over-the-counter (OTC) drugs.1 This complex legislation stems from the dual role of pharmacies: they are retail businesses as well as providers in public health care systems.2 From the retail business perspective, studies on pharmacies have traditionally focused on functional aspectsdnamely, service quality in terms of the clinical expertise and the advice provided by pharmacists to their customers. The services that pharmacies provide are associated with their differentiation and to their customers’ satisfaction and perception of value.3–5 Several changes that have occurred over the past few decades in the health care sector, in retailing and in the global marketplace have created a scenario characterized by increasing competitiveness.6 More and more independent pharmacies are suffering from drastic losses in drug profit margins because of the commercial aggressiveness of encroaching retail pharmacy chains. Furthermore, patients are becoming better informed, using health services more critically and seeking the “best value for money.”7 This new context has forced pharmacy managers to focus on differentiating their pharmacies and on improving their business model through the implementation of new competitive strategies. Recent literature has identified shopper marketing8,9: as an efficient strategy to increase sales. Shopper marketing is the set of all marketing activities that influence an individual who is in the shopping mindset and mode in order to deliver a satisfactory shopping experience or a “seamless shopping experience” in words of Shankar.6 From an operational standpoint, new practices in shopper marketing.2 include the extension of the product inventories into OTC drugs and wellness products, the redesign of the shop layout, the incorporation of category management and the improvement of merchandising.10 Consequently, pharmacy owners are endeavoring to transform their stores to provide
shoppers with just such an experience11done that combines both functional and hedonic elements. Given the unique objectives of pharmacies based on their dual role as retail businesses and health care providers, they must now consider whether to apply some of the aforementioned new practices in shopper marketing. Thus, an important challenge for researchers is to ascertain the extent to which these new practices could prove valuable for pharmacies. The study model of the present research is based on shopper marketing applied to pharmacy retailing. The study focused on clients that go to pharmacies as purchasers, regardless of whether they actually consume the products that they purchase. Certain critical aspects were considered. First, providing a shopping experience in the pharmacy remains a challenge. Albeit shopping at other types of retail locations has evolved from a functional activity to an experience,12 this shift in shopping patterns currently does not represent a true advantage for most pharmacies, which remain strictly functional. Even though pharmacies sell other products besides prescriptions (wellness, beauty, etc.), shopping at pharmacies is not yet perceived as an enjoyable experience.13 Second, a key aspect of shopper marketing is the relevance of in-store touch points. Touch points in the shopper marketing literature refer to internal interfaces of the pharmacy with customers during a transaction; for instance, point of sale material, leaflets, merchandising, TV screens or customized bags. Touch points are critical for reaching and influencing in order customers to trigger the shopping cycle; indeed, it is not surprising that many shopping decisions are made inside the store.14 However, pharmacy shoppers when buying prescriptions, also called negative goods, usually decide what to purchase before entering the store. Given that pharmacies are retail destinations as well as health care providers, researchers are interested in studying the extent to which in-store activities could enhance purchases of nonprescription itemsdduring what Huang et al15 have called the “moment of truth.” The study presented here had two objectives: First, to analyze how shopping experiences in pharmacies based on new practices in shopper marketing affect shopping behavior. Second, to study the mediating effect of customer satisfaction on the relationship between shopping experiences and shopping behavior. The authors believed that an understanding of the role of new practices based on shopper
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marketing in Spanish pharmacies would enable pharmacists to develop the hedonic side of the shopping experience in their stores in order to increase their sales. They also considered that testing the mediating effect of customer satisfaction on the relationship between shopping experience and shopping behavior would demonstrate the value of shopper marketing. The paper is organized as follows. First, the Spanish pharmacy sector is briefly described. Second, an overview of the literature on experiences and innovation in shopper marketing from other sectors is provided. Third, the research model and methodology of the present study are outlined. Fourth, the main results are reported and the principal conclusions are explained. Finally, specific contributions of the research are provided, the limitations of the study are outlined and directions for future lines of research are described.
Literature review Spanish pharmacies Among European countries, Spain ranks third (after Belgium and Greece) in pharmacy to inhabitants ratio: it has one pharmacy to serve 2159 inhabitants (21,500 pharmacies in total). In fact, 98.9% of the Spanish population has at least one pharmacy within 800 m from home.16 In the Spanish model of pharmaceutical retailing, the pharmacy is a privately-managed public service whose owner must be a pharmacist. However, pharmacists in Spain are limited to only one license; therefore, there are no retail pharmacy chains such as Boots or Lloyds in the UK. Furthermore, in order to ensure that all citizens have a pharmacy close to their home, the Spanish government legally dictates the locations of pharmacies according to demographic criteria. Lastly, pharmacies are the only location in Spain where OTC drugs can be legally sold. The standard Spanish pharmacy offers prescription drugs and myriad health care products in an average retail space of less than 50 m2. Prescription drugs account for 70% of sales revenues, and health & beauty products (baby food, cosmetics, etc.), and OTC (over the counter) items, account for the remaining 30%. An average Spanish pharmacy has annual sales revenue of V500,000 ($690,000) and has three employees; usually two pharmacists and one assistant. This implies a low concentration of sales and low bargaining power in a highly fragmented industry in
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which the owner is both a technical professional and an entrepreneur. From a marketing perspective, sales performance in pharmacies is complex, due to the limited space for product exhibition and the requirement of a counter for dispensing drugs. Customers often stand in line to fill their prescriptions which leads to a rather uninspiring shopping experience: wait, be served, and pay.17 However, a few Spanish pharmacies have begun to enhance hedonic experiences for customers, innovating to create product awareness and to trigger shopping among these shoppers.18 This work has included improving store layout and ambience (e.g. aisle placements and shelf positions of products), and offering non-medical (wellbeing) products (e.g. for nutrition, skincare, etc.). Shopper marketing The past few years have witnessed a renewed interest in shopper marketing: efforts by retailers to understand consumer purchasing-behavior and then exploit the acquired knowledge to enhance their business.9,14 Shopper marketing starts long before shoppers enter a store. It encompasses the challenge of drawing consumers into the store, and focuses on the key touch points that influence shopper decision-making throughout the entire shopping cycle, as well as on post-purchase actions to ensure that customers return for future purchases.19 Among the most important approaches in shopper marketing is to provide customers with a “seamless shopping experience.”6 Creating such experiences have become paramount in today’s retail environment. Indeed, retailers from all sectors have embraced the idea of delivering a differentiated and outstanding consumption experience across the multiple channels of a retailer and through in-store and out-of-store activities.6 In fact, consumer demand is gradually shifting from product to experience,12 and from rationale to feeling and fun.20 To guarantee the efficacy of their retail strategies, stores should focus on offering and managing a pleasant shopping experience that includes every point of contact between the customer and the business.18 As goods and services become increasingly commoditized,21 experience has become the primary instrument for differentiation among retailers.22 Organizations that wish to compete by providing their customers with satisfactory experiences must orchestrate all the clues that these customers detect during the buying process.23
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Experiences are holistic in nature and involve the shopper’s cognitive, affective, social and physical response to the retailer.24 The relevant literature distinguishes between the functional side and the hedonic side of the shopping experience. Most of the elements that contribute to each side are under the retailer’s control, including service interface, store layout and design, store ambience, product assortment, price, etc.12,25–29 Despite the value placed on shopper experience across retail sectors, most retail pharmacies have been quite late in grasping the importance of this concept, as they have not considered the aforementioned shift in shopping priorities to be advantageous to their case. Indeed, as pharmacies have traditionally been presumed to deal strictly with functional product shoppers, their focus on the shopping experience was on functionality; there was no place for enjoyment, and no possibility that their customers could buy for fun.13 Retail pharmacies have extensively studied customer perceptions of the functional side of the shopping experience. This side is based on processing of rational and analytical information,22 and deals with shopping efficiency and with making an accurate and suitable product choice based on logical assessment of information on product performance and functionality.30 In a study on Japanese pharmacies, Kamei et al.31 showed that convenient opening hours, short waiting times (for prescriptions to be filled), and good information management were the most important factors for customers when choosing a pharmacy. A similar study on customer perceptions of pharmacies in Singapore emphasized the importance of short waiting lines (for prescriptions to be filled), accurate dispensing of medicines, and pricing.32 In contrast, Holdford and Schulz33 found that pharmacy clients in the USA were less concerned with what they received (e.g. medicines or advice) than with how the services were delivered (e.g. friendly service), even when the technical quality was low. Their results reflected the relevant development of the hedonic side of the shopping experience, characterized by providing customers with heightened arousal, enjoyment, adventure and entertainment.12,27 For retailers, their customers’ shopping activities must often combine both functional and hedonic attributes, as the absence of either side compromises the overall shopping experience.34 Thus, the authors of this study envisioned that analyzing both sides of the shopping experience at Spanish pharmacies would offer new insight
into this business, which has traditionally been managed and studied from a purely functional perspective. Customer satisfaction Initially, scholars defined satisfaction as an emotion-based response elicited during a consumption experience.35 However marketing researchers have long since recognized that such responses could be elicited in other contexts, such as shopping.36 Satisfaction is the first emotion to receive scrutiny in post-purchase behavior research and is a vital outcome of marketing activity,37 as it has been found to significantly affect all stages of the consumer’s decision-making process, the consumer’s attitude and behavioral intentions, and customer retention.38–40 Providing satisfaction is crucial to achieving customer loyalty as well as profitability.41 Indeed, customer satisfaction data could markedly influence analysts’ earnings forecasts, and could be used as a proxy for non-financial information to evaluate a business or to increase the robustness of financial analyses.42 Pursuing customer satisfaction is a critical goal for retail pharmacies, given the fierce competition among pharmacies as they vie for customers, for whom the cost of switching from one pharmacy to another may be insignificant. Customer satisfaction is complex and requires further investigationdnamely, to comprehend how consumers can be engaged, aroused and entertained through product assortment, service and atmosphere.43 During the overall shopping experience, retailers strive to induce certain desirable emotions in their customers, while trying to minimize negative affective responses that may arise from undesirable conditions, such as waiting, crowding, etc. Upon entering a shop, customers may experience a vast array of emotions, from excitement, joy or interest to anger, frustration or simply boredom. However, once the shopping experience has ended, the customer’s level of satisfaction emerges as the global output of the experience. Based on the previous, we propose the following two hypotheses: H1a: For customers shopping at pharmacies, their functional experience will positively influence their level of satisfaction. H1b: For customers shopping at pharmacies, their hedonic experience will positively influence their level of satisfaction.
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Shopping behavior The relationship between customer satisfaction and shopping behavior has been widely studied in marketing.44 The overall shopping experience directly affects customer satisfaction and in turn, retail performance. Customer satisfaction has been shown to be a reliable predictor of shopper patronage behavior in the retail sector,45 as it leads to consumer-desired patronage in the form of loyalty.46–48 Thus, as with any other retailer, pharmacies must focus on how to improve customer satisfaction, which is associated with a service provider’s ability to get its customers to say positive things about the provider, recommend the provider to other consumers; remain loyal, repurchase from the provider,18,48 spend more money or purchase more items per shopping visit,27 and pay price premiums. There is also evidence in other retail contexts that the shopping experience directly impacts shopping patterns. The shopping experience could trigger a shopping cycle, thus increasing the number of decisions that the shopper must make inside the store. The functional shopping experience influences shopping behavior by providing customers with ideas, suggestions and pricing information on potential future purchases.27,49 However, this behavior is also shaped by sensory inputs, which are a strong component of the hedonic shopping experience.50 Background music, color, smell and lighting can each alter a customer’s interest in the product assortment and consequently, influence their shopping behavior.6 Therefore we propose the following hypotheses: H2a: For customers shopping at pharmacies, their satisfaction will mediate the relationship between their functional experience and their shopping behavior. H2b: For customers shopping at pharmacies, their satisfaction will mediate the relationship between their hedonic experience and their shopping behavior. Fig. 1 shows the theoretical model of the study: the hypotheses and their relationships.
Methods Survey A self-reported questionnaire was developed for Spanish pharmacy customers, in order to measure
Fig. 1. Theoretical model of the study.
the following four concepts: hedonic experiences, functional experiences, customer satisfaction and shopping behavior. To measure functional and hedonic experiences, a set of survey statements on retail experience from Diep and Sweeney51 were chosen, adapted to the pharmacy business, and then translated into Spanish. The functional experience at the pharmacy (four statements) was based on convenience, waiting time and product availability, whereas the hedonic experience (four statements) was based on the attractiveness of the pharmacy retail environment, and on the customer’s level of enjoyment while shopping. It is interesting to highlight that we have included “giving good health advice” as a hedonic experience. The reason is that “giving a good health advice” is not just a simple and plain answer to a problem. A “good health advice” considers the personal circumstances of the customer what makes the advice very much customized. This fact makes the client reassured, beloved and cared, thus producing an experience beyond functionality. Respondents were asked to indicate their level of agreement on a five-point Likert scale, scored from 1 (completely disagree) to 5 (completely agree) (Table 1). Customer satisfaction was measured by two items adapted from Westbrook35 that cover both the cognitive and emotional sides of the concept, according to the theoretical framework of customer satisfaction studies. These items are: “On the whole, you are ____ with this pharmacy,” scored on a five-point Likert scale (from 1 [not at all satisfied] to 5 [very satisfied]); and “This pharmacy leaves you with a ____ feeling,” scored similarly (from 1 [very unpleasant] to 5 [very pleasant]). Shopping behavior was measured using two variables that reflect the shopper patronage: the number of products bought during the trip to the pharmacy (besides prescriptions); and the frequency of trips there.52 The reason for using number of products sold per visit rather than amount of money
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Table 1 Questionnaire items: functional experience and hedonic experience Functional experience F1: This pharmacy has convenient opening hours. F2: I don’t have to wait in this pharmacy. F3: This pharmacy always carries the products that I am looking for. F4: This pharmacy offers good value for money. Hedonic experience H1: This pharmacy is a pleasant shop. H2: This pharmacy is an attractive shop. H3: The pharmacy staff gives me good health advice. H4: I feel good when I come to this pharmacy.
spent per visit was to avoid the bias mentioned by Campo et al.,53 who found that product purchasing measured in dollar terms depends on buying power (as measured by certain socio-demographic variables). The frequency of trips to the pharmacy was scored according to a five-point Likert-type scale, ranging from 1 (rarely shop there) to 5 (very often shop there). The count variable “number of products bought per visit” was categorized using visual binning54 into 5 categories prior to the analysis. Five demographic questions were included in the questionnaire (Table 2). The questionnaire was examined by a panel of experts to evaluate content validity and to ensure the accuracy of the text translations. To verify the clarity of the questions and gain feedback on the length of the questionnaire, it was further tested in a group of 25 customers. Sampling and data collection procedures The authors initially contacted a convenience sample of 90 pharmacies selected based on a common element; they all had introduced more than one in-store practice of shopper marketing. In addition to medicines, these pharmacies offered a range of toiletry, cosmetic and health care products, although they differed in size and atmosphere (e.g. interior design, etc.). Twenty eight pharmacies dispersed throughout Spain agreed to participate within the study time frame. Each pharmacy enrolled in the research to obtain the Table 2 Questionnaire items: Shopping behavior Shopping behavior SB1: Number of products bought during the visit SB2: Frequency of visits
study results, and agreed to gather a random sample of 100–150 completed questionnaires from among its clients over a period of 10 days, devoting one employee to the process. The pharmacy employees were trained in order to properly understand the questionnaire. They used the following rule to randomly select study participants from among their clients: Ask the nth (fourth, fifth, etc.) client every hour. The questionnaire was self-administered by the respondents, who completed it alone and while standing. The conditions under which the data were collected, and the need to facilitate collaboration, obligated the authors to minimize the length of the questionnaire. The respondents spent an average of approximately 3 min to complete the survey. After the completion of the questionnaire participants received as a reward a free product sample. The data were collected in March 2012: these comprised 3602 questionnaires, of which 3337 were complete and therefore, were used in the study. Data analysis Structural Equation Modeling (SEM) was performed to test the hypothesis using SPSS AMOS 19.0, with a maximum likelihood estimation method. The measurement model was first estimated to assess factor structure, reliability, convergent validity and discriminant validity. Subsequently, the parameters of the structural model were estimated and the mediation effects were tested. Results Respondent demographics The respondents’ demographics (gender, age, educational level and household size) are listed in Table 3. Results of the measurement model The means, standard deviations, and correlation matrix are shown in Table 4. All variables correlate significantly in the predicted direction. The measurement model is depicted in Fig. 2. Reliability of the subscales of the model was acceptable, as the coefficient alpha estimates ranged from 0.783 to 0.87955 (Table 5). The composite reliability estimates55 ranged from 0.75 to 0.89, and all the variance-extracted estimates,56 ranged from 0.58 to 0.79. All the reliability measures exceeded the recommended thresholds.56 Convergent validity was assessed
Gavilan et al. / Research in Social and Administrative Pharmacy j (2014) 1–12 Table 3 Summary of the statistics from the data set (N ¼ 3337) Percentage Gender Male Female Age (years) !20 21–30 31–55 O55 Educational level University degree Vocational school Secondary school Primary school Household size (# people) 1 or 2 3 4 O4 Distance from home to pharmacy 0–199 m 200–499 m 500 m–2 km O2 km
26.6 73.4 1.9 18.4 46.3 33.4 21.2 20.3 31.8 26.7 48.6 24.8 17.9 8.7 23.1 14.5 42.4 20.0
for the measurement model by determining whether each indicator’s estimated maximum likelihood (l) loading on the underlying construct was significant.57 All confirmatory factor loadings exceeded 0.751 and were significant (P ! 0.001). Standardized values and unstandardized values with standard errors are also provided in Table 5. Discrimination between the constructs was evident, because the average variance-extracted (AVE) estimates, ranging from 0.58 to 0.79, exceeded all squared phi correlations between constructs,58 which ranged from 0.14 to 0.41. Results of the structural model As the measurement model proved satisfactory, the structural model was then estimated (see
7
Fig. 3). All the fit indices59 were above the recommended thresholds60,61 indicating respectable fit: c2 ¼ 233.14; df ¼ 48; (P ! 0.01); Comparative Fit Index (CFI) ¼ 0.972; Tucker–Lewis Index (TLI) ¼ 0.961 and Root Mean Square Error of Approximation (RMSEA) ¼ 0.06 with a 90% confidence interval of 0.04–0.07. Assessment of the hypothesized relationships Functional experience and hedonic experience each positively and significantly influenced customer satisfaction, as had been predicted. Interestingly, the hedonic experience had the strongest influence on customer satisfaction (standardized path coefficient ¼ 0.461; P ! 0.01); it was stronger than the influence of functional experience (standardized path coefficient ¼ 0.247; P ! 0.01). Therefore, H1a and H1b are supported. Next, in accordance with the “causal steps approach” by Baron and Kenny,62 the potential mediation effect of customer satisfaction on consumer behavior was ascertained. The direct and indirect effects were tested for significance using the Bootstrap estimation procedure (Bootstrap sample of 2000) in two parts: a basic model postulating a direct relationship between each predictor (functional experience and hedonic experience) to the criterion (shopping behavior) in the absence of mediators; and a mediation model that posits the relationship between each type of experience and the shopping behavior, as mediated by customer satisfaction. As shown in Table 6, the direct paths between functional experience and shopping behavior, and between hedonic experience and shopping behavior were statistically significant (b ¼ 0.306, P ! 0.001; and b ¼ 0.478, P ! 0.001, respectively). These results satisfy Baron and Kenny’s62 first step of testing mediation. When the mediator was added to the model in order to evaluate the indirect effects of functional experience and of hedonic experience on
Table 4 Means, standard deviations and correlations among the constructs Construct
Mean
Standard deviation
Functional experience
Hedonic experience
Customer satisfaction
Shopping behavior
Functional experience Hedonic experience Customer satisfaction Shopping behavior
3.6 3.7 3.9 3.1
1.3 1.1 2.6 2.0
1 0.48** 0.36** 0.53***
1 0.53*** 0.62***
1 0.63***
1
**P ! 0.01, ***P ! 0.001.
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Fig. 2. Measurement model of the study.
shopping behavior, the magnitude of the association was reduced but remained significant (b ¼ 0.249, P ! 0.01; and b ¼ 0.300, P ! 0.01 respectively). These results are consistent with a partial mediation of customer satisfaction on consumer behavior. Therefore, H2a and H2b are supported. Discussion In the study presented here, the extent to which functional experiences and hedonic experiences
could each influence customer satisfaction and shopping behavior (purchases and loyalty) in pharmacies in Spain was assessed. Data collected from pharmacy customers were analyzed, and a theoretical model to understand the relationships among these factors was deviseddnamely, to determine how the effect of each experience on shopping behavior might be mediated by customer satisfaction. The primary aim was to demonstrate, using empirical evidence, that a seamless shopping experience incorporating functional and hedonic
Table 5 Results of the confirmatory factor analysis Construct
Item
Standardized factor loading
Unstandardized factor loading (standard error)
t
Cronbach alpha
Construct reliability
Average variance extracted
Functional experience
F1 F2 F3 F4 H1 H2 H3 H4 CS1 CS2 SB1 SB2
0.796 0.850 0.805 0.752 0.751 0.806 0.815 0.821 0.863 0.909 0.801 0.729
1.00 1.15 1.05 1.05 1.00 1.19 1.19 1.15 1.00 1.03 1.00 0.907
– 28.436 26.851 24.764 – 25.102 25.386 25.555 – 25.908 – 19.208
0.832
0.89
0.62
0.875
0.87
0.64
0.879
0.88
0.79
0.783
0.75
0.58
Hedonic experience
Customer satisfaction Shopping behavior
(0.00) (0.04) (0.04) (0.04) (0.00) (0.04) (0.05) (0.04) (0.00) (0.04) (0.00) (0.04)
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Fig. 3. Structural model of the study.
elements is crucial in Spanish pharmacies, despite their reputation as being strictly functional retailers. For years pharmacies have been seen as mere sellers of prescription drugs, rather than as retail setting in which customers could be entertained while shopping for medicines and other products. The findings reported here suggest that pharmacies in Spain can no longer rely on their traditional business model. In order to prosper in today’s business environment, they must seek to provide their customers with a complete shopping experience that also includes hedonic elements.
Table 6 Mediation effects
Partial mediation: functional experience, customer satisfaction, shopping behavior Partial mediation: hedonic experience, customer satisfaction, shopping behavior **P ! 0.01, ***P ! 0.001.
Direct effects without mediation
Direct effects with mediation
0.306***
0.249**
0.478***
0.300**
Functional and hedonic experiences are each important for customer satisfaction in pharmacies in Spain. The authors of this study posit that, in terms of management drivers, and despite being traditionally classified as functional retailers, these pharmacies are actually more similar to consumer goods retailers than has traditionally been perceived. Furthermore, it was determined that customers at these pharmacies obtain greater satisfaction from hedonic experiences than from functional ones. Thus, in order for these pharmacies to survive, they must evolve to include hedonic experiences for their customers, albeit without losing their functionality. The findings reported here empirically support the use of shopper marketing in pharmacies in Spain, the relationships between customer satisfaction and frequency of visit,18,48 and between customer satisfaction and number of products bought,27 that had been previously reported for other retail sectors. Finally, this study has also showndas hypothesizeddthat due to the partial mediating effect of customer satisfaction on shopping behavior, a customer’s experience at a pharmacy can itself trigger a shopping cycle. This appears to be an interesting finding since this is the first report of such an effect in the pharmacy literature. The results of the present work have direct implications for managers of Spanish pharmacies.
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These pharmacists should invest in improving hedonic experiences to provide their customers with a pleasant, attractive and amusing atmosphere. Recent efforts to improve business by some pharmacies in Spain (and many other countries) that are focused on functional aspects (extending their opening hours, reducing waiting times or ensuring that products are in stock) are simply not enough to guarantee their survival. One major element in shopper marketing is to improve the ambience of a store by changing its layout, controlling atmospheric variables (e.g. lighting, aromas and music), redecorating it and/ or introducing new promotionsdall of which can be applied to pharmacies. Another interesting possibility is to separate products according to categories traditionally used by other types of retailers (e.g. supermarkets): for instance, to create a dedicated wellness space for wellbeing products. In this sense, pharmacies in Spain should try to position their business in health care and wellbeing, in addition to the fulfillment of their traditional role in efficient treatment of illness.10 Most pharmacists in Spain have not considered shopper marketing because they assume that their customers come to the pharmacy only when they have an explicit need for a specific product. However the data indicate the contrary: that providing customers with positive hedonic experiences will lead them to buy more products per visit and to return to the store more frequently for future purchases. The introduction of shopper marketing in Spanish pharmacies should ultimately enable pharmacy owners to enjoy higher profits, employees to gain access to more attractive jobs, and customers to benefit from a greater selection of health and personal care items presented in a better layout. The present study had certain limitations. First, because of the circumstances under which the questionnaire was administered, the number of items for measuring some of the constructs had to be minimized. However, and as noted previously, the study was carefully designed to control biases during data collection. Second, the data used for the analysis were self-reported from pharmacy customers. Getting additional feedback from these customers, beyond the information from the data collected would have provided greater insight into their shopping experiences at the pharmacies. Thus, the authors suggest that managers of Spanish pharmacies use qualitative methods to conduct research about their customers’ shopping experiences. Finally, the limitations associated with the
cross-sectional nature of the study design should be taken into account. In terms of future research on pharmacies in Spain, the authors are planning to evaluate a broader scope of elements that are under the retailer’s control in order to seek a better understanding of the multiple factors both within and outside the retailers’ control that affect their customers’ experiences (e.g. the influence of other customers, the purpose of their shopping visit, etc.). The research model used in the present work could be applied to other traditional retail settings (e.g. banking services), and the results obtained could be compared with ours from the present study in order to assess any differences among sectors. Conclusion Pharmacies in Spain have long been considered as strictly functional retailers. In the last years the overall retail sector has undergone structural changes. This new context has required pharmacies to evolve in order to improve their business model through new practices such as shopper marketing that has proven to be efficient in other retail settings. Shopper marketing would allow pharmacies to provide their customers with a complete shopping experience including both functional and hedonic benefits in the same visit. The incorporation of shopper marketing would enhance customer satisfaction and shopping behavior. In conclusion, pharmacies in Spain need to face an important challenge: position their business in the health care and wellbeing sectors, in addition to the fulfillment of their traditional role in efficient treatment of illness. References 1. Report: “Los modelos de farmacia en la Unio´n Europea” Consejo General del Colegios Oficiales de Farmace´uticos, 2007. 2. Hamilton J, Tee S. The value-expectations relationship: connecting customer-perceived value with the expectations of pharmacy-offered services. Inf Manage 2010;47:1–18. 3. Hamilton J. Building a targeted pharmacy customer engagement approach. Int J Pharm Healthc Market 2009;3:320–332. 4. Slater S, Narver J. Intelligence generation and superior customer value. J Acad Market Sci 2000;28: 120–127. 5. Whittaker G, Ledden L, Kalafatis S. A reexamination of relationship between value,
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