Bachelor Thesis. Olfactory marketing The influence of scents on consumers buying behaviour at the point of sale

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1 Bachelor Thesis International Business Management Olfactory marketing The influence of scents on consumers buying behaviour at the point of sale Supervisor: Prof. Dr. Sabine Haller Second reader: Dipl. Kff. Silke Knoll Written by: Nicole Winter Student No Berlin School of Economics and Law Words

2 III Table of Contents List of illustrations iv List of abbreviations v Affidavit....VI 1 Introduction Experiential Marketing Concept of Experiential Marketing Definition Importance in times of changing consumer expectations Experiential marketing in comparison to traditional marketing Financial goals and impacts of experiential marketing How to create experiences Concept of Multisensory Marketing Definition and components of sensory marketing Impact of multisensory marketing on experiences Concept of Environmental Psychology Definition The SOR Paradigm of environmental psychology Components of physical store environment The Marketing Power of Scents Concept of Olfactory Marketing Definition Goals and impact on financial results Measuring the impact of ambient scents on consumer s perception Current application area Functioning of the Olfactory System Basic principle of the olfactory system Impact of scents on emotion and memory Correlation of scent and mood...24

3 3.3 Scents as a Tool of Experiential Marketing Key factors influencing the choice of the right scent The Abercrombie and Fitch case Top 10 scents and their effects on consumers Technical implementation and investments at the PoS Cultural considerations Gender considerations Health and manipulations concerns Ethical and legal concerns Empirical Study: Influence of Scents on the consumer s buying behaviour Research objective Procedure and choice of interviewee Data analysis Interpretation of data Results Recommendations and Tendencies List of References Appendix 1: Excerpt from Remembrance of things past Appendix 2: Technical Implementations Appendix 3: Questionnaire expert interviews Appendix 4: Transcript interview Bernd Schubert Appendix 5: Transcript interview Jens Reissmann, Reima Appendix 6: Transcript interview Hans Voit, Voitair...89 Appendix 7: Transcript interview Frank Rehme, Metro Group

4 IV List of Illustrations Illustration 1: The customer s holistic experience....3 Illustration 2: Economic Distinctions...4 Illustration 3: Customer internal process in experience marketing...5 Illustration 4: Goal hierarchy in experience marketing...7 Illustration 5: Stages of customers purchasing behaviour...8 Illustration 6: The Mehrabian-Russell model...13 Illustration 7: The four realms of an experience..15 Illustration 8: Olfactory receptor cells.21 Illustration 9: Process of decoding scent information Illustration 10: The limbic system Illustration 11: Inverted U-shaped function..26 Illustration 12: Derval Research favourite and worst scents.. 33 Illustration 13: Overview of interviewees.. 37 Illustration 14: Goal and efficiency relationship...47 Illustration 15: Key factors olfactory marketing 49 Illustration 16: Scent considerations..52

5 V List of abbreviations A&F: Abercrombie and Fitch FMCG: Fast Moving Consumer Goods HVAC: Heating, Ventilation and Air Conditioning IFRA: International Fragrance Institution PoS: Point of Sale P-variable: personality variable RIFM: Research Institute for Fragrance Materials S-O-R: Stimulus-Organism-Response TV: Television

6 VI Affidavit I declare that I wrote this thesis independently and on my own. I clearly marked any language or ideas borrowed from other sources as not my own and documented their sources. The thesis does not contain any work that I have handed in or have had graded as a Prüfungsleistung earlier on. I am aware that any failure to do so constitutes plagiarism. Plagiarism is the presentation of another person's thoughts or words as if they were my own even if I summarize, paraphrase, condense, cut, rearrange, or otherwise alter them. I am aware of the consequences and sanctions plagiarism entails. Among others, consequences may include nullification of the thesis, exclusion from the BA program without a degree, and legal consequences for lying under oath. These consequences also apply retrospectively, i.e. if plagiarism is discovered after the thesis has been accepted and graded. Ich erkläre hiermit, dass ich die vorliegende Arbeit selbständig verfasst und nur die angegebenen Quellen und Hilfsmittel benutzt habe. Wörtlich oder dem Sinn nach aus anderen Werken entnommene Stellen sind unter Angabe der Quelle als Entlehnung kenntlich gemacht. Die Arbeit enthält kein Material, das ich bereits zu einem früheren Zeitpunkt als Prüfungsleistung eingereicht habe. Mir ist bewusst, dass die ungekennzeichnete Übernahme fremder Texte oder fremder Ideen als Plagiat gilt, selbst wenn diese zusammengefasst, umschrieben, gekürzt, oder anderweitig verändert wurden. Die Konsequenzen eines Plagiats sind mir bekannt. Die möglichen Konsequenzen umfassen, unter anderem, ein Nichtbestehen der Bachelorarbeit, den Ausschluss von weiteren Prüfungsleistungen im Studiengang, oder zivilrechtliche Konsequenzen, die mit dieser eidesstattlichen Erklärung verbunden sind. Diese Konsequenzen können auch nachträglich zur Anwendung kommen, also nachdem die Arbeit angenommen und korrigiert wurde. My name: Title of my thesis: Date: Signature:

7 1 1 Introduction Odours have a power of persuasion stronger than of words, appearances, emotions or will. The persuasive power of an odour cannot be fended off, it enters into us like breath into our lungs, it fills us up, imbues us totally. There is no remedy for it. (Süßkind, 1986, p ) There is an incredible and mystical power ascribed to the human olfaction which has not only been detected by the author of the novel Perfume but which has also aroused the attention of marketers in the past few years. It is said that every human is breathing about times a day and most of the time; it happens unconsciously (Now University, n.d.). With every breath, different scents are perceived, which may be evaluated as either pleasant or unpleasant. In contrast to the other senses, it is possible to close the eyes, not to look, close the ears, not to hear and stop touching things, not to feel, but it would never be possible to stop breathing without smelling for a considerable time. This is why the olfactory sense is considered as attractive and unique. So far, the power of olfaction has not been extensively used, especially when it comes to the marketing at the Point of Sale. Although scents in hotels and wellness centres have already been established, retailers still argue about the implementation at retail environments. Nonetheless, due to the increased marketing presence of companies, consumers are confronted with to advertising messages every day which consequently led to an information and sensory overload in the past years (Langner, 2009, p.13). People are no longer able to absorb and process all information they are exposed to so that they ignore the majority of the contents. Accordingly, companies are suffering from the inappropriate allocation of money which makes a change of thinking unavoidable and which necessitates a rapid response. Marketers realize that the society has changed and evolved into an experience and sensation seeking environment. In particular retailers of low involvement, fast moving consumer goods are affected and therefore need to react to this negative trend. With converging price and product ranges in the past, it became more difficult for retailers to contrast strongly with the competitors. Retailers understood that the store itself provides a

8 2 promising opportunity for differentiation and sales increase and therefore emphasized on designing and developing unique store environments. Having previously paid attention to a carefully chosen price and promotion, marketers are now focusing on atmospherics: the conscious designing of space to create certain effects in buyers to enhance their purchase probability. (Kotler, P. 1973) Having exploited visual and auditory stimuli, retailers start to concentrate on olfactory stimulation to regain consumers attention at the PoS while creating a pleasant atmosphere with scents. In this respect, the intention of this thesis is to find out if olfactory marketing may be implemented for retail environments. Specifically, the question which arises is whether or not ambient scents, have an impact on consumer s buying behavior and to which extent ambient scents may be used at the PoS. In order to approach this research question, the thesis is divided into 3 main parts. The first part will consider where the idea of olfactory marketing originates from while referring to the approach of experiential marketing and particularly of sensory marketing. Within this approach, environmental psychology will also be considered in order to examine the relationship between people and physical environments. Afterwards, the second part will deal with olfactory marketing itself, general concerns and considerations to be made for retailers at the PoS. In the last section of the thesis, the empirical part will examine if support is given for or against olfactory marketing at the PoS while deducting expert interviews. In this respect, the focus is set on fast moving consumer goods at supermarkets and grocery stores, where olfactory marketing is still in the early developing stage.

9 3 2 Experience Marketing Definition As an intriguing marketing approach, experiential marketing has become one of the most promising marketing innovations in times where consumers ask for more than just products and services. Experience marketing has emphasized the need to stimulate, entertain and affect consumers at an emotional level in order to create the premises for an experience in consumption. (Dumitrescu et al. 2012, p. 56) Besides, it aims at building relationships with the customers and it intends to raise awareness, create desire and more importantly, it is designed to create memories in order to increase turnover. According to Schmitt (1999), the ultimate goal of experiential marketing is to create holistic experiences that integrate individual experiences into a holistic Gestalt. (Schmitt, 1999, p. 53) In this respect, Tyan and McKechnie (2008) developed a framework to represent the holistic customer experience. Pre-Experience Activities: Imagining Searching Planning Budgeting Customer Experience Value Source: Sensory Emotional Functional/utilitarian Relational Social Imormational Post-Experience Outcomes: Enjoyment Entertainment Learning Skills Nostalgia Fantasising Illustration 1: The customer s holistic experience Adapted from: Tyan and McKechnie, 2008, p. 509 The perceived experience is divided into three different stages: pre-experience, the real customer experience and the post-experience. The first stage relates to the customer s search of information while planning and budgeting so that in the end customers realize and achieve the desired experience. The second stage deals with the actual experience. There are different ways how customers can acquire an experience. According to the table above, customers obtain sensory,

10 4 emotional, utilitarian, relational, social, informational, and sometimes even novelty and utopian values. Particularly emotions are closely related to action, which will increase the likelihood of a potential sale. The post-experience stage implies different outcomes from the customer s point of view. Having created enjoyment, entertainment or nostalgia, customers are more likely to come back and to talk about the experience which will consequently persuade other potential customers. (cf. Tyan and McKechnie, 2008, p. 509) The concept of experience marketing has initially emerged in 1982, when Holbrook and Hirschman (1982) acknowledged the importance of customer experiences. In this regard, Holbrook and Hirschman underline the significance of hedonic consumption which designates those facets of consumer behaviour that relate to the multi-sensory, fantasy and emotive aspects of one's experience with products. (Holbrook and Hirschman, 1982, p. 99) Originating from that, Pine and Gilmore (1998) have identified four stages in the progression of economic value in order to show to which extent the economy has evolved into an experience economy over the last few decades. They diversify four economies: the agrarian, industrial, service and experience economy having different economic functions that developed over time. (Pine and Gilmore, 1998, p. 98) Table 2: Economic Distinctions Adapted from Pine and Gilmore, 1999, p. 98 Based on the illustration, commodities are defined as fungible, goods as tangible, services as intangible, and experiences as memorable. It also becomes obvious

11 5 that the focus is no longer on the market but on the guest visiting a store. Pine and Gilmore conclude that an experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event. (Pine and Gilmore, 1998, p.98) Besides, while talking about experiences it is important to distinguish experiential marketing from service marketing. Experiences include different levels of customer involvement. More precisely, it involves a rational, emotional, sensorial, physical and spiritual component. (Gentile et al. 2007, p.397). Schmitt (1998) argued that marketers can differentiate five different types of experiences in marketing: sensory, affective, creative cognitive, physical and social-identity experiences. (cf. Schmitt, 1999, p. 53) In other words, consumers: Illustration 3: Customer internal process in experience marketing Adapted from: Own Illustration, 2013 Companies have realized that establishing experiences is crucial when it comes to the creation of customer loyalty. It became apparent that companies compete best when they integrate functional and emotional features in their offerings. (cf. Dumitrescu et al. 2012, p. 57) Experiential marketing also proved to be a strong weapon for companies to differentiate themselves from competitors because holistic experiential designs are difficult to imitate Experiential marketing in comparison to traditional marketing With the emergence of experiential marketing, companies started to distance themselves from the traditional "features-and-benefits" approach and focused on the creation of experiences for their customers (cf. Schmitt, 1999, p. 53). The traditional marketing approach has been early developed in times when access to media has become readily available and when marketers started to think about promoting their products. Traditional marketers believe that customers are rational decision makers who weigh their decision upon the functional features of a

12 6 product. Due to this assumption, marketers consider product features as key tool for differentiating a company's offerings from competitive offerings (Schmitt, 1999, p. 56). Nonetheless, when companies started to globalize and marketers realized that it will need more than pure product features to be permanently successful, brand marketers broaden the narrow functional focus of traditional marketing. However, being primarily viewed as an identifier, brands missed to create memorable brand experiences. 1 Customers increasingly asked for products and companies they can relate to and they can associate with. In this regard, the concept of experience marketing arose. Within this approach, customers are no longer viewed as purely rational, but emotionally driven decision-makers The experience-oriented consumer Over the past few decades, there has been a major change in consumer behaviour. While people primarily focused on the satisfaction of basic needs during the post-war era, the society has continuously evolved into an affluent and prosperous society that seeks variety and emotional attachment. Due to the shift in society, the consumer increasingly concentrates on higher needs and strives for pleasure, fun and enjoyment; in other words, emotional consumer experiences (cf. Kroeber-Riel et al. 2003, p. 124; Opaschowski, 2006, p. 144) (cf. Opaschowski, 2001, p. 196). The emotionally experienced individuality is reflected in all aspects of life. More specifically, people highly value leisure time, are environmentally concerned and strive for luxury and brand-name products, however, they are not always willing to pay accordingly. In this respect, the idea of the former hybrid consumer becomes relevant. Hybrid consumers have the distinction of being price-conscious, but also wasteful; resulting in a bipolar behaviour (cf. Salzmann, 2007, p. 14). The experience-oriented consumer still shares some of those features. Referring to Maslow s hierarchy of needs, it becomes obvious that the consumer, striving for 1 Kotler (1997) defines brand as a name, term, sign, symbol, or design, or a combination of them, [that] is intended to identify the goods and services of one seller or a group of sellers and to differentiate them from those of competitors (Kotler, 1997, p. 443) 2 for further readings see chapter 2.3.1

13 7 self-actualization, multisensory and emotional stimulation, will spend a great amount of money in order to satisfy his higher needs. However, the consumer is no longer willing to spend a larger amount for basic consumptions. For instance, while the majority of consumers are buying their groceries at discount stores, people will choose high-end stores when it comes to semi-luxury food for their well-being. Concluding from that, the experience-oriented consumer may be classified as a luxury, experience and wellness oriented consumer demanding for an additional emotional value, he is willing to pay for Financial goals and impacts of experiential marketing Experiential marketing holds great potential for companies to increase the efficiency and revenues of a retail store. More precisely, an experience-oriented store layout may have different impact on the efficiency of the selling space at the PoS which can develop over the short and long term. Illustration 4: Goal hierarchy in experience marketing Adapted from: Diller and Kusterer, 1986, p. 107 (cited in Salzmann, p. 26)

14 8 With the designing of an experience-oriented retail store, marketers primarily intend to prolong dwell time and encourage impulse buying behaviour in the short run, which will consequently have an impact on the amount spent per customer during each shopping trip. In the long run instead, marketers generally aim at increasing the level of awareness and store loyalty. Overall, the long term goals will influence and increase the number of customers in the retail environment. Furthermore, retailers might also intend to balance different valences of particular store elements. (cf. Diller and Kusterer, 1986, p.107) Generally, there are only few figures on potential sales increase for the retail stores. Some experts talk about % while others even expect % sales increase. (Schüly, n.d., p.3) It depends on the extent of how well experiences are incorporated. In terms of illustration; a couple of years ago Lego created an engaging Legoland in California and increased sales revenue by 15 %. (Pham, n.d.) How to create experiences? Customers always have an experience whether it is perceived as good, bad or indifferent. However, the real challenge of companies is to create experiences which are memorable and pleasant. But how do companies create those memorable experiences? One key element in regard to this is to primarily realize and understand the stages of customers purchasing behaviour before experiences can be created. Illustration 5: Stages of customers purchasing behaviour Adapted from: Schmitt, 2010, p.73-74, Own illustration Correspondingly, customers first identify products that meet their wants and needs, and then they evaluate the possible choices, acquire the product itself,

15 9 integrate it into their daily life and, hopefully, extend a relationship with the product, service, company or store. (Schmitt, 2010, p.73-74) Based on this knowledge, marketers may easily intervene into each stage of the process in order to create experience during a shopping trip. First of all, companies need to arouse attention and curiosity and to provide incentives to be discovered. In this case, companies may refer to the sensory feature of experiential marketing. Engaging the five senses has proved to be particularly affective when it comes to the attraction of customers. When they perceive a pleasant smell at the PoS, it is more likely that they will discover the particular location and consequently, the products within and around. In terms of evaluating, emotions become particularly important. While triggering emotions, companies will be able to interact with the consumer and start building a relationship. Triggering emotions is a crucial aspect in terms of creating memorable and pleasant experiences. Companies need to make sure that every interaction with the customer is memorable. Having achieved an emotional attachment with the customer, it will be more probable, that they will start perceiving the company, location or product as valuable and worthwhile to consider again. With regard to the designing of memorable experience, Pine and Gilmore (1998) also determined five key principles for the designing of experiences. (Pine and Gilmore, 1998, p.102) The first principle implies that companies should create a theme to stage the experience. Companies often fail to do so although it has proven that experiences only operate as a whole. The second and third principle relate to the establishment of positive impressions in the customer s mind. In this respect, it is important to create positive cues which are consistent with the theme but also to eliminate negative cues which might impair the delivery of great experience. According to the fourth key factor, retailers should provide physical reminders of the experience which are cheaply available. The last key principle concerns the engagement of all five human senses. It claims that, the more senses an experience engages, the more effective and memorable it can be. (Pine and Gilmore, 1998, p. 104)

16 Sensory Marketing Definition With the emergence of an experience seeking economy, sensory perception has enormously gained in importance. As one essential component in experiential marketing, sensory marketing is appealing to the five human senses vision, audition, olfaction, gustation and haptics. While engaging the five senses, sensory marketing aims at influencing consumers feelings, mood and behaviour on an emotional level in order to encourage customer loyalty and to attract new customers. (cf. Pemler, 2009, p.10) Most of the time, when marketers are talking about sensory marketing, they also talk about sensory branding. Both terms are used interchangeably, even if they are not defined exactly the same. Sensory branding describes the intent [ ] to develop strong brands that are more memorable for customers than conventional visual branding techniques alone. (Dixon et al. n.d., p.2) The sensory marketing approach draws on new findings from Neuromarketing 3. The previous assumption that the consumer is rational has proven to be erroneous. Instead, 70% of customers decisions are made unconsciously. (cf. Häusel & Gruppe Nymphenburg, 2010, p.10) More precisely, based on the knowledge that every human is dealing with approximately decisions a day, of these will be finalized intuitively. (cf. Giersch, 2009) Die wahren Entscheider und Wettbewerber im menschlichen Gehirn sind die Emotionen 4 (cf. Häusel. & Gruppe Nymphenburg, 2010, p.10) In contrast to the visual- and audio-heavy mass marketing, sensory marketing approaches customers in a personal and individual way while stimulating multiple and also previously neglected senses. (cf. Sutton, 2011) As one of the main characteristics of sensory marketing, the application of all five senses can only be realised in practice, meaning at the Point of Sale. Products can be touched, tasted and tested and the atmosphere can be sensed and experienced, being at the focus of this thesis. 3 Definition: study of how people's brains react to advertising (Cambridge dictionaries online, n.d.) 4 Author s translation: the real power and competitor in the human brain are the emotions. For further readings see 3.2.2

17 11 Visual perception, appealing to the sense of sight, plays a dominant role in sensory marketing. As for all the other senses, the main evolutionary function of the visual sense is to protect the human against pain and danger while strictly observing what is happening around. The basic instinct of being attentive and alert also applies in marketing practice. So far, marketers have been mainly paid attention to visual elements at the PoS. Undoubtedly, a retail environment designed without visual stimuli does not exist whereas a store design without specific auditory and olfactory stimuli most likely does. In fact, a retail store is always visually present. (cf. Salzmann, 2007, p. 28) Auditory stimulation in marketing refers to the human sense of hearing. The sense of hearing is ascribed to have an incredible emotional power. A tone, sound or song is able to trigger emotions and associations having a direct effect on mood. (cf. Gavin, 2012, p. 21) When it comes to the designing of a store environment, background music is a common tool to create a better atmosphere at the PoS. Auditory marketing is the second most important approach in mass marketing. It is a strong communication tool in TV and radio commercials and it is also used to directly communicate with the customer. Olfactory perception relates to the human sense of smell while using the nose as stimulation medium. The human function of smell is closely related to [ ] memory and emotion, which is why the right scent can be a driver of both strong memories and powerful emotions. (Gavin, 2012, p. 21) The olfaction is often compared to the sense of hearing, due to the previously mentioned connection to the memory. As a result, scents are frequently used in harmony with music in order to create a pleasant atmosphere at the PoS. The sense of smell has so far played a minor role in marketing. However it is seen as one of the most influential of the five human senses. Being at the focus of this thesis, olfactory marketing will be intensively explained and discussed later on. Gustative marketing is ascribed to the human sense of taste. The human being is able to differentiate 5 basic flavours: sweet, sour, salty, bitter and umami. (cf. Milmo, 2010) In contrast to the other four senses, the usage of tasting samples in grocery stores is directly related to one certain product. In this case, food offerings

18 12 will not only improve the consumers buying experience but it will also have a real impact on the product sales. However, the stimulation of the human taste is not only limited to the food retailing industry. Offering a selection of drinks and snacks has also become a common practice in other business sectors including the service and luxury goods industry. Taste is also considered as being the intimate sense because it cannot be perceived from distance. Tactile perception refers to the sensory function of the skin. Being the biggest sense organ of the human body, the skin is able to distinguish different shapes and textures in a three dimensional manner. In terms of marketing, tactile perception is mainly used to influence the decision-making process of highinvolvement products. In regards to the sense of taste, while many products cannot be literally tasted they can be sampled or tested in store. (Gavin, 2012, p. 21) Impact of Sensory Marketing on Experiences As previously mentioned, experience marketing is closely related to the human senses, being at the centre of sensory marketing. Nonetheless, it is important to distinguish both marketing approaches. Regardless of their close affiliation, both concepts are not interchangeable. Sensory marketing is only about engaging all five senses whereas experiential marketing involves the experience as a whole. As a key concept, sensory marketing is applying the human senses in order to affect how customers appreciate the in-store experience. Hereby, the implementation of senses at the PoS may not only enhance the image and the brand, but it can change the customer perception of the store and products while enriching the customer experience. Marketers and retailers intend to make a lasting impression in order to be able to better differentiate themselves from the competitors and to create customer loyalty. And even if customers do not purchase a product, being surrounded by a pleasant and positive atmosphere, might have improved the customer s experience overall. (cf. Ganda, 2012)

19 13 According to Pine s and Gilmore s Four Realms of an Experience, the dimension of entertainment relates to the human senses. In fact, sensory marketing is one major part of experience marketing. The Four Realms of an Experience Absorption Educational Escapist Esthetic Entertainment Passive Participation Active Paticipation Immersion Illustration 6: The four realms of an experience Adapted from: Pine & Gilmore, 1998, p.102, Own Illustration As an example of successful product experience marketing, Herbal Essences refines its shampoos with a specific and unique smell not because it improves the product quality but it simply makes the experience more engaging. The same also applies to grocery stores using background music and ambient scents to create a better atmosphere as well as sensational and memorable experiences. Ogden-Barnes and Barclay (n.d.) get the gist of the interconnection of both approaches: "At its core a visit to a retail store is and always has been a sensory experience: sight, sound, touch, scent and taste all shape the propensity to purchase, with the subsequent opinions, emotions and experiences shaping the purchase process," (Ogden-Barnes and Barclay, n.d., p. 10)

20 Environmental Psychology Definition The most common theoretical framework for studying the effects of scent on the shopping environment is drawn from environmental psychology. (Spangenberg, et al. 1996, p. 68) Environmental psychology is a research approach which examines the dynamic interaction between people and their physical environment. This environmental field of study addresses the question of how the environment affects human behaviour and how the environment can be designed accordingly. (Ittelson et al. 1977, p. 17) The interdisciplinary approach assumes that the individual endeavours to be in control of an unknown situation while classifying the new environment with the help of environmental cues. (Kroeber-Riel et al. 2009, p. 461) For a long time, psychologists have neglected to consider the influence of store environments and purely studied the environment-behaviour relationship in work, residential and institutional environments. But principally, environmental psychology appears to have equally powerful applications to store environments specifically with regard to a customer-oriented store design and the presentation of the goods. (Donavan and Rossiter, 1982, p. 34; Kroeber-Riel, 2009, p. 461) Environmental psychology is classified into two approaches. Depending on which mental process is predominant in the respective situation, either the cognitive or emotional approach appears. (Kroeber-Riel et al. 2009, p. 461; Gröppel-Klein, 2007, p. 15) The cognitive approach focuses on the human perception, realization and remembrance of the physical environment in the sense of explaining and understanding human behaviour. The emotional approach instead, is particularly relevant for the creation of experiences. It assumes that the environment primarily affects human behaviour on an emotional basis rather than cognitively. (cf. Kroeber-Riel et al. 2009, p. 461) The SOR Paradigm of Environmental Psychology Within the emotional approach of environmental psychology, the model of Mehrabian and Russell (1974) has become important. Although it has already been developed during the 70s, Mehrabian and Russell s (1974) seminal conceptualization is the basis of most research on the impact of environmental factors on shopping behavior. (Kaltcheva & Weitz, 2006, p. 107) The theoretical

21 15 model is derived from the Stimulus Organism Response (S-O-R) paradigm. It suggests that the environment is a stimulus (S) containing cues that combine to affect people s internal evaluations (O) which in turn create one of two contrasting responses: an approach or avoidance response (R). (Spangenberg et al. 1996, p. 68; Mehrabian and Russell, 1974) Illustration 7: The Mehrabian-Russell model Adapted from: Emerald, n.d. The stimulus factors (S) in the model include colours, lighting, music, scent, temperature as well as tactile stimuli. Due to the holistic view of psychologists on the environment, the stimuli cues are principally considered as a whole. In this respect, Mehrabian and Russel (1974) introduce the information rate, covering the entire volume of an environmental stimulus. The more information is processed, the higher the information rate. (Mehrabian and Russell, 1974, p. 82ff) The intervening variables (O) in the model are based on three fundamental emotional dimensions: pleasure, arousal, dominance. Those emotional dimensions serve as mediating variables in order to determine the variety of emotions triggered by the environment. (cf. Mehrabian and Russell, 1987, p. 8) Pleasure refers to the extent to which a person feels good in the environment, and arousal relates to the extent to which a person feels excited or stimulated. (Baker et al. 1992, p. 449) Dominance expresses whether an individual refers the emotion to his independence or inferiority. (cf. Mehrabian and Russell, 1987, p.18ff) However, the last dimension of intervening variables has not been approved during empirical studies and is therefore mainly neglected in the model. (cf. Kroeber-Riel et al. 2003, p. 430)

22 16 Apart from the S-O-R variables, there are also personality variables (P) that express that every individual perceives pleasure, arousal and dominance in a different manner. According to Mehrabian und Russell (1974), the most important differences in personality are to be derived from arousal. Therefore, some people might be classified as arousal-seekers why others are defined as non-arousalseekers. (cf. Mehrabian and Russell 1987, p ) The last intervening variable R refers to the generic concept of approachavoidance which is defined in a broad sense to include physical movement toward, or away from, an environment or stimulus, degree of attention, exploration, favourable attitudes such as verbally or nonverbally expressed preference of liking approach to a task [ ] and approach to a task [ ] and approach to another person [ ] (Mehrabian and Russell, 1974, p. 96) In order to find support for the Mehrabian-Russell model in a retail context, Donavan and Rossiter (1982) examined the in-store variables in eleven different store environments that have an effect on shopping behaviour. (Donavan and Rossiter, 1982, p. 42) As one of the major findings, the study revealed that storeinduced pleasure was positively associated with purchase intentions. It further suggests that arousal [ ] can increase time spent in the store and also willingness to interact with sales personnel. (Donavan and Rossiter, 1982, p. 54) Components of Physical Store Environment The Mehrabian-Russell model accurately outlines the influence of environment on human behaviour; however it lacks to provide a taxonomy system of environmental cues. A distinctive classification of key elements in store environment has proved to be particularly useful to find the appropriate mix of environmental stimuli. (cf. Baker et al. 1992, p. 445) While Hall (1966) provides a basic distinction between fixed (walls and floors), semi-fixed (furniture) and nonfixed features (ambiance and people), Kotler (1973) and Baker (1992) deliver more specific taxonomies on environmental cues. (cf. Hall, 1966, pp ) Kotler (1973) describes the particular set of environmental dimensions in sensory terms: The main sensory channels for atmosphere are sight, sound, scent and touch. (Kotler, 1973, p. 50) As visual stimuli in atmospherics, Kotler (1973)

23 17 considers colour, brightness, size and shapes. The auditory dimensions of an atmosphere are volume and pitch whereas olfactory dimensions include scent and freshness. Regarding tactile dimensions, Kotler (1973) mentions softness, smoothness and temperature. (Kotler, 1973, p. 51) Baker instead, developed a framework that include social, design and ambient factors. Social factors describe the interaction of people in the environment, specifically between and among both store customers and employees. In this case, the number, type and behaviour of staff personnel are considered. (cf. Baker et. Al. 1992, pp ) Design factors instead, primarily focuses on the visual component using functional and aesthetic elements such as architecture, colour, size, shape, style and layout. (cf. Baker et al. 1992, p ) The design factors also include colour, brightness, size and shapes. The last dimension is about ambient factors. According to Baker (1992), ambient factors are background conditions in the environment, including air quality, noise, music, lightning, scent and temperature. (Baker et al. 1992, p. 450) Despite differences across the three taxonomies, each contains an ambiance component that includes elements such as temperature, lightning, sounds and scents. For the relevance of this paper, an appropriate classification can just be made according to the perception of the consumer, where Kotler s dimensions apply. Atmosphere is always present as a quality of the surrounding space and it is apprehended through the sense. Therefore the atmosphere of a particular set of surroundings is describable in sensory terms. (Kotler, 1973, p ) 3 The Marketing Power of Scents Definition Olfactory marketing draws on the most sensitive and powerful of the five human senses: the sense of smell. The marketing method relies on the positive effects scents have on emotions, memory and mood. 5 So far, the human sense of olfaction has been mainly neglected by retailers although it is proven that the 5 For further readings see chapter and 3.2.3

24 18 olfaction has a stronger effect on promoting impulse buying and customer satisfaction. (cf. Molaro, 2007, p. 84) The olfactory marketing approach includes two different types of scents: product and ambient scents. According to Spangenberg et al. (1996), ambient scent is defined as scent that is not emanating from a particular object but is present in the environment, where product scents originate from the product itself. (Spangenberg et al. 1996, p. 67) For instance, products such as cheese, coffee or bread have their own particular scent which is directly linked to the product. In the past, retailers have primarily relied on product scents which are automatically present and simply delivered without any intervention. However, nowadays ambient scents are considered to be more attractive for retailers because ambient scent can potentially influence reactions to all products sold in a given setting, including those that would be difficult or inappropriate to add fragrance. (Gulas and Bloch, 1995, p. 89) Goals and impact on financial results Similar to the goals of experiential marketing olfactory marketing primarily aims at increasing sales and turnover for a store. However, when it comes to olfactory marketing in particular, there are also other goals which are important in order to reach the overall goals. More specifically, the implementation of ambient scents at the PoS primarily intends to provide a well-being experience for the customer while creating a positive and pleasant atmosphere. Due to this, customers will spend more time in the store and carefully pay attention to products. (Stöhr, 1998, p ) Ambient scents at the PoS are also designed to underline the image of a store in order to create a corporate scent which is associated with the store itself. While doing so, retailers aim to differentiate themselves with their products and services from competitors so that consumers can recall the scent and directly associate it with only one specific retailer and store. With regard to economic figures, the success of ambient scents is significantly depending on the quality of the scents and the right execution. Therefore, scents which are perceived as negative may have a negative effect on economic parameters. About a decade ago, Stöhr (1998) investigated a field research in

25 19 order to detect the impact of ambient scents on economic figures of a sports clothing store. Within this study, customers were observed and asked during their shopping trips while being exposed to a citrus ambient scent. Based on those field interviewing and observations, it became clear that a citrus scented sports clothing store achieved a sales increase of 6 % compared to the same non-scented store. (Stöhr, 1998, p ) In general, olfactory marketing experts agree that scent utilisation at the PoS will increase sales by 6 15 %. is also supposed that ambient scents will increase dwell time by 16 % and customer s willingness to buy by 15 %. (cf. Die Duftfabrik, n.d.) Measuring the impact of ambient scents on consumer s perception As previously mentioned, there have been several studies that investigated the effect of scent marketing on consumer s perception of the store or certain products and on economic figures. Generally it can be said that if the consumer behaviour is affected, there will be an impact on financial factors, either positive or negative. Those effects are, in most cases, experimentally proven while comparing behaviours in a scented room with an identically unscented retail environment. For instance, in a study conducted by Martin Lindstrom, two pairs of Nike shoes were placed into two identical rooms which were only differing in the presence of an ambient scent in one of both rooms. After customers were exposed to both pairs of shoes, they were asked to evaluate both of them. During this survey, it became apparent that 84 % of customers would rather buy the shoes in the scented room. (cf. the smell of success grows stronger) Besides, they indicated that they would be willing to pay % more for the shoes. (Lindstrom, 2005, p. 107 ff) In most cases, scientists tend to rely on field interviews and field observations. For instance, people may be asked about their perceived time they spend at a store and expose the real time spent in order to figure out the influence of scents on dwell time. Besides, retailers might use cameras to observe where consumers are attracted and gravitated towards within the store. Nonetheless, some people argue that field interviewing and observations are insufficient. Therefore, some scientists rely on the measurement of

26 20 electrophysiological activities. This method observes which area in the brain is stimulated and which emotions are triggered by scents. However, this method is a costly and time-consuming method and therefore rarely used. (Schröter, 2010) When it comes to the measurement of economic figures, retailers are comparing sales numbers from a date where scent marketing has been already implemented with the identical date from previous years, without the scent. Nonetheless, it has to be mentioned that it is difficult to ascribe financial success to ambient scents because retailers frequently incorporate other sensory stimuli at their stores Current application areas In the past years, retailers started to appreciate the vital role of olfactory marketing as a tool to create unique and memorable experiences and sensory environments. Nowadays companies such as Jimmy Choo, Guess, Abercrombie & Fitch 6 and Samsung, are using odours to increase sales. (cf. Vaccaro et al. 2009, p. 186) A decade ago, several hotels and wellness centres initially recognized the power of scents and implemented fragrances for their lobbies and relaxing zones. The hotel chain Starwood Hotels have been a pioneer in using distinctive scents in their hotel lobbies. As part of the hotel group, Sheraton seduces their guests with the smell of fig, clove and jasmine whereas Westin relies on cinnamon flavours and white tea to create a calming atmosphere. (cf. Bell, 2007, p. 61) So far, there have been just a few supermarkets and grocery stores exploiting the potential of using scents at the PoS. So far, retailers providing fast moving consumer goods just relied on product-specific scents whereas ambient scents have been predominantly used at non-food stores. Therefore, the impact of permanently and regularly perceived scent at the Point of Sale is not completely discovered. 6 For further readings see 3.2

27 Basic principle of the olfactory system The sense of smell has remained a mystery for a long period of time. As a milestone in 2004, the two scientists Richard Axel and Linda B. Buck detected how the olfactory system works and received the Nobel Prize in Physiology or Medicine for their discoveries of "odorant receptors and the organization of the olfactory system". The following section will deal with this topic in great detail. When the nose is breathing in air through the nostrils, those odor molecules are recognized by 10 to 20 million receptor cells located in the olfactory membrane of the upper nasal cavity. (cf. Axel & Buck, 2004) Illustration 8: Olfactory receptor cells Adapted From: Derval, 2010 The olfactory receptor cells are covered with tentacle-like protrusions containing proteins and are able to simultaneously receive and encode chemical stimuli and to transform those into electric signals before they are further transferred into the central nervous system. The information transfer to the brain passes through the axon of the olfactory receptor cell through the bone into the olfactory bulb which is

28 a part of the cerebrum. (cf. Axel & Buck, 2004) 22 Illustration 9: Process of decoding scent information Adapted from: Stangor, 2011, Chapter 4 Within the olfactory bulb, the information is transferred to the mitral cells. When the olfactory nerve has arrived at the mitral cells, they will be further processed to the olfactory brain via olfactory pathways. All information derived from the previously inhaled odor molecule now arrives at the limbic system. The limbic system is known as one of the oldest part of the brain which is also responsible for the emotions and memories which will be further explained in the following sections. (cf. Axel & Buck, 2004) In the history of evolution, the olfaction has been and still is our alert system. For instance, most people smell instinctively in spoiled milk before they pour it over cereal or in a cake mix. This is usually the result of bad experiences. (Häusel, 2012, p. 173) Concluding, the general purpose of the sense of smell is to protect us against substances that will harm us Impacts of scents on emotions and memory As previously confirmed, the olfaction is considered to be the most closely related sense to emotional reactions. Studies have shown that, in comparison to other senses, about 75 % of the emotions are generated by the sense of smell. (Bell, 2007, p.61) This is explained by the fact that the olfactory bulb is directly linked to

29 23 the limbic system which is known as the centre of emotional triggering. More specifically the amygdala is responsible for the emotions in the human brain which is part of the limbic system. Due to the direct connection between the perception of smell and the amygdala, people directly react and respond to scents they are exposed to before they are able to judge and interpret them. (cf. the smell of success grows stronger, 2013, p. 26) Illustration 10: The Limbic System Adapted from: Anxiety and our Brains, 2009 Generally, it can be said that scents which are perceived as pleasant also elicit positive emotions such as happiness, excitement, and interest whereas scents that are recognized as unpleasant are associated with negative emotions such as anger, boredom and pain. Positive emotions generally activate the reward center in the brain and release happiness hormones such as dopamine and endorphin. Reward is the central economic factor in the brain. The higher the expected reward, the higher the willingness to buy. (cf. Schubert & Hehn, 2011, p. 19) However, not all customers associate the same scent with positive emotions. This mainly depends on the memories the specific scent triggers. Emotions and memories are also closely related in the limbic system. (See illustration 10) Having

30 24 defined the amygdala as the emotion center, the hippocampus is seen as the memory center within the limbic system. (Halloway, 1999, p. 42) The human being is collecting memories through his entire life and most of the time, they are associated with a certain smell. This also becomes evident when asking people about what they smell at certain locations or when they are exposed to certain products. In most cases, people will start answering the questions with: This smells like.. which underlines the connection to memories they established. This will also mean that due to the direct connection of olfactory bulbs to the hippocampus, people also learn new scents before they can be associated. Besides, studies have shown that people are able to recall smells with accuracy of about 65 % after one year. In comparison, images can only be recalled with accuracy of only 50 % after three months which also draws back to the understanding that customers are visually saturated. (Bell, 2007, p. 61) The ability of scents to evoke memories is also known as Proust phenomenon. In the late 1910s, Marcel Proust, a French author published the Novel "A la Recherche du Perdu" (see appendix 1) in which he relates smelling madeleines to a past childhood experience. (cf. Proust, , pp ) Knowing that people will remember the scent they will smell also helps retailers to create a powerful store and brand loyalty. However, considering negative emotions is also of vital concernment. Negative emotions are valued more intensively and last longer which is mainly due to the protective function of the brain. Once the customer associate negative emotions with a store, it is hard to change them into positive. (cf. Bittner and Schwarz, 2010, p. 48) Correlation of scent and mood Having pointed the impact of scents on emotions and memory, it appears logical that scent also wields influence on mood. In fact, the limbic system is also responsible for the generation of mood. When dealing with this topic, it is important to highlight that mood is not an interchangeable for emotion. According to Paul Ekman (2003), the most obvious difference is that emotions are much shorter than moods. Moods can last a whole

31 25 day, sometimes two days, while emotions can come and go in minutes, sometimes seconds. A mood resembles a slight but continuous emotional state. (cf. Ekman, 2003, p. 66) Besides, emotions are more precise than moods because they are normally distinguished between good and bad. (cf. Hill, 2012) However, there are also intersections between both emotions and moods. Moods and emotions might be perceived at the same time and it is presumable that the emotion has the valence as the mood. (cf. Hill, 2012) Nonetheless, it is also possible to temporarily feel happy within a bad mood. Drawn from that using scent may be the most efficient method to enhance both mood and positive emotions. (cf. Czaplewski et al. 2012, p. 40) The knowledge that mood is an affective state that lasts for a longer period of time might be of particular interest for retailers. Once the consumer has been set in a good mood by a pleasant scent, it can be assumed that he will also dwell and shop longer. Besides, when the mood lasts even after the store has been already left, customers visit the store soon again or might share their experience. And even if the customer is not in a good mood, a pleasant ambient scent might provide him with a temporary feeling of satisfaction or happiness Key factors influencing choosing the right scent When retailers decide to implement olfactory marketing at the POS, it will need more than just a randomly chosen scent in order to be successful. Customers are particularly sensitive when it comes to scents because they are constantly perceived. Therefore, retailers need to pay attention to some key considerations in order to find a scent that is according to the goals set, attracts the right target group and that is generally perceived as pleasant. In a retail environment, pleasantness is directly linked to approach and avoidance behavior 7, which is why the right choice of scents is even more important. There are some scents that are usually perceived as pleasant such as flowers and coffee. The smell of gasoline and body perspiration instead, is frequently perceived as unpleasant. (cf. Social Issues Research Centre, n.d.) 7 For further readings see chapter 2.3.2

32 26 However, if a retailer has found the right scent that is initially perceived as pleasant by the majority of customers, it is crucial that the scent is implemented appropriately. In this respect, intensity is of great importance. (Dos and Don ts, 2011) If a scent is too intense or too faint, customers will react negatively even if the scent is generally liked. There is a strong relationship between pleasantness and intensity which may be expressed in terms of an inverted u-shaped function. Illustration 11: Inverted U-shaped function Adapted from: Own Illustration, 2013 According to the illustration above, there is a thin line in order to find the optimal level of pleasantness and intensity. The optimal level is achieved when the intensity of the scent is at a medium level. In this case, the scent will be perceived as highly pleasant which provides ideal conditions for approach behaviour. If intensity exceeds the optimal level, pleasantness will decrease. The same also applies when intensity falls below the optimal level. (cf. Spangenberg et al. 1996, p. 69) Neutral scent might therefore be perceived as indifferent or even slightly negative. This can be explained by the fact that other product related scents might become predominant. As a general rule it can be said that if the scent is noticeable, the intensity is too high because retailers want their scent to work subliminal. Furthermore, when considering intensity, it is also essential to remember the phenomenon of adaptation. This phenomenon implies that people are only able to perceive odours to a certain extent. After that point is reached, the customer does not perceive the scent anymore and adapt. Therefore, retailers may change the ambient scent from time to time to deal with adaptation.

33 27 Another important aspect to consider when implementing scent marketing at the PoS is congruency. Several studies have shown that the congruity between scent and other environmental factors [ ] has positive effects on evaluation, time spent in retail stores, and money spent. (Spangenberg et al., 2003, p. 13) For instance, in a research conducted by Spangenberg it became particularly apparent that the combination of (Christmas) music and (Christmas) scent in a retail environment led to higher evaluations of the store. (Spangenberg et. Al., 2003, p.13) By implication, this also means that incongruence leads to the opposite. Consequently, a pleasant scent may not elicit positive affective responses when that scent is mismatched with other features of the environment. (Gulas & Bloch, 1995, p. 92) After having considered all key factors, it will be important to properly perform scent marketing at the PoS. This implies that the retailer perfectly applies the ambient scent at the store with the right techniques and experts who know what to do. Retailers do not have the chance to experiment at the store in order to find the right adjustments. It must immediately fit in order to be efficient and effective because only where customers perceive a pleasant scent, they are willing to stay longer and consequently shop longer. Besides, another key aspect which is often underestimated is the commitment of all employees. There are many companies which do not involve their employees into this process. However, those are the ones who will be the first responder to the customer interactions and who may intensify the memorable customer experiences created at the PoS The Abercrombie and Fitch case Known as an American apparel chain company, Abercrombie and Fitch created a successful and unique multi-sensory in-store experience for customers. The differentiation strategy of the company appeals to the visual, auditory, olfactory and tactile sense to reinforce the premium lifestyle presented by the brands. (cf. annual report AF 2012, p. 4) The company relies on a specific visual presentation of merchandise, the technical support of background music and ambient scenting and also attractive sales associates in order to achieve a unique in-store experience at the PoS and to be

34 28 able to differentiate from competitors. (cf. annual report AF 2012, p. 4) Each A&F store is dimly lit and intensively scented. The music played in the background is loud and creates a party atmosphere that invites to dance. With respect to the ambient scenting, the company uses the male perfume fierce which is also available in stores. Surprisingly, the multi-sensory strategy which has already been implemented in the 1990s has been successful. Abercrombie and Fitch is nowadays one of the most famous and demanded apparel brands for young people. Obviously, the A&F case contradicts to the points previously discussed in this thesis. Regarding the implementation of the ambient scent at the PoS, it becomes apparent that the company decides to spread an intensively and strongly perceived fragrance. The explanation behind this is that Abercrombie s primary goal was to create awareness and to differentiate from competitors. When the company realized the strategy, Abercrombie refrained from investing in promotion and advertising. Instead, the company solely relied on word of mouth. Apart from this, the focus was not only on creating a positive and pleasant atmosphere but on creating memories and brand loyalty. This is underlined by the fragrance itself which can be bought at the store. In this case, the diffusion of the scent can be also seen as product promotion. Due to the intensity of the fragrance, customers still perceive the scent when they are already at home because the scent lingers in the clothes bought. Resulting from this, Abercrombie & Fitch is able to prolong the experience and to build up a memorable scented brand. However, the effect of the permanent diffusion of the scent on consumers seems to somehow slowly diminish. As previously noted, intense fragrance might lead to headaches of customers so that they cannot bear with the scent for a longer period of time. The main problem which occurs is that customers slowly adapt to the scent, perceive it as nothing new anymore and lose curiosity.

35 Top 10 scents and their influence on consumers In 2011, the Scent Marketing Institute 8 compiled an overview about scientifically proved scents that are able to trigger certain customer response and emotions which will be dealt with in the following. The first scent, talcum powder is ascribed to convey a feeling of safety, security and nostalgia. The reason behind this is evident: talcum powder is used for artistic gymnastics in order to stabilize during the exercises. Most people will be familiarized with this smell because they also practiced gymnastics in physical education at school and they remember the usefulness of the product. The next scents, peppermint, citrus and lemon, help to be more alert and productive and have a positive impact on concentration. Peppermint is often used in office buildings and banks because it is known as an energy booster. (cf. Evans, 2012) The fragrance of peppermint has therefore proven to be useful for monotonous worker to increase productivity. The smell of lemon instead, is often associated with freshness and cleanliness because lemons have antiviral and antibacterial properties and are therefore mainly used for detergents. Besides, having a calming effect on consumers, citrus odorants positively affect customer s buying behaviour so that they spend more time and money in the store. (cf. Evans, 2012) Lavender, jasmine, vanilla and chamomile instead help people to calm down and to reduce emotional stress. This is why wellness centres often rely on those scents to encourage customers to switch off and to relax. In this respect, marketers should pay particular attention to smell of vanilla. It is known as being a pure odorant which is not causing any irritation. (cf. Derval, 2010, p. 61) However, this does not mean that everybody necessarily perceives this smell as pleasant it just minimizes the risk of sensitive reactions. (cf. Derval, 2010, p. 61) When it comes to scents which retailers can use to change the perception of their stores, they might choose barbecue smoke or apple and cucumber smells. The former scent is able to let customers think that a room or store is smaller whereas the latter makes people believe that a room is bigger than it actually is. Furthermore, when a retailer is selling furniture he or she should rely on the smell 8 All information on top 10 scents within the next paragraphs are drawn from the Scent Marketing Institute

36 30 of leather and cedar. Customers are associating the smell of leather with a high quality and expensive product which makes it easier for the retailer to justify higher prices. The last scents which the Scent Marketing Institute mentions are unpleasant smells such as rubbish, urine and vomit. Retailers have to consider which scents customers generally evaluate as unpleasant. (Scent Marketing Institute, n.d.) Technical Implementation at the PoS Having identified all aspects which need to be considered when relying on the power of scents, retailers have to find the right techniques that are according to the targeted goals, satisfy the needs of the customer and more importantly, that fit the location. In order to obtain the best results and to find the optimal mechanical system, the retailer firstly has to clarify if the whole store should be scented or only parts of the retail environment such as the in-store fruit and vegetable section. It will also be important to know, if the ambient scent should be permanently perceived or just when the consumer is entering those specific areas of the store. Having set the framework for the scent implementation, the retailer may now choose between several different technical capabilities how the scent should be spread within the store. (See appendix 2) However, in most cases a cold air technology is being used. This method has proven to be most efficient and successful. Hot air dispensers instead, appear to be practically ineffective because it is possible that they change the quality of the scent. Besides, scenting systems are nowadays more frequently implemented into the HVAC system of a retail store. This method is preferably used because it is directly connected with the existing HVAC system. With the help of those mechanical systems, the fragrance itself is diffused as molecule of scented, essential or rarely as heated oil, or also as aerosol which are concentrated in fragrance cartridges. Generally, the cartridges that release the fragrance last approximately 1-3 months depending on the intensity of the scent diffuse which can individually regulated and customized (cf. Scentair, n.d.). With reference to the investments required for the implementation, there are numerous costs incurred that retailers need to consider. According to Czaplewski

37 31 et al. (2012), equipment costs range from $100 for small diffuser up to several $1000 for HVAC integrated diffusers, depending on the size of the area. (cf. Czaplewski et al. 2012, p.43) Apart from this, retailers need to bear in mind that there are also regular, monthly costs that occur in scent marketing. For the scent cartridges themselves, the costs range from $30 to several hundred dollars. (cf. Czaplewski et al. 2012, p.43) Furthermore, if the retailer decides to let a perfumer create a unique scent, the initial costs may range from $5,000 to several $10,000 depending on the elaborateness of the fragrance creation. (cf. Czaplewski et al. 2012, p.43) There are several examples for the successful technical implementation of scent marketing at the PoS. For instance, Edeka franchisee Günter Schuler decided to install 24 scent delivery systems in his store and was charged 3,000 for the installations and 100 each month for the scent oil cartridges. (cf. Mett, 2011) Concluding from that, scent marketing is a highly effective and inexpensive alternative to enhance customer s well-being and perceptions of the store. (Spangenberg et al. 1996) Cultural Considerations Having discussed which key factors need to be considered when implementing ambient scents at the PoS, retailers also have to bear in mind that cultural and gender differences also appear important in scent marketing. Due to different customer s preferences, experiences and particularly cultural backgrounds, scents will be perceived and evaluated individually. Therefore, it is virtually impossible to find the right scent which appeals pleasant to all customers. (cf. The Smell of Success grows stronger, 2013, p. 30) However, geographical features of a country can directly affect the behavior of people, their consumption habits and also general preferences for certain scents in a country. The preference for specific fragrances is also influenced by climatic conditions of a country which primarily applies in warm and hot climate. Inhabitants of those regions often have a strong need for freshness and cleanliness (Disdet, 1993, p.45ff). As a result, lemon and citrus fragrances which convey a pleasant fresh and clean feeling are preferred in those climatic zones. Besides, the intensity of scents might quickly decrease in those countries so that long lasting perfumes and scents are

38 32 preferred. Moreover, there appears to be a preference for scents that are dominant in the flora of a country which are therefore more appealing to inhabitants of this country. In America for instance, the most preferred scent is vanilla (from Mexico) whereas Indians favour sandalwood. (cf. The Smell of Success grows stronger, 2013, p. 30) Apart from geographical characteristics, socio-cultural features also play an important role in finding the right scent for different people. These include membership of a particular culture or ethnic group with their traditions and religions and related values and attitudes. The German fragrance marketing for instance, has been influenced by increasing ecological awareness. Therefore, German consumers increasingly prefer products that have a natural smell and which are made from natural ingredients Gender and age considerations Apart from cultural and geographical particularities, it has to be noted that age and gender also have a strong impact on preferences and the perception of scents. Concerning gender issues, it has been exposed that women are more sensitive to scents than men. In a research conducted by Doty and Cameron in 2009, men and women were exposed to 50 different odorants and asked to name each of them. During this study, it became apparent that men better recognize odorants of peanut, onion, chocolate, watermelon, banana, and cheddar whereas women better identified the smell of coconut, dill, lime, gingerbread, cedar, musk, and black pepper. (cf. Doty and Cameron 2009) Doty and Cameron concluded that, women had on average a better detection and recognition of smell than man: they not only can better sense the presence of an odorant, but can also name it. (Doty and Cameron) Furthermore, women appear to be even more sensible during pregnancy and menstruation. (cf. Social Issues Research Centre, n.d.) Age also has a great impact on customer s perception of smell. The US National Institute of Health (2009) conducted a study on smell impairments of elderly people. It became clear that the ability to smell properly declines with increasing age. However, differences between men and women are still visible and remain in old age. It also becomes apparent that people from different generations have

39 33 other smell preferences. People born before 1930 tend to prefer natural smells such as grass and horses, whereas people born later gravitate to synthetic smells such as Play-Doh and SweeTarts. (cf. The Smell of Success grows stronger, 2013, p.30) Furthermore, several studies found that given hormonal predispositions and segmentation also have an impact on the perception and preference of smell. A research study launched by Derivalresearch and St. Croix Sensory Inc. conducted a study prenatal distribution of testosterone and oestrogen. For the research, they asked 23 women between the age of 50 and 69 years to list their favourite and worst smells which have been grouped into different categories: Favourite Scents Food: steak, vanilla, apple, baked bread, Chinese food, ginger, cinnamon, orange Flower: lilacs, clean linen, jasmine, flowers Worst Scents Organic: garbage, vomit, eggs, septic, sewer, urine, dish, necrotic, burnt food, skunk Chemical: petroleum, cleaning products, ammonia, cigarette, chemicals, chlorine Illustration 12: Derval Research favorite and worst scents Adapted From: Derval, 2010, p After the scents have been listed, the influence of prenatal hormones on each study participant has been examined with the aid of the digit ratio 9. Generally, women with a digit ratio >1.00 are oestrogen-driven and women with a digit ratio <1.00 are testosterone-driven. In this case, 10 participants prove to be oestrogendriven whereas the remaining 13 have been identified as testosterone-driven. (cf. Derval, 2010, p. 69) 9 Digit ratio: how it works The ratio between the index and ring finger is determined when we are a fetus and remain the same. It is considered as a reliable biological marker of the organizational effects of hormones. Our digit ratio or hormonal fingerprint can be measured by comparing the length between the index and the ring finger on the right hand: a shorter index is a sign of higher exposure to prenatal testosterone (Manning, 2002)

40 34 Having now compared hormonal segmentations with the previously listed favourite and worst smells of each individual, it became clear that seven of the oestrogendriven women preferred flower scents and that eight of the testosterone-driven women favoured food smells over flower smells. Exceptions prove the rule. (cf. Derval, 2010, p. 63) Resulting from this study, it becomes clear that prenatal testosterone and oestrogen distribution also have an influence on sensory perception. Based on these findings, Dervalresearch also found out that, based on observations in over 25 countries, 50 % of the men and women are equally influenced by testosterone and oestrogen, 20 % of the men and 25 % of the women are oestrogen-driven, and that 30% of the men and 25 % of the women are testosterone-driven. (Derval, 2010, p. 70) Critical health and manipulation concerns The sudden increase of retailers relying on the positive effects of ambient scents also led to growing health concerns about the use of fragrance at the PoS. Customers hold the belief that the basic presence of scent molecules in the air has a negative impact on the human organism. (Knoblich et al. 2003, p.160) In particular, highly sensitive or allergic customers assume that excessively scented stores will cause headaches, dizziness or respiratory problems. In Germany, about 30 % of the total population is suffering from allergies and this number is expected to increase within the next few decades. (Wissenswertes für Allergiker, n.d.) However, die häufigste Art allergischer Reaktionen sind allerdings Kontaktallergien, die für die Raumbeduftung unerheblich sind. 10 (Knoblich et al. 2003, p. 160) Most concerns relate to synthetic odourants which account for the largest share of the fragrant composition. More precisely, more than 80 per cent of the fragrance composition is derived from synthetic materials. (cf. Worker s Health and Safety Center Canada, n.d.) Artificial compounds are often portrayed as dangerous, while natural fragrances and essential oils are classified as non-hazardous to health. 10 Author s translation: However, the most common type of allergic reactions are contact allergies, which are irrelevant for ambient scenting.

41 35 The above mentioned health concerns also emerge from the knowledge that customers are helplessly exposed to the scents and therefore fear manipulation. As previously discussed, scents are able to influence the consumer s behaviour and mood below the threshold of perception which strengthens customers belief of being defrauded. However, manipulation and influence is always the purpose of marketing communication tools. It is therefore undeniable that the use of scents aims at provoking certain reactions and responses. (Knoblich et al. 2003, p. 163) Ethical and legal concerns Apart from the health and manipulation concerns of customers, consumer protectionists also debate on the ethical and legal framework for the use of scents in marketing. When it comes to ethics, protectionists principally criticize that scent marketers intend to mislead and deceive consumers while, for instance, scenting low quality products with high quality, non-product-specific scents in order to skim off higher profits. As previously mentioned, ethicists also warn consumers against health impairments caused by hazardous and unhealthy ambient scents and artificially scented products. Besides, consumer protectionists claim that marketers primarily aim at manipulating and influencing consumers buying behavior so that in the end customers buy products and services they initially did not intend to buy. In addition to that, it is criticized that companies would postpone product improvements as long as the old products still achieve reasonable turnover. (cf. Knoblich et al. 2003, p. 203) But what does the law say? Principally, the German Civil Codes, and also the European Law, lacks to provide specific laws to the fragrance industry, especially with regard to ambient scents and their adequate declaration and implementation. Due to the lack of specific legal framework, the Research Institute for Fragrance Materials (RIFM) and the (IFRA) started to act as self-regulation. IFRA for instance, steadily develops and implements a Code of Practice that provides recommendations for good operating practice and guidelines on fragrance ingredient safety assessment, and includes fragrance safety standards which may limit or ban the usage of certain fragrance materials. (IFRA 2006, p. 2) The Code of Practice serves as a binding guideline for its members and gains international

42 36 recognition. However, it needs to be emphasized that the IFRA declares itself against complete disclosure of fragrance compositions for the protection of intellectual property. (IFRA 2006, p. 2) 4. Empirical study on the effect of scent on consumer s buying behavior at the PoS The impact of scents on the human brain, memory and emotions indicate that olfactory marketing seem to be a promising marketing method. Research has shown that the implementation of ambient scents is particularly efficient in locations where the service has already been bought before they are exposed to the scent itself like in hotels and wellness centres. However, in order to project effects on consumer s buying behaviour for low involvement products, this empirical part of the study is dealing with whether or not scent marketing will be applicable at the PoS. The main focus of this study will be set on the implementation at supermarkets. In order to gain profound knowledge on this topic in practice, data is collected within the scope of expert interviews. This qualitative method proves to be most appropriate for influences that are hardly measurable and difficult to analyse. 4.1 Research objective The primary goal of this study is to find whether or not the employment of scents at the PoS does in fact have an influence on the consumer s buying behavior. Based on the theoretical understandings in the previous chapters, it will also be important to determine which operational aspects will be considered essential for the implementation of olfactory marketing in practice. Apart from this, the intention of this study is to identify problems that arise with the implementation of scents at the PoS. Given the fact that three out of four interviewees can exhibit the necessary expertise with practical long-term experience, conclusion can be drawn regarding the suitability or non suitability of scent usage at the PoS. Particularly, it should be evaluated to which extent olfactory marketing might be established for the everyday low involvement products found at grocery stores.

43 37 The investigation is not only practical, but also of scientific value, since the suitability of scent marketing for low involvement products at the PoS, and especially for supermarkets, has, so far, not been studied comprehensively. This survey brings together different opinions of all parties involved in olfactory marketing and combines knowledge of theoretically and practically experienced experts to give profound information on the suitability of scent marketing at the PoS. The combination of different opinions existing on scent marketing at the PoS helps retailers to gain a better understanding of how this marketing approach might be applicable to their own retail stores. 4.2 Procedure and choice of interviewee In the empirical research of this study, four experts have been asked their opinion on the influence of scents on consumers buying behavior and the possible implications at the Point of Sale. The experts have been exclusively selected based on their knowledge in the field of olfactory marketing. Other factors such as age and gender considerations do not apply in this study and have therefore been neglected. Business field Institution Interviewee Scent Marketing Reima Duftmarketing CEO Jens Reissmann Agency Scent Marketing Voitair CEO Hans Voit Agency Book Author University of Göttingen Prof. Dr. Bernd Schubert Whole Sale / Cash and Metro AG Real Future Frank Rehme Carry Group Store Illustration 13: Overview interviewees Adapted from: Own illustration, 2013 In order to avoid a biased presentation of arguments and to acquire a diversified data base, it has been important to consider opinions from different angles. Hence, Prof. Dr. Bernd Schubert, a university professor and author of the book Marketing

44 38 mit Duft has been interviewed in order to obtain knowledge from an interviewee who is strongly familiar with the theory and who is able to rely on scientific studies relevant for the subject at hand. Apart from this, in order to receive an impression of how scents are already implemented at supermarkets, an interview has been conducted with the Innovation Manager of the Metro AG, a cash and carry group who previously realized scent marketing in practice. Besides, two experts from scent marketing agencies have been selected in order to have experts with a combination of both, theoretical knowledge and practical experience. Although great value has been set upon an accurate selection of interviewees, it has been only possible to interview one or a maximum of two experts of each field of operation due to time restrictions. However, the careful choice of the sampling frame should provide the opportunity to give direction to the evaluation of olfactory marketing at the PoS. Before the interviews have been conducted, the following hypotheses have been developed: H1: The implementation of scent does not have any influence on consumer s behavior. H2: Scent alonse is a powerful tool to influence consumer s behaviour. H3: Intensity is a key factor when retailers want to use scents at the PoS. After comparing the statements, it will be analysed whether evidence is provided to support the hypotheses or whether the evidence is against the hypotheses. A couple of days before the interviews were conducted, the questions were sent to all interviewees via . The questionnaire consists of 15 questions, posed in German 11. (See appendix 3) At the same time, appointments were made and the experts had been informed that the interview will form a part of a bachelor thesis. The interviews were then conducted via telephone and once face-to-face once due to the proximity of time and place. The data was collected in the period between May 3 rd and July 10 th Principally, the interview was scheduled at 30 minutes. The shortest interview took 29:56 minutes whereas the longest one 11 The circumstances that all experts of German do not require an english written questionaire

45 accounted for 44:06 minutes. Every interview was recorded and transcribed once the interviews had been conducted. (See appendix 4-7) Data Analysis The data analysis is performed based on the standard qualitative methods for the evaluation of expert interviews. Precisely, every question is dealt with individually while comparing the statements of each interviewee with the others in order to find out, where there is agreement and disagreement within those statements. (See appendix 4-7) Hereby, the first and last question is not taken into consideration, because they are not qualitatively relevant in order to find support/contradiction for the hypotheses. Question 2: In order to primarily create a stable foundation for the further discussions, question number 2 is concerned with what extent the consumer behavior may be influenced by scenting the PoS. In this case, Prof. Dr. Schubert is referring to the changing perception of products and the increased dwell time. This argument is further specified while stating that wenn es mir gut geht, dann bleib ich halt länger. 12 Furthermore, a distinction is made between two different strategies. The first strategy intends to improve the store atmosphere in order to increase dwell time and well-being. The second strategy instead, is concerned with the emotional staging of certain products. Frank Rehme from Metro Group is also talking about those two strategies. With reference to the first strategy, Rehme is specifying that the creation of a pleasant atmosphere is applicable with both, ambient scents and scents that are integrated into the shelves of the retail environment. According to Rehme, the latter is still in the development process. As an example of ambient scenting, Rehme is referring to Abercrombie and Fitch and to Edeka, which is using the scent of citrus in the fruit and vegetable section of their stores. Rehme defines this method as Raum-maskierung. 13 Regarding the second strategy of staging certain products, the Metro Innovation Manager provides the example of whole milk nut chocolate flavor which might be diffused within the sweets section of a store in order to check how customers might react to 12 Author s translation: I stay longer, if I feel good. 13 Author s translation: Room masking technique in order to create an atmosphere.

46 40 this. In this instance, Rehme is talking about manipulation: Das ist für mich eine absolute Beeinflussung, das ist Manipulation. Das würde ich nie machen. 14 The expert is distancing himself clearly from this topic. Rehme emphasizes that in the best case, no influence is wield on consumers and points out that he would never contribute in a project that intends to influence consumers. Instead, he suggests interactive touchpads where consumers are able to control the scent diffuse on demand. In contrast to this, Hans Voit admits that consumer behaviour is significantly affected by scents because it is not possible to escape. In comparison to the visual stimulus, he continues, it is easy not to look. But scent instead, is always perceived and therefore there is a constant impact on behaviour. However, Voit argues that, the stimulation threshold between positive and negative is set relatively narrow. A specific example of this would be how Voit explains that a strong fragrance of a woman might, on the one hand, arouse a great deal of attention, while on the other hand, the intensity of the fragrance might negatively affect the opinions of people perceiving the perfume. Concluding from that, Voit states that diese Abstimmung ist das Entscheidene. 15 Voit is also referring to the alert function of the olfactory system which is why a lot of odours will be perceived as negative and others as positive. Above that, Voit and Reissmann, the second expert of an olfactory marketing agency also confirm the existence of two different strategies. However, for the second strategy Reissmann indicates that companies might point to certain product categories such as chocolate but it will be impossible to highlight differences between several chocolate producers. In this case Reissmann suggest that companies place their products solely far away from competitive products. Question 3: Concerning the goals of scenting at the PoS, Schubert is referring to the previously mentioned increased dwell time, the positive atmosphere and emotionally charged brands that are experienced through all the senses. Reissmann, Voit and Rehme also agree on this argument. Reissmann talks about a shopping experience which is underlined by music, light, colours and scent. For the latter he also adds that scent is always arousing attention. Rehme refers to the overall scenario which already exists in the group s own multisensory Real Future Store. In this respect, Metro relies on the scent of herbs of Provence, the sound of 14 Author s translation: I would never do that, that manipulation. 15 Author s translation: Balancing is key.

47 41 ocean waves, the chirping of seagulls and an interactive floor projection of fish swimming in water which is changing when people are stepping on the display. Rehme admits that the experience with the multi-sensory concept, including the power of scents, has been entirely positive. Nonetheless he adds that it is difficult to evaluate the impact individually. Wir reden über Gesamtszenarien. Da kann man nie sagen, das liegt an dem speziellen Punkt oder nicht. 16 Voit agrees to that and refers to an example of a retail clothing store. Respectively, when a customer is entering a store he or she might be directly confronted with a pleasant smell, fancy decorated shop fittings and welcoming staff which will consequently create a positive overall impression of the store because everything fits together. Concluding from this particular example, the customer would prefer this store over another one. Voit reveals that in times of saturated markets where customers do not need a majority of products offered, it becomes more and more difficult to differentiate from competitors. Especially in those times, it is even more important to arouse attention. Question 4: The next question is dealing with the topic of how scents might be efficiently implemented in order to achieve an impact on consumer behavior. In this respect, Schubert emphasizes the importance of the goal setting. [ ] es ist dann effektiv, wenn ich meine Ziele erreiche. 17 In this respect, the expert refers to a study conducted at the chocolate section of a store. In this case, chocolate displays have been scented and unscented for a certain amount of time in order to examine potential effects on chocolate sales. Surprisingly, the study revealed that people bought less when the area was scented. Therefore, the implementation of the scent has not been successful and consequently inefficient. With accordance to efficiency at the PoS, Schubert says Wenn Marke und Duft nicht zusammenpassen, dann kann es ins Gegenteil führen. 18 (Schubert, 2013) In this case, he mentions intensity, quality of scents and the careful choice of scents as key factors. Concerning the choice of the scent, Voit indicates that the single smell of an orange or citrus is not enough for increasing sales. In general, the composition of a scent is divided into three different parts. The first part, the overtone, is what we perceive and accounts for 1/3 of the scent composition. The 16 Author s translation: We're talking about total scenarios. You can never tell, this is due to that particular point or that one. 17 Author s translation: It s efficient, when goals are achieved. 18 Author s translation: The opposite may happen, if brand and scent do not fit.

48 42 remaining 2/3 consists of the heart and basis note which are responsible for the effect that the scent is remaining in the room. If the goal is to create a relaxing scent, vanilla and sandlewood are used. However in the end, everything needs to fit together. With reference to the efficient implementation of scents at the PoS, Reissmann generally talks about the targeted and timely creation of attention towards certain products or scents. Besides, he is also distancing himself from the term manipulation on that question and rather talks about promotional support. Question 5: When it comes to the right technical implementation, Voit initially refers to the composition of a scent: 70 % are activating scents and the overtone, defining what we perceive, represents the remaining 30 %. However, a perfume always needs a base in order to fly through space, which will be in most cases alcohol, Voit reveals. In this respect, the expert attributes most allergic reactions to the chemical composition of the scent. When it comes to the scent itself, Voit declares that his company uses 100 % pure oil which is sold in ml cartridges, being diffused with the technique of micronisation of molecules. Even if there is a belief that using pure oil would be expensive, Voit admits that the consumption is slow. Reissmann instead, is generally talking about the existence of various techniques. There are small scent dispensers, which are able to scent an area up to 20qm and there are also techniques incorporated in the air conditioner which are literally able to scent whole airports. Personally Reissmann argues against scenting of whole areas. Instead, he prefers to have scent-free zones. In order to find the right technique, Reissmann suggests that this decision should be made individually and insists that general statements cannot be made. Schubert is referring to his book Marketing mit Duft and mentions cold air and hot air technologies. He is also speaking for himself that he is not a fan of hot air technologies because heat is changing the quality of the scent. Nonetheless, he is pointing out the importance of the right intensity of scents. The retailer Rehme is not able to answer this question. Question 6: Concerning the investments to be made when implementing scents, Voit is exactly stating the prices of the company s machines. Eine Maschine für 300qm kostet 990. [ ] Also so ein Geschäft 10h beduftet, da reicht eine Flasche Duft, die bei uns im Verkauf 148 Euro kostet, die reicht 3-4 Monate. Also ich hab

49 43 am Tag 1 Euro [ ] 19 The other olfactory marketing agency expert is also stating that the scenting of a 20qm store would cost monthly Euro. The remaining two experts, Rehme and Schubert are both arguing that the investment depends on the preconditions given in the store. If the store is perfectly equipped with a modern air conditioning in which the scenting system might be easily integrated, the cost would be, according to Rehme, below Additional costs might appear when the machines are hidden in the store. Rehme recommends small scent pillars for retailers that are not yet experienced with scent marketing in order to save costs. Schubert generalizes that if the scenting system is included into the air conditioner, it will be more expensive than just using a stone and a good perfume. Question 7: This question asks in which areas scent is suitable. In response to this question, Schubert mentions sport fashion stores while stating the research study of Anja Stöhr. Besides, Schubert relates to the Real Future Market in which the fish counter is scented. He also confirms the use of scents in the fruit section and the bakery department within a store. These examples are further confirmed by Rehme, who is in favour of using scents at fruit and vegetable sections and sweets corner. He also comments on unsuitable departments such as the cosmetic corners. He argues that due to an instinctive and conditioned behavior, customers are always opening a bottle of shower gel, in order to smell it. Ambient scenting those areas would therefore be highly ineffective. The scent of the product would be lost. Apart from the above mentioned locations, both experts from scent marketing agencies name abstract locations they already scented in Germany such as DIY stores, empty office rooms of Alliance, pharmacies, waiting rooms of hospitals and dental offices as well as opticians and retirement homes. Question 8: When it comes to the problems that might appear with the implementation of scent marketing at the PoS, all experts refer to intensity and organisation. According to Schubert, it is difficult to find a scent that is not perceived too strong but which is nonetheless efficient. Apart from this, problems arise from the phenomenon of adaptation. After a certain amount of time, scents are no longer perceived. Besides, Schubert also sees significant problems when 19 Author s translation: A scent system costs 990, When a store scents 10h a day, one catridge, at a price of 148, will last for 3-4 months. That s about 1 a day.

50 44 companies are randomly testing scents in order to save market research costs. Reissmann also indicates that the right implementation and adjustment of scents should be left to professionals. Rehme and Schubert also both highlight the organizational problems that someone in the company needs to be responsible for the whole olfactory project. Voit gives an example where both problems occur: a shop owner who is responsible for the scent regulation within his own store adapts to the scent he is exposed to. If he is now vulnerably changing the intensity of the scent, customers might suddenly react negatively. In this respect, Voit is referring to Abercrombie and Fitch, a company which is doing what contracts to everything mentioned before, he continues. Amongst other tools, Abercrombie relies on the diffuse of a strong and intensive perfume and increased attention from young people and controversy from elderly. Even if the disperse of a highly intensive scent would be beneficial for his own company, he admits, Voit argues that this strategy is never a long lasting one. Abercrombie achieved to create attention at a short period of time and has been present in all media, either positive or negative. Voit adds, auch negative Werbung soll ja auch Werbung sein. 20 Question 9: The next question asks with odours/odourants are able to trigger certain effect. In this respect, Reissmann generalizes that there is no specific scent that triggers certain emotions because a scent which is perceived as pleasant by one party is not automatically pleasant for the other one. This argument is supported by Rehme by stating that it generally depends on the pictures we associate with the particular scent. Voit refers to the 50 scents they offer in terms of sales promotion. He states that again, the overtone needs to fit to the situation and product at hand. Schubert just generally admits that there are scents in aromatherapy which are triggering certain emotions. Question 10: With reference to the impact on sales increase, Voit is generally talking about an increase in sales of 5 10 %. In some areas, such as in the chocolate corner, he also observed sales increase of 15 %. Nonetheless, Voit points out that wenn die Ware nicht stimmt, wenn der Laden gräßlich ausschaut, wenn die Preise hoch sind, beschissene Bedienung drin haben, dann können wir 20 Author s translation: Negative publicity is still publicity.

51 45 Duft reinschütten, was wir wollen, dann haben wir überhaupt keinen Erfolg. 21 Reissmann and Schubert both refer to the study of Anja Stöhr, who detected a sales increase of 5 6 % in a sports fashion store. However Schubert admits that from his point of view, the effects on sales have not been extensively surveyed so far. Rehme argues that it is impossible to ascribe sales increase to the impact of scent because so far, he never used scents as single marketing method at a time. Therefore he generalizes that with the help of multisensory tools, sales increase of % are easily possible. Question 11: As it is proved that scents are able to trigger emotions and associations and able to influence mood positively, the experts have been asked which feature they perceive as most important. In this respect, Schubert, Rehme, Voit and Reissmann all agree on the emotional influence of scents. Reissmann states that it will be initially important to know what emotions a retailer intends to trigger so that he can react according. Rehme is referring to the knowledge from Neuromarketing and Prof. Gigerenzer stating that decisions are made intuitively rather than rational. As an example, Rehme is referencing the success of Starbucks. Wenn mir vor 10, 15 Jahren jemand gesagt hätte Tasse Kaffee 10 Mark, dann hätte ich dem gesagt nie im Leben. Aber wenn ich jetzt Latte Macchiato, Soy milk, low fat, Hazelnut flavor in einem Loungesofa genieße bei Starbucks und Lifestyle noch mitbekommen dann ohne mit der Wimper zu zucken zahl ich dies. 22 According to Rehme, the reason for this is that the consumer now can get a story around a product, which he is willing to pay for. He insists that companies need to provide context around a product because when there is no context, there is only price companies can compete on. In contrast to the mentioned impacts, Voit is naming the atmosphere as an important factor. Everything needs to fit together. And in times where retailers are more and more alike with similar prices and similar shop fittings, they need to find out what their clientele is like in order to react accordingly with colours, music and scent. 21 Author s translation: If the product is not right when the store looks ghastly, when prices are high, the service is crappy service, we cannot pour pure scent, what we want, but we have absolutely no success. 22 Author s translation: If someone would have asked me 10, 15 years ago the price of a cup of coffee would be 10 Mark, I would have said never in my entire life. But now when I can get a Latte Macchiato, soy milk, Low fat, Hazelnut flavor I can enjoy in a lounge sofa at Starbucks and get lifestyle then without batting an eyelash, I pay this.

52 46 Question 12: Concerning the question of how those effects may be measured, every expert admits that the measurement is very difficult. According to Rehme, the measurements may even be impossible. Schubert still argues that the impact of scents may be investigated experimentally. Voit points to universities which are regularly testing the impacts. Furthermore, he argues that chain store operators might directly draw conclusions when comparing sales from a last year s date with the same current date. However, Voit indicates that scent is just one part of the whole. Reissmann also confirms that impacts might be difficult to ascribe to one particular product. Question 13: An important question which often arises when talking about scent marketing is the legal part. All experts agree that so far, customers do not need to be informed about the implementation of scents at the PoS: However, Rehme believes that a retailer should treat information about the usage openly. Reissmann is absolutely against the announcement of scent implementation at the PoS. He argues that there are also people that are sensitive to lights and that meat counter is working with window-dressing light which is not being announced. He declines fully to adapt to minorities which ask for this information. He further adds that so far, there has been no proof that an ambient scent would cause allergic reactions. Schubert argues that the introduction of a law would be highly difficult because in some cases, a scent can be ascribed to a product itself which cannot be controlled. He agrees to Rehme s argument to admit freely that a retailer is using ambient scents in order to smooth critics. Question 14: The next question is concerned with the phenomenon of adaptation. Schubert and Voit agree that it makes sense to permanently rely on ambient scent at the PoS. However, Voit hold the belief that themes and therefore scents may be changed. Rehme also concludes that retailers should change the scent from time to time because consumers get used to the smell very quick. As an example, Rehme says that citrus scents are normally used in the fruit and vegetable section of a retail environment. In order to continuously delight and convince consumers, retailers may vary with mango or carrot scents. But, when the scent is used as a corporate scent, which is true for Abercrombie, it is of course not recommended. Voit also refers to Abercrombie in that case but he states that a consequent intensive scent is only good for advertising because no one else is doing it.

53 47 Nonetheless, he believes that the majority perceives this as negative. Coming back to the regularly change of the scent, Reissmann agrees that a seasonal change is a good idea in order to prevent adaptation and to boredom. However, he is not considering adaptation as negative because otherwise some jobs could not be performed. Schubert says that generally scents need to be perceived as positive and needs to fit to a product or store at hand. The main problem lies in the right execution, he adds. 4.4 Interpretation of data After having analyzed each question individually, the arguments are grouped with regard to key words and subsequently interpreted. Those key words include arguments concerning goals, problems, financial impact, measurement, application areas and manipulation. In this respect it is important to note that the expert interviews did not reveal any further information on the relationship between the olfactory system and emotions and the phenomenon of adaptation which is why those topics are not considered in the interpretation after they have been analyzed in the previous section. Goals: During the data analysis, significant knowledge was gained on the importance of the goal setting itself. The goals are in the centre of considerations. When the goals are achieved, the implementation is effective and successful. goal setting efficiency Illustration 14: Goal-efficiency correlation Adapted from: Own Illustration, 2013

54 48 With reference to ambient scenting, the experts refer to Abercrombie and Fitch and Edeka as representative examples. Abercrombie is using a scent for the whole retail environment whereas Edeka confines to the fruit and vegetable section within its stores. Obviously both retailers use different implementation and execution strategies in scent marketing which prove to be both successful. Edeka intends to simply create a pleasant atmosphere when customers directly enter the store. The supermarket chain uses a less intensive scent which is not consciously perceived because the company wants the scent to work subliminal. Abercrombie and Fitch s main goal instead is to arouse attention rather than creating a positive atmosphere. In this case, the company is using a strong fragrance which is consciously and strongly perceived. Although the success of Abercrombie reflects precisely the contrary of what needs to be considered in terms of intensity, the experts agree that the company has achieved its goal because they receive attention from young people and controversy from elderly which results in a strong media presence. Besides the data reveals that apart from the goals mentioned in chapter x, arousing attention is a key goal in scent marketing. Particularly in times of saturated markets where it is hard to differentiate it is even more important to arouse attention. However, it becomes evident that all experts refer to a multisensory shopping experience with all senses incorporated. The data analysis further exposes that it is difficult to separate scents from other environmental stimuli because in order to create a holistic experience customers ask for, it will need more than one stimuli. The Starbucks example also underlines the development to an experience-oriented customer and indicates the importance of holistic shopping experiences. As also stated in chapter x, people are willing to pay when they are provided with a holistic experience. Besides, the empirical study confirms that the connection between the olfactory system and emotions are of key importance in scent marketing. Projecting this knowledge on the retail environment, it is important that retailers first identify which emotions they want to trigger in order to achieve particular goals. Financial Impact: When the goals are effective, it is generally agreed that the implementation of scent marketing at the PoS will result in a sales increase of 5 10 %. Measurement:

55 49 However, based on the data analysis, it becomes clear that the measurement is still a problem which confirms the theory. Experts indicate that there must be more research done on effects of scent in marketing. Besides, as previously the data collection revealed that retailers do not use scent solely which is why a correct measurement is hard to perform. Problems: Furthermore, the data analysis revealed that there are two main problems that occur with the implementation of scent marketing: Intensity Organisation Illustration 15: Key factors olfactory marketing Adapted from: Own Illustration, 2013 Intensity refers to the scent itself whereas organization refers to the right execution. The experts confirm that there is only a narrow gap to find the appropriate intensity which refers to the pleasantness and intensity relationship model developed in chapter x. Organizational problems appear, according to the experts, when no one feels responsible for the right execution. The illustration above indicates that if one of the two things is not considered, scent marketing will not be successful. Technologies and Investments: During the data analysis it becomes apparent that the retailer and the scientist of the experts are both not familiar with the technological part of scent marketing. This reveals that particularly the retailer relies on the competency of a professional scent system provider who is delivering the technical equipment. This contradicts to the points that everybody in the organization should be aware and familiar with

56 50 the scent implementation at the PoS. Besides it is therefore doubtful, if the retailer will be therefore successful with the scent implementation. Application areas: When it comes to the application areas, the data divulges that principally scent marketing is applicable in all different industries. With reference to low involvement products at supermarkets, the experts agree that the fruit and vegetable section such as the bakery and sweets corner are perfectly suitable for the implementation of scent marketing. The indication of one expert to not use scents at the cosmetic corners is pretty helpful to see where it won t work. According to a personal experiment by the retailer, it has become obvious that wherever a conditioned behaviour is involved, scent marketing does not make sense. This implies that for the remaining areas in the supermarket, retailers need to try themselves if the usage of scent would make sense. However, it is also recommended that not all areas of the store are scented in order to keep a balance between scented and unscented areas. Manipulation: Apart from the questions themselves, the data analysis reveals that manipulation is still a key problem. It is interesting to note that two experts are distancing from the accusations of manipulation in scent marketing. However, as previously mentioned, the general purpose of scent marketing is to achieve an influence and manipulation of consumers buying behaviour to a certain extent. In this respect it is particularly surprising that the retailer of the experts argues that the targeted staging of certain products with the help of scents would be manipulating. However, this would mean that ambient scenting itself is not manipulating. This argument is also supported by another expert, who is redefining the term manipulation in scent marketing as a tool to create promotional support of certain products. Voit instead, confirms that scents are always manipulating and influencing consumer s behaviour whenever a scent is present. However, concluding that there are obviously effects of scent marketing on sales and customer s emotional state, it undeniable that there is an influence on consumer s buying behaviour. Manipulation is a strong and powerful word. People normally tend to deny when it is talked about manipulation. Manipulation in (scent) marketing is a highly debated topic which is why retailers try to protect themselves

57 51 against offenses. Besides, manipulation is in most cases related to something against the will of the customers. However, according to the experts, ambient scenting is to create a positive atmosphere in favour of the customers because in any case they would prefer shopping in a nicely scented area instead of a neutral smelling retail environment. 4.5 Results Based on the data analysis and interpretation, it becomes clear that H1 cannot be supported. Obviously, scents have an impact on consumer s emotions, mood and behaviour which is consequently influencing the buying behaviour at the PoS. However, in order to achieve a positive impact on consumers, it will be important to consider the factors intensity and organization. The data revealed that retailers need to particular think about organizational issues which are mostly neglected by retailers. Nonetheless, when one of those two are not considered, scent marketing will not have a positive impact on consumer s buying behaviour. Therefore, H3 can be partly supported, however even if the intensity is rightly chosen, without the organization within a company, the whole concept is not working. Having identified the impact of scents on consumer s buying behaviour at the PoS, the question if scent alone may act as a powerful tool in marketing arises. According to the data analysis, there is no support for H2 because scents are used to create a holistic experience. Each stimuli is able to appeal to one of the five senses and even if the olfaction is seen as the most powerful sense, the data provides no proof to argue that scents will be solely used. According to the expertise of the interviewees, there is no one example given, where products have been staged without any other marketing support or where an atmosphere has been scented with anything else inside. Therefore, H2 cannot be supported. Having also revealed that customers may be constantly exposed to ambient scents, it becomes clear that olfactory marketing will also be highly effective when it comes to everyday, low involvement products available at supermarkets. According to the findings in the empirical part, scents may be implemented in different areas of grocery stores.

58 52 5. Recommendations and Tendencies Both the theoretical and the empirical part of this thesis support the thesis that scents may have an impact on consumer s buying behaviour at the Point of Sale. This is mainly due to the fact that the majority of purchase decisions are based on emotions which are mainly triggered by scents. Particularly, in times of changing consumer behaviour and saturated markets where it becomes more difficult to arouse attention and distinguish from competitors, retailers started to realize the importance of emotions in marketing and consequently the potential of olfactory marketing at the PoS. Particularly in the retail environment, scent marketing has so far not been exploited so that the trend which rapidly emerged, may well continue: In 2007, Ravn estimated the olfactory marketing industry at a $100- million business and predicted that it will grow up to $1 billion within the next 7 8 years (Ravn, 2007). Having considered the implementation of scents for grocery stores, it became apparent that, ambient scenting may be a powerful tool for everyday and low involvement products, supposing that retailers carefully consider the choice, quality and intensity of the scent itself, in order to ensure pleasantness, comfortableness and the health of customers during their shopping trip. Choice Quality Intensity Illustration 16: Scent considerations Adapted from: Own Illustration However, it has also been exposed that scents are not solely used as a marketing strategy. Today s consumers ask for a holistic shopping experience which is only achievable with the implication of multiple senses. Consequently, all stimuli need to perfectly match in order to create a strong and pleasant holistic experience for the customer. Recapitulating, Hans Voit outlines: Ich betone noch einmal, ich formuliere es so im Marketingbereich, wir haben eine gesättigte Gesellschaft und Duft ist heute ein ganz wichtiger Mosaikstein, aber er macht es nicht alleine. Wenn

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