The Experience Economy: Concepts

The Experience Economy recognises the significant importance of experiences in shaping individuals’ perceptions making businesses create compelling experiences for their customers.

In the previous service economy, companies simply wrapped experiences around their services to sell them better. However, there is now a paradigm shift where businesses are deliberately designing engaging experiences that command a ‘fee’.

In the Experience Economy, the new economic offering is experiences. Experiences occurs whenever a company intentionally uses services as the stage and goods as props to engage an individual.

Related: More Marketing Concepts here

Progression of Economic Value

Companies are no longer keen to offer goods or services alone, but are keen to offer the resulting experience rich with sensations. While commodities are fungible, goods tangible, and services are intangible, experiences are memorable.

Prior economic offerings remained outside the buyer, but experiences are personal.

An individual personal experience is a result of interaction between the brand & the individual’s frame of mind, and no two people have the same experience.

Companies are now staging experiences, they are engaging the customer on an emotional, physical, intellectual or even spiritual level.

Experience Dimensions

1. Customer Participation in experience:

• Passive participation: customers don’t affect the performance at all.
• Active participation: customers play a key role in creating the performance or event that yields the experience.

2. Connection or environmental relationship that unites customers with the event or performance:

• Absorption: “occupying a person’s attention by bringing the experience into mind” – the experience goes into the customer.
• Immersion: “becoming physically (or virtually) a part of the experience itself” – the customer goes into the experience.

• Entertainment (passive absorptive): customers participate more passively than actively & connection is one of absorption. Example: Attending Muse Concert.

• Educational (active absorptive): customers take more active participation but still more outside the event than immersed in the action. Example: Your Experience right now.

• Escapist (active immersive): teach as well as educational or amuse as mush as entertainment but involve greater customer immersion. Example: Sky diving.

• Esthetic (passive immersive): Increased immersion but minimised active participation. Immersed in the activity or environment but have little effect on it. Example: Visitor to an Art gallery.

Experiential Marketing

Customers nowadays take functional features and benefits, product quality and a positive brand image as given. Customers today want to be stimulated, entertained, educated & challenged.

They want products, communications and marketing campaigns that dazzle their senses, touch their hearts, and stimulate their minds…[and] that they can relate to and that they can incorporate into their lifestyles.

Brands that provide customers with experiences thus become part of their lives.

In Traditional Marketing, the focus is on functional features & benefits; product category & competition are narrowly defined; customers are viewed as rational decision makers; methods and tools used are analytical, quantitative and verbal.

In Experiential Marketing, focus is on customer experiences and examining the consumption situation. Customers are considered as rational & emotional animals, and methods and tools used are eclectic.

The experience economy constitutes only a small percentage of most economies. It is more appropriate to view business attention to experiences as a new way of marketing products & services; the experiential value would not then exist in the products or services per se, but in the marketing of these items (Schmitt, 2011).

Experience Providers (ExPros)

The various means to provide experiences:

• Communications: advertising, annual reports and publications.
• Visual and Verbal Identity: names, logos and signage.
• Product Presence: product design, packaging and brand characters (Service: Service design).
• Co-branding: events & sponsorship and product placement.
• Spatial Environments: building & exhibition design.
• Websites & Electronic Media: websites & digital marketing (and social media).
• People: the organisation’s employees and partners.

Types of Experiences

There are five types of experiences (Sense, Feel, Think, Act, Relate), viewed as Strategic Experiential Modules, that constitute the objectives & strategies of the organisation’s marketing efforts.

Sensory Experiences: Sensory marketing appeals to five senses and provides aesthetic pleasure, excitement, beauty & satisfaction through sensory stimulation. Five senses should not only be stimulated but delighted through primary elements, styles.

Feel Experiences: Feel Marketing is the strategy and implementation of attaching affect to the brand via ExPros and requires a clear understanding of how to create feeling during the consumption experience. Affective Experiences affect moods, feelings & emotions. In consumption situations, face-to face interactions are the most important cause of strong feelings.

Think Experiences: Think marketing aims to encourage customers to engage in elaborative & creative thinking that may result in a re-evaluation of the brand. Individuals engage into two different types of thinking (Guilford, 1950): Convergent thinking is the narrowing of the mental focus until it converges on a solution. Divergent thinking is the broadening of the mental focus in many different directions. Here the objective is to to surprise by departing from common expectations, raising customer’s curiosity or through provocation.

Act Experiences: Create experiences related to the physical body, behaviour and lifestyles and as a result of interaction with other people. Demonstrate alternative ways of doing things. Act Experiences should focus on physical body experiences, facilitate the right perceptions & interactions. Customers also want brands to express and drive their lifestyles.

Relate Experiences: Relate marketing expands beyond the individual’s private sensations, feelings, cognitions, and actions. It aims to relate the individual self to the broader social and cultural context reflected in a brand. ‘Relate’ implies a connection with other people, other social groups or a broader, more abstract social entity such as nation, society or culture.

References

Pine II B.J. and Gilmore J.H., (1998), “Welcome to the Experience Economy: As Goods and Services Become Commoditised, The Customer Experiences that Companies Create will Matter Most”, Harvard Business Review.

Schmitt B.H., (1999b), “Experiential Marketing”, Journal of Marketing Management, Vol. 15, pp 53-67, ISSN: 0267-257X.