Friday, August 14, 2015

Marketing in the Experience Economy

Way back in 1998, Pine and Gilmore's Harvard Business Review article about the Experience Economy outlined a four-step progression from undifferentiated commodity positioning/market pricing to the highly differentiated culmination of staging an experience at premium pricing. "To realize the full benefit of staging experiences, however, businesses must deliberately design engaging experiences that command a fee," the authors wrote.

Today, consumers are surrounded and distracted by more potential experiences than ever--facilitated by connectivity and ever-present digital devices. In a very real sense, then, marketing must be ever-present and available to reach customers and deliver experiences when and where desired.

In fact, material goods are so ubiquitous that consumers often crave an interesting or unique experience in conjunction with a purchase OR rather than the purchase of a tangible item. (Think "Spotify" instead of music download, for instance, Uber car service instead of a traditional taxi service.)

Not surprisingly, consumer behavior favoring experiences is having an effect on the retail industry. Stores can't simply be stores. Prices can't simply be prices. Showrooming and webrooming rule. The key to marketing in this experience economy is to understand your customers and adapt to their needs and wants--quickly--with appropriate/differentiated offerings and customer services that set the offering apart from competing offerings.

Even purchases like Uber rides are actually experiences, especially since both driver and passenger rate the experience. Bad experience? Bad rating. Good experience? Good ratings add to the potential for further differentiating this offering and charging more for the experience.

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