Summary “Welcome to the Experience Economy” – B. Joseph Pine II and James H. Gilmore
The economy is changed over the entire history. From agrarian, to industrial, to services, to
experience economy. Current companies will find out that the next stage is experience.
The most companies simply will wrap experiences around their traditional offerings to sell them
better, but the transition from selling services to selling experiences will be not so easy for
established companies. Unlike companies would like to stay in a commoditized business, they have
to upgrade their offerings to the next stage of experience. The question is only WHEN and HOW.
An experience occurs when a company let a good or services, become more than just only the
good/services. 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. Experiences are memorable.
4 economies with their functions:
1. Agrarian economy: offers commodities. The economic function is to extract. Commodities
are fungible. The buyer is the market and the seller is the trader. The key attribute is natural.
2. Industrial economy: offers a good. The economic function is to make. Goods are tangible.
The buyer is the user and the seller is the manufacturer. The key attribute is standardized.
3. Services economy: offers services. The economic function is to deliver. Services are
intangible. The buyer is the client, the seller is the provider. They key attribute is customized.
4. Experience economy: offers experiences. The economic function is to stage. Services are
memorable. The buyer is the guest, and the seller is the stager. The key attribute is personal.
Prior economic offerings were external to the buyer, experiences are inherently personal, existing
only in the mind of an individual, who has been engaged on an emotional, physical level. No 2 people
can have the same experience, because each experience derives from the interaction between the
staged event and the individual’s state of mind.
In the entertainment business was experience always regarded as important, but nowadays the
experience happens more and more in other kind of services/products. Companies try to attract
customers with fascinating displays and fun activities. But experiences are not only about
entertainment, it’s about engage customers in a personal, memorable way. Companies have to use
their base service as the stage for a memorable experience. But not only in business-to-consumer
markets occurs this, also in business-to-business markets.
But keep in mind: most companies move from one economic stage to the next in incremental steps.
Some companies are now starting with charging admission: requiring customers to pay for the
experience. The customers only pay for the experience. This doesn’t mean that companies have to
stop selling goods and services. Companies can’t without their products, but also not without the
experiences.
Some festivals in America already do charge admission. This are festivals, which are outdoor
shopping malls, and people pay to visit this malls, just because the whole atmosphere around it
(there are activities for the customers before, after and while they are shopping). But before a
company can charge admission, it must design an experience that customers judge to be worth the
price. Excellent design, marketing and delivery will be as crucial as the goods and services itself.
Ingenuity and innovation will always crate growth in revenue.
Thinking about experiences can in two dimensions:
- Customer participation: you have participants who don’t affect the performance at all (passive) and
on the other hand you have active participants, in which customers play key roles in creating the
performances.
The economy is changed over the entire history. From agrarian, to industrial, to services, to
experience economy. Current companies will find out that the next stage is experience.
The most companies simply will wrap experiences around their traditional offerings to sell them
better, but the transition from selling services to selling experiences will be not so easy for
established companies. Unlike companies would like to stay in a commoditized business, they have
to upgrade their offerings to the next stage of experience. The question is only WHEN and HOW.
An experience occurs when a company let a good or services, become more than just only the
good/services. 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. Experiences are memorable.
4 economies with their functions:
1. Agrarian economy: offers commodities. The economic function is to extract. Commodities
are fungible. The buyer is the market and the seller is the trader. The key attribute is natural.
2. Industrial economy: offers a good. The economic function is to make. Goods are tangible.
The buyer is the user and the seller is the manufacturer. The key attribute is standardized.
3. Services economy: offers services. The economic function is to deliver. Services are
intangible. The buyer is the client, the seller is the provider. They key attribute is customized.
4. Experience economy: offers experiences. The economic function is to stage. Services are
memorable. The buyer is the guest, and the seller is the stager. The key attribute is personal.
Prior economic offerings were external to the buyer, experiences are inherently personal, existing
only in the mind of an individual, who has been engaged on an emotional, physical level. No 2 people
can have the same experience, because each experience derives from the interaction between the
staged event and the individual’s state of mind.
In the entertainment business was experience always regarded as important, but nowadays the
experience happens more and more in other kind of services/products. Companies try to attract
customers with fascinating displays and fun activities. But experiences are not only about
entertainment, it’s about engage customers in a personal, memorable way. Companies have to use
their base service as the stage for a memorable experience. But not only in business-to-consumer
markets occurs this, also in business-to-business markets.
But keep in mind: most companies move from one economic stage to the next in incremental steps.
Some companies are now starting with charging admission: requiring customers to pay for the
experience. The customers only pay for the experience. This doesn’t mean that companies have to
stop selling goods and services. Companies can’t without their products, but also not without the
experiences.
Some festivals in America already do charge admission. This are festivals, which are outdoor
shopping malls, and people pay to visit this malls, just because the whole atmosphere around it
(there are activities for the customers before, after and while they are shopping). But before a
company can charge admission, it must design an experience that customers judge to be worth the
price. Excellent design, marketing and delivery will be as crucial as the goods and services itself.
Ingenuity and innovation will always crate growth in revenue.
Thinking about experiences can in two dimensions:
- Customer participation: you have participants who don’t affect the performance at all (passive) and
on the other hand you have active participants, in which customers play key roles in creating the
performances.
