Summary Economy of Experiences
Chapter 1. The development of the experience economy
1.1 Origin and relevance: an inventory
The origins
Experience economy is one of the world’s oldest profession. The Greeks and Romans had an excellent
understanding of how to make money from experiences. They know how to combine ‘bread and
games’ to keep the populace subdued. In 1992 Gerhard Schulze, a German sociologist wrote a
voluminous book called the Erlebnisgesellschaf. He describes a development in society towards a new
kind of community, formed on the basis of meaningful experiences, interests, values and pastimes
rather than faith, political preference and class.
The economic and management sciences discover the experience economy
In 1999 Pine and Gilmore published their best-seller, the experience economy, a year after their article
had appeared in the Harvard Business Review. Their ideas stimulated great interest not only in the
Western world but also in China and Japan. Pine and Gilmore state that as soon as a certain level of
prosperity in a country reached, the interest shifts from goods and services to experiences. There is
growing price competition and businesses are forced to find ways in which to set their products and
services apart in order to attract customers.
A person who buys a service ensures that certain non-material actions are performed in his interest
(like having a meal prepared, the house cleaned or transport provided to reach his destination). Yet
someone buying an experience pays for the time in which that experience takes place and the time the
organisation in question spent coordinating and staging it. It is like a drama that touches the individual
personally. The goods and services act as the décor on stage, they are the backdrop. The experience
revolves around the drama that is being presented, with a distinct theme and a development leading to
a climax. The customer can either take part actively In the paly or be an enthralled member of the
audience. It could be a birthday party at the McDonalds or the experience of riding with friends in a 15
meter long limousine.
An experience is consequently a unique personal offer through which the company can differentiate
itself and for which a premium can be charged.
Example:
- A coffee bean, which is practically worthless
- A packet of coffee brought at the supermarket, from which a home-made cup of coffee can be
made costing between 10 and 20 cent.
- A cup of coffee brought at a local café for between 1.50 or 2 euro.
- A cup of coffee bought at Starbucks or Coffee Company which would be slightly more
expensive.
- A cup of coffee at a local fancy restaurant which could cost in excess of 8€ and finally the
ultimate coffee experience of sipping an espresso or cappuccino at Café Florian on the Piazza
San Marco in Venice for around 17€.
,How the hype took off
People have gradually come to understand that there is more to the goods and services and functions
that they represent, and to the image of the brands with which customers can identify. This has been
observed not only by visionaries such as Pine and Gilmore; many other observers have noticed that
something is missing and that the business is being changed by the growth of digital technology.
A few leading authors on the subject are:
- Michael Wolf (the entertainment economy)
- Rolf Jensen (the dream society)
- Diane Nijs and Frank Peter (Imagineering, a Disney concept)
- Davenport and Beck (the attention economy)
- Jeremy Rifkin (the age of access)
1.2 A new look at the experience economy
There is a certain degree of similarity in the above-mentioned authors on economic change. Most of
these discourses take the company as their point of departure. The company tells he customer stories,
seeks the customer’s attention, produces experiences for the customer and so forth. Companies always
take the initiative! In most cases companies still regard customers as a passive target, as the intention
of a business is to find ways of selling more and generating a large turnover, but now via experience.
The pioneers Pine and Gilmore have also become critical of this development in the experience
economy. They note that during periods when the turnover in experiences is higher than ever, the cry
for Guinness, for authenticity, increases.
1.3 Meaningful experiences and their significance
From a psychological and philosophical point of view, our feelings and experiences, and the value we
attach to them, give meaning to our lives. The meaningful experiences in our lives enable us to make
choices which, to a large extent, shape our lives. We determine with whom and how we enter in
relationships
The literature on the experience economy usually refers to the second of the above definitions,
specifically with reference to ‘undergoing. It is generally accepted in the business world that once a
customer has ‘experienced’ a product, he or she is more likely to make a purchase.
It is generally accepted that people absorb new ideas much more quickly and remember them better
when ideas have been experienced first-hand. Education is a good example of this.
1.4 Summary
In this chapter the framework of the book was sketched with regard to experience from the
perspectives of both the old and the new points of view.
In the fields of business management and economics, the pioneers and their followers approached
experience as a way in which companies tried to deal with the intense competition associated with
markets that are abundantly supplied and where there is no visible difference between similar
products, and which consequently resemble one another closely and become interchangeable.
, Chapter 2. Value creation: the arenas
2.1 Arenas for creating intangible value
There are numerous different arenas and domains where we encounter application in which immaterial
value is created. The traditional ones : entertainment, the theatre, art and architecture are examples of
creating immaterial value. These take place in almost every field: in sport, the automobile industry,
retail tourism and retail shopping, hospitality industry, entertainment and theatre, social media and etc.
The automobile industry
The automobile industry in its approach to feeling, experiencing the product and the connection and
loyalty felt towards the brand. Modular systems for ordering your own car may be modern, but in fact
this is simply an age-old form of mass customisation. Experience 2.0 comes into the picture systems
where users collaborate in innovation during the development of the final product and its use.
Retail, shopping and retail tourism
Shopping is a domain that has traditional paid a lot of attention to experiences. The retail trade uses
advanced techniques in an attempt to influence e.q. sound, light and smells. One trend is the
development of new shop-concepts in historical buildings.
In 1990s saw the arrival of a phenomena as ‘’flagship stores’. The empathic presence of a brand name
at a top location, displaying the very best that a brand name has to offer. The number of staff is
remarkable. Profit is not the main objective of this type of flagship store. Contributing to increasing
the reputation of the brand name is what matters.
APPLE
A = Approach the customers with a personalized warm welcome
P = Probe politely to understand all the customers need
P = Present a solution for the customer to take home today
L = Listen for and resolve any issues or concerns
E= End with a fond farewell and an invitation to return
Lots of people no longer want to be limited to shopping in exclusive shopping malls in their own
country. Shopping tourism is becoming increasingly common. It is easy and cheap to get to cities like
London, Paris, Milan and Barcelona.
The hospitality industry
The objective of the hospitality industry is to make guests as comfortable as possible whether they are
on a holiday, having a day out or doing business. It is important that they have a home away from
home feeling. In this sector, providing personalised service is a high importance. The capacity of
businesses distinguish themselves and be competitive is sought in boundary-stretching levels of
service and personalisation in combination with the design of the surroundings.
Entertainment and theatre
A sector traditionally very involved in experience is the entertainment and theatre. Forms are being
created in which entertainers try to get maximum audience participation in the entire theatre
happening.
The media, augmented reality and digital hyper connectivity
Enormous technological developments make it possible for us to be in contact with people
continuously, wherever they may be in the world. Internet makes it possible to get in touch with
almost everyone in the world. A fundamental development is the connecting and sharing that is
Chapter 1. The development of the experience economy
1.1 Origin and relevance: an inventory
The origins
Experience economy is one of the world’s oldest profession. The Greeks and Romans had an excellent
understanding of how to make money from experiences. They know how to combine ‘bread and
games’ to keep the populace subdued. In 1992 Gerhard Schulze, a German sociologist wrote a
voluminous book called the Erlebnisgesellschaf. He describes a development in society towards a new
kind of community, formed on the basis of meaningful experiences, interests, values and pastimes
rather than faith, political preference and class.
The economic and management sciences discover the experience economy
In 1999 Pine and Gilmore published their best-seller, the experience economy, a year after their article
had appeared in the Harvard Business Review. Their ideas stimulated great interest not only in the
Western world but also in China and Japan. Pine and Gilmore state that as soon as a certain level of
prosperity in a country reached, the interest shifts from goods and services to experiences. There is
growing price competition and businesses are forced to find ways in which to set their products and
services apart in order to attract customers.
A person who buys a service ensures that certain non-material actions are performed in his interest
(like having a meal prepared, the house cleaned or transport provided to reach his destination). Yet
someone buying an experience pays for the time in which that experience takes place and the time the
organisation in question spent coordinating and staging it. It is like a drama that touches the individual
personally. The goods and services act as the décor on stage, they are the backdrop. The experience
revolves around the drama that is being presented, with a distinct theme and a development leading to
a climax. The customer can either take part actively In the paly or be an enthralled member of the
audience. It could be a birthday party at the McDonalds or the experience of riding with friends in a 15
meter long limousine.
An experience is consequently a unique personal offer through which the company can differentiate
itself and for which a premium can be charged.
Example:
- A coffee bean, which is practically worthless
- A packet of coffee brought at the supermarket, from which a home-made cup of coffee can be
made costing between 10 and 20 cent.
- A cup of coffee brought at a local café for between 1.50 or 2 euro.
- A cup of coffee bought at Starbucks or Coffee Company which would be slightly more
expensive.
- A cup of coffee at a local fancy restaurant which could cost in excess of 8€ and finally the
ultimate coffee experience of sipping an espresso or cappuccino at Café Florian on the Piazza
San Marco in Venice for around 17€.
,How the hype took off
People have gradually come to understand that there is more to the goods and services and functions
that they represent, and to the image of the brands with which customers can identify. This has been
observed not only by visionaries such as Pine and Gilmore; many other observers have noticed that
something is missing and that the business is being changed by the growth of digital technology.
A few leading authors on the subject are:
- Michael Wolf (the entertainment economy)
- Rolf Jensen (the dream society)
- Diane Nijs and Frank Peter (Imagineering, a Disney concept)
- Davenport and Beck (the attention economy)
- Jeremy Rifkin (the age of access)
1.2 A new look at the experience economy
There is a certain degree of similarity in the above-mentioned authors on economic change. Most of
these discourses take the company as their point of departure. The company tells he customer stories,
seeks the customer’s attention, produces experiences for the customer and so forth. Companies always
take the initiative! In most cases companies still regard customers as a passive target, as the intention
of a business is to find ways of selling more and generating a large turnover, but now via experience.
The pioneers Pine and Gilmore have also become critical of this development in the experience
economy. They note that during periods when the turnover in experiences is higher than ever, the cry
for Guinness, for authenticity, increases.
1.3 Meaningful experiences and their significance
From a psychological and philosophical point of view, our feelings and experiences, and the value we
attach to them, give meaning to our lives. The meaningful experiences in our lives enable us to make
choices which, to a large extent, shape our lives. We determine with whom and how we enter in
relationships
The literature on the experience economy usually refers to the second of the above definitions,
specifically with reference to ‘undergoing. It is generally accepted in the business world that once a
customer has ‘experienced’ a product, he or she is more likely to make a purchase.
It is generally accepted that people absorb new ideas much more quickly and remember them better
when ideas have been experienced first-hand. Education is a good example of this.
1.4 Summary
In this chapter the framework of the book was sketched with regard to experience from the
perspectives of both the old and the new points of view.
In the fields of business management and economics, the pioneers and their followers approached
experience as a way in which companies tried to deal with the intense competition associated with
markets that are abundantly supplied and where there is no visible difference between similar
products, and which consequently resemble one another closely and become interchangeable.
, Chapter 2. Value creation: the arenas
2.1 Arenas for creating intangible value
There are numerous different arenas and domains where we encounter application in which immaterial
value is created. The traditional ones : entertainment, the theatre, art and architecture are examples of
creating immaterial value. These take place in almost every field: in sport, the automobile industry,
retail tourism and retail shopping, hospitality industry, entertainment and theatre, social media and etc.
The automobile industry
The automobile industry in its approach to feeling, experiencing the product and the connection and
loyalty felt towards the brand. Modular systems for ordering your own car may be modern, but in fact
this is simply an age-old form of mass customisation. Experience 2.0 comes into the picture systems
where users collaborate in innovation during the development of the final product and its use.
Retail, shopping and retail tourism
Shopping is a domain that has traditional paid a lot of attention to experiences. The retail trade uses
advanced techniques in an attempt to influence e.q. sound, light and smells. One trend is the
development of new shop-concepts in historical buildings.
In 1990s saw the arrival of a phenomena as ‘’flagship stores’. The empathic presence of a brand name
at a top location, displaying the very best that a brand name has to offer. The number of staff is
remarkable. Profit is not the main objective of this type of flagship store. Contributing to increasing
the reputation of the brand name is what matters.
APPLE
A = Approach the customers with a personalized warm welcome
P = Probe politely to understand all the customers need
P = Present a solution for the customer to take home today
L = Listen for and resolve any issues or concerns
E= End with a fond farewell and an invitation to return
Lots of people no longer want to be limited to shopping in exclusive shopping malls in their own
country. Shopping tourism is becoming increasingly common. It is easy and cheap to get to cities like
London, Paris, Milan and Barcelona.
The hospitality industry
The objective of the hospitality industry is to make guests as comfortable as possible whether they are
on a holiday, having a day out or doing business. It is important that they have a home away from
home feeling. In this sector, providing personalised service is a high importance. The capacity of
businesses distinguish themselves and be competitive is sought in boundary-stretching levels of
service and personalisation in combination with the design of the surroundings.
Entertainment and theatre
A sector traditionally very involved in experience is the entertainment and theatre. Forms are being
created in which entertainers try to get maximum audience participation in the entire theatre
happening.
The media, augmented reality and digital hyper connectivity
Enormous technological developments make it possible for us to be in contact with people
continuously, wherever they may be in the world. Internet makes it possible to get in touch with
almost everyone in the world. A fundamental development is the connecting and sharing that is
