The experience economy has had a major impact on the developing modernization,
globalization and industrialization, which directly affects the economy worldwide and
therefore is an important business strategy for marketing purposes and major
decision-making skills. This paper talks about the experience economy with analyzing its
impact on the hospitality industry while integrating the concepts of modern management,
soft skills, differentiation and emotional experience.
The experience economy is that terminology through which 'consumers' are searching
for a structured 'bundling of products and services' in such a manner that brings forth
reactions 'across a range of their intellectual, emotional and aesthetic senses', where an
experience is intangible and has been described as the 'fourth economic offering' for
many successful businesses (Bryman cited in Baum 2006, p. 124, Pine & Gilmore 2011,
p. 3). Due to an increasing consumer's wants and demands along with the evolving
market changes in the service industry, many establishments are constantly kept on
their toes in being innovative and creative, when delivering different products to their
customers. From the economic perspective, since different organizations depending on
their nature, offer a diverse range of goods and services, the competition in the
marketplace has become extremely intensified. However, today, major companies
based on their customer anticipations, focus on providing them with an all-together
different experiences along with their services, which in turn doesn't only engage them
with those products, but also create an important value for their clients in preserving
long-lasting memories. It is also through these powerful customer experiences at the
end of the process, that maintains a commercial enterprise's reputation and long term
stability, heightening its consciousness and leading to a greater profit margin.
This concept of experience economy was first put forward in 1999 by Pine & Gilmore in
their book called 'The Experience Economy' which could be seen as a young business
campaign that following after husbandry, fabrication and the service economy is
emerging as another substantial field with bigger possible earnings and gross revenue,
stating that the customer experiences are solely instituted on 'business and economic'
operations (Sundbo & Sorensen 2013, p. 5). Furthermore, Sundbo & Sorensen (2013)
also state that the experience economy has also invoked increasing cognizance by two
significant key factors which includes by combining the 'psychological' and 'production'
system together and being more economical in the approach. Another important
perspective for better understanding the experience economy is through the 'Maslow's
hierarchy of needs', where it talks about the basic human behavioral and emotional
needs, experiences are seemed vital to fulfill the 'esteem' and 'self-actualization' needs,
located on top of the pyramid (McLeod, 2014). As such, individuals are willing to go out
of their way to pay a high price for the experience itself since it is much more precious
than the product and adds valuable grandness to the entire package, engrossing them
in mentally perceiving the service in an all-together new environment. For example,
travelling on the luxury train 'The Ghan' from Adelaide to Darwin would be much more
entertaining, adventurous, emotional and a memorable journey and experience for the
tourists, which is bound to take two days with excellent service skills provided by the
staff members, rather than taking a normal, routine flight and reaching in just three hours
time.
In today's modern commercialized hospitality, where the host has an active interaction
, with its guests in a hospitable environment and is directly responsible for their
well-being, service is a vital component to success. Experiencing service can be
visualized as a 'theatrical performance', where staff members are presented as the
'actors' in delivering the experience to its customers, who are the actual 'audience',
which is extremely critical for making a first good impression of the establishment since
service is an 'intangible', 'perishable' product which is variable for different brands
(Grove and Fisk 1992 & Martin 2007). Steen (2013) states that the hospitality industry is
shown to be struggling with the experience economy since hotel brands have failed to
create an emotional bond with their customers and have focused more on their
designing concepts. It is important that staff members understand hospitality in its true
sense, which must be completely internalized inside an establishment among all
departments for delivering better customer service and establishing great experiences in
building guest loyalty.
Apart from managing the hard skills such as being efficient, responsive and accurate
needed in completing the everyday tasks, soft skills take on a major role in the
hospitality industry by touching the customer's innermost feelings. Soft skills are the
'hard necessities' for shining the hard skills by powerful 'interpersonal skills' required for
communicating both 'verbal' and 'non-verbal', having the right 'attitude' and 'behavior',
good 'teamwork and leadership' skills and lastly, showing 'empathy' for developing good
customer relationships (JKS Talent Network 2016 & Nedry 2016). For example,
welcoming guests at the reception of a five star hotel requires careful selection of
smiling, friendly and highly interactive staff members with a bubbling personality at the
front desk, who would be responsible for making the customers feel right at home. While
hard skills can be easily acquired and enforced through staff training, soft skills on the
other hand can take years of experience which can only be improved with self-practice,
which directly relates to the emotional experience.
Emotional experience refers to the emotional journey that is undertaken by a customer
throughout the entire service experience which is totally subjective and can either have a
positive or negative impact on the business operations of an organization. This can be
used as a critical tool for succeeding businesses since emotions display the customer's
'behavioral' character, associating in the manner they 'perceive', 'value' and 'associate'
different hospitality brands (Barlow & Maul 2000). Hence, many businesses use
'customer relationship management' as a strategy for spreading their 'brand awareness'
in retaining and acquiring new customers, connecting 'emotionally' with their consumers
and monitoring the 'important moments of truth' (Thompson 2006). It is evenly essential
that hospitality employees understand the concept of emotional intelligence which
pertains to 'recognizing' and 'handling' one's emotions, 'self-motivation' and
'acknowledging' and 'reading' emotions of other individuals for nourishing 'relationships'
in delivering magnificent customer service (Businessballs 2016). For example, in a
fine-dining restaurant environment, other than excellent service skills supplied by the
restaurant staff, customers would only return back to the establishment if they were
successful in emotionally connecting with their customers on a one-to-one basis.
Since different hospitality trademarks cater for different experiences, including the time
and cost, the competition in the market has escalated each day, giving its customers to
choose from a wide range of opportunities with various alternatives. Organizations can
globalization and industrialization, which directly affects the economy worldwide and
therefore is an important business strategy for marketing purposes and major
decision-making skills. This paper talks about the experience economy with analyzing its
impact on the hospitality industry while integrating the concepts of modern management,
soft skills, differentiation and emotional experience.
The experience economy is that terminology through which 'consumers' are searching
for a structured 'bundling of products and services' in such a manner that brings forth
reactions 'across a range of their intellectual, emotional and aesthetic senses', where an
experience is intangible and has been described as the 'fourth economic offering' for
many successful businesses (Bryman cited in Baum 2006, p. 124, Pine & Gilmore 2011,
p. 3). Due to an increasing consumer's wants and demands along with the evolving
market changes in the service industry, many establishments are constantly kept on
their toes in being innovative and creative, when delivering different products to their
customers. From the economic perspective, since different organizations depending on
their nature, offer a diverse range of goods and services, the competition in the
marketplace has become extremely intensified. However, today, major companies
based on their customer anticipations, focus on providing them with an all-together
different experiences along with their services, which in turn doesn't only engage them
with those products, but also create an important value for their clients in preserving
long-lasting memories. It is also through these powerful customer experiences at the
end of the process, that maintains a commercial enterprise's reputation and long term
stability, heightening its consciousness and leading to a greater profit margin.
This concept of experience economy was first put forward in 1999 by Pine & Gilmore in
their book called 'The Experience Economy' which could be seen as a young business
campaign that following after husbandry, fabrication and the service economy is
emerging as another substantial field with bigger possible earnings and gross revenue,
stating that the customer experiences are solely instituted on 'business and economic'
operations (Sundbo & Sorensen 2013, p. 5). Furthermore, Sundbo & Sorensen (2013)
also state that the experience economy has also invoked increasing cognizance by two
significant key factors which includes by combining the 'psychological' and 'production'
system together and being more economical in the approach. Another important
perspective for better understanding the experience economy is through the 'Maslow's
hierarchy of needs', where it talks about the basic human behavioral and emotional
needs, experiences are seemed vital to fulfill the 'esteem' and 'self-actualization' needs,
located on top of the pyramid (McLeod, 2014). As such, individuals are willing to go out
of their way to pay a high price for the experience itself since it is much more precious
than the product and adds valuable grandness to the entire package, engrossing them
in mentally perceiving the service in an all-together new environment. For example,
travelling on the luxury train 'The Ghan' from Adelaide to Darwin would be much more
entertaining, adventurous, emotional and a memorable journey and experience for the
tourists, which is bound to take two days with excellent service skills provided by the
staff members, rather than taking a normal, routine flight and reaching in just three hours
time.
In today's modern commercialized hospitality, where the host has an active interaction
, with its guests in a hospitable environment and is directly responsible for their
well-being, service is a vital component to success. Experiencing service can be
visualized as a 'theatrical performance', where staff members are presented as the
'actors' in delivering the experience to its customers, who are the actual 'audience',
which is extremely critical for making a first good impression of the establishment since
service is an 'intangible', 'perishable' product which is variable for different brands
(Grove and Fisk 1992 & Martin 2007). Steen (2013) states that the hospitality industry is
shown to be struggling with the experience economy since hotel brands have failed to
create an emotional bond with their customers and have focused more on their
designing concepts. It is important that staff members understand hospitality in its true
sense, which must be completely internalized inside an establishment among all
departments for delivering better customer service and establishing great experiences in
building guest loyalty.
Apart from managing the hard skills such as being efficient, responsive and accurate
needed in completing the everyday tasks, soft skills take on a major role in the
hospitality industry by touching the customer's innermost feelings. Soft skills are the
'hard necessities' for shining the hard skills by powerful 'interpersonal skills' required for
communicating both 'verbal' and 'non-verbal', having the right 'attitude' and 'behavior',
good 'teamwork and leadership' skills and lastly, showing 'empathy' for developing good
customer relationships (JKS Talent Network 2016 & Nedry 2016). For example,
welcoming guests at the reception of a five star hotel requires careful selection of
smiling, friendly and highly interactive staff members with a bubbling personality at the
front desk, who would be responsible for making the customers feel right at home. While
hard skills can be easily acquired and enforced through staff training, soft skills on the
other hand can take years of experience which can only be improved with self-practice,
which directly relates to the emotional experience.
Emotional experience refers to the emotional journey that is undertaken by a customer
throughout the entire service experience which is totally subjective and can either have a
positive or negative impact on the business operations of an organization. This can be
used as a critical tool for succeeding businesses since emotions display the customer's
'behavioral' character, associating in the manner they 'perceive', 'value' and 'associate'
different hospitality brands (Barlow & Maul 2000). Hence, many businesses use
'customer relationship management' as a strategy for spreading their 'brand awareness'
in retaining and acquiring new customers, connecting 'emotionally' with their consumers
and monitoring the 'important moments of truth' (Thompson 2006). It is evenly essential
that hospitality employees understand the concept of emotional intelligence which
pertains to 'recognizing' and 'handling' one's emotions, 'self-motivation' and
'acknowledging' and 'reading' emotions of other individuals for nourishing 'relationships'
in delivering magnificent customer service (Businessballs 2016). For example, in a
fine-dining restaurant environment, other than excellent service skills supplied by the
restaurant staff, customers would only return back to the establishment if they were
successful in emotionally connecting with their customers on a one-to-one basis.
Since different hospitality trademarks cater for different experiences, including the time
and cost, the competition in the market has escalated each day, giving its customers to
choose from a wide range of opportunities with various alternatives. Organizations can
