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Towards the Realm of Experience

Posted: November 21st, 2013 | Author: | Filed under: Business Strategy | Tags: , , , , , , , , , , | Comments Off on Towards the Realm of Experience

It could have been the typical conversation at odds between an iPhone fan and a Samsung tifossi but this time there was something which caught my attention. My two friends were defending the advantages of their corresponding smartphones and trying to convince the counterpart about the pre-eminence of one company over the other one:

“Esthetically iPhone -and Apple by extension- will always be much more developed than Samsung”.

“Ok. But, you know what, technically the top Samsung smartphone is much better and powerful than the top iPhone, even regarding the screen resolution”.

“Nonetheless, and you have to admit that, having a iPhone is an unique experience; something Samsung will never be able to improve or even replicate”.

And here lights switched on and some past readings came to my mind… Experience, that’s the question.

As B. Joseph Pine II and James H. Gilmore explained in their book The Experience Economy, commodities, goods, and services are no longer enough to foster economic growth; experiences must be pursued as a distinct form of economic output.  Experience-based firms will be the winners in this new paradigm.

The economy has evolved from commodity -natural- to good -standardized- to service -customized- to experience -personal. Whereas commodities are fungible, goods are tangible, services are intangible, and experiencies are memorable. Commodities are only raw materials for the goods they make; goods are only physical embodiments of the services they deliver; and services are only intangible operations for the experiences they stage.

What was El Bulli? And Disney World? And Apple? Just corporations leveraging on experiences to increase their revenues. It is well-known the experience-based approach of Apple regarding its shops: they should be like clubs, experiential spaces. Apple analyzed thoroughly the hospitality experiences at both Ritz-Carlton and various boutique hotels for design inspiration in creating its new experiential retail format.

With respect to El Bulli, from the people who visited this restaurant, who went for the food? Few of them, the paramount was the social culinary innovative experience.

Even the Internet is an experience-driven force: most individuals surf it for the experiencie itself. The Internet is an active medium that provides a social experience for many people –connecting, conversing, and forming communities.

For Pine and Gilmore, companies that wish to forestall commoditization by entering the Experience Economy should first customize their goods and services: some companies have made their goods more experiential by sensorializing them -by adding elements that enhance the customer’s sensory interaction with them. The more effectively an experience engages the senses, the more memorable it will be. Regarding services through mass customization they can be transformed into an experience. Mass produced, mass marketed and mass distributed offerings send one clear message to potencial buyers: companies don’t care enough to know them individually.

The difference regarding purchasing a service or an experience, explain the authors in their book, is that when a person buys a service, s/he purchases intangible activities carried out on her/his behalf. However, when s/he buys an experience, s/he pays to spend time enjoying a series of memorable events that a company stages to engage her/him in a personal way.

According to the the psychologists Travis J. Carter y Thomas Gilovich in their work “The Relative Relativity of Material and Experiential Purchases”, buying experiences makes people happier than purchasing goods. As Alvin Toffler predicted in his book Future Shock in 1970, consumers one day will begin to collect experiences as consciously and passionately as they once collected things.

That day has come.

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