Imagineering Summary level 1
Year 1
Semester 3
NHTV- University of Applied Sciences
Iris Woestenburg
,Chapter 2: Literature subject 1
The context: The experience economy
B. Joseph Pine & James H. Gilmore
Differentiation disappears, margins fall through the floor, and customers buy solely on the basis of
price, price, price.
Three economic offerings:
- Commodity
- Good
- Service
A new source of values
Experiences are a fourth economic offering. Businesses that ascend to this fourth level of value
establish a distinctive experience that develops f.i. the purchase of coffee, increasing its value by two
orders of magnitude over the original commodity.
When a person buys a service, he purchases a set of intangible activities carried out on his behalf. But
when he buys an experience, he pays to spend time enjoying a series of memorable events that a
company stages to engage them in a personal way.
Disney: first theme parks, which immerse guests in rides that not only entertain but involve them in
an unfolding story. Create a unique experience!
Rather, companies stage an experience whenever they engage customers, connecting with them in a
personal, memorable way.
‘commodity mind-set’: that a business is merely performing a function, go beyond the function and
compete on the basis of providing an experience.
Consumers aren’t the only ones to benefit from experiences. Businesses are made up of people, and
business-to-business settings also present stages for experiences.
‘This is experiential computing at its ultimate, where our customers can know what their products
will look like, sound like, feel like before manufacturing.’
Valuable distinctions
Newfound prominence of such experiences within the U.S. economy and, increasingly, that of other
developed nations as well. They are herald of the emerging experience economy.
From commodities to goods to services and then to experiences.
Additional reason for the rise of the experience economy: rising affluence
The perception results in part from a self-fulfilling commoditization that occurs whenever an
organization fails to fully recognize the distinctions between higher-value offerings and pure
commodities.
Commodities:
Materials extracted from the natural world. They are fungible: they are what they are.
, Industrial revolution drastically altered the way of life, beginning on the farm but quickly extending
into the factory. As manufacturers the world over copied and learned these techniques, automating
millions of craft jobs in the process, the foundation for all advanced economies irrevocably shifted to
goods.
Goods:
Using commodities as their raw materials, companies make and then inventory goods – tangible
items sold to largely anonymous customers who buy them off the shelf, from the lot, out of the
catalog and so on.
Their users value them more highly than the commodities from whence they came. Although people
have turned commodities into useful goods throughout history, time-intensive means of extracting
commodities and the high-cost methods of craft producing goods long prevented manufacturing
from dominating the economy.
Services:
Services are intangible activities customized to the individual request of known clients. Service
providers use goods to perform operations on a particular client or on his property or possessions.
Goods merely supply the means.
In a service economy, individuals desire service. Whether consumers or businesses, the scrimp and
save on goods in order to purchase services they value more highly.
To escape the commoditization trap, manufacturers often deliver services wrapped around their core
goods.
Giving away or buying goods to sell services is a harbinger that the service economy has reached a
level once thought unimaginable and by many undesirable.
The internet is the greatest force for commoditization known to man. The internet increasingly turns
transactions for goods and services into a virtual commodity pit.
Today, even professional service providers increasingly discover that their offerings have been
‘productized’- embedded into software, such as tax preparation programs.
The service economy is peaking. A new, emerging economy is coming to the fore, one based on a
distinct kind of economic output. Goods and services are no longer enough.
Experiences:
Offering of experience: When a company uses services as the stage and goods as props to engage an
individual. Experiences are memorable.
The company an experience stager, no longer offers goods or services alone but the resulting
experience, rich with sensations, created within the customer. Each experience derives from the
interaction between the staged event and the individuals prior state of mind and being.
However, while the work of the expierence stager perishes upon its performance, the value of the
experience lingers in the memory of any individual who was engaged by the event.
The shift in consumer (and business) demand from commodities to goods to services and now to
experiences, should shift the prototypical ‘market basket ‘ to these higher-valued offerings, but the
federal government is behind the times.