In 1999, B. Joseph Pine II and James H. Gilmore wrote a book named, “The Experience Economy.” In a nutshell, the book argued that offering, solely, products or services is no longer enough for a brand to demand a premium. Authors claimed that, instead, brands should create memorable experiences for their customers. They went a step further to argue that it was the memory, not the product, that was at the centre of a brand. Well, eleven years later, their theory is more valid than ever.
Let’s play a game. Look around you and try to find a product that is not branded. Chances are, you will spend a couple of minutes before coming up with an answer. The reality is, we live in a world where almost everything is branded. Yes, but what is a brand?
Historically, a brand has been a guaranteed promise of quality. That’s why any branded product or service demands a premium compared to a commodity. The more elaborate your brand promise is, the higher the premium you can demand. For instance:
- You can buy a whole chicken for $1.15 at a chicken farm.
- You would pay $2.50 per pound at a grocery store.
- KFC charges 2.75 for a piece of chicken breast.
- At Jacobs & Co, a high-end restaurant in Toronto, a chicken dish would cost you $37.
This is a simple, yet effective, demonstration of how branded experiences create massive economic value. In addition to allowing you to charge a premium for your product, a pleasant experience could also help you create a buzz, differentiate your brand, and generate loyalty, which in return, creates, even more, revenue.
Here is the good news: The sky is the limit for your brand as long as you can create a valuable experience. We don’t go shopping just to buy goods anymore. We go shopping to be entertained, educated and feel good. Consider this, why do we go to Apple Store? How often do you go there and how frequently do you buy something? Why does ING Direct –a bank- has cafes? Because these are pleasant branded experiences that make us feel good. (To learn more on this topic, see below the excerpt from Kit Yarrow’s book Gen BuY.)
You might think that experience economy is for big guys, companies with deep pockets, firms with vast resources. That’s not true. On my next post, I will introduce you to Mr. Howard, a mainstream Chinese tea guru, who happens to be a great marketer.
The Most Common Psychological Reasons Why We—All of Us, Not Just Gen Y—Overspend
To compensate for feelings of deprivation—feeling unappreciated or unloved, overburdened, or overworked.
To avoid dealing with anger in personal relationships.
Because we’re not taking control and personal responsibility and instead blame others or situations for our financial decisions.
We shop when exhausted or under stress, which sabotages reasoning and dissolves will.
We have a distorted sense of entitlement and a feeling that we deserve things and the rest will sort itself out.
We buy to fill a sense of emptiness. An overemphasis on what we have and how we look can create a sense of emptiness—which is momentarily filled by approval and attention for new purchases and appearances. This “mini-fix” isn’t deeply satisfying but offers just enough relief to become a distracting addiction, ultimately exacerbating the emptiness—which leads to more buying.”