The Experience Economy Analysis - Book Report/Review Example

The Experience Economy Introduction Pine and Gilmore (1999) in their book d The Experience Economy have presented the case for an analytical conceptual and theoretical framework of an economy that supposedly or in reality exists in the current world. There are five essential elements involved in the delivery of experiences for a business enterprise. These five elements consist of theme the experience; harmonize the impressions with positive cues; remove negative cues; bring in the factor of memory through memorabilia; and ensure that there is engagement of all the five senses in the experience. The importance of themes can be seen in the success that businesses that have identified a right theme for their business activity have attained. It is this right theme that gives customers something to associate with the business activities of the business enterprise. Very common examples of this are eateries that have identified a theme and built their business activities around such a theme. Customers coming to such eateries attracted by the theme put out like Hard Rock Café or the House of Blues and continue coming there because the experiences there have appealed to all the five senses of sight, hearing, touch, smell and taste. Analysis Chapter One on “Welcome to the Experience Economy” attempts to convey the message or argument that experiences are a clear and distinct economic offering and provides the means for future economic growth against stagnation since the agrarian economy and the scale economy of industrialization. The book starts with these words “Commoditized. No company wants that word applied to its goods or services”. (p.1). However, that is exactly what has happened. With the sole concentration on price there is hardly any differentiation between products and services and so margins crash. Coffee is a true commodity. Yet, it also offers to be a commodity, good, or service depending on the how customers can be made to attribute value to it. Sold as coffee beans it remains a commodity, but as coffee powder it becomes a good. However, sold in a restaurant the value of ambience lifts the value of a cup of coffee sold and provides a sensation of experience to the cup of coffee through teasing the senses, through theatre experience or the like and thus the value of the cup of coffee rises even further. This is the economic offering that experience offers and the basis of the experience economy of the authors. In Chapter Two on “Setting the Stage” the authors try to reinforce this message by taking and demonstrating with examples how business enterprises have and can transcend from mass production mass service offerings to adding the ingredient of experience and moving up to the experience economy. They go into detail about product names and brand identities that establish benchmarks in the process of creating brand loyalty. Before this transformation can take place it is essential that there is a proper understanding of what experience really means from this business perspective. Entertainment is not the only means to experience. Every time the business enterprise and its employees interact with customers in such a manner that the customers are left with a memorable experience or in other words the interaction lingers in the mind of the customer, then that is experience and an enhancement of value from the perspective of the customer. In Chapter Three titled “The show must go on” the authors discuss the normative phase of the business organization. In other words business organizations ought to set the stage for what’s coming up or they have to do so necessarily in order to survive in a highly competitive environment. Here theme related experience matters much more than anything else. The authors cite numerous examples strategies adopted by retailers, restaurateurs and coffee bars as the rejuvenating theme-based experience to the customer. Experience provides a premium in price for a product that none of the other strategies of mass production or good customer service provides, for the value is personal and is the means for business enterprises to differentiate themselves for sustained growth. Transformation into an experience economy will see the passing away of many business enterprises, which do not really understand its meaning and how to transform its economic activity. In Chapter Four “Get your act together” the authors discuss the raison d’être behind the business’s ability or inability to put together the simple facts of conducting business sensibly. Thus the experience is all about placing products, both goods and services, not on the shelf at a chain store or a supermarket but integrating the probable customer experience with the product’s many faceted dimensions. This is sought to be reinforced by what the experience economy has in store for the persevering entrepreneur. Product dimensions are not only enhanced through experiences of senses as in the case of sensory marketing but also accentuated through modular experiences that the authors recommend as a way out of the current predicament. The current predicament is all about the degree of the organization’s preparedness to face the unfolding scenarios of developments in the newer experience economy. They are just like the neon signs or lights that glimmer, flicker and dazzle through the night. The conceptualization is based on the modern stagecraft of presenting a razzle-dazzle scenario of high economic performance. Here the reader is being prepared for the less sacrifice experience. Chapter Five of the book on “Experiencing less sacrifice” is intended to have a colossal impact on the reader. The experience economy comes alive here because both the consumer and the seller experience less sacrifice in the process of consumption and production, i.e. distribution included as in commerce. Mass customization does not mean mass variety. In fact it’s the opposite. Customization refers to efforts that are intensely focused on creating brand loyalties. In other words they are intended to create particular tastes. Coca Cola and McDonald’s do the same thing. In the process both the seller and the customer make less sacrifices because they both experience the same outcome associated with a particular experience. Chapter Six specifically focuses on the inevitable experience of the customer, i.e. moving across on the stage towards the product being marketed by the organization. Employees of the organization realize the underlying potential of this act on the part of the consumer and respond with equanimity. Employees of the business organization are as much motivated as are the consumers who wish to experience the novelty, the parenthetical experience and above all the ultimate outcome of being welcome by a unique experience. Probably ideological perceptions of the customer might collude with those of the organization to produce a convergent outcome. Chapter Seven of the book applies a phased out approach to theater with four different forms. Naturally there are as many forms as there are characters on the stage. However four forms apply to four situations in the experience economy and therefore categorically pinpoint the probable outcomes in a dynamic setting. According to the when different situations coincide to produce the ultimate experience, there is very little left behind by way of independent decision making behavior on the part of the customer. Thus it sets the scene for the eighths act. In Chapter Eight the authors have concentrated on the boardroom where directors and executives of the company interact to produce the kind of novel experience in a still different setting. Guidelines that are required for each individual performer to be followed on the stage are set out here. Thus the customer is at the center of attraction here though the company officials are only enacting various roles in the hope of producing the kind of experience. Various departments of the business organization have to perform their own acts of advertising, marketing, production, Human Resource Management (HRM) and so on. These individual acts are performed by departmental heads with their respective departments’ officials. A very important aspect of it all is the fact that experience counts when the act is being performed. A broader level of experience means a still broader level of performance culminating in the final act of satisfying the needs/wants of the consumer. Employees have a significant role to play in the experience strategy of a business enterprise, maybe even more than in their erstwhile roles in the mass production industrial activity. It is this role that gives en edge to the experience economy in enhancing the productivity in the economy. As a customer comes across the stage of a business activity, the employees start acting their roles in making this passing into an engaging experience for the customer. These roles include harmonizing the impressions with positive clues and removing negative clues; ensuring the five senses are engaged and that there is enough to carry home as memories that will trigger another desire to engage in such an experience and thereby ensuring continuity of the business activity. Finally, Chapters Nine titled “Customer is product” and Ten titled “Finding your role in the world” the authors focus on transformations that are much desired and wanted by the organization for long term survival. The human element role in the transformation of a business enterprise is a key factor and it enters into every aspect of the human assets available in an organization, extending from the lower rungs of the employee cadre to the highest rung of management, for everyone as a role to play on the stage that transforms a business enterprise from a mass product or service entity to an experience entity. This means that human resources development has a significant role to play. This means it has to relearn its activities that allow it to perform its required role in a transformed business activity environment that will make it efficient in transforming all the human assets in the business enterprise into active agents or actors on the business stage to provide engaging experiences to customers satisfying all their senses, so that they come back for more. Individuals are unique in their through processes and therefore customers will have different values attached to the different realms of experience or their preferred experiences will differ. This brings out an important issue in the attempt to make experiences a value addition. Irrespective of the products or services that are offered by a business enterprise, customers will be looking for a variety of experiences in their engagement with the enterprises. Satisfying this experiential want enhances the value of the product or service and dissatisfaction would lead to the ruin of the business enterprise. This makes the offering of the right experience a key factor in the experience strategy of a business enterprise. Offering the right experience would lead to sustained success, while offering of the wrong experience would lead to the demise of the business enterprise. Conclusion The fundamental premise of the book is that the modern world of business has come to a stage of modern history where experiences are the greatest available opportunities for both the business and the individual customer. Thus the business organization makes the highest offering by way of this exalted experience. In a sense this is philosophical but it also has a very remarkable element of cognitive experience. Cognitive biases or heuristics as expounded in sensory marketing come closer to this perception of the economy and business organizations. Therefore it must be noted that the authors have set out to examine in a far more abstract way the various elements associated with the next phase of economy’s evolution from the current service based economy. The success of this depends on the variety and extent of the analytical depth as found in the book’s contents. It’s a progression from being merely acting in conformance with a predetermined set of norms to a more complex and diverse paradigm of behavior on the part of the organization. REFRENCES 1. “Pine II, Joseph. B. & Gilmore, H. James. The Experience Economy: Work Is Theatre & Every Business a Stage. Boston: Harvard Business School Press, 1999. Read More