I am deeply shocked that this book, or the term “experience economy”, was described by the author B. Joseph Pine II and James H. Gilmore in the end of last century. To some degree, this is a precise prediction of the current and future life, way better than the other unfettered imaginations in science fictions. Look at the hot topics in today’s business world, the application of “experience economy” can be seen everywhere: marketing professionals are putting more emphasis on experience marketing which is related to public relations and other communication skills; the finance and accounting industry offers more private services such as personal banking, which are actually tailored for the specific customers; even in the relative new area like information systems and supply chain, companies such as IBM and UPS focus their service on customized offerings in order to keep a B2B relationship. How can we imagine a current deal based purely on goods or commodity? No way!
As the whole Michigan is struggling with a great depression, the car industry is changing its operation from the mere selling of vehicles to linking the products to personal experiences. “Automakers increase the range and length of their warranties and offer to lease cars” (The Experience Economy, P9), and some famous brands encourage the loyal customers to publicize their stories about the specific model of vehicles on Facebook page and attract potential customers to click the “like” button. In fact, they are unconsciously applying experience economy related strategies. From this point of view, I believe that the Michigan State will soon find a way to rebound from the awful situation.
My evidence for this standpoint is not only in the field of car industry. I have experienced a kind of really awesome hospitality service during the Halloween holidays last year in Urban Hills, Michigan. Erebus Four Story Haunted Attraction, one of the world’s largest haunted houses, is located there. I went to experience the unique entertainment theme house with my friends and therefore gained a wonderful “horrible” memory. If there will be more such kind of experience economy based businesses emerging in Michigan, I am quite confident that the state will soon recover from the depression.
The Attributes of Experience Economy
Compared to the traditional economic model of selling commodities and goods, the core competency of experience economy is the unique personal experience and its consequent memory. According to the authors of the book, the stage is the setting of the experience economy and the theme should be the motif of the memorable “story”. Therefore, the whole experience consumption can be analogized as a theater. Similarly, I would like to use another term in the art form of drama to depict the effect of the whole process. It is “montage”. In the theory of film, montage stands for the accumulative result of the combination of a series of motion pictures. Each piece of the montage scene is only part of the series, but the result of the combination is much greater than the mere sum of each part. This magical cinematic theory also works in the experience economy. Say, in a theme park such as Disneyland, the guests can buy the goods such as Mickey Mouse souvenir and Hannah Montana doll which can be regarded as props; on the other hand, the guests’ engagement in different forms of entertainment is the clue of the experience; the theme “Disneyland” is the core motif of the experience. At last, after one trip in Disneyland, the whole experience of a family would be a period of unforgettable golden memory. The family will share the experience with their friends later, or recall it in one member’s birthday after decades. Anyway, the unique valuable memory would be an important event in one’s life’s timeline. From this point of view, the high value created by the experience cannot only be measured by money. This is also why experience economy can bring potentially huge profits.
Another point of experience economy should be its high level of status in the Economic Distinctions Table (The Experience Economy, P6). Experience economy possesses all the attributes that the lower level of economy has. Since it is the combination of commodities, goods and service, it can be fungible, tangible and intangible as well. My ideal future hotel industry model should be quite similar to the form of private room renting. This form of hospitality can be partly seen in the website Airbnb (http://www.airbnb.com/). On this website, people can rent bedroom in the host’s house which is located in the place they plan to travel. Or, they can also exchange their own house with the other who also wants to travel to their hometown. The house is decorated in different styles according to the characters of the host. Therefore, there is variety of forms of houses that the guests can choose. The uniqueness of the house and the related environment would be formed into the memory of the travel. People do not need to choose the so-called standard hotel room; instead, they can picture the trip they expect. The emergence of this kind of unique experience economy is due to the development of the Internet and the virtual economy. In the near future, I believe other types of hospitalities such as exchange private restaurant/dining room would be originated based on the innovation in the experience economy.
The Disparity between the Developed Countries and the Developing Countries
In a further step, I also discovered the gap between developed countries and developing countries from this economy. While the developing countries are still transforming from the goods economy to the service economy, the developed ones has already upgraded from service economy to experience economy. In the short term, the change of the developed countries seems to slow down the growth of GDP (Gross Domestic Product). Yet, in the long run, the transformation will help the developed country enter into a new prosperity and meanwhile enlarge the distance to the developing countries. It will be hard for the developing countries to emulate the scene because the development of an experience economy does not only rely on the improvement of the service industry, but also depends on the core value of the society.
In China, for example, a country develops heavily on exporting goods and productions, the consumers are still not used to the habit of consuming service. One of the reflections should be the high demand of houses and cars. People are trying to buy houses despite of the uncurbed increasing price of house. Young couples living in the cities cannot afford a house and a new car, but their parents would try the best to support them, even including to use their only pension. Why the demand is still high since the price is in an unreasonable high level? From my point of view, it is because people still regard the house and the car as a good, a good can bring security and reputation. Yet, the scenario in the developed countries is quite different. In the US, young couples who cannot afford purchasing a house would prefer to rent an apartment or a house. They would choose to buy a second-hand vehicle instead of a brand new one. To the western people, life is a kind of experience, and owning a house is not necessary. On the other hand, renting a house would bring more convenience if the family will move to another state later. Without the burden of purchasing a house and a new car, it will be easier for young people to struggle for their personal goal while enjoying the life. And in the long run, such kind of conception would help the whole country to develop an experience economy structure. If the core value of the society cannot change from the traditional mode of consumption, it will be difficult for the country to enter into a new consuming era. And since the commodities and goods can only be the small part of experience consumption, it is hard for the developing countries to increase the capital.
The disparity between the developed countries and developing countries also tells us that the hospitality industry in the developing country is still in an infancy stage. In a quite long period of time, the majority of the consumers can still accept the traditional form of hospitality services such as restaurant and hotel. If some companies plan to bring avant-garde forms of experience consumption in these countries, they should put more emphasis on deploying communication programs to propaganda the new idea of economy.
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