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Why the experience economy is an opportunity for product brands

As a marketer, you’ve prob­ably heard of the ‘expe­ri­ence economy’. Coined in 1988 by Joseph Pine and James Gilmore, it describes an economy where “goods and services are sold by empha­sizing the effect they have on people’s lives” – an economy, research suggests, we’re now living in.

So, what does it mean for product marketing? Perhaps you haven’t taken much notice of the expe­ri­ence economy, consid­ering it largely irrel­e­vant to your purpose. Well, we’re here to tell you that’s not the case. In fact, failing to posi­tion your product brand in the expe­ri­ence economy could be your biggest marketing mistake.

Here are 8 reasons why

1. MODERN CONSUMERS WOULD RATHER BUY EXPERIENCES THAN MATERIAL THINGS

Seventy-six percent of consumers would now rather spend their money on expe­ri­ences than mate­rial things, according to Momentum Worldwide’s 2019 research. The figure is slightly higher for millen­nials, with 78% choosing to spend on expe­ri­ences over mate­rial things and 72% saying they’d like to increase this further in the next year. Indeed, since 1987 all US consumer spending on live expe­ri­ences and events has increased by 70%.

Don’t be too quick to assume these stats are a death blow for product brands, though. In less than 200 years our economy has evolved from agrarian, to indus­trial, to service, to expe­ri­ence. Like others before it, the expe­ri­ence economy simply repre­sents a shift in consumer expec­ta­tions to which brands must respond to continue flour­ishing.

2. EXPERIENCES MAKE PEOPLE HAPPIER THAN MATERIAL THINGS

So, why the shift? Psychologists have discov­ered that expe­ri­en­tial purchases make people happier for longer than mate­rial purchases. One reason is that we’re more prone to adapting to mate­rial posses­sions in a way we don’t with expe­ri­ences. In fact, while our eval­u­a­tion of mate­rial purchases is proven to decrease over time, our eval­u­a­tion of expe­ri­en­tial purchases actu­ally increases.

3. GREAT SERVICE ISN’T ENOUGH TO GIVE YOUR BRAND THE EDGE

Perhaps thanks to marketers’ strong focus on ‘customer expe­ri­ence’, you might miscon­strue excel­lent service as suffi­cient to posi­tion your brand in the expe­ri­ence economy. But expe­ri­ences are a distinct offering from services, requiring brands to use “services as the stage, and goods as props, to engage indi­vidual customers in a way that creates a memo­rable event.”

In fact, the only compa­nies that will exist 10 years from now, believes co-founder and CEO of AnyRoad Jonathan Yaffe, “are those that create and nurture human expe­ri­ences. This learning and growth will come from maxi­mizing oppor­tu­ni­ties, including the rein­ven­tion of retail spaces, new models of engage­ment, and an under­standing of expe­ri­ences as perhaps the most impor­tant form of marketing.”

4. CONSUMERS WANT BRANDS TO OFFER INSPIRATION AND MEANING

Modern consumers seek “inspi­ra­tion and meaning” from brands, a trait that’s seen a 200% increase in desir­ability since 2012. Meanwhile, utility has been toppled from its posi­tion as the most impor­tant brand trait in 2012, drop­ping a whop­ping 32%.

Utility is no longer the most important brand trait!
The message for product brands is clear: to stay rele­vant, your product must be more than useful – it must inspire consumers to live a partic­ular kind of life, or help them find meaning in the life they already have. By creating expe­ri­ences in which your product is a prop, marketers have the oppor­tu­nity to create an inspiring, mean­ingful narra­tive that show­cases the kind of life your product helps create.
5. FRAMING YOUR PRODUCT EXPERIENTIALLY MAKES YOUR VALUE PROPOSITION CLEARER

Way back in 1996, Intel chairman Andrew Grove had the right idea when he said, “We need to look at our busi­ness as more than simply the building and selling of personal computers. Our busi­ness is the delivery of infor­ma­tion and life­like inter­ac­tive expe­ri­ences.”

Taking the time to consider what inspi­ra­tion and meaning your customers seek, as well as concep­tu­al­izing expe­ri­ences that weave your product into that narra­tive, forces product marketers to be crystal clear on your value propo­si­tion. What do you really sell? A product… Or the lifestyle and oppor­tu­ni­ties it offers?

6. EXPERIENCES INCREASE ANTICIPATION AND OFFER AN ADDED REASON TO BUY

We know expe­ri­ences make people happier than mate­rial things. But expe­ri­en­tial purchases have been proven to bring about more happi­ness even before the purchase has been made (or expe­ri­enced) – the antic­i­pa­tion of a trip, for example, is more serotonin-inducing than the antic­i­pa­tion of buying a new mobile phone. Thus, creating expe­ri­ences around your product could induce antic­i­pa­tory happi­ness that becomes a reason to buy.

7. EXPERIENCES LOWER BARRIERS TO PURCHASE AND REDUCE BUYER REMORSE

With ever-increasing compe­ti­tion, prod­ucts are in danger of being completely commodi­tized. But psychol­o­gists have found people are less likely to compare what they have with what others have if we’re thinking in expe­ri­en­tial terms, and less likely to regret purchases framed expe­ri­en­tially. Marketers who offer expe­ri­ences around their product there­fore place their brand outside the compe­ti­tion, less­ening consumers’ propen­sity to compare theirs with other similar prod­ucts on the market, and improving the like­li­hood of posi­tive brand asso­ci­a­tions post-purchase.

8. EXPERIENCES TRIGGER WORD-OF MOUTH MARKETING

Psychologists have discov­ered part of the enjoy­ment of expe­ri­ences is rooted in our ability to share our stories of them with others. Added to that, since expe­ri­ences form a more mean­ingful part of our iden­tity than mate­rial things, they make a more natural topic for social bonding. It follows that creating expe­ri­ences around your product leads to free word-of-mouth marketing you won’t neces­sarily get from prod­ucts alone.

Digging deeper into the subject of regret, it turns out we’re more likely to regret the things we have purchased, whereas we’re more likely to regret the expe­ri­ences we haven’t had. Framing your product expe­ri­en­tially not only weakens a poten­tial barrier (antic­i­pated regret of a mate­rial purchase), but also contributes another reason to buy (avoiding regret of an expe­ri­ence missed out on).