The consultants B. Joseph Pine II and James Gilmore stated that business should be theater, with services representing the stage and goods representing the props to deliver experiences to consumers. They listed changes in economic value; from agrarian economies trading in commodities, through to manufactured goods to the Service Economy.
Each change offered a way of differentiating itself from increasingly commoditized, competitive offerings with the belief that, as services become undifferentiated, brands can stand out by delivering high quality experiences that set them apart from the competition, as well as building affinity. Pine and Gilmore first wrote about the Experience Economy in 1992, using the example of a birthday cake to illustrate changes in economic value over time. In the Commodities Economy, parents made their child’s birthday cake at home from raw ingredients whereas in the Service Economy, they bought the cake from a bakery. In the Experience Economy, parents outsourced the whole birthday party to a child-friendly chain restaurant, with the cake thrown in for free.
The next stage on from the Experience Economy (not explored by Pine and Gilmore) is the Relationship Economy, where the party is still outsourced but mum has chosen the venue from reviews on Mumsnet, dad is skyping granny in Canada so she can ‘be there’ and guests post photos on Facebook after the event. The venue’s marketing team members probably feel that they have done a great job if the guests’ email addresses have been captured and there are money-off vouchers in the party bags along with the balloons.
The rise of the Relationship Economy does open up new opportunities for brands, but only through having the right tools in place can these opportunities be capitalized on.
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