Premium for memories

BUSINESSES THAT FAIL TO ADAPT TO THE EXPERIENCE ECONOMY RISK BEING LEFT BEHIND

- SHYAMAL MAJUMDAR

SI EGGLESTON BRACEY, Unilever's chief growth and marketing officer, calls it the "joy and experience economy." The essential ingredients for an experience economy is that people want to invest in themselves and are willing to pay a premium for not just a product but for memories, Bracey said at an event in Mumbai last month. Bracey should know, as Unilever, one of the largest consumer goods companies in the world, has been engaged in giving customers the "experience" of feeling good. Unilever is one among many, but there are still many companies in India which need to realize fast that the next competitive battleground lies in staging experiences. Those connected with their consumers will be streets ahead in benefiting from the experience economy.

Recognition of the emergence of the Experience Economy was championed by Joseph Pine and James Gilmore and with their best-selling book 'The Experience Economy' in 1994. The concept sees the economy as ever-evolving, with offerings moving from low-value tangible things to high-value intangible things. Commodities are fungible, goods tangible, services intangible, and experiences memorable.

Starbucks is a classic example of paying premium for memories via experience. Today, Starbucks is the third-largest food outlet in the world, with over 32,000 stores worldwide and a market cap of over $110 billion. When it first launched in 1971, the concept of paying a premium for something as mundane as coffee did not exist. However, by the early 2000s, customers were paying 10 times more for Starbucks coffee than that of a regular coffee shop.