In the following theoretical article I have tried to explain what is meant by the experience economy and how this can be related to apps. These theories are taken from the thesis I made on Branded apps. All further related articles and the actual thesis can be found at this part of my site.
The Experience economy
There are several major factors affecting premium-product businesses today. Cheaper brands, from China and elsewhere, together with the increasing popularity of private brands, are affecting the market share of their premium counterparts. Commoditization and rapid imitation is leading to shorter product life cycles for premium brands. Furthermore the increasing power of giant retailers demanding lower prices from manufacturers is resulting in shrinking margins (Avans lecturer Lavearts, 2010). Companies need to offer experiences rather than just high-quality goods and services (Pine & Gilmore, the experience economy 1999). For example, Nike, The Body Shop and Hard Rock Café all create experiences around their traditional products in order to sell these products more effectively. At the moment, most of these experiences are offered for free. Ultimately, it would be preferable to offer these for a fee.
In the experience economy, Walt Disney is the true pioneer, offering guests a personal experience in their amusement parks. By nature, experiences are personal. They only exist in the mind of the consumer, who is engaged with the brand on a emotional, physical, intellectual or, even, spiritual level.
Experience involves either passive or active participation. In passive participation, the consumer is an observer or listener; he does not affect the outcome, e.g. watching branded content or going to a concert. In active participation, the consumer plays a prominent role in the creation of the experience (Pine & Gilmore, 1999). Apps have the ability to be such a value-adding brand experience. A brand should offer consumers tools, which can be used alongside the product to create a brand experience. Back in 1998, Pine and Gilmore were already convinced by the possibilities of engagement using new technologies and stated that this would lead to the creation of a whole new genre of experience.
Today most of a consumer’s material needs have already been fulfilled and their future needs are yet unknown to them. Therefore traditional marketing research is leading less and less to the creation of distinctive experiences (Nijs & Peters, Imagineering, 2006). Concept development should therefore turn to more symbolic and ethical values to find out what consumers expect.
Nijs and Peters (2006) go into greater depth in their approach to experiences, adding an extra dimension described as “Imagineering”. They see the theme approach of Pine and Gilmore as not authentic enough to be suitable for all markets outside the United States. People are looking for more authentic experiences, which brands should try to offer and inspire consumers to transform their ways for the better. The Body Shop is a good example of this sort of authenticity. The retail chain is built on the vision of founder Anita Roddick, providing refillable containers of ethically produced, quality skincare products free from animal testing. The Body Shop provides an experience, not just a product (Roddick, 1991).
In an interview with Professor Nijs (2011) of NHTV University the relationship between apps and creating brand experiences was discussed. Professor Nijs stated that rather than trying to sell you a product, companies should be more concerned with helping consumers solve problems they might encounter. Apps are a new tool that should be concerned while looking to solve problems for consumers. Please do note that apps on itself are just a technology and success will depend on implementation of this technology.
The Experience economy related to apps
Apps can offer consumers experiences related to a brand. They can make a brand present in consumers’ lives, offering them wholly new experiences and/or beneficial tools during their experiences. In the experience economy, it is understood that there will be a fee charged for these experiences. At present, apps are generally being created on a model that offers the basic app for free and charges a fee for additional content. There are multiple methods for payment for apps like, in app transaction or by creating a “premium” and “lite/free” version of the app. These approaches can be experimented with, but the main focus for the brand should be gaining market share and becoming a dominant player now that this market is still exponentially growing.
All in all it could be assumed that in this experience driven economy brands should focus more on their total experience that just only on the product. Apps can be a great addition in creating this experience that is enhanching the product or complimenting what the brand stand for.