Anyone who has ever been to Disneyland knows they aren’t paying an exorbitant fee just to ride roller coasters for a day. No; they go to meet their favorite Disney characters, smell the sweet scent of cinnamon churros in the air, visit expertly crafted sites from their favorite movies, see amazing sights, and experience it all with their loved ones. Anyone can ride a roller coaster at the county fair for probably five percent of the price of the Disneyland tickets, but it is simply not the same experience.
Experience. That’s a word that seems to be coming up more often in recent conversations, and for good reason. According to the Harvard Business Review, “today the concept of selling experiences is spreading beyond theaters and theme parks.”[i] Entire books could be (and have been) written on the subject of creating experiences for consumers, but this article will focus on showing business owners the importance of seeking the consumer’s ultimate prosperity by creating experiences that are meaningful.
Over the past few years, a new field of study has begun to emerge in the business world. This field, known as experience design and management, focuses on creating meaningful experiences for consumers. Recent studies show that the market for experiences, as opposed to products alone, is growing.[ii] People are beginning to demand experiences that will add meaning to their lives and deepen their relationships with those closest to them. They are starting to view products as a merely means to an end—the end being these positive and meaningful experiences—so when companies decide to zero in on producing this desired end result, they increase in value in the eyes of consumers.
Thus, if businesses wish to stay relevant, they must adapt to consumer demands by shifting their focus to marketing the consumer experience, rather than just the products they are hoping to sell or the pain points (problems that consumers experience) they are hoping to solve. This article will examine the science behind positive psychology, display the shift in consumer demand from products to experiences, analyze the unique aspects of an experiential economy, and present different ways for businesses to adapt to the changes in consumer demands.
Hedonia vs. Eudaemonia
In recent years, researchers have conducted studies to measure the impacts of hedonia versus eudaemonia. The former is the experience of pleasure. It indicates the absence of physical or mental pain, such as anxiety. In other words, hedonia refers to the ability to simply avoid pain, rather than actively create any type of positive energy or feeling. The latter indicates human flourishing. This sensation occurs when people are able to do good and create something that extends further than themselves. Examples of eudaimonia include acting to the best of one’s ability, exercising positive virtues, and working toward reaching one’s potential.[iii] While both hedonia and eudaemonia are important, studies have shown that experiencing eudaemonia frequently results in a more sustainable state of well-being than hedonia provides; this is because happiness without productive meaning leads to selfish behavior and, ultimately, unhappiness. After all, humans naturally flourish as they reach beyond themselves to connect with, create with, and serve others.[iv]
Where Business and Humanity Meet
Many businesses (and even consumers) believe that all people want/need is to be relieved of their present pain (i.e. experience hedonia). After all, the current trend among those who can afford it (and sometimes those who cannot) is to plan lavish vacations, with fancy food and drink and beautiful destinations. While these experiences may be enjoyable, they create very little true meaning for the consumers because they do not inherently create opportunities for people to reach outside themselves and serve others. In turn, these vacations may remain in these consumers’ memories as a “good time,” but they will not have any lasting or meaningful impact.
If these luxuries fail to make a meaningful impact on people, why is this behavior still so prevalent? Because many do not yet understand that a large percentage of the developed world already has the resources needed to relieve people of simple pains such as hunger and minor medical issues. Once people obtain a little bit beyond their basic needs, receiving more does not greatly increase their happiness. Thus, when a person simply seeks for more things, as opposed to being grateful for what they already have and sharing with others, they will never truly be satisfied.
This is where businesses come into play. They offer solutions to this dissatisfaction in the form of meaningful experiences, thus filling a consumer-wide demand in the market. This way, not only can businesses do more to better people’s lives, but they can also become much more profitable. It is common knowledge in business that corporations are ultimately most successful when they build themselves around the central purpose of helping others. Companies that seek to do good for their customers are profitable because people recognize they are trying to do something greater than create a profit, whereas companies that seek primarily to make money often struggle. Modern consumers usually see right through them, as such companies do not provide the experiences that consumers crave.[v]
This craving for experience is the natural result of a slow evolution in demand. Over time, as the world has developed in its ability to provide for basic human needs through technological advances, the employment demand has shifted away from agriculture and toward invention, discovery, and business. In developed countries, people have more time on their hands because they don’t spend as much time worrying about putting food on the table. As a species, we have more time to think, play, grow, and recreate. We spend more time learning about the world rather than working to stay in it.
The Experience Economy
With the shift in demand emerges a new business model called the experience economy. It is vital that businesses learn and understand it. This model illustrates how the value of a commodity in a market increases as its interaction with the consumer increases. It also shows how businesses can transition from selling services to selling experiences. The easiest way to explain the experience economy is to look at one of America’s favorite beverage establishments, Starbucks. As shown in Figure 1, the “products” that a company puts out can be placed into four different categories: commodities, goods, services, and experiences. As the product grows closer to the heart of the consumer, thus creating meaning for them, the product simultaneously becomes more lucrative. This is one reason why commodities are worth far less than experiences; commodities require less effort to produce and do not fulfill the same emotional needs that experiences do.
Figure 1. The Progression of Economic Value
Incorporating the Experience Economy into Your Business
How can a company transition from offering a service to offering an experience? This answer will be different for every business, but one way to start is by creating an experiential environment and charging customers for the experience, rather than just the service. If you offer consumers an experience they desire, they will be willing to pay for it. This is why such a business model can be so lucrative; after all, an establishment is worth what it charges. However, to accomplish this, you must ensure that your consumers feel the message that you are trying to convey through your initial marketing.
It is vital that companies keep one very important fact in mind: people have certain basic physical needs that must be met, but those needs are minimal. After those needs are met, what people want most is human connection and the opportunity to reach outside themselves and create ways to connect to others through meaningful interactions and service. When businesses create opportunities for people to form such connections and create something greater than themselves, they are ultimately more profitable. Therefore, businesses must seriously consider the type of experience they are creating if they hope to keep up with the shift of the market.
[i] B. Joseph Pine, II, and James H. Gilmore, “Welcome to the experience economy,” Harvard Business Review 76, no. 4 (July 1998): 97+, Gale Academic OneFile, https://link.gale.com/apps/doc/A20916746/AONE?u=byuprovo&sid=AONE&xid=0814e132.
[ii]Leonieke G. Zomerdijk and Christopher A. Voss, “Service Design for Experience-Centric Services,” Journal of Service Research 13, no. 1 (February 2010): 67–82, https://journals-sagepub-com.erl.lib.byu.edu/doi/pdf/10.1177/1094670509351960
[iii] Richard M. Ryan and Edward L. Deci, “On Happiness and Human Potentials: A Review of Research on Hedonic and Eudaimonic Well-Being,” Annual Review of Psychology 52, no. 1 (2001): 141–
[iv] Veronica Huta and Richard M. Ryan, “Pursuing Pleasure or Virtue: The Differential and Overlapping Well-Being Benefits of Hedonic and Eudaimonic Motives,” Journal of Happiness Studies11, (2010): 735–762, https://doi.org/10.1007/s10902-009-9171-4.
[v] Peter F. Drucker, “Converting Social Problems into Business Opportunities: The New Meaning of Corporate Social Responsibility,” California Management Review 26, no. 2 (Winter 1984): 53, https://doi.org/10.2307/41165066.