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18/02/2013 by

Digital Turns The Experience Economy Upside-Down

Digital turns the experience economy upside down. How will this affect CMOs and their brands? Read the insights shared by a marketing strategist.

Digital Turns The Experience Economy Upside Down

A few years ago, Joseph Pine and James Gilmore wrote the book The Experience Economy. They stated that brands could not sufficiently differentiate themselves with their products and services alone.

What was needed was an extra element: the brand experience. However, digital media seems to turn their model upside-down.

Let’s start with the basics. Pine and Gilmore had an interesting hypothesis: brands evolve. From time to time they need to add extra layers to keep their edge.

From Commodity to Theatre
First, raw products were sufficiently differentiating: one type of corn was superior to the other. When corn became a commodity, it was about the product: who could make the best bread from this common corn?

Next, all bread had a similar quality and it became about services: who delivers the bread to your doorstep?

And finally it was about experience: who can turn bread into a theatre? In other words, a baker should not only make the best bread and bring it to your doorstep. He also has to offer a special experience.

Customers can see how his dough is freshly made and smell how the bread is baked. They can even create their own, personal bread. Starbucks showed the potential of this extra step by introducing a new coffee experience: a home away from home.

Everything Upside-down

Nowadays, the philosophy of the experience economy is widely accepted and frequently used. It is interesting to ask whether this is rightly so. Does the sequence of these phases still apply? Should it not be turned upside down?

Think with me, if you will: many brands offer amazing experiences with apps, social media, second screens or websites. In this example many bakeries offer a digital experience that theatrically shows you how the best bread is made.

But far less bakers know how to get digital media closer to their core proposition by improving their service offering. For example, only a few use digital to offer a made-to-order proposition. Therefore, most bakers only create superficial brand contacts with their digital activities.

This is fine if a baker’s marketing is mainly about likes, but this approach does not really improve his intrinsic proposition.

Need to Have
Even less brands know how to take the next step by creating a fundamental link between digital media and their core product. This can be a bakery that offers you an app to specify all the ingredients of your bread.

Many digital services are therefore nice to haves instead of need to haves. The extras make the offering more attractive, but not fundamentally better.

The next step, the link to commodities, is the most challenging and a little abstract. One can state, that brands that completely master digital media, introduce digital services so elementary that they become as fundamental as corn: no baker can do without them.

Think of a bakery that uses digital media to introduce a Just In Time process that changes the bread industry in such a fundamental way, that it becomes a necessity: a commodity for every baker. Just like online booking became a commodity for travel agencies.

My Key Take-Away?
In short: the basic challenges from yesterday seem to be the innovations for today.

What About You?
What examples of digital turning the experience economy upside-down have impressed or inspired you? I’d love to discuss your thoughts in the comments below.

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About the Author

Ingmar de Lange is marketing strategist and founder of Mountview. He’s a strong believer in meaningful, useful marketing.


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Comments (5)

  • Igor Beuker 18/02/2013, 16:20

    Hi Ingmar,

    Great story and insights, thanks for sharing.

    In your experience, what is the biggest challenge for brands to make these moves?


  • Tyler Hakes 18/02/2013, 18:31

    This is a great post that really makes you think about the nature of digital media and how it really strikes into the core product/service.

    One of the best models that I think is really inspiring is crowd-sourced funding and peer-to-peer lending. While they might not have defined the entire banking industry, they show an all-digital integration of what the finance industry could look like — and it’s wildly successful.

    Something that I think will come along more in the future is a more-integrated digital approach to real estate and car purchases. We’ve already seen some big changes in the way people shop (online reviews, etc), but I think there is still a disruptive idea to be created that will change the way we make these major purchases.

  • Ingmar Lange 18/02/2013, 21:05

    Thanks for attention and feedback!

    @Igor: I think one of the challenges is ‘upside down’ thinking. As marketeers, we have all been raised with the assumption that intrinsic differences between products are minimal (‘all beer and cola taste the same’) and the difference can be made by adding emotion / experiences. Online, it’s the other way around. All successful propositions are intrinsically different (faster, cheaper, easier etc.). Still, many brands are too much focussed on emotion / experiences and too little on their intrinsic basics in the digital world (somehow often looked upon as ‘the boring part’). I feel this is illustrated by the way brands approach social media.

    @Tyler: I agree, I think the service industry has a great potential to use digital to reinvent its basics. I expect to see many digital innovations that will quickly become ‘service commodities’. This is especially the case in service industries where intermediaries still profit from market inefficiencies. Real estate and car purchases are a prime example. Digital will make such markets more efficient, for example using peer-to-peer principles.

    • Igor Beuker 19/02/2013, 01:00

      Thanks for your prompt reply!

      And like the asnwer too. It’s difficult to explain to brands that experience branding can work, but will also need good and relevant products, a working helpdesk, slicks sales channels and other aspects of a great experience.

      Great content marketing or adding meaningfulness, it will not be enough for many brands.