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The Experience Economy

Tuesday 3rd April

Most people have heard of the saying “money can’t buy you happiness” conveying that lots of belongings will not bring personal fulfilment. However, what money can buy you, and what Millennials and Gen Z are tapping into are experiences. In 1999, Joseph Pine and James Gilmore introduced the experience economy; a concept based on the premise that materialistic goods are no longer sufficient for consumers, who desire memorable events and immersive experiences. Fast forward nearly two decades later – IG and FB stories, Snapchats, Tweets, Boomerangs, pop-us, filters, brand events, VR… we live in a real-time digitally enhanced world which has only propelled the experience economy.

Now more than ever, consumers are opting to spend their disposable income on the creation of long-term memories, as opposed to the short term contentment derived from product purchases. Take the huge growth of Airbnb, whose CEO Brian Chesky declares experiences as the future, as Millennials and Gen Z customers “live in smaller urban spaces where amassing things becomes superfluous.” Voucher sites such as Wowcher and Groupon also act as big influences, offering a taste of a bourgeois lifestyle – afternoon tea with champagne at a five star hotel or a luxury weekend away – for a quarter of the original price, while retaining all of the social stature. The hugely popular Secret Cinema has heightened the cinema experience, creating film-based experiences blurring performance, audience, set and reality, whilst Alcotraz Bar allows customers to immerse themselves in bar inspired by America’s most infamous prison. Further signifying this movement, shifting consumer habits have resulted in London waving goodbye to its beloved BHS store and replacing this with a new seaside themed crazy golf venue.

 

Social Media

These shiny new experiences and themed events are deemed highly shareable, and act as catalysts for people to showcase their best selves through social media. Instagram stories and Snapchat facilitate this by encouraging people to broadcast the very best of their daily activities to their social following. It should come as no surprise that Millennials and Gen Z are the main drivers of this trend. Research conducted by the Harris Group suggests more than ¾ of this generation would prefer to spend money on an experience or event over buying something tangible.

The social currency of this consumer is based on where they’ve been and what they’ve done, not as much about showcasing materialistic items; we used to share our new cars or handbags to showcase our social or economic status, now we post pictures from a chairlift in Courchevel or the latest music festival in Croatia. As crazy as it sounds, this is not just psychological, but physiological too; it is scientifically proven that gaining social “Likes” generates the same rush of dopamine as a shopping purchase.

This can lead to a domino effect, whereby other users see these experiences and want to have the same or a similar experience; 36% of Gen Z say they’ve based their holiday destination on something they saw on social media (Expedia, 2018).

The psychological bit

Psychologists Amit Kumar, Thomas Gilovich and Matthew Killingsworth findings reflect that consumers report feeling mostly frustrated before a planned purchase of an item, yet feel happy before experiential purchases. That happiness lingers around longer for experiences too as they are linked to memory, something called hedonic adaptation. Furthermore, consumers are less likely to compare their experiences, meaning they have little benchmark for criticism and are more satisfied.

“So if you have a Nissan and your neighbour has a Porsche, there’s no doubt who has the better car, and if you ask the Nissan driver to swap, they will. But if you ask people who went on holiday to the Seychelles or south Wales, it’s clear who had the fancier holiday, but surveys show the person who went to Wales won’t swap because they had an equally good time.” – Colin Strong, head of behavioural science at Ipsos.

What does it mean for us advertisers?

 As advertisers, the experience economy opens many doors. Now more than ever consumers are craving brand engagement beyond product purchase, providing opportunities to build on existing consumer relationships and enhance customer acquisition. This can be in the form of VR experiences, pop ups, branded events, personalisation and sponsorships, just to name a few.

Selling a product alone does no longer suffice for a lot of today’s shoppers; the brand needs to provide an atmospheric, entertaining and engaging environment where the consumer can interact with the brand. For brand experience inspiration take a look here.

Article Written by

Laura Newton

Graduate Trainee, Total Media

Fresh from studying Marketing Communications at Bournemouth University, Laura is on the Total Media graduate scheme, currently working in the broadcast team.

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