How Should Business Respond to the Rising Demand for Experiential Consumption?
There is a fundamental shift in consumer values towards experiences over things that bring happiness and well-being, with spending on experiences like travel, leisure and foodservice to rise to US$8.0 trillion by 2030. The experience trend is impacting across sectors, from the value placed on the dine-in experience in consumer foodservice, and the importance of the shopping experience in the retail sector, through to the priority some consumers give to experiences such as holidays, over purchasing the latest TV or latest fashion. Those at the frontline such as retailers and restaurateurs are tackling this trend head on by placing more emphasis on the consumer experience as a vehicle for boosting sales and margins. Creating more intimate experiences with consumers, providing a seamless shopping environment whether online or in-store and personalising their offering.
A brand that evokes a neutral response and is consumed passively in auto-pilot risks losing its identity, having no point of differentiation, and falling prey to competitors, eventually running the risk of brand irrelevancy. As a result, today even daily-use products like beauty and personal care and laundry care are receiving an all-encompassing experiential makeover, thanks to the product packaging, ingredients used and marketing/social media to evoke sensations even for the most routine of products:
- Mass-market brands like Radox are facing immense price pressure, with Radox losing 0.1% of its global share in 2016, which necessitates a full-on experiential assault on its consumers to go beyond the core product, evoke the senses, and offer intangible benefits such as positive mood.
- Unilever’s Persil brand’s “Dirt is good” campaign also taps into the experience trend. Rather than focusing on the laundry detergent’s technical attributes and stain-busting properties, the campaign signals that children in particular should be free to experience the world around them no matter the impact on their clothes.
To meet this trend, consumer-facing businesses are (or should be) focusing on:
- A sense of community: Experiences can be exclusive yet inclusive. A prime example of this is an easily-accessed community, which offers exclusive experiences only to its most loyal members. Mastercard’s Priceless is a prime example of a business model that adds value through exclusive experiences but with relatively low barriers to entry.
- Authenticity: Consumers increasingly want authentic, natural and local experiences, embracing imperfection. In the age of social media, there is an appreciation that a failure to show compassion and empathy is tantamount to handing your competitors a competitive advantage. Heritage brands fare well here.
- Technology: will increasingly play a role in consumers’ interactions with brands, whether in the path to purchase, during the experience or afterwards when they share their stories/images online with friends and family. This means that the experience does not even need to be real for consumers to enjoy and engage with it.
- Customisation: where there is a unique 1 to 1 brand-consumer relationship is the Holy Grail for many marketers, offering deeper engagement, higher return on investments and loyalty, which is in scarce quantities in the age of price comparison. Travelsify is an online hotel booking platform, which ranks each hotel according to 34 attributes, and then allows users to pick a hotel based on their mood or emotional state, rather than simply selecting from a list of amenities.
- Brand Love: Many brands are becoming creative about how they can engage before, during and after the purchase to develop consumer Brand Love by providing value-added engagement and experiences. Eg creating social spaces and offering classes – Sephora, a renowned experiential retailer does this to great effect. Another example, Hurom, is a popular slow juicing appliance manufacturer.in South Korea. The company opened its own juice bar café to allow consumers the experience to sample the juice before making a purchase. Helping to overcome fears of high price point. This helped the company increase sales by 58% in South Korea in just three years. And the concept has been so successful, the company has expanded to Thailand, Indonesia and Vietnam.
Experiencing the brand allows the consumer to really see and feel its benefits. It also pushes the consumer to believe that the brand really understands who they are, deepening the connection. Successfully tapping into this trend allows brands to build consumer loyalty, which in an age of endless choice is no mean feat. However, the stakes are high, getting it wrong will alienate consumers who see their time as an increasingly valuable commodity.