In their seminal article on the Experience Economy, Pine and Gilmore (Harvard Business Review, 1998) exemplified the evolution of economic progress with a birthday cake: At the most basic level of economic activity, commodities, i.e. the cake’s raw ingredients, were extracted, traded, and competed purely on price. Economic activity then progressed to processing such commodities and producing standardized goods. For instance, pre-processed cake baking mixtures would be sold as branded products at a premium. At the next level of differentiation, customers would outsource the whole process of making the birthday cake to a service provider, which in turn would be able to command tenfold the price of the original raw materials. At the highest stage, the cake becomes merely an ingredient itself. Theme parks and event centers would offer to plan and host the entire event. Customers pay for the birthday party experience and the cake may even be included free of charge.

Experience as Differentiator

As the above example suggests, the most differentiated level of economic activity is concerned with direct sale of experiences. This is essentially equivalent to commanding an entrance fee for an event or happening, such as for a concert or a stay at a holiday destination. The customer pays for the personal, unique, contextually situated experience. Associated goods and services are sold as extras, included in the package, or even given away for free. Taking the example of booking a holiday package versus a business trip, customers value and pay for the holiday experience at the destination and throughout the trip (e.g. cruise ship), rather than the service of getting from A to B. The value has transcended from “getting there” to “being there”.