All businesses must orchestrate memorable events for their customers, they argue, and that memory itself becomes the product - the "experience". More advanced experience businesses can begin charging for the value of the "transformation" that an experience offers, e.g. as education offerings might do if they were able to participate in the value that is created by the educated individual. This, they argue, is a natural progression in the value added[?] by the business over and above its inputs.
A core argument is that because of technology and the increasing expectations of consumers, services today are starting to look like commodities. Just as service markets[?] build on goods markets[?] which in turn build on commodity markets, so transformation and experience markets build on these newly commoditized services, e.g. Internet bandwidth[?], consulting[?] help.
The classification for each stage in the evolution of products is that:
Proceeding to the next stage more or less requires giving away products at the more commodified level. For instance, to charge for service, e.g. new car warranties, one must be prepared to give away new cars to replace 'lemons'. And, to charge for transformations, one must be prepared to risk there being no payment for the time you spend working with customers who don't "transform".
Pine and Gilmore draw on Walt Disney, AOL, Nordstrom, Starbucks, Saturn and IBM as examples.
Their thesis has been criticized as an example of an over-hyped business philosophy arising from or in the dotcom boom and a rising economy in the U.S. that was tolerant of high prices, inflated claims, and no limitations of supply - or investment. In contrast to other service economy theses such as Natural Capitalism, there was no clear focus on making measurably better use of scarce resources, usually considered to be the basis of economics.
See also: Computers as Theatre[?]
publisher's review (http://hallprofessions.com/harvard_business_school_press/17.shtml)
wikipedia.org dumped 2003-03-17 with terodump