Experience Economy

Unless you've been living under a rock in Malaysia recently, you would have probably heard of the controversy regarding the 7th Harry Potter novel. Just to recap: MPH, Popular, Times and Harris bookstores decided for a brief period in time to not carry the Harry Potter and the Deathly Hallows novel in protest against the “indiscriminate price discount” by Carrefour and Tesco.

Now that the dust has settled on this controversy, it is probably high time that these four big bookstores started to rethink and reinvent themselves to not only focus on how cheaply they can sell their books. Because heaven forbid what if one day the mother of all hypermarkets (Walmart) decides to open up shop on our shores, or what if Amazon is able to offer free shipping or dirt-cheap shipping charges to Malaysia. What happens then? And it wouldn’t be a surprise if Carrefour and Tesco decides on a permanent basis to carry selected book titles.

So the bookstores better start to think beyond prices; they need to move away from the commodity game and start playing in the experiences economy. According to Joe Pine and Jim Gilmore, authors of "EXPERIENCE ECONOMY: Work is Theatre and Every Business a Stage", there are four levels of value starting with raw-materials economy at the base. Next up, the goods economy. Then, the services economy, and at the top of the totem pole is the experience economy. Examples of two companies that are reaping rewards by playing in the experience economy are Starbucks and Harley Davidson. Starbucks is not in the business of selling cups of coffee but is in the business of selling an experience referred to as the “third-place” between home and work where customers can find refuge, unwind, chat and connect with one another. Harley Davidson is not in the business of selling motorbikes but is in the business of selling an experience that Harley calls the “Rebel Lifestyle”. According to a senior executive in Harley, “What we sell is the ability for a 43-year old accountant to dress in black leather, ride through small towns, and have people be afraid of him.” Former Harley CEO Rich Teerlink's success in changing Harley’s “persona” from “motorcycles” to “Rebel Lifestyle” has added billions of dollars to Harley Davidson's stock-market capitalization.

Some in Malaysia might argue that people here are only concerned about the prices of things and nothing else; especially not this touchy-feely thing about experience. Well, if that is really true then the most sought-after portable music player should be the cheapest player that one can find in Low Yat and not the iPod. And if Malaysians are truly only concerned about prices, then coffee places like Starbucks and the modernized kopitiams (traditional breakfast and coffee shops found in Malaysia) that are popping up everywhere should be as empty as ghost towns but they are not. This goes to show that the experience economy is alive and kicking here in Malaysia... and local companies need to realize this fact.

So the “Big Four” bookstores that flexed their collective muscle by boycotting Harry Potter and the Deathly Hallows novel should take heed of what Managing Director of Penguin Singapore and Malaysia said, “Avid fans are looking for a magical atmosphere rather than just cheap price”. Or in the words of Tom Peters, “Experience is the Beginning and End of Value Added. Not just at Disney World. Not just at Starbucks. But in every kind of company and for every kind of profession... from fur trapping to high finance.”