Trends & experience economyTrends & experience economy

Sakariina HeikkanenSakariina Heikkanen

Some global trends by..Some global trends by..

-Visit Britain-Visit Britain

-Simon Hudson: Marketing for Tourism & Hospitality-Simon Hudson: Marketing for Tourism & Hospitality

-Institute for Tourism and Recreational -Institute for Tourism and Recreational Research in Northern Europe (N.I.T.)Research in Northern Europe (N.I.T.)

-LEO-LEO

-Rolf Jensen-Rolf Jensen

-Pine & Gilmore-Pine & Gilmore

How does tourism demand How does tourism demand work?work?

Tourism Demand

Externalinfluences

Emergingpatterns

Source: N.I.T. 2006

Influencing factorsInfluencing factors

Tourism Demand

Threats/Crisis

Sosio-cultural impactsEconomy

Ecological environment

Technology

Politics, Legal issues Consumer

AttitudesSource: N.I.T. 2006

How do they influence?How do they influence?

External factors may have an impact on External factors may have an impact on tourism demand by affecting the tourism demand by affecting the ability to ability to traveltravel (freedom, time, money, fitness) and (freedom, time, money, fitness) and the the motivationmotivation to do so. to do so.

Consumer Behaviour is not a reaction to a Consumer Behaviour is not a reaction to a single factor, but to the single factor, but to the whole set of whole set of influencing external factorsinfluencing external factors. In addition it is . In addition it is driven by driven by internal factorsinternal factors (e.g. motives, (e.g. motives, abilities etc.). abilities etc.).

Source: N.I.T. 2006

GROWTH TRENDSGROWTH TRENDS Tourism is expected to grow 4.5 percent annually over Tourism is expected to grow 4.5 percent annually over

the next decadethe next decade China will soon be most popular destination China will soon be most popular destination By 2020, an estimated 50 million Indians will tour By 2020, an estimated 50 million Indians will tour

overseasoverseas Business travel from, and among, developing countries Business travel from, and among, developing countries

will grow more rapidly than business marketwill grow more rapidly than business market Two growth areas: China and IndiaTwo growth areas: China and India Certain sectors will grow faster than others, for Certain sectors will grow faster than others, for

example, cruise industryexample, cruise industry

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DEMOGRAPHIC TRENDSDEMOGRAPHIC TRENDS

Over the next 20 years, key markets Over the next 20 years, key markets for outbound travel will remain Europe, for outbound travel will remain Europe, Asia, and the AmericasAsia, and the Americas

Significant implications of demographic Significant implications of demographic change in this century is aging of change in this century is aging of world’s populationworld’s population

World median age is projected to rise World median age is projected to rise from 26 years in 2000 to 44 years by from 26 years in 2000 to 44 years by 21002100

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TechnologyTechnology Internet Internet

Enabled the low-cost carrier revolutionEnabled the low-cost carrier revolution More price transparency / competitionMore price transparency / competition Empowered tourists to share opinions Empowered tourists to share opinions

with the world: no hiding place for those with the world: no hiding place for those offering poor qualityoffering poor quality

Only 5% of Indian’s have access, but Only 5% of Indian’s have access, but that is 60 million people that is 60 million people

The rise of the budget accommodation The rise of the budget accommodation chain & travel agencies (on-line) also.chain & travel agencies (on-line) also.

Some other issues..Some other issues..

The ‘unexpected’ The ‘unexpected’ (9/11)(9/11) will continue to will continue to take us by surprise, and the ‘expected’ take us by surprise, and the ‘expected’ (EU (EU expansion)expansion) will continue to have will continue to have unexpected implicationsunexpected implications

Climate change will shape government, Climate change will shape government, business and consumer behaviour: there business and consumer behaviour: there will be winners and loserswill be winners and losers

WHAT DO CONSUMERS WANT?WHAT DO CONSUMERS WANT? Multi-roleMulti-role- consumers: Fly in on Ryanair, - consumers: Fly in on Ryanair,

stay in a Hilton, grab lunch in McDonalds: stay in a Hilton, grab lunch in McDonalds: no neat segmentsno neat segments

The visitor The visitor experience experience must offer must offer value for value for moneymoney

‘‘what you do’ more important than ‘where what you do’ more important than ‘where you do it’: you do it’: ‘experiences’ not ‘destinations’ ‘experiences’ not ‘destinations’ countcount

AuthenticityAuthenticity: Visitors have higher : Visitors have higher expectations than earlier generations expectations than earlier generations

The experience industryThe experience industry

Commodities (coffee bean). Commodities (coffee bean). Goods (bean produced to coffee product for sale)Goods (bean produced to coffee product for sale) Services (intangible Services (intangible serving of a cup of coffee in serving of a cup of coffee in

a café )a café ) Experiences Experiences events that engage individuals in a events that engage individuals in a

personal way personal way If a café was turned into a themed arena, the If a café was turned into a themed arena, the

served cup of coffee would change in to an served cup of coffee would change in to an experience. experience.

Manufactures must turn their goods into Manufactures must turn their goods into experiencesexperiences in order to have their share in the in order to have their share in the world of business. world of business.

Experience gives an added value to the service Experience gives an added value to the service provided.provided.

Experience EconomyExperience EconomyExperience Pyramid by LEOExperience Pyramid by LEO

The Experience Pyramid is a practical tool to The Experience Pyramid is a practical tool to analyze, understand and enhance the analyze, understand and enhance the experience-based elements of a product.experience-based elements of a product.

As experiences are a As experiences are a highly subjectivehighly subjective matter, matter, a a meaningful experiencemeaningful experience can never be guaranteed. can never be guaranteed. However, a tourist guide / expert can create the However, a tourist guide / expert can create the ideal surroundings for meaningful experiences.ideal surroundings for meaningful experiences.

The Experience Pyramid suggests a twofold The Experience Pyramid suggests a twofold approach to experiences: approach to experiences: customer experience and customer experience and elements of the product. elements of the product.

Experience PyramidExperience Pyramid

http://www.leofinland.fi/LEO/In_English/Experience/experience_pyramid.iw3http://www.leofinland.fi/LEO/Suomeksi/elamys/elamyskolmio_-malli.iw3

ELEMENTSELEMENTS IndividualityIndividuality : how unique and extraordinary a : how unique and extraordinary a

product is. Is there a potential to tailor the product product is. Is there a potential to tailor the product according to customer needs. according to customer needs.

Authenticity:Authenticity: is it 'genuine' and 'real'. Is it fake? is it 'genuine' and 'real'. Is it fake? Cultures, Disney?Cultures, Disney?

StoryStory is closely related to authenticity. There is closely related to authenticity. There needs to be a story.needs to be a story.

Multi-sensoryMulti-sensory : is it possible to experience a : is it possible to experience a product with as many of the senses as possible.product with as many of the senses as possible.

ContrastContrast: how different the experience is from the : how different the experience is from the customer's everyday life. customer's everyday life.

Interaction:Interaction: how well it communicates with the how well it communicates with the audience / customer. audience / customer.

LEVELS OF EXPERIENCELEVELS OF EXPERIENCE

Motivational levelMotivational level: awakening attention and interest. : awakening attention and interest. Marketing!Marketing!

Physical level: Physical level: the product is experienced through the the product is experienced through the senses. A pleasant and safe experience must be guaranteed. senses. A pleasant and safe experience must be guaranteed.

Rational levelRational level : on the intellectual level, we decide if we're : on the intellectual level, we decide if we're satisfied with the product or not. Here, a good product offers satisfied with the product or not. Here, a good product offers the customer the potential to learn something new.the customer the potential to learn something new.

Emotional level: Emotional level: this this is where the is where the meaningful experience meaningful experience take place. We try to give joy, excitement, the pleasure of take place. We try to give joy, excitement, the pleasure of achievement and the pleasure learning new skills.achievement and the pleasure learning new skills.

Mental levelMental level: meaningful experience may lead to personal : meaningful experience may lead to personal change change modifications to physical being, state of mind or modifications to physical being, state of mind or lifestyle. lifestyle.

From commodities economy to From commodities economy to experience economyexperience economy

Pine & Gilmore Pine & Gilmore how the world economy how the world economy has changed from the commodities has changed from the commodities economy to an experience economy: economy to an experience economy:

A mother used to bake a cake from a A mother used to bake a cake from a scratch, using commodities.scratch, using commodities.

Some years later, she bought a cake Some years later, she bought a cake mixture from the local super market or mixture from the local super market or even a half made frozen cake.even a half made frozen cake.

In the 21st century, however, parents buy In the 21st century, however, parents buy the whole party with all of its products and the whole party with all of its products and services. services.

The question arises, what next? The question arises, what next?

Pine suggests: Pine suggests:

After the experience economy, there After the experience economy, there will be a will be a transformation economy.transformation economy. Mother and father not only buy the Mother and father not only buy the birthday party, but a whole set of birthday party, but a whole set of birthdays to lead the child into a birthdays to lead the child into a

direction that they think would be the direction that they think would be the best for the child. (Football player, best for the child. (Football player,

ballet dancer)ballet dancer)

Transformation Business? Transformation Business? Pine suggests that the next step from the Pine suggests that the next step from the

experience economy is transformation business.experience economy is transformation business. What all sorts of services that could include?What all sorts of services that could include? Do you think it is present already & is it about to Do you think it is present already & is it about to

take over in the tourism business as well?take over in the tourism business as well? Read the abstract of the theory (given) and Read the abstract of the theory (given) and

evaluate the questions above as well as the evaluate the questions above as well as the problems this kind of business could create.problems this kind of business could create.

Jensen, Rolf Dream Society:Jensen, Rolf Dream Society: The following six market profiles comprise the most important aspects The following six market profiles comprise the most important aspects

of the Dream Society:of the Dream Society:

1. Adventure market: Stories and adventures are demanded and 1. Adventure market: Stories and adventures are demanded and supplied like products themselves. supplied like products themselves.

2. The Market for Togetherness, Friendship, and Love: Emotional 2. The Market for Togetherness, Friendship, and Love: Emotional satisfaction satisfaction

3. The Market for Care: People have a need to receive and provide 3. The Market for Care: People have a need to receive and provide care. care.

4. The Who-Am-I Market: What kind of person am I, what are my 4. The Who-Am-I Market: What kind of person am I, what are my esteemed values.esteemed values.

5. The Market for Peace of Mind: In an insecure and changeable world 5. The Market for Peace of Mind: In an insecure and changeable world we demand stories about permanence, peace of mind, and stable we demand stories about permanence, peace of mind, and stable values. values.

6. The Market for Convictions: Interest groups have always existed but 6. The Market for Convictions: Interest groups have always existed but never in such numbers and influence. never in such numbers and influence.

Read the abstract of the book (given) - How could these profiles affect and be Read the abstract of the book (given) - How could these profiles affect and be used in the tourism business?used in the tourism business?