Lesson 2' Adding Value to Rural Businesses with Experience Economy Strategies - PowerPoint PPT Presentation

Loading...

PPT – Lesson 2' Adding Value to Rural Businesses with Experience Economy Strategies PowerPoint presentation | free to view - id: 55212-NTY2M



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Lesson 2' Adding Value to Rural Businesses with Experience Economy Strategies

Description:

'Esthetic' - One of a kind plus size women's wear & accessories ... Decorations of a party or holiday ... www.stillpond.com/gift.htm. http://www.openbookmn. ... – PowerPoint PPT presentation

Number of Views:177
Avg rating:3.0/5.0
Slides: 39
Provided by: CC26
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Lesson 2' Adding Value to Rural Businesses with Experience Economy Strategies


1
Lesson 2. Adding Value to Rural Businesses with
Experience Economy Strategies
2
Quick Links
  • 2.1 The 4E Strategies to Differentiate Your
    Business from Competitors
  • 2.2 Making Offerings Memorable through Experience
    Economy Strategies

3
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
4
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • A competitive advantage differentiates a small
    business from its competitors. A competitive
    advantage is a distinct combination of offerings
    that customers want and only you can uniquely
    provide. In a world full of options, it makes
    you more attractive than your competition. Some
    examples of factors that provide a competitive
    advantage are product quality, service
    reliability, and unique experiences (Megginson,
    Byrd, Megginson, 2006).

5
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • Traditionally, small firms have attempted to
    develop competitive advantages and
    differentiation based on several practical
    benefits delivering your goods to customers
    better, cheaper, or faster. Few small firms can
    compete in all of these areas and some may not be
    very effective with any of the strategies due to
    their limited size and scale of operation.
    Additionally, small firms will rarely win the
    price competition game and thus should not use it
    as a differentiation strategy (National Retail
    Federation, 2005).

6
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • Instead, small firms should look for
    non-traditional means of creating valuesuch as
    experiencesto compete against major discounters
    and chain operations. Experiences can be a key
    competitive resource for small firms as they can
    be very unique, hard to copy, and difficult for
    larger firms to effectively deliver on a personal
    customer level. In the case of experiences, size
    can be used to the small firms benefit as it
    allows for personalization, flexibility, and
    quick reaction something not easily accomplished
    by the big guys!

7
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
8
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • Pine and Gilmore (1999) suggest that in the
    Experience Economy, customers idea of a business
    being better increasingly includes
    differentiated offerings, such as experiences,
    along with goods and services. A retailer
    offering an Educational wine tasting experience
    along with selling bottles of wine exemplifies
    added (Experience Economy) value.

9
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • The success (or failure) of many small businesses
    grows out of the decision to move beyond just
    selling a good to creating a customer experience
    (National Retail Federation, 2005).
  • Experiential offerings address a higher level of
    customer value that can uniquely position and
    differentiate your business. Creating value for
    the customer also creates value for your firm.
    In this lesson we will explain what a
    differentiation strategy is and how small
    businesses can add value to their offerings by
    enhancing them with experiences (Megginson, Byrd,
    Megginson, 2006 Zimmerer Scarborough, 2005).

10
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
11
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • The real strengths of successful small
    independent businesses revolve around
    specialization, differentiation, and finding
    profitable, defendable, and sustainable niches
    (National Retail Federation, 2005)
  • A differentiation strategy seeks to develop a
    competitive advantage and attract customers by
    positioning its offerings in a unique and
    distinctive way. It must be truly different in
    the eyes and mind of your customer. The
    element(s) upon which a firm positions itself
    must be something important to customers---it
    must be something they value. Once this is
    discovered, a small business can then begin to
    charge (maybe even a higher price) for this
    offering (Pine Gilmore, 1999).

12
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
13
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • This diagram reflects the continuum of elements a
    small firm can use to develop a unique
    combination of offerings and achieve
    differentiation in the marketplace (Kotler, 1997,
    p. 283). Note that experiences can complement
    the other offerings or could be the primary
    offering.

Adapted from Kotler, P. (1997). Marketing
Management Analysis, Planning, Implementation,
and Control. Upper Saddle River, NJ Prentice
Hall. Pine, B.J., Gilmore, J.H. (1999). The
Experience Economy Work is Theatre and Every
Business a Stage. Boston, MA Harvard Business
School Press.
14
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • To view this diagram from an Experience Economy
    perspective, Pine and Gilmore (1999) provide a
    theatre example to demonstrate the value created
    by experiential offerings. They suggest that the
    goods you offer could be considered like props in
    a play. Similarly, your services could be viewed
    as the stage where you offer the props and your
    personnel as actors in their interactions with
    customers. Experiences are the highest value
    creating element when added to other components
    of your offerings. All of these elements must
    work in coordination with each other for the
    play to be a hit!

15
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • Remember, like in a play, all elements of your
    differentiation strategy must make sense together
    and hinge on a common theme. How will your
    customer experience your goods (props) and
    services (the stage)? This approach would
    require consideration of all details that support
    your theme. For example, if your theme involved
    replication of a 19th century schoolhouse, you
    would not use a digital clock. Although this
    sounds obvious, small details in combination
    create and support a themeand can make it
    effective or not.

16
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
  • It is wise for small firms to find a niche in the
    market and serve it well. However, successful
    differentiation requires that offerings be unique
    yet complementary to each other and to the theme
    and memorable experience you aim to deliver.
  • Effective differentiation through experiences
    requires that small businesses consider their
    goods (props), services (stage), and personnel
    (actors), and experiences together.
  • Small rural firms must consider new ways for the
    customer to experience their business and
    offerings that are fresh, different, and fun
    (Lisanti, 1997). In so doing, they will add
    greater (experiential) value for the customer,
    uniquely position and differentiate themselves in
    the marketplace, and strengthen their
    competitiveness.

17
2.1 The 4E Strategies to Differentiate Your
Business from Competitors
18
2.2 Making Offerings Memorable through Experience
Economy Strategies
19
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Implementing Experience Economy strategies to
    create a competitive advantage, as outlined in
    the previous lesson, offers an added benefit for
    small businesses. These strategies result in
    experiences in the mind of the customer that
    endure beyond the business-customer interaction.
    In other words, implementing Experience Economy
    strategies can create an experience that is
    memorable for the customer.

20
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Think about the experience that comes to mind
    when you say, I remember when. The experience
    you remember is likely to reflect one or more of
    the following qualities
  • Situations of personal significance such as
  • Getting engaged
  • Winning an award
  • Rarity, surprise, or suspense such as
  • Spotting a mountain lion when on a neighborhood
    walk
  • An acrobatic circus show

21
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Special design or sensory features such as
  • Decorations of a party or holiday
  • Incredible natural beauty of nature like the
    colors of a setting sun
  • Intensity of emotion such as
  • A really scary roller coaster ride
  • An exciting moment in sports

22
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Making something memorable means to make a
    positive experience easy to recall or remember at
    will. An operator should aim to make his/her
    business memorable. When a business remains in
    the mind of the customer, it is likely to lead to
    both repeat business and positive communication
    by the customer to friends and relatives. This
    positive message shared by customers is termed
    Word-of-Mouth (WOM) advertisinga cost effective
    promotional strategy or what is commonly called
    free advertising for the business.

23
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • This message is not only free, but when it comes
    from a trusted source, such as a family member,
    friend, or colleague, it increases the
    persuasiveness of the message (Derbaix
    Vanhamme, 2003). WOM provides a description of
    the experience for potential customers, which
    helps reduce perceived risk associated with
    patronizing a new business (Wilkie,1990).
    Therefore, WOM advertising can be an effective
    way of increasing the customer base for
    experience-oriented firms.

24
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • There are a number of techniques to make
    something easier to recall or remember (Gordon,
    2003 Meyers Jones, 1993 Revelle Loftus,
    1990 White, 2002 Wolfe, 2003 3 Memory Systems,
    2005) and they relate to the qualities presented
    in the previous slide. These techniques include
  • Repetition of information
  • Personally relevant experiences
  • Making sense of unexpected information
  • Physical performance of an action rather than
    simply observing
  • Multi-sensory e.g., sight, smell, sound
    experiences
  • Emotionally arousing experiences

25
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • These recall-enhancing techniques are embodied in
    Pine and Gilmores (1999) Experience Economy
    strategies. By using such competitive strategies,
    a business and its offerings are made memorable.

26
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Repetition of information
  • As mentioned in the previous lesson, Pine and
    Gilmore (1999) recommended creating a theme for
    the business and harmonizing cues around the
    theme. The theme and harmonized cues reinforce
    the message of the business. Thus, the message is
    repeated and made memorable.

27
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Personally relevant experiences
  • The theme also attracts a customer and makes the
    experience more memorable because of its personal
    relevance. For instance, a young customer with an
    interest in Indy 500 drivers is more likely to
    remember who won each go-cart race when the cars
    are modeled after Indy cars with which he/she is
    already familiar.

28
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Making sense of unexpected information
  • Themes many times have an element of the
    unexpected, or surprise, that help the customer
    recall the business and its offerings. This
    surprising information piques curiosity because
    it does not fit a customers expectations.
    Customers, therefore, spend more time paying
    attention to and thinking about the business,
    aiding recall (Gordon, 2003). For instance, the
    theme of the furniture shop, RVP-1875, is
    furniture production using 19th century methods
    and tools, which is surprising thus drawing
    attention and enhancing recall.

29
2.2 Making Offerings Memorable through Experience
Economy Strategies
30
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • Physical performance of an action, multi-sensory
    and emotionally arousing experiences
  • The 4Es employ a number of the recall-enhancing
    techniques to make the business offering more
    memorable. Educational and Escapist experiences
    require the customer to be actively involved.
    Esthetic experiences, and many times Escapist and
    Entertainment experiences, provide rich
    multi-sensory settings. Each of the 4Es is likely
    to arouse emotions of the customer. For
    instance, pleasant scents (Engen, 1982 Van
    Toller, 1988) and music (Ackerman, 1990) that
    help create an Esthetic experience can arouse
    pleasant emotions.

31
2.2 Making Offerings Memorable through Experience
Economy Strategies
  • The suspense of an Entertainment or Escapist
    experience can be thrilling. The joy of learning
    and achieving personal accomplishment during an
    Educational experience can create emotional
    arousal as well. For instance, a joyful
    experience can come from learning about new
    produce varieties and recipes at a farmers
    market.

32
2.3 Summary of Lesson 2
  • This lesson presented how a differentiation
    strategy used in small businesses could add value
    to the business offerings by enhancing them with
    experiences. Experience economy strategies, key
    distinctive business strategies, help
    differentiate the business from its competitors.
    Customers are attracted to the added value
    offered by experiences unique to the business.
    Experience economy strategies also support
    lasting memories of the experiences that lead to
    repeat customers and free advertising helping to
    sustain the business. 

33
References
  • Ackerman, D. (1990). A natural history of the
    senses. New York Vintage Books.
  • Derbaix, C., Vanhamme, J. (2003). Inducing
    word-of-mouth by eliciting surprise--a pilot
    investigation. Journal of Economic Psychology,
    24(1), 99-116.
  • Engen, T. (1982). The perception of odors. New
    York Academic Press.
  • Fiore, A.M., Ogle, J.P. (2000). Facilitating
    the integration of textiles and clothing subject
    matter by students. Part I Dimensions of model
    and taxonomy. Clothing and Textiles Research
    Journal 18(1), 31-45.

34
References (continued)
  • Gordon, K. T. (2003, November). Total Recall
    Find out what the latest research can teach you
    about creating ads your prospects won't forget.
    Entrepreneur Magazine. Retrieved May 25, 2005
    form http//www.entrepreneur.com/article/0,4621,31
    1562,00.html
  • Holbrook, M.B. (1986). Emotions in the
    consumption experience Toward a new model of
    consumer behavior. In Peterson, R.A., Hoyer,
    W.D., Wilson, W.R. (Eds.), The role of affect in
    consumer behavior Emerging theories and
    applications. Heath, Lexington, MA, pp. 17-52.
  • Holbrook, M.B. Hirschman, E.C. (1982). The
    experiential aspects of consumption Consumer
    fantasies, feelings, and fun. Journal of Consumer
    Research 9, 132-140.

35
References (continued)
  • Kotler, P. (1997). Marketing management
    Analysis, planning, implementation, and control.
    Upper Saddle River, NJ Prentice Hall.
  • Lisanti, T. (1997). Whatever you may call it, the
    theme concept spells success. Discount Store News
    36(3), 13.
  • Megginson, L.C., Byrd, M.J., Megginson, W.L.
    (2006). Small business management An
    entrepreneurs guidebook. New York McGraw-Hilll
    Irwin
  • Meyers, C. Jones, T. B. (1993). Promoting
    active learning. San Francisco, CA Jossey-Bass.
  • National Retail Federation. (2005). Challenges of
    the future The rebirth of small independent
    retail in America. New York National Retail
    Federation.

36
References (continued)
  • Pine, B.J., Gilmore, J.H. (1999). The
    experience economy Work is theatre and every
    business a stage. Boston, MA Harvard Business
    School Press.
  • Revelle, W., Loftus, D. A. (1990). Individual
    differences and arousal Implications for the
    study of mood and memory. Cognition and Emotion,
    4 (3), 209-237.
  • Scarborough, N.M. Zimmerer, T.W. (2006).
    Effective small business management An
    entrepreneurial approach (8th Ed.). Upper Saddle
    River, NJ Pearson Prentice Hall.
  • Van Toller, S. (1988). Emotion and the brain. In
    S. Van Toller G. H. Dodd (pp. 122-144),
    Perfumery The psychology and biology of
    fragrance. London Chapman and Hall.

37
References (continued)
  • White, R. (2002). Memory for events after twenty
    years. Applied Cognitive Psychology, 16(5), 603
    612.
  • Wilkie, W.L. (1990). Consumer behavior. New York
    John Wiley Sons.
  • Wolfe, B. (2003). Twenty ways to spruce up your
    lecture. Retrieved May 25, 2005 from
    www.fpg.unc.edu/scpp/pdfs/spruceup03.pdf
  • Zimmerer, T.W., Scarborough, N.M. (2005).
    Essentials of entrepreneurship and small business
    management (4th Ed.). Upper Saddle River, NJ
    Pearson Prentice Hall.
  • 3 Memory Systems. (2005) Retrieved May 25, 2005
    from http//www.uni.edu/walsh/memory.html

38
References (continued)
  • Images
  • http//www.flipviewer.com/pictures/!Sunset,20Door
    20County.jpg
  • http//www.psysheep.com/punkflamingo/RollerCoaster
    _1.jpg
  • http//www.mdf.ru/english/contests/sprotshot/cart_
    racing/
  • http//www.rvp1875.com/studio.html
  • http//www.knowdowntown.com/events/farmersmarket/
  • http//www.pegasusbookstore.com/
  • http//www.stillpond.com/gift.htm
  • http//www.openbookmn.org/
  • http//www.daphne1.com/studio.html
  • http//www.lhf.org/
About PowerShow.com