The world from its inception has
undergone several different economic phases. In the
beginning in the first ever human economy, humans lived
in a commodities driven economy. An example of a true
commodity--at least the example given in the book--would
be a coffee bean. Coffee as a commodity trades for about
$1 per pound or roughly translated one or two cents a
The next economic phase the goods phase is seen in the grocery store. A manufacturer will take the coffee beans, grind them, package them, and distribute them. The beans have now become a good. The price to the consumer now lands somewhere between 5 and 25 cents a cup. Even later, in the service economy, a small coffee shop can brew the coffee and serve it in a cup for about 50 cents to a dollar per cup. So, what if the coffee is now served in a fancy expresso bar overlooking the city of San Francisco? A customer will now gladly pay $2 to $5 per cup.
Why will someone pay up to $5 a cup for something that is only worth 50 cents somewhere else? It is the experience and memories surrounding the cup of coffee, not the actual coffee that is fetching the larger price. One quick look around and you'll start to see the new experience economy taking root. The Hard Rock Cafe, FAO Schwarz, Niketown, The Geek Squad, to name a few companies in the business. People are now hungry for services that can fill items that are higher on our list of hierarchical needs. Feeding people, or providing the goods or services they need isn't enough anymore. People are looking for experiences that will provide them with personal memories and they are willing to pay a premium to get what they want.
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