The elder Erskines are good prospects for quality service establishments, better quality grocery items, fine home furnishings, and upscale anything they want to buy. Most of their lifestyle spending is discretionary. In fact, the percentage of household income classifiable as "discretionary" is highest for their age group, 65-to-74-year olds, according to the Bureau of Labor Statistics. Generally speaking, people who have passed beyond the possession experience years, with materialistic desires substantially satisfied, tend to become less price sensitive about purchases they perceive as having high experiential value. This can be even truer with respect to purchases that customers perceive as serving as gateways to being experiences.
John and Mary Erskine, sometimes come close to being outrageous in what they pay for something. While John often does comparison shopping when he’s in the market for something and Mary still watches sales and takes cents-off coupons to the grocers, he has budgeted over $10,000 for the trip he plans to surprise Mary with upon her graduation from graduate school that will take them to Russia to visit the world famous Hermitage art museum in St. Petersburg. No bargain basement fares and lodgings on this trip. When they see something they want, and they perceive it as having high experiential value, they are willing to pay a greater difference between generic value and perceived value than when they are buying something they simply need, like replacing an appliance or buying a TV.
Obviously, how much a person is willing to pay beyond the generic value of something is highly subjective. But just as obvious, the more a person anticipates a product will lead to a highly coveted experience, like the Erskine’s trip to Hermitage, the greater the spread between generic value and perceived value. However, this is not true just of retirees who have become more relaxed about life and spending.
Joseph Pine and James Gilmore, the deans of customer experience specialists and authors of The Experience Economy, say that whoever your market is, "The experience is the marketing." If you get the experience right, you’ve done all the marketing you need to do. Well, not quite, as they recognize. You still have to get the word out that you’re around. But a great experiential environment, such as Anthropologie offers customers, or the American Girl Place in Chicago (a favorite of Pine and Gilmore), will draw attention from media and generate buzz among customers. Readers who want to learn more about the American Girl Place, where customers in effect pay for the right to shop, and others that have successfully made the customer experience the centerpiece of marketing can find satisfaction at Pine and Gilmore’s Strategic Horizons Website. They have graciously provided links to a large number of sources of information about the customer experience.
In the wheels business—two-wheeled or four-wheeled—Harley-Davidson stands out for its success in capitalizing on customers’ experiential appetites. The average customer of a Harley is 46, makes $78,000, and rides a $16,000 machine. He or she loves the Harley experience so much, that the company is able to price its products with a wide enough margin to net more than seven times the net that General Motors realizes per unit sold. Harley nets $1,922 on each unit sold, as measured by the results of the Spring quarter of 2001, in comparison with $292 per unit netted by General Motors in the same quarter. For most people, a car is a car, but for everyone who buys a Harley, a Harley is an experience—often, a being experience—whatever the age of the Harley owner.