Owning The Magic – Experiences Matter More Than Products

by Thomas MORADPOUR on July 22, 2011 · 10 comments

If you’re like me and grew up with Danone, you’re probably wondering why the French CPG giant decided to open three yogurt bars in the Paris area this month. Surely, there has to be better, more efficient, cheaper ways to distribute something as banal as yogurt?

“Something as banal as yogurt.”
This is the commodity-kiss-of-death many consumer product businesses are trying to dodge.

Products can be replicated, priced down, commoditized. But experiences are magic; much harder to copy, if not impossible.

This is why so many premium brands, from Apple to M&Ms, and now Danone, are investing in strategies that look more like retail or services than like the traditional “product manufacturing” business model.

Why? There’s 3 key trends that make it harder for products to succeed.

THREE CRUSHING TRENDS FOR PRODUCTS.

  • Modern Trade Uniformisation. Today’s retail giants own the shopping environment. The likes of Wal*Mart, Carrefour, Sephora and Best Buy don’t let manufacturers make their products stand out on uniform shelves, or run spectacular brand theater, like they used to years ago.
  • Reduced Advertising Effectiveness. Fragmented, cluttered, more expensive than ever, traditional advertising dollars don’t perform as well as in the past (and don’t bet on an improvement).
  • People Own The Conversation. What people say about your category, your products, or your competition, is increasingly in the hands of people, no longer in yours.

Three powerful forces all brands face today, all contributing to a spiral of commoditization for products. Undifferentiated, unglamourous, unexciting, Products are a bad business to be in these days.

So how can premium brands retain what makes them truly unique, special… in short, magical?

By taking control back on the Product Experience. I’m not talking “Experiential Marketing” here. I’m talking about Marketing The Experience - the shopping, consumption and sharing rituals that a product fits in. Soda on its own may not be the most exciting product… but if you’ve learned to enjoy a Pepsi with a pizza or burger, the experience of having a pizza or a burger will never be complete without Pepsi.

Traditionally left to third party distributors, or the privacy of consumers’ home, the Experience is now the battleground brands need to dominate.

THREE WAYS TO OWN THE EXPERIENCE MAGIC.

1. Flagships – owned shopping experience that educate and inspire.
Danone’s Yogurt Bar efforts fit in this strategy. So does the M&M Store, the Hershey Store, the Lego Store and countless other recent examples. Sure, there has to be a strictly business/revenue rationale for these ventures; but I believe their main reason is not the bottom line they generate. Walk into an M&M store, and you’ll be surrounded by the magic of chocolate and colors; you’ll enter a world where M&Ms can seduce and captivate you. Same for Lego, where the shopping experience ‘educates’ young and old brick-fans in the the 1,001 ways Lego brings imagination to life. As for Danone, wouldn’t you see yogurt as a little less banal if the bar inspired you to consume it in dozens of new delicious ways?

2. Vertical Bundles – everything needed to enjoy you at your best.
What’s the best way to enjoy beer? Not bottles, it’s draft. But that’s not the product consumers can get in their fridge… at least it wasn’t until Heineken came up with Beer Tender, a high quality version of the keg-and-tap that brings the perfect draft experience home.
Do you know how to brew the perfect cup of coffee? Most people actually don’t, so the blend fine-tuning efforts of coffee champions like Kraft or Nestle are mostly wasted in botched preparation. That is, until the Nespresso and Tassimo systems offered a bundled alternative. Integrating a simple machine with single-serve coffee pods, they deliver the perfect cup, every time.
In both cases, high value for the consumer who gets the perfect beer experience, the perfect coffee experience… and high value for the brand who premiumizes otherwise commoditized markets.

3. Full Control – simply owning everything!
It’s a deeper commitment, but also not a surprise that the brands that capture the highest forms of consumer loyalty and love, are those with full control over the experience, both at retail and at home.
Take Apple – from the physical stores, to the closed OS, to the iTunes and App stores – the experience is fully owned by Cupertino’s teams. And the benefit is a level of quality, simplicity and consistency no other computer or phone brand can replicate.
Take Nespresso – from the day you buy a machine, you will only buy and drink pods ordered through their own high street or online stores. Your coffee issue forever solved.

OVER TO YOU.

It takes a mindset shift – stop seeing yourself in the business of selling products, start seeing yourself in the experience business…
What experience and rituals does your product fit in and elevate?
What is your product’s experience at its best?
How can you move up the chain and gain share of the full experience?

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  • http://twitter.com/Carts888 Nic Cartwright

    Similar theory in sports where the Holy Grail is to make the Game Day Experience (and all other experiences) become more important than just the simple “Win” (the product)……..  Increasingly the two worlds – sports and industry – are collaborating to achieve same objective for both of course…..  

    • http://twitter.com/TomMoradpour Thomas Moradpour

      Interesting build! Music is also moving in that direction with struggling products (albums), and stronger business driven by experiences (concerts). Thanks for reading and commenting, Nic!

      Cheers, Tom

  • http://www.hanelly.com hanelly

    I think this is why – in the age of information as a commodity – I still look forward to receiving my print publications. Though slightly different than your premise, the experience of consuming content (which I can theoretically get more efficiently online) in print is something I’m willing to pay a premium for. When I read Wired, I appreciate the thick pages and texture of the magazine. I like the way it smells. With Esquire, I like how they’ve creatively used every available surface in the book to squeeze in witty writing. I like that when I’m reading GQ the cologne ads make me *feel* upscale.

    I’ll pay for experience. It’s worth it.

    Great post, Thomas.

    • http://twitter.com/TomMoradpour Thomas Moradpour

      Thanks!
      You’re making a great point about magazines! That said, I think the iPad versions will start to compete in a compelling way when they take the experience in a different (richer) direction, rather than just replicate the print content, like you can see all too often. Wired is a good example, Pop Science too…
      Tom

  • Elbeisfree

    Nespresso do it for the wrong reasons, apple do it for the right reasons….

    • http://twitter.com/TomMoradpour Thomas Moradpour

      Oh, you’re saying too much or too little, mate.
      Why is Nespresso doing it for the wrong reasons?
      Tom

  • Jim

    One word – Disney

    • http://twitter.com/TomMoradpour Thomas Moradpour

      Agreed.

    • http://twitter.com/skypulsemedia Howie at Sky Pulse Media

      First of all I love seeing your comments Jim no matter where I see em! Did you know Disney Parks have a VP of Parking? A decision was made that the first and last impression a customer will have is the parking lot. Was it clean. Did you get trapped in a jam. Could you get in and out.

  • http://twitter.com/skypulsemedia Howie at Sky Pulse Media

    People pay a premium for an experience. Think IMAX or 3-D Movies. Whole Foods. Trader Joes. Even Starbucks! The worst place to be in the Value Proposition is a fight to be the low cost provider. Though that actually doesn’t hold with Southwest Airlines does it?

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