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from vol.10, #2: Experiential Marketing: A New Framework Spring 1999 for Design and Communications By Bernd Schmitt Introduction by DARREL RHEA Vice chairman of DMI Darrel Rhea is an outspoken advocate A tectonic shift in design practice was underway in 1999. for our community of design Both traditi...

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from VoL.10, #2: SPRING 1999

Experiential Marketing: A New Framework for Design and Communications By Bernd Schmitt

INTRoDuCTIoN By

DARREL RHEA Vice chairman of DMI Darrel Rhea is an outspoken advocate for our community of design professionals. He is the founder of Rhea Insight, a consultancy that facilitates the creation of strategy for senior executive teams around the world. He is also chief design oicer of The Technology Reserve, where he is helping design a new global platform to radically transform the economics of intellectual property and democratize innovation. With 35 years of consulting to Fortune 1000 companies, Darrel is the former CEO of the publicly-held innovation consulting irm Cheskin Added Value. He is also the coauthor of Making Meaning: How Successful Businesses Deliver Meaningful Customer Experiences.

A tectonic shit in design practice was underway in 1999. Both traditional features and beneits marketing and brand communications were giving way to customer experience design. Our community saw that this was a more powerful platform for integrating design and communications activities, and a whole new set of approaches, methods, and tools were beginning to be developed. While several authors, such as Pine and Gilmore, had successfully advocated for this new perspective, Bernd Schmitt from Columbia Business School was creating a systematized, practical framework for managing experience design. The core ideas presented are still relevant today. In fact, designers are still having to make the same arguments to business 15 years later. Schmitt’s article (in addition to his many other books and articles) reveals emerging distinctions that many of us in the design industry have built upon in our writings. While the concept of experience design has matured to include more robust models and more comprehensive frameworks for guiding design development, practitioners will ind this piece both useful for what they do today and a good reminder of how we got here.

DMI 40TH ANNIVERSARY ISSUE 2015 19

FEATuRE EXPERIENTIAL MARKETING: A NEW FRAMEWORK FOR DESIGN AND COMMUNICATIONS Notes 1. The term experiential marketing has been used by a variety of firms (Coca-Cola, Forrester Research, Gillette, MasterCard, Momentum of McCann-Erickson, National Mall Network) in a variety of contexts, including event marketing and sponsorships, shopping-mall design, online marketing, and

E

various forms of communications. Moreover, academic researchers have explored the “experiential aspects of consumption” (see Morris Holbrook and Elizabeth Hirshmann, “The Experiential Aspects of Consumption: Consumer Fantasies, Feelings, and Fun,” Journal of Consumer

xPERIENTIAL MARKETING IS everywhere. In a variety of industries, companies have moved away from traditional features-and-beneits marketing toward creating experiences for their customers.1 “Welcome to the experience economy,” write B. Joseph Pine II and James H. Gilmore in their article of the same title. Using a long-term perspective, these authors have distinguished four stages in the progression of economic value: commodities, goods, services, and experiences. They write: “As services, like goods before them, increasingly become commoditized—think of long-distance telephone services sold solely on price—experiences have emerged as the next step in what we call the progression of economic value. From now on, leadingedge companies—whether they sell to consumers or businesses— will ind that the next competitive battleield lies in staging experiences.”2 Unfortunately, traditional marketing and other business ields ofer hardly any guidance for capitalizing on the emerging experiential economy. I use the term traditional marketing to refer to a canon of principles, concepts, and methodologies that marketing academicians, practitioners (marketing directors, brand managers, communication managers), and consultants have amassed throughout this century and, in particular, during the past 30 years. Traditional marketing presents an engineeringdriven, rational, analytical view of customers, products, and competition. It was developed in response to the industrial age. Today’s information, branding, and communications revolution calls for a diferent approach. Traditional marketing has the following four key characteristics: 1. A focus on functional features and benefits. Traditional marketers—and product designers— assume that customers weigh functional features in terms of their importance, trade of features by comparing them, and select the product with the highest overall utility. 2. Product categories and competition are narrowly defined. In the world of a traditional

20 DMI 40TH ANNIVERSARY ISSUE 2015

Research, September 1982, vol. 9, pp. 132-140). 2. B. Joseph Pine II and James H. Gilmore, “Welcome to the Experience Economy,” Harvard Business Review, July/August 1998, pp. 97-105.

3. James Engel, Roger D. Blackwell, and Paul W. Miniard, Consumer Behavior (Ft. Worth, Tex.: Dryden Press, 1994). 4. David Aaker, Managing Brand Equity: Capitalizing on the Value of a Brand Name (New York: The Free Press, 1991).

marketer, McDonald’s competes against Burger King and Wendy’s (and not against Pizza Hut or Starbucks). Chanel fragrances compete against Dior fragrances and not against those of Lancôme or L’Oreal, or any other fragrance ofered by a mass-market retailer. For a traditional marketer, competition occurs primarily within narrowly deined product categories—the battleground of product and brand managers. 3. Customers are viewed as rational decision makers. Customer decision-making processes typically are assumed to involve several problem-solving steps: need recognition, information search, evaluation of alternatives, purchase, and consumption. As Engel, Blackwell, and Miniard3 explain, problem solving refers to thoughtful, reasoned action undertaken to bring about need satisfaction. 4. Methods and tools are analytical, quantitative, and verbal. These techniques include regression analyses, positioning maps, and conjoint analyses based on Likert scales or that sacred cow of qualitative research, the focus group (conducted in artiicial environments far removed from the customers’ natural settings).

But how about branding? But, you may ask, didn’t the branding approach change all that? Brand strategists certainly do not look at products merely in terms of their functional features and beneits. David Aaker, for instance, describes brand equity as consisting of “assets (and liabilities) linked to a brand, its name and symbol.”4 Unfortunately, most brand theorists have treated brands as identiiers and signiiers of abstract attributes such as “quality.” Their equation reads: Brand = ID. As we will see, this view misses the very essence of a brand as a rich source of sensory, afective, and cognitive associations that result in memorable and rewarding brand experiences: Brand = EX. Today, customers take functional features, beneits, and product quality as a given. What they want is products, communications, and marketing campaigns that dazzle their senses, touch their hearts, and stimulate their minds. They want

FEATuRE EXPERIENTIAL MARKETING: A NEW FRAMEWORK FOR DESIGN AND COMMUNICATIONS

products, communications, and campaigns they can relate to and that they can incorporate into their lifestyles. They want products, communications, and marketing campaigns to deliver an experience.

Experiential marketing: Four key characteristics Experiential marketing difers from the traditional approach in four important ways (Figure 1) —all aimed at a broader, more holistic view of the consumer.

FIGuRE 1 The four characteristics of experiential marketing.

1. CuSToMER ExPERIENCES. In contrast to traditional marketing’s narrow focus on functional features and beneits, experiential marketing focuses on customer experiences, which makes for a much wider view. Experiences occur as a result of encountering, undergoing, or living through certain situations. As I will demonstrate, experiences provide sensory, emotional, cognitive, behavioral, and relational values that replace functional values.

EXPERIENTIAL MARKETING

Customer EXPERIENCE Focus on

CONSUMPTION

Methods are

2. CoNSuMPTIoN AS A HoLISTIC ExPERIENCE. Experiential marketers do not think “shampoo, shaving cream, blow dryer, and perfume.” Instead, they consider the holistic consumption experience of “grooming in the bathroom.” They ask what products it into this consumption situation, how to design such products, and how packaging and communications can enhance the experience of using the products. Examining the consumption situation and sketching the fuzzy boundaries of categories and competition accordingly amounts to a radical shift in thinking about market opportunities—a shift that moves marketing thinking “over” and “up.” This type of thinking, illustrated in Figure 2, page 22, broadens the concept of a category (moving over) and examines the meaning of the speciic consumption situation in its broader sociocultural context (moving up). In sum, we are moving away from thinking about an isolated product and, instead, following along a sociocultural consumption vector to arrive at a broader space of meaning for the customer. The holistic basis of experiential marketing broadens the concept of a category (moving over) and examines the meaning of a speciic consumption situation in its broader sociocultural context (moving up). For example, if you are marketing McDonald’s hamburgers, you consider yourself to be competing against all other forms of fast food, whether they are competing hamburger chains or fried-chicken shops. At the same time, experiential marketing examines the macro picture: How does your product it into the cultural bias toward healthy foods? How should McDonald’s be positioned and communicate in this world?

ECLECTIC

Customers are

RATIONAL & EMOTIONAL animals

3. CuSToMER AS RATIoNAL AND EMoTIoNAL ANIMAL. To an experiential marketer, customers are emotionally, as well as rationally, driven. That is, although customers may frequently engage in rational choice, they are just as frequently driven by emotions because consumption experiences are often “directed toward the pursuit of fantasies, DMI 40TH ANNIVERSARY ISSUE 2015 21

FEATuRE EXPERIENTIAL MARKETING: A NEW FRAMEWORK FOR DESIGN AND COMMUNICATIONS Notes 5. Jessica Feldman and John Boult, “Third-Generation Design Consultancies: Designing Culture for Innovation,” Design Management Review, vol. 16, no. 1 (2005), pp. 40-47.

6. This framework is presented in more detail in my book, Experiential Marketing: How to Get Customers to SENSE, FEEL, THINK, ACT and RELATE to Your Company and Brands (New York: The Free Press, 1999). 7. Steven Pinker, How the Mind Works (New York: Norton, 1997).

THE SOCIO-CULTURAL CONSUMPTION VECTOR SCCV (e.g., eating a hamburger as part of a casual meal, given your healthy diet)

SCCV

HAMBURGER

FIGuRE 2 For an experiential marketer, McDonald’s competes against any other form of fast food, whether it is a quick bite or a hang-out. Moreover, experiential marketing examines the macro picture: What does it mean to eat a hamburger in a time when nutrition facts are screaming in your face in the supermarkets and when Martha Stewart urges you to live a homey, healthy lifestyle? How should McDonald’s be positioned and communicate in this world? For example, if you are marketing McDonald’s hamburgers, you consider yourself to be competing against all other forms of fast food, whether they are competing hamburger chains or fried chicken shops. At the same time, experiential marketing examines the “macro” picture: How does your product it into the cultural bias toward “healthy” foods? How should McDonald’s be positioned and communicate in this world?

HEALTHY LIFESTYLE

Socio-cultural context (e.g., low-fat, healthydiet environment)

CASUAL MEAL

feelings, and fun.”5 Moreover, it is useful to think of customers as animals whose physical and mental apparatus for generating sensations, thoughts, and feelings evolved by natural selection to solve the problems faced by their evolutionary ancestors. 4. METHoDS AND TooLS ARE ECLECTIC. In contrast to the analytical, quantitative, and verbal methodologies of traditional marketing, the methods and tools of an experiential marketer are diverse and multifaceted. In a word, experiential marketing is not bound to one methodological ideology; it is eclectic. Some methods and tools may be highly analytical and quantitative (such as eye-movement methodologies for measuring the sensory impact of communications). Or they may be more intuitive and qualitative (for example, brainfocusing techniques used for understanding creative thinking). They may be verbal, taking the traditional format of a focus group, indepth interview, or questionnaire. Or they may be visual. They may occur in an artiicial lab environment or in a bar, where consumers watch TV and drink beer.

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A strategic framework for managing experiences This research builds on earlier work done with Alex Simonson that culminated in our book Marketing Aesthetics: The Strategic Management of Brands, Identity and Image (New York: The Free Press, 1997). Marketing Aesthetics, however, focused on sensory experiences only. The current framework is much more comprehensive and incorporates all types of customer experiences.6 It is marked by two key strategic concepts: strategic experiential modules (SEMS) and experience providers (ExPros). STRATEGIC ExPERIENTIAL MoDuLES (SEMS) SEMs (Figure 3) are strategic experiential modules that managers can use to create diferent types of customer experiences for their customers. The term module has been borrowed from recent research in cognitive science and the philosophy of mind to refer to circumscribed functional domains of the mind. Modules have distinct structures and functions.7 The experiential modules to be managed in experiential marketing include sensory experiences (SENSE), afective experiences (FEEL), creative cognitive experiences (THINK), physical experiences, behaviors, and lifestyles (ACT), and social-identity experiences that result from relating to a reference group or culture (RELATE). Each SEM has its own objectives, internal structure, and principles. SENSE: The SENSE module—or SENSE marketing— appeals to the senses, with the objective of creating sensory experiences through sight, sound, touch, taste, and smell. SENSE marketing may be used to diferentiate companies and products, to motivate customers, and to add value to products through, for example, aesthetics or excitement. One of the key principles of SENSE is “cognitive consistency/sensory variety”: that is, the ideal SENSE approach provides an underlying concept that is consistent but always fresh and new. The long-lasting campaign for Absolut vodka is a good example of SENSE marketing. The bottle design provides the resting point and

FEATuRE EXPERIENTIAL MARKETING: A NEW FRAMEWORK FOR DESIGN AND COMMUNICATIONS

FIGuRE 3 Strategic experiential modules (SEMs) can be used to create diferent types of customer experiences.

cognitive consistency, yet it can be executed in continually new designs with sensory appeal. FEEL: FEEL marketing appeals to customers’ inner feelings, with the objective of creating afective experiences that range from mildly positive moods linked to a brand (for example, for a noninvolving, nondurable grocery brand or service or industrial product) to strong emotions of joy and pride (for example, for a consumer durable, technology, or social marketing campaign). What is needed to make FEEL marketing work is a close understanding of stimuli that can trigger certain emotions. Standard emotional communications lack both because they do not target feelings during consumption. It is diicult to create successful FEEL campaigns on an international scale because both the emotion-inducing stimuli and the willingness to empathize in a given situation often difer from culture to culture. An example of a FEEL marketer is Hallmark. From the design of its greeting cards and the various sections in its Creations stores to its website, Hallmark is all FEEL. THINK: THINK marketing appeals to the intellect, with the objective of creating

SEM

FEEL THINK RELATE ACT

People

Websites

Environment

Co-branding

Products

ENRICHING vs SIMPLIFYING BROADENING vs SHRINKING

SENSE

Identities

Communications

EXPRO

CONNECTING

INTENSIFYING vs DIFFUSING

SEPARATING

cognitive, problem-solving experiences that engage customers creatively. THINK appeals engage customers’ convergent and divergent thinking through surprise, intrigue, and provocation. THINK campaigns are common for new-technology products. A good example is Microsoft’s “Where Do You Want to Go Today?” campaign. But THINK marketing is not restricted to high-tech. THINK marketing has also been used in product design, retailing, and communications in many other industries. ACT: ACT marketing enriches customers’ lives by targeting their physical experiences, showing them alternate ways of doing things (for example, in business-to-business and industrial markets), as well as alternate lifestyles and interactions. Rational approaches to behavior change (that is, theories of reasoned actions) are only one of many behavioral change options. Changes in lifestyles and behaviors are often motivational, inspirational, and emotional in nature and frequently involve role models (such as movie stars or athletes). Nike’s Just Do It has become a classic of ACT marketing. RELATE: RELATE marketing contains aspects of SENSE, FEEL, THINK, and ACT marketing. However, RELATE marketing expands beyond the individual’s personal, private feelings, thus relating the individual to something outside his or her private state. RELATE campaigns appeal to the individual’s desire for self-improvement (a future ideal self that he or she wants to relate to). They appeal to the need to be perceived positively by other individuals (peers, girl- or boyfriends, spouses, or colleagues). They relate the person to a broader social system (a subculture, a country). America’s Harley-Davidson motorcycle is a RELATE brand par excellence. Harley is a way of life. From the bikes themselves to Harleyrelated merchandise to Harley-Davidson tattoos on the bodies of enthusiasts (who come from all social groups), consumers see Harley as a part of their identity. Not surprisingly, HarleyDavidson users form strong bonds in the form of brand communities. DMI 40TH ANNIVERSARY ISSUE 2015 23

FEATuRE EXPERIENTIAL MARKETING: A NEW FRAMEWORK FOR DESIGN AND COMMUNICATIONS

Should the organization broaden its experiential appeal from individual experiences to experiential hybrids and holistic experiences, or should it stick to—or focus on—one single experience?

SEM oVERLAP As mentioned earlier, the ive types of SEMs all have their own inherent structures and principles. SENSE design is aesthetically appealing or exciting; FEEL design uses emotional symbolism; THINK design is unusual and surprising; ACT design is dynamic and action inducing; RELATE design uses cultural and ethnic associations. Or consider SEMs...