Experiential Competition

In an environment of intense competition, customers flock to providers who offer the best value proposition.  For manufacturers, the means of competition is a choice between offering better quality and lower price to tailor the features to the needs of a given market segment and provide a desirable solution at an affordable or advantageous price.   For retailers, the means of competition is a selection of product offerings that appeal to their chosen segment.

The constraints of reality, however, lead to commoditization where customer needs are similar.  Manufacturers will produce and retailers will offer a product with the same features and qualities at roughly the same price as their competitors.   The variations will be eroded by competitive pressure to gain market share by imitating the choices made by other vendors.

As a result, both quality and price gravitate toward commoditization and competitors must find more subjective an idiosyncratic means of competing for their desired market segments.  In practice, the means of competition become aligned with customer and consumer experience.

The term “experience” bas become nebulous, but is understandable in the reductive sense: it is about reducing the friction of interactions surrounding the product (obtaining and using it) while increasing the non-functional benefits of consumption (psychological and social factors).   Distinction is easy, but distinction in a manner that is relevant to the interests of a specific market is exceedingly difficult.  It requires more speculation, and is more difficult to address – because while it is simple to observe where customers are experiencing pain, it is difficult to imagine opportunities that might delight them.

Where experience becomes the distinguishing factor, the features and price of the product seem irrelevant – though in truth they are highly relevant to the market and compromising upon them will have disastrous consequences.   If the core value proposition is neglected or violated, the experiential components will be deemed irrelevant and the product will not succeed.   But so long as they can be preserved to the standard defined by the commodity, they are of little importance in winning consumer preference.

This shift toward experience-driven competition has been disconcerting to suppliers because it implicitly shifts control of the market from the producer to the consumer in a far more obvious way.  That is, consumers were always in control, as the ability to “vote” with their buying dollars is the measurement of the success to any decisions made internally within the supplier.   Hence the ability to “sell” is gained from proactive control, but from reactive accommodation.

In that sense, the notion of experience can be recognized as an opportunity for suppliers to engage in a more passive and receptive manner with their buyers, which reflects the manner in which this engagement should have been considered all along.   But the relevance of these decisions to the success of the firm has become more explicit and distinct.