progression of economic value

Source: B. Joseph Pine II, James H. Gilmore, The Experience Economy, Harvard Business School Press, 1999

The progression of economic value relates offering differentiation relevant to customer needs to customer value and pricing. The more an offering is tailored, or customized, to meet the specific needs of a customer, the higher the value thus the higher the premium that can be charged for that offering.

The progression from lowest to highest value offerings is --

• commodities
• goods
• services
• experiences
• transformations

The dynamic forces of an ever evolving economy, with its continual creative destruction, continually innovates offerings. Experiences are commoditized into services, services into goods, and goods into commodities. On the other hand, goods are customized to become services, services customized become experiences, and experiences customized become transformations. Because a transformation is inherently personal and the product is the changed individual, transformations cannot be communized.

The progression of offerings from commodities to transformations goes from low-value tangible offerings to high-value intangible offerings.