Richard Gottlieb

Are you a commodity provider or an experience provider or maybe both?

I am always looking for new ways to slice and dice how we look at our business so I was surprised to find inspiration from a new source: a political pundit. David Brooks, a regular feature on major network news shows and a nationally recognized columnist wrote an interesting piece for the February 8, 2008 New York Times entitled “Questions for Dr. Retail.”

In comparing Hillary Clinton and Barak Obama, Brooks looks to retailing with the following quote:

. . . [T]he essential competition in many consumer sectors is between commodity providers and experience providers, the companies that just deliver product and the companies that deliver a sensation, too. There’s Safeway, and then there is Whole Foods. There’s the PC, and then there’s the Mac. There are Holiday Inns, and there are W Hotels. There’s Walgreens, and there’s The Body Shop.

Brooks makes the point that Obama is an experience provider and that Hillary is a commodity provider. Then he makes the intriguing point for those of us in the private business sector that whether you are shopping for a commodity or an experience in 21^st century America depends upon your economic status. Brooks writes:

The consumer marketplace has been bifurcating for years! It’s happening because the educated and uneducated lead different sorts of lives. Educated people are not only growing richer than less-educated people, but their lifestyles are diverging as well. A generation ago, educated families and less-educated families looked the same, but now high school graduates divorce at twice the rate of college graduates. High school grads are much more likely to have kids out of wedlock. High school grads are much more likely to be obese. They’re much more likely to smoke and to die younger.

Their attitudes are different. High school grads are much less optimistic than college grads. They express less social trust. They feel less safe in public. They report having fewer friends and lower aspirations. The less educated speak the dialect of struggle; the more educated, the dialect of self-fulfillment.

In other words, the wealthy are looking for an experience while the poorer are looking for a product. They just want to get by.

If you are a toy company or a retailer, it may be time to sit back and consider your product and whether your intended consumer base is weighted towards those who have the money to indulge in entertainment or those who are just getting by and are looking for a basic commodity? In an economy that is becoming more stratified, it’s certainly something to consider. 

Posted by Richard Gottlieb on February 12, 2008 | Comments (0)