Is a tourist train ride Transportation? Or Entertainment?
This can get confusing, especially when the operation requires moving passengers from point a to point b. It LOOKS like transportation. To the operations crew whose job it is to keep the trains running, it FEELS like transportation. When guests purchase train tickets to get to a kayaking point or to return from a cycling trip, it kind of IS transportation.
Why is the distinction important? Because the customers’ purchase criteria will differ. Transportation in all its many modes is fundamentally a means to an end. It’s a way to get somewhere: to work, to school, shopping. Purchase criteria will include time and place of departure & arrival, time in transit, and price. The goal = the Destination, or, getting there. That’s Transportation.
When the goal = the Journey, the customer’s purchase criteria shift to: Will it meet my need? Is it worth it? Is it unique or are there alternatives? When the Customer is valuing the anticipated Experience, That’s Entertainment.
The US Bureau of Economic Analysis categorizes Personal Consumption Expenditures (PCE) in terms of Goods, both Durable & Nondurable, and Services. Transportation and Entertainment are both in the Services category. Services can be segmented further into “Experience-related services” including parks, theaters, events, museums, etc.
“Experiences are king” is a headline in an article from management consulting firm, McKinsey & Co. The article states that over the past few years, consumer spending on experiences — has grown nearly 4.0 times faster than spending on things(goods). McKinsey found the average spend on Entertainment for GenXers, Baby Boomers and Millennials exceeds $100, per month, with Millennials leading the way at $164 per month. The authors assert that the shift in consumer spending behavior is here to stay and is driven by three keys factors:
1) the perspective on what leads to happiness,
2) the growing importance of social media, and
3) the increasing fear of missing out.
Happiness. Citing a Cornell University research study which found that the value placed on material goods tends to decrease over time while the value of experiences tends to increase with the passage of time, the McKinsey authors conclude that shared experiences with friends and family have a deeper link to long term happiness than buying things.
Likes. Experiences make for sharable content, stories and pictures that will garner likes and shares
FOMO. Fear Of Missing Out. Keeping up no longer means owning the same things as the Joneses. Now it means joining in and doing the same, or better, more interesting things.
Good news for tourist railroads! With consumers increasing spending on experience-related services, a rail excursion is the perfect opportunity to create memories with family & friends, upload and share stories and pictures, enjoy a unique and interesting journey.
Source: McKinsey & Company “Cashing in on the US experience economy”-December 2017.