The Experience Economy divides commercial offerings into five categories:
(1) Raw materials
(2) Products
(3) Services
(4) Experiences
(5) Transformations

The authors argue that our emerging economy is one of experiences, which is differentiated from mere services by the experience itself, which adds value beyond that added by services.

One example they cite is coffee. The price per pound is around a dollar, meaning one or two cents per cup. When someone roasts, grinds, and packages the coffee, it sells as a product for around 5 to 25 cents per cup. At a typical diner, that same coffee product offered as a service will sell for 50 cents to a dollar per cup. At Starbucks, the service is transformed into an experience, in which the customer comes in, smells the coffee, waits in a queue, orders their own specialty drink, and has a steaming cup of hot coffee made to order, all for 2-5 dollars per cup. It is the experience, they argue, that customers are willing to pay for. (The fifth aspect, transformations, is covered mainly toward the end of the text, and is more of a foreshadowing of that to come than an analysis of existing economic offerings.)

An interesting quote:

The richest experiences encompass aspects of all four realms [entertainment, education, esthetic, escapist]. These center around the "sweet spot" in the middle of the framework. America Online's success results not from any one element but from the collective options--and crosses the boundaries of the realms of experience. As Steve Case, president and CEO, said in a response to a question about which online areas would generate AOL's future growth, "We don't break it out into separate areas or applications. We see online as a whole packaged experience that we want to bring to customers. This package increasingly includes some new areas, and more of what we already have--multiplayer games, shopping, and financial services. But what's really going to drive this is the overall experience." (pp. 30, 39)

A second quote:

Designing for the average is the root cause of customer sacrifice; every mass-produced product comprises a bundle of 'take-it-or-leave-it' features or dimensions offered to all customers. The more features bundled, the greater the likelihood of introducing some element that disqualifies the product with a particular buyer.... Similarly, talk about "designing for the customer" in many organizations really means designing for "the average customer"--who doesn't really exist.... Each customer is unique, and all deserve to have exactly what they want at a price they are willing to pay. (pp. 79, 86)

One final quote:

To truly differentiate themselves, businesses must focus first on increasing customer satisfaction, then on eliminating customer sacrifice, and finally on creating customer surprise. (p. 99)

The book really tries to convince readers of the subtext of the title: "Work is Theatre & Every Business a Stage." They're clearly theatre folks, and they write about business in the language of theatre. Whether or not business really is theatre, they pose some compelling ideas about the future of business.