TL;DR: The Future Belongs to Experience Architects

The Hedonic Hierarchy isn't just a theoretical framework—it's a practical guide to value creation in today's economy. As consumers increasingly seek meaning over material, connections over convenience, and transformation over transactions, businesses that understand and adapt to this hierarchy will thrive.

The most successful companies of the coming decade won't simply sell products or services; they'll architect experiences that help consumers construct identity, create meaning, and connect with others. In doing so, they won't just satisfy customer needs—they'll become an integral part of customers' personal narratives and self-concept.

In the attention economy, where time is the ultimate luxury and experiences form the currency of a life well-lived, understanding the Hedonic Hierarchy isn't optional—it's essential for any business striving to remain relevant and valuable in consumers' increasingly experiential lives.

Why People Buy Experiences Before Services Before Products

In the complex landscape of consumer behavior, a fascinating pattern has emerged in recent years—a clear hierarchical structure in how people prioritize their spending. This phenomenon, which we call the Hedonic Hierarchy, demonstrates that consumers increasingly value experiences over services, and services over products. Understanding this hierarchy isn't just academically interesting; it's critical for businesses looking to position their offerings effectively in today's marketplace.

The Three-Tier Hierarchy of Consumer Desires

At its core, the Hedonic Hierarchy reflects a fundamental shift in consumer psychology—away from material accumulation and toward experiential consumption. Let's explore each tier:

Tier 1: Experiences (Highest Value)

Experiences represent the pinnacle of consumer desire. These are memorable events that engage people emotionally, intellectually, and sensorially.

Why experiences reign supreme:

• Research from Cornell University shows that experiential purchases provide more enduring happiness than material ones

• Experiences form part of our autobiographical memory and personal narrative

• They deliver "social currency"—stories worth sharing that enhance one's perceived status and identity

• Experiences typically involve multiple sensory inputs, creating stronger memory imprints

Consider the explosion of the experience economy: food tours instead of restaurants, festival tickets rather than music streaming subscriptions, and immersive pop-up events commanding premium prices. These experiences aren't just purchased—they become part of who we are.

Tier 2: Services (Middle Value)

Services occupy the middle tier—valued more highly than physical products but less than transformative experiences.

Why services outrank products:

• They often save consumers' most precious resource: time

• Many services involve human connection, satisfying social needs

• They frequently reduce cognitive load and decision fatigue

• Services can be personalized in ways products often cannot

• They don't occupy physical space or require maintenance

The subscription economy exemplifies this tier's growth, with consumers willingly paying monthly fees for services like Netflix, meal kit deliveries, or curated clothing selections—all of which minimize effort while maximizing convenience.

Tier 3: Products (Base Value)

Physical products form the foundation of the hierarchy. While still necessary and valued, they increasingly serve as gateways to experiences rather than ends in themselves.

The evolving role of products:

• They're increasingly evaluated based on experience facilitation

• Products with strong experiential components command higher prices

• Digital dematerialization has reduced the prestige of mere ownership

• Environmental consciousness has dampened accumulation desires

• Products create maintenance obligations that services and experiences don't

Even in product categories, we see this hierarchy at work. Apple doesn't just sell phones; they sell entrance into an ecosystem of experiences. Peloton isn't merely selling exercise equipment; they're selling interactive fitness experiences and community membership.

Neurological and Psychological Foundations

This hierarchy isn't arbitrary—it's rooted in how our brains process and value different types of consumption:

Hedonic Adaptation

We quickly adapt to material possessions. The new car or smartphone that initially thrilled us soon becomes just another object we take for granted. Experiences, however, tend to resist this adaptation because:

• They exist primarily in memory, where they're often idealized over time

• They can be reinterpreted and shared, gaining new meaning

• They aren't constantly visible, avoiding "familiarity decay"

A study in the Journal of Consumer Psychology found that material purchases showed a 33% faster hedonic adaptation rate compared to experiential purchases.

The Diminishing Utility of Possessions

As societies reach material sufficiency, additional possessions provide diminishing returns in happiness. In contrast, novel experiences continue to deliver happiness even in affluent populations.

Identity Construction

Modern consumers increasingly construct their identities through what they do rather than what they own. Experiences shape our narratives about ourselves in ways products rarely can, activating deeper regions of the brain associated with self-concept and identity.

Implications for Businesses

Understanding the Hedonic Hierarchy creates significant opportunities for businesses willing to adapt:

Product Companies: Experientialization Is Essential

For those selling physical goods, the mandate is clear—wrap your products in experiences:

• Successful Example: LEGO transformed from a toy manufacturer to an experience company with theme parks, movies, and immersive retail locations. This shift helped rescue the company from near-bankruptcy to become one of the world's most valuable brands.
  
  

• Successful Example: Sephora converted traditional cosmetics shopping into an interactive beauty playground with testing stations, classes, and personalized consultations, enabling them to thrive despite e-commerce competition.
  
  

Service Providers: Elevate to Experiences

Service businesses must find ways to transform functional offerings into memorable experiences:

• Successful Example: Equinox evolved from a standard gym service to a lifestyle brand offering exclusive events, retreats, and community, allowing them to charge premium prices in a competitive market.
  
  

• Successful Example: Airbnb's transition from accommodation service to "Experiences" marketplace demonstrated their understanding that where you stay matters less than what you do when you get there.
  
  

Experience Creators: Focus on Transformation

For those already in the experience business, the next frontier is transformation—helping customers become who they aspire to be:

• Successful Example: Masterclass doesn't just offer educational content; they sell the transformational promise of learning from the world's best, activating aspirational identity shifts.
  
  

• Successful Example: Burning Man has evolved from an event to a transformational experience that changes participants' worldviews and self-perception, creating an almost religious devotion among attendees.
  
  

The Spending Evidence

Consumer spending patterns confirm this hierarchy. According to McKinsey research, experience-related categories have grown at approximately 1.5 times the rate of personal consumption over the past decade. Even during economic downturns, experience spending tends to be more resilient than product spending.

A particularly telling statistic: 78% of millennials report preferring to spend money on experiences or events over material purchases, according to a Harris Group study. This preference crosses generational lines, with Gen Z showing even stronger experiential priorities.

Global and Cultural Variations

While the Hedonic Hierarchy appears across markets, its expression varies culturally:

• In Scandinavian countries, experience consumption is often tied to self-development and personal growth

• Asian markets frequently emphasize the social sharing aspects of experiences

• In developing economies, certain premium products still carry significant status, though this typically shifts as material sufficiency is achieved

Despite these variations, the underlying progression from product to service to experience preference appears consistent as economies develop.

Future Trajectory: The Virtual Experience Expansion

The hierarchy is evolving further with technology. Virtual and augmented reality are creating entirely new categories of experiences that blend the boundaries between products, services, and experiences:

• Virtual concerts attracting millions of attendees

• Digital art and NFT collections creating new forms of experiential ownership

• Augmented reality shopping experiences merging physical products with digital experiences

These developments suggest not a replacement of the hierarchy but its expansion into new domains where the lines between categories blur while maintaining the fundamental value progression.

Creating Value Within the Hierarchy

For businesses contemplating their position in the Hedonic Hierarchy, consider these strategies:

1. Product companies: Create "ownership experiences" through customization, community, and ongoing engagement

2. Service providers: Add experiential elements that transform functional benefits into memorable moments

3. Experience creators: Focus on transformation and identity reinforcement, helping customers become who they aspire to be

4. All businesses: Consider how to move up the hierarchy by reframing offerings toward their experiential components

The Future Belongs to Experience Architects

The Hedonic Hierarchy isn't just a theoretical framework—it's a practical guide to value creation in today's economy. As consumers increasingly seek meaning over material, connections over convenience, and transformation over transactions, businesses that understand and adapt to this hierarchy will thrive.

The most successful companies of the coming decade won't simply sell products or services; they'll architect experiences that help consumers construct identity, create meaning, and connect with others. In doing so, they won't just satisfy customer needs—they'll become an integral part of customers' personal narratives and self-concept.

In the attention economy, where time is the ultimate luxury and experiences form the currency of a life well-lived, understanding the Hedonic Hierarchy isn't optional—it's essential for any business striving to remain relevant and valuable in consumers' increasingly experiential lives.

About the Author: Hendy Saint-Jacques is the Founder of Valkyrie Media Advertising, pioneering quantum marketing principles to liberate human potential through autonomous, solar-powered value creation systems. With a background bridging marketing, physics, and systems thinking, Hendy is dedicated to creating mechanisms that free people from trading their irreplaceable time for manufactured currency.