Goods Dominated Logic in Marketing
MK0388 Marketing Management and Strategies
Assignment
Part 1
Goods-Dominated (GD) logic has been instilled in contemporary thinking since the industrial era, stemming from the fact that economic growth was achieved through a country’s ability to produce excess quantities of goods and export the excess for wealth. Although when this logic is extended into services it results in reducing service offerings into man hours, information and other ‘exchangeable’ units. Whereas recently, literature has proposed the concept of a Service Dominated (SD) logic where the customer and the firm are involved in co-creating value-in-use, rather than value-in-exchange, within a service system (Vargo et al 2008). In this SD logic Vargo & Lausch (2004) suggest that a business’ offering of a value is merely a proposition for the customer to realise at point of use, and until this point what is being offered is only potentially valuable described in FP7 of the 10 “Foundational Premises” offered by Vargo and Lausch (2008). They do this by reaching into a pre-industrial past to find a more holistic marketing logic suited to the more open, dynamic and global markets than the control-orientated resource allocation model most commonly represented as the 4P’s (Ballantyne & Varey 2008). And it has been suggested that, through this SD logic, marketing literature has seen a paradigm shift as more attention is being paid to the intangible resources of a firm due to the impact they have on the co-creation of value between suppliers and customers, rather than simply exchanging their good or service for a pre-determined price as even Kotler (1977) notes that the “importance of physical products lies not so much in owning them as in obtaining the services they render”. Instead it is now believed the strategic role of the supplier is to support the customer’s value creating purposes with both service activities and goods that render service (Gummesson 1993). One of the main
Assignment
Part 1
Goods-Dominated (GD) logic has been instilled in contemporary thinking since the industrial era, stemming from the fact that economic growth was achieved through a country’s ability to produce excess quantities of goods and export the excess for wealth. Although when this logic is extended into services it results in reducing service offerings into man hours, information and other ‘exchangeable’ units. Whereas recently, literature has proposed the concept of a Service Dominated (SD) logic where the customer and the firm are involved in co-creating value-in-use, rather than value-in-exchange, within a service system (Vargo et al 2008). In this SD logic Vargo & Lausch (2004) suggest that a business’ offering of a value is merely a proposition for the customer to realise at point of use, and until this point what is being offered is only potentially valuable described in FP7 of the 10 “Foundational Premises” offered by Vargo and Lausch (2008). They do this by reaching into a pre-industrial past to find a more holistic marketing logic suited to the more open, dynamic and global markets than the control-orientated resource allocation model most commonly represented as the 4P’s (Ballantyne & Varey 2008). And it has been suggested that, through this SD logic, marketing literature has seen a paradigm shift as more attention is being paid to the intangible resources of a firm due to the impact they have on the co-creation of value between suppliers and customers, rather than simply exchanging their good or service for a pre-determined price as even Kotler (1977) notes that the “importance of physical products lies not so much in owning them as in obtaining the services they render”. Instead it is now believed the strategic role of the supplier is to support the customer’s value creating purposes with both service activities and goods that render service (Gummesson 1993). One of the main