Service Dominant Logic
Service dominant logic view of marketing has changed from the traditional, foundational, goods dominant logic of exchange, in which goods were the focus of exchange and services that marketing inherited from economics a little more than 100 years ago to service as the basis of economic and social exchange. Service dominant logic has bought a paradigm shift in marketing from goods centred “value is embedded in output” dominant logic where focus was on the efficiencies in the production of tangible output. which was fundamental to the industrial revolution to service centred view that is informed by resource-advantage theory, competence, knowledge and relationship marketing where “value is defined by and co-created in concert with the consumer” (vargo and lush P14, 6).one current example is internet purchasing where customers with or without their knowledge provide the web vendor with valuable information on purchasing habits.
The comparison between goods dominant logic and service dominant logic by vargo and lusch (2007) Goods Dominant logic
Customer and Environments as Exogenous
Firms Create Value
Operand Resources are Paramount
Management of Marketing Mix
Relationships are Repeated Encounters
Service Dominant logic
Customer and Environments as Endogenous
Value is Co-Created
Operant Resources are Paramount
Co-Creation of Marketing Mix
Relationships are Embedded
Profits are Learning Loop
Constantin and lusch (1994) define operand resources as resources on which an operation or act is performed to produce and effect e.g. Production, and they compare operand resources with operant resource which are employed on operand resources e.g. Technology. S-D logic treats everyone in the organisation as the value creators , According to Lush and Vargo 2006”One of the distinguishing features of S-D logic, in contrast to G-D logic, is the former’s treatment of all customers, employees, and organizations as operant resources, which are endogenous to both the exchange and value-creation processes. Since ‘service-for-service’ implies all parties are both value-creators and value beneficiaries, the implication are that the offerer/customer and supply/ demand distinction vanishes.”
Service dominant logic is more inclined to global sustainability where as goods dominant logic is less inclined to it because the service dominant logic uses operant resources which produce effect by enabling humans both to multiply the value of natural resource and to create additional operant resource e.g. : Microprocessor where the abundant resource like silica and embedded with knowledge .where as in goods dominant logic the operand resources are deplorable and can sustain only until the resources are available. Customer Alienation:
In goods dominant logic the customers are alienated as value distribution (Webster 1992) as operand resource as the customers were segmented, targeted, promoted to, distributed to, captured and then enticed to continue to purchase by seller using heavy promotion programs where transparency was exceptional and customers and environment were treated as exogenous. Whereas in service dominant logic advocates viewing the customer as operant resource a collaborative partner who co creates value with the firm (Vargo and Lush 2004) and promotes a market with philosophy and customers and environment were considered as endogenous hence customers are not alienated in service dominant logic.
Respect for Marketing in the firm:
In the goods dominant logic Marketing is being forced out of the equation. Sales is not guided by marketing strategy, but by the need to hit metrics for volume and margin also Marketing ideas are not linked to driving profits.The Service dominant logic helps to gain marketing respect in the firm were strategy are made based on the service rather than goods. Marketing plays a vital role in...
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