Stephen L. Vargo & Robert F. Lusch

Topics: Marketing, Strategic management, Customer relationship management Pages: 43 (14777 words) Published: November 2, 2011
Stephen L. Vargo & Robert F. Lusch

Evolving to a New Dominant Logic for Marketing
Marketing inherited a model of exchange from economics, which had a dominant logic based on the exchange of “goods,” which usually are manufactured output. The dominant logic focused on tangible resources, embedded value, and transactions. Over the past several decades, new perspectives have emerged that have a revised logic focused on intangible resources, the cocreation of value, and relationships. The authors believe that the new perspectives are converging to form a new dominant logic for marketing, one in which service provision rather than goods is fundamental to economic exchange. The authors explore this evolving logic and the corresponding shift in perspective for marketing scholars, marketing practitioners, and marketing educators.


he formal study of marketing focused at first on the distribution and exchange of commodities and manufactured products and featured a foundation in economics (Marshall 1927; Shaw 1912; Smith 1904). The first marketing scholars directed their attention toward commodities exchange (Copeland 1920), the marketing institutions that made goods available and arranged for possession (Nystrom 1915; Weld 1916), and the functions that needed to be performed to facilitate the exchange of goods through marketing institutions (Cherington 1920; Weld 1917). By the early 1950s, the functional school began to morph into the marketing management school, which was characterized by a decision-making approach to managing the marketing functions and an overarching focus on the customer (Drucker 1954; Levitt 1960; McKitterick 1957). McCarthy (1960) and Kotler (1967) characterized marketing as a decision-making activity directed at satisfying the customer at a profit by targeting a market and then making optimal decisions on the marketing mix, or the “4 P’s.” The fundamental foundation and the tie to the standard economic model continued to be strong. The leading marketing management textbook in the 1970s (Kotler 1972, p. 42, emphasis in original) stated that “marketing management seeks to determine the settings of the company’s marketing decision variables that will maximize the company’s objective(s) in the light of the expected behavior of noncontrollable demand variables.” Beginning in the 1980s, many new frames of reference that were not based on the 4 P’s and were largely independent of the standard microeconomic paradigm began to emerge. What appeared to be separate lines of thought surStephen L. Vargo is Visiting Professor of Marketing, Robert H. Smith School of Business, University of Maryland (e-mail: svargo@rhsmith.umd. edu). Robert F. Lusch is Dean and Distinguished University Professor, M.J. Neeley School of Business, Texas Christian University, and Professor of Marketing (on leave), Eller College of Business and Public Administration, University of Arizona (e-mail: The authors contributed equally to this manuscript. The authors thank the anonymous JM reviewers and Shelby Hunt, Gene Laczniak, Alan Malter, Fred Morgan, and Matthew O’Brien for comments on various drafts of this manuscript.

faced in relationship marketing, quality management, market orientation, supply and value chain management, resource management, and networks. Perhaps most notable was the emergence of services marketing as a subdiscipline, following scholars’ challenges to “break free” (Shostack 1977) from product marketing and recognize the inadequacies of the dominant logic for dealing with services marketing’s subject matter (Dixon 1990). Many scholars believed that marketing thought was becoming more fragmented. On the surface, this appeared to be a reasonable characterization. In the early 1990s, Webster (1992, p. 1) argued, “The historical marketing management function, based on the microeconomic maximization paradigm, must be critically examined for its relevance to marketing theory and practice.” At the end...
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