S-D Logic
Introduction to Service Dominant (S-D) Logic
Recently there has been a shift away from the traditional product-orientated marketing perspective to a more service-orientated one which focuses on “intangible resources, the co-creation of value and relationships” (Vargo and Lusch, 2004). Merz, He & Vargo (2009) commented that goods were a “vehicle for service”, and whilst the provision of goods was still an important part of a transaction, there will always be some element of intangible service attached to each product, which develops relationships and delivers value to the consumer (Ballantyne & Varey, 2008).
Vargo and Lusch’s literature (2008) gives ten foundational premises implying a complete change in perspective from a tangible goods-centred view. They help explain S-D logic and how it differs from the traditional goods-dominant (G-D) logic (appendix 1). One of the major differences includes the use of resources (Vargo and Lusch 2004a). G-D logic focuses on operand resources which need to be acted upon to produce an effect (e.g. a product). The foundations of S-D logic rely on operant resources (e.g. human knowledge) which act upon operand resources.
S-D logic is distinct from G-D logic in focusing on the long term gains of sustaining relationships with customers and learning from them in order to make their business more efficient and profitable. This involves an intangible element of business, where the focus is not solely on the product supplied, but the intangible interaction with the customer.
An argued strength of adopting an S-D logic approach is that it adopts a holistic perspective, suiting the modern global business world (Ballantyne and Varey, 2008) where the 4Ps marketing mix is said to be too limiting (Zineldin & Philipson, 2007). S-D logic to supplement the 4 Ps by giving them ‘strategic direction’, (Lusch and Vargo, 2006) providing a context to each decision to increase efficiency (Lusch and Vargo, 2006). Responding to this, Kotler argues
Recently there has been a shift away from the traditional product-orientated marketing perspective to a more service-orientated one which focuses on “intangible resources, the co-creation of value and relationships” (Vargo and Lusch, 2004). Merz, He & Vargo (2009) commented that goods were a “vehicle for service”, and whilst the provision of goods was still an important part of a transaction, there will always be some element of intangible service attached to each product, which develops relationships and delivers value to the consumer (Ballantyne & Varey, 2008).
Vargo and Lusch’s literature (2008) gives ten foundational premises implying a complete change in perspective from a tangible goods-centred view. They help explain S-D logic and how it differs from the traditional goods-dominant (G-D) logic (appendix 1). One of the major differences includes the use of resources (Vargo and Lusch 2004a). G-D logic focuses on operand resources which need to be acted upon to produce an effect (e.g. a product). The foundations of S-D logic rely on operant resources (e.g. human knowledge) which act upon operand resources.
S-D logic is distinct from G-D logic in focusing on the long term gains of sustaining relationships with customers and learning from them in order to make their business more efficient and profitable. This involves an intangible element of business, where the focus is not solely on the product supplied, but the intangible interaction with the customer.
An argued strength of adopting an S-D logic approach is that it adopts a holistic perspective, suiting the modern global business world (Ballantyne and Varey, 2008) where the 4Ps marketing mix is said to be too limiting (Zineldin & Philipson, 2007). S-D logic to supplement the 4 Ps by giving them ‘strategic direction’, (Lusch and Vargo, 2006) providing a context to each decision to increase efficiency (Lusch and Vargo, 2006). Responding to this, Kotler argues
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