The Management and Marketing of Service: Serviceforum 07 October 29-30, 2007, Tampere, Finland

ServiceForum 07 October 29-30, 2007, Tampere, Finland
The Management and Marketing of

Service
Implications
of a Service Logic and Customer Value-In-Use Perspective
Tore Strandvik
Professor of Marketing
CERS Centre for Relationship Marketing and Service Management

HANKEN Swedish School of Economics and Business Administration
Helsinki, Finland
© Tore Strandvik 2007 Email: tore.strandvik@hanken.fi CERS Centre for Relationship Marketing and Service Management
Services marketing or service marketing?
Service-dominant logic,Service
logic, Service science, Value-in-
use...what is going on?
HISTORY AND PRESENT
An Inside View from One Classroom of the
Nordic School
Past, Present, & Future of Research

at the Department of Marketing and CERS, HANKEN, Finland
Nordic School Timeline at Hanken
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1980 1990 1994 2000 2004 2007
Continuous cooperation with CTF/Karlstad University and Stockholm University, ASU
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© Tore Strandvik 2007 Email: tore.strandvik@hanken.fi CERS Centre for Relationship E Marketing and Service Management
Research Topics in the Beginning (1994)
Doctoral dissertations at the Marketing Department of Hanken
(31) 1994-2007
Quality, value, loyalty

167. Rytting, Leif: Visst gör kunden en stor del av jobbet – referensramar för kunders
medverkan vid tillkomsten av konsumenttjänster, Customer Participation in Consumer
Services, 2007 (Conceptual)
155. Korkman, Oskar: Customer Value Formation in Practice: A Practice-Theoretical
Approach, 2006 (Conceptual, qualitative)
129. Leino, Mirel: Value Creation in Professional Service Processes. Propositions for
Understanding Financial Value from a Customer Perspective, 2004 (Conceptual,
Theoretical)
125. Nordman, Christina: Understanding Customer Loyalty and Disloyalty - The Effect of
Loyalty-Supporting and -Repressing Factors, 2004 (Conceptual, Qualitative)
124. Heinonen, Kristina: Time and Location as Customer Perceived Value Drivers, 2004
(Conceptual, Quantitative and Qualitative)
111. Arantola, Heli: Relationship Drivers in Provider - Consumer Relationships.
Empirical Studies of Customer Loyalty Programs, 2002 (Conceptual, Quantitative and
Qualitative)
76. Ojasalo, Jukka: Quality Dynamics in Professional Services, 1999 (Conceptual,
Qualitative)
63. Liljander, Veronica: Comparison Standards in Perceived Service Quality, 1995
(Conceptual, Quantitative)
58. Strandvik, Tore: Tolerance Zones in Perceived Service Quality, 1994 (Conceptual,
Quantitative)
Customer relationships/dynamics
132. Åkerlund, Helena: Fading Customer Relationships, 2004 (Conceptual, Qualitative)
78. Roos, Inger: Switching Paths in Customer Relationships, 1999 (Conceptual,
Qualitative)
Business relationships
134. Wendelin, Robert: The Nature and Change of Bonds in Industrial Business
Relationships, 2004 (Conceptual, Qualitative)
112. Owusu, Richard: Collective Network Capability in International Project Business
Networks - A Case Study of the Business Network for the Ashanti Electrification
Project in Ghana, 2003 (Conceptual, Qualitative)
94. Voima, Päivi: Negative Internal Critical-Incident Processes - Windows on
Relationship Change, 2001 (Conceptual, Qualitative)
77. Leminen, Seppo: Gaps in Buyer-Seller Relationships. Case Studies in the
Telecommunication Industry, 1999. (Conceptual, Theoretical)
106. Polsa, Pia: Power and Distribution Network Structure in the People's Republic of
China - The Case of an Inland City in Transition, 2002 (Conceptual, Qualitative)
69. Rosenbröijer, Carl-Johan: Capability Development in Business Networks. A Study of
Distribution in the Fine Paper Sector in the United Kingdom, 1998 (Conceptual, Qualitative)
66. Holmlund Maria: Perceived Quality in Business Relationships, 1997 (Conceptual,
Qualitative)
Relationship profitability, productivity

75. Ojasalo, Katri: Conceptualizing Productivity in Services, 1999 (Conceptual,
Theoretical)
55. Storbacka, Kaj: The Nature of Customer Relationship Profitability - Analysis of
Relationships and Customer Bases in Retail Banking, 1994 (Conceptual, Quantitative)
Marketing communication, relationship communication
170. Berndtson, Mikael: Informell marknadskommunikation – teoretisk analys jämte en studie
av användningsmöjligheter inom banksektorn, Informal marketing communication – a
theoretical analysis and use within the banking sector, 2007 (Conceptual, qualitative)
139. Kauppinen, Hannele: Colours as Non-Verbal Signs on Packages, 2004 (Quantitative)
137. Finne, Åke: Hur den aktiva kunden konstruerar budskap. Ett synsätt inom
relationskommunikation, How the active customer constructs messages. A Perspective
within Relationship Communication, 2004 (Conceptual, Qualitative)
133. Skåtar, Kim: Faktorer som Initierar och Påverkar Prat i Långsiktiga Relationer, Word-of-
Mouth in Bank Relationships, 2004 (Quantitative)
99. Lindberg-Repo, Kirsti: Customer Relationship Communication - Analysing
Communication from a Value Generating Perspective, 2001 (Conceptual, Qualitative)
74. Stenbacka, Caroline: Brand Visibility - en referensram för marknadskommunikation med
ett relationsmarknadsföringsperspektiv. Brand Visibility - A Frame of Reference for
Marketing Communications with a Relationship Marketing Perspective. English
Summary, 1998 (Conceptual, Qualitative)
123. Ballantyne, David: A Relationship Mediated Theory of Internal Marketing, 2004
(Conceptual, Qualitative)
Service/product development
140. Kokko, Teemu: Offering Development in the Restaurant Sector – A Comparison
between Customer Perceptions and Management Beliefs, 2005 (Conceptual,
qualitative)
92. Kinnunen, Ritva: Creating and Testing of Service Ideas and Service Production
Concepts, 2001 (Qualitative)
122. Sääksjärvi, Maria: Consumer Evaluation of Hybrid Innovations, 2004 (Quantitative)
57. Hedvall, Maj-Britt: The Process of Self-Care Decision Making, 1994 (Conceptual,
Qualitative)
Research Topics Now (2007)
Brands, Images and

Communication in Relationship
a Relationship Dynamics
Setting
Strategic customer
Internal Marketing management
The influence of
and customer relationships
Service Innovation and business networks
on the competitiveness
of firms
Value and satisfaction

in services and
relationships
Core researchers
Visiting researchers
Business participants International business
Students Business services, relationships and networks
relationships and networks
Currently enrolled active doctoral students (34)
Golik Natasa Email as a communication channel in B:B
Haaranen Tuulikki Networks in the Music Industry
Hallberg, Arja Service orientation in manufacturing companies
Helkkula Anu Marjatta Service design in municipality services
Helle, Pekka Value creation and value capture in B:B
Hellén, Katarina Surrogate customers perception of service quality
Hintsanen Suvi Tuulikki Account Managers Relationship Orientation
Holmqvist, Jonas The effect of language on service quality
Höykinpuro Ritva Contrasting Multiple Perspectives on Service Performance
Kedzior, Ryszard Consumption in Virtual Communities (Second Life)
Leverin, Andreas Customer relationships as assets in retail banking
Liewendahl, Helena Instilling relationship orientation in the organisation
Mattinen, Hannu Relationship communication
Mickelsson, Karl-Jacob Consumer Enthusiasm
Nenonen Suvi Maria Profitability of Customer Portfolios in B:B
Nyman, Henrich Customer Portfolios in Retail banking
Pulkkinen Ewa Consumer Adoption of Innovations
Pura, Minna Customer Perceived Value and Loyalty in Mobile Services
Rindell, Anne-Maj Image Heritage
Rundelin Antti Social responsibility
Sarvikivi, Marja-Leena Patterns in the advertising of a specific company
Solhäll, Catharina The use and non-use of customer information
Steinby, Camilla Social networks in the pharmacy industry
Suokannas, Maria Elderly consumers
Teng, Ming Relationship marketing in China
Vihtkari Tiina Hannele Brand construction in Virtual communities
Holma, Anne Adaptation processes in business travel services

Paajanen, Erkki
Ravald, Annika Customer perceived value
Vesterinen, Nina Tourism
Virtanen, Henrik
West, Björn Franchising strategies
Wägar Karolina Learning about customers - a study of frontline personnel
Åhman,
© Tore Strandvik 2007 Email: Sara
tore.strandvik@hanken.fi CERS in
Strategic Purchasing Centre for Relationship
a Supply Network Marketing and Service Management
Christian Grönroos
”If I were to describe my career in service marketing
research with just a few words, I would choose to
quote Frank Sinatra: ”I did it my way.” In my research
approach, I have never felt obliged to be constrained
by existing paradigms, models or concepts. If I believed
that they did not fit, I put them aside and looked for
alternatives. If I could not find anything applicable, I
developed something new myself. I have never considered
an empirical approach that the academic establishment
has considered the only accepted or preferred scientific
methodology if I did not believe in it”
Evert Gummesson
” I have an interest in theory generation rather than

theory testing, in syntheses rather than reduction, and
in ’Verstehen’ rather than statistical evidence. This
requires an inductive research approach for which
Glaser and Strauss’s Grounded Theory has been and
still is a source of inspiration; qualitative data generation
methods, including participant observation and action
research; case study research; interpretation rather than
statistical inference; the recognition of the positive
qualities of subjectivity… and the rejection of the
supremacy of objectivity…; and the deployment of
experiences from ’reflective practitioners’.
My Image of the Nordic School
• Challenge Follow
• Explore Validate
• Create Use
• Stretch Rigor
CHANGES IN MENTAL MODELS
- WHAT IS MARKETING AND WHAT IS SERVICE?
The Evolution of Marketing
Management
focus
Network Customer
Relationship
2000- Value-in-useFocus on the
Management
e (network) customer’s production
r v ic processes and how
Se gic the firm can participate
Relationship lo
1990- Relationship
Customer Marketing (relationship) and Management
interface Focus on own
Episode Services production processes
1980- and how the customer
marketing participates
1970-
Transaction Traditional Focus on the
marketing firms own production
processes
Product Competence Core competence, Innovativeness,
of customer company’s learning
contact resources
personnel
Competitiveness driver = critical success factor
Different perspectives on the company’s offering
Network
Relationship
2000- Product
Network
Service
Relationship Network Product

1990- Relation-
ship
Customer Service
interface Network Product
Episode 1980- Service
Relationship
1970-Network Product Service

Transaction
Relationship

of customer company’s learning capacity
contact resources
personnel
Competitiveness base
What is the company’s offering?
Network
2000-
Membership
in a Community
Relationship
1990- Relationship
Customer
interface
Episode 1980- Service
1970-
Transaction
Product

contact resources
personnel
The Evolution of Marketing
New Business Concepts
Modularised
Network Offerings
2000- Service New Virtual Market
Relationship
Science? Places
Management (network)
Relationship Virtual Organisations
1990- Relationship
New Communication
Customer MarketingModes
(relationship) and Management
interface
Episode 1980- Services
marketing
1970-
Transaction Traditional
marketing
contact resources
personnel
The Evolution of Marketing – Widening the Scope
”Business concept innovation will
be the defining competitive advantage
Network
2000- in the age of revolution.”
Gary Hamel (2000): Relationship
Leading the Revolution
Relationship ”Business concept innovation is the capacity to
1990- Relationship
imagine dramatically different business
concepts or dramatically new ways of differentiating
interface existing business concepts”.
marketing
1970-
marketing
contact resources
personnel
Competitiveness driver = Critical Success
Factors
The Evolution of Marketing – Widening the Scope
Network
2000-
IMP Relationship
Relationship
1990- Relationship
Nordic School of
Relationship Marketing
interface
Nordic School of
marketing
Service Marketing
1970-
marketing
contact resources
personnel
4 Quality or Value creating dimensions
Network
2000-
Relationship
Relationship
1990- Relationship WHERE-
quality
WHEN-
quality
interface
marketing
HOW-
quality
1970-
Transaction WHAT-
Traditional
quality
marketing
contact resources
personnel
A comparison of SM, RM and the Network approach
Perspective on effects
Simple Complex
effects effects
Transactions, Service management,

episodes Brand management
Content Simple Relationship

marketing
relationships
Complex IMP
relationships
A comparison of the RM and the Network approach
Perspective on effects (functions)
Simple (single) Complex (multiple)
effects effects
Consumer
Simple
relationships
relationships
Substance
Interaction & Network
Approach in B:B
Complex
Marketing
relationships
(IMP)
Initiation of Cultivation of Dissolution of

relationships relationships relationships
Uninteresting
Network
approach
Current challenges in service management
The Customer’s world
Customer
processes,
Other’s The customer’s
goals
experiences experiences
Customer
perceived
value
Doing
Telling Listening
Challenge 7 Challenge 4 Challenge6
Listening Doing Telling
Challenge 3
Service
design
Challenge 1 Challenge 2 Challenge 5
Visioning
Strategy-making
The Company’s world

Current challenges in service management
Customer
processes,
goals
Customer
perceived
value
Doing
Telling Listening
Service focus Challenge 3

today
Service
design
Visioning
Strategy-making

FUTURE
Future challenges in service management
Customer
processes,
goals
Customer
perceived
value
Doing
Telling Listening
Challenge 3
Service
design
Strategic view Visioning

Strategy-making

Customer
processes,
goals
Customer
perceived
value
Doing
Telling Listening
Communication Listening Doing Telling

view
Challenge 3
Service
design

Strategy-making

Customer
processes,
Customer Other’s The customer’s
goals
Practices Customer
view perceived
value
Doing
Telling Listening
Communication Listening Doing Telling

view
Challenge 3
Service
design

Strategy-making

Future tasks in service management
Customer
processes,
Customer Other’s The customer’s
goals
Practices Customer
view perceived
value
Doing
Telling Listening
Business Brand
Insight
Communication
management Listening Doing
engineering Telling management
view
Challenge 3
Service
design

Strategy-making

COMMUNICATION MANAGEMENT
CHALLENGES
Next Practice in Marketing Communication ?
Next Management
Network practice? focus
Customer
Relationship
2000- Value-in-useFocus on the
Management
e (network) customer’s production
r v ic processes and how
the firm can participate
Se gic
Relationship lo
1990- Relationship
interface Focus on own
production processes
Episode 1980- Services and how the customer
marketing participates
Marketing
1970- campaigns
Transaction Traditional Focus on the
firms own production
marketing processes
contact resources
personnel
Competitiveness driver = critical success factor
The communication environment of today
”Where media consultants seek to convince

organizations to communicate more in order
to gain a larger ’share of voice’, many
decision makers have come to realize that
what they gain is primarily a larger ’share of
noise’” Christensen and Cheney 2000
One of the scarcest resources today is

attention and interest
”Consumers control integration, not
marketers”
(Don. E. Schultz, Marketing News, March 15, 2006. Don Schultz is one of the key academic
researchers working on IMC (Integrated MarketingCommunication) ideas)
”The error I made was in thinking that integration could

be driven by what the marketer or agency did or could
do. That is that integration was how the marketer
arranged his marketing and communication messages,
how he sent them out, how he measured the
marketplace result.
Thats not how integration works – not at all”
”Marketers don’t do the integrating, consumers do. That is,

the real value of integration occurs at the customer end,
not the marketer end of the process”.
What do consumers integrate?
(that may cause a management challenge)
• History and the present, perhaps something of

the future too
• Facts and fiction
• Our company with other companies
• Potentially all kinds of interactions whether they

are meant to be brand building elements or not
• Things that catch their attention and stick.

Generally consumers are not very attentive or
interested in companies
Reasons for a renewed interest in
Corporate Brand Management
• Corporate Brands represent an economic asset (brand equity/
customer equity) and are thus strategically interesting in the
business world of today, from the perspective of owners,
top management and financial management (compared to a
traditional interest among marketing and communication officers)
• In an increasingly turbulent and competitive markets Corporate Brands

are ways of creating trust, stability and differentiation. This applies
also internally and concerning other stakeholders.
• Corporate Brand Management is thus a strategic key issue from

shareholders/owners, top management’s and other stakeholders’ view.
Common underlying beliefs in marketing
communication management
• The company’s BRAND is something that is and can be
deliberately built by advertising campaigns and physical
designed ”corporate identity” elements (logos, colours, design,
etc.)
• It will be even more effective if all communication is integrated
according to a planned model = the company practices
Integrated Marketing Communication
• If the company decides to change its BRAND or IDENTITY it
can easily be done by changing the content of the marketing
communication
• It is rather easy to measure the effect of the communication, it
is more or less a question of monitoring sales and conducting
customer image studies or customer satisfaction studies. In fact
the marketing manager or an experienced ad agency
representative has a relatively good understanding of how
customers feel and think.
Reasons why common underlying beliefs
are wrong
• The company’s BRAND is something that is to a large extent
uncontrollable and built by each customer or stakeholder.
Everything communicates, correct or incorrect
• The customer integrates everything anyway – regardless of
what we as a company do
• Customer’s usually remember things- there is an image
heritage, especially if they are our customers or have been our
customers. Those that are not our customers may pay less
attention but they are on the other hand some other companies’
customers.
• It is quite complicated to study what customers really think
and feel and how they have formed their brand image. It is very
difficult for a marketing manager or ad agency representative to
understand the current situation without specific research.
What should we do?
• In general recognize silent and invisible communication as

an field for increased attention because it might have strong
effects on brand equity, customer equity and thus the
financial result of the company
• Remember that this statement may be true:
”…in a cluttered communication environment saturated with
messages asserting importance and uniqueness, it is highly
unlikely that corporate messages will be able to stimulate
more than a passing interest, let alone engagement, outside
the organization’s formal boundaries.” Christensen and
Cheney 2000
To sum up
• As marketers we need to know what should be

considered – a map of what communicates
• An understanding of what we perhaps could do
differently in order to maximize our impact
• An understanding of how different ”media” affects
different customers in different situations
• Put more effort on studying experiences and
practices of customers
INDUSTRIAL SERVICE CHALLENGES
Transition from industrial services to industrial service
- change in underlying business logic
System
Scope
of
offering
Component
Seller Interactive Customer

Control
Transition from industrial services to industrial service
System Networks and

Nets (IMP)
Scope Service-dominant
business logic
Goods and services

dominant business
Component logic
Seller Interactive Customer

Control
To conclude
• Focus on strategic issues, communication and customer processes

and practices
• Manage brands, business concepts and customer insight
• Always strive beyond current thinking models, even service-dominant
logic, service science etc.
• Be innovative rather than rigourous
• Service marketing and management has strong roots, cross-fertilize
do not reinvent the wheel
Has there been a preoccupation on what companies are selling
rather than what customers are buying and paying for?
THANK YOU!

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ServiceForum 07 October 29-30, 2007, Tampere, Finland

The Management and Marketing of

CERS Centre for Relationship Marketing and Service Management

Past, Present, & Future of Research

Quality, value, loyalty

Relationship profitability, productivity

Brands, Images and

Value and satisfaction

Holma, Anne Adaptation processes in business travel services

” I have an interest in theory generation rather than

Relationship Network Product

1970-Network Product Service

Product Competence Core competence, Innovativeness,

Product Competence Core competence, Innovativeness,

Transactions, Service management,

Content Simple Relationship

Initiation of Cultivation of Dissolution of

Listening Doing Telling

The Company’s world

Listening Doing Telling

Service focus Challenge 3

The Company’s world

Listening Doing Telling

Strategic view Visioning

The Company’s world

Communication Listening Doing Telling

Strategic view Visioning

The Company’s world

Communication Listening Doing Telling

Strategic view Visioning

The Company’s world

Strategic view Visioning

The Company’s world

”Where media consultants seek to convince

One of the scarcest resources today is

”The error I made was in thinking that integration could

Thats not how integration works – not at all”

”Marketers don’t do the integrating, consumers do. That is,

• History and the present, perhaps something of

• Facts and fiction

• Our company with other companies

• Potentially all kinds of interactions whether they

• Things that catch their attention and stick.

• In an increasingly turbulent and competitive markets Corporate Brands

• Corporate Brand Management is thus a strategic key issue from

• In general recognize silent and invisible communication as

• As marketers we need to know what should be

Seller Interactive Customer

System Networks and

Goods and services

Seller Interactive Customer

• Focus on strategic issues, communication and customer processes

rather than what customers are buying and paying for?

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