Professional Documents
Culture Documents
SDL - What It Is
SDL - What It Is
SDL - What It Is
Precursors
S-D Logic
Services are exchanged for servicesit is the beginning, the middle, and the end of economic science
Goods as distribution mechanisms for service Goods as embodied knowledge Strategic Role of Resource Management
What is needed is not an interpretation of utility created by marketing, but a marketing interpretation of the whole process of creating utility (Alderson, 1957)
The historical marketing management function, based on the microeconomic maximization paradigm, must be critically examined for its relevance to marketing theory and practice. Webster (1992) The exchange paradigm serves the purpose of explaining value distribution (but) where consumers are involved in coproduction and have interdependent relationships, the concern for value creation is paramountThere is a need for an alternative paradigm of marketing. Sheth and Parvatiyar (2000) The very nature of network organization, the kinds of theories useful to its understanding, and the potential impact on the organization of consumption all suggest that a paradigm shift for marketing may not be far over the horizon. Achrol and Kotler (1999)
A Partial Pedigree
S-D Logic
e.g., Shostack (1977); Berry (1983); Gummesson (1994) ; Gronroos (1994); etc. Penrose (1959)
Network Theory
Service
S-D Logic
The application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself (self-service)
Operand Resources
Operant Resources
Market With (Collaborate with Customers & Partners to Create & Sustain Value)
Through 1950
1950-2005
2005+
Foundational Premises
S-D Logic
FP1. The application of specialized skill(s) and knowledge is the fundamental unit of exchange.
Activities render service; things render service (Gummesson 1995) : goods are appliances
Operant resources, especially know-how, are the essential component of differentiation Service only now becoming more apparent with increased specialization and outsourcing
There is no value until offering is used experience and perception are essential to value determination
Since value is always determined by the customer (value-inuse)it can not be embedded through manufacturing (value-in-exchange)
FP 9. Organizations exist to combine specialized competences into complex service that is demanded in the marketplace.
Operant resources being used for the benefit of the customer places the customer in the center of value creation and implies relationship.
10
Operand Resources Tangible Value Added Goods Products Transactional Units of Output Promotion Brand Equity Profit Maximization
G-D Focus
Operant Resources Intangible Co-creation of value Service Experiences Relational Processes Conversation/Dialog Customer Equity Financial Feedback
S-D Focus
Concepts
Goods Products
Transitional Concepts
Services Offerings Benefit
Service-Dominant Concepts
Service Experiences Solution
Feature/attribute Value-added Profit maximization Price Equilibrium systems Supply Chain Promotion To Market Product orientation
Co-production
Financial Engineering Value delivery Dynamic systems
Co-creation of value
Financial feedback/learning Value proposition Complex adaptive systems Value-creation network/constellation Dialog Market with Service-Dominant Logic (Consumer and relational)
12
Value-Chain
Integrated Marketing Communications Market to Market Orientation
Why Service?
S-D Logic
What is exchanged is the application of specialized knowledge and skills (competences) for the benefit of another partyi.e., Service
Transaction Relationship (Manufactured) Quality Perceived (Service) Quality Brand Equity Customer Equity Consumer Prosumer (co-producer of value)
13
Why Service?
S-D Logic
Academic
Unifyingorganized around the common denominator (mutual service provision) Unique Marketing Origininternally generated, rather than inherited Resource-Centeredbuilds on relative resource-expanding nature of operand vs. resource-depleting nature of operant resources Value-definingshifts focus to value-in use Logically Divisible--Allows sub-discipline of direct service provision Promotes researchprovides clear links among firm, customer, society, value, etc
Micro implicationsMakes service-based concepts central/applicable to marketing Macro implicationsSocial role of Marketing
15
Practice
Education
Society
Marketing is the process in society and organizations that facilitates voluntary exchange through collaborative relationships that create reciprocal value through the application of complementary resources.
Therefore marketing can be viewed as the means by which societies are able to create value through the voluntary exchange of knowledge and skills.
Reflection of the transition to a services era Justified by the Superior Customer Responsiveness of Service Companies Restatement Of The Consumer Orientation Alternative To The Exchange Paradigm Equating Service with Provision of Functional Benefits Suggesting that Financial Feedback equals Profit Applicable only to marketing management
Foundation of a paradigm shift in marketing Basis for a General Theory of Marketing Reorientation for economic theory Foundation for theory of the firm Perspective for understanding role of markets in societyTheory of Markets
S-D Logic
Thank You!
For More Information on S-D Logic visit: sdlogic.org
We encourage your comments and input. If you would like your working papers or teaching material and/or links to your research displayed on the website, please e-mail us Steve Vargo: svargo@sdlogic.net Bob Lusch: rlusch@sdlogic.net
From goods to service(s). Tax policy to encourage firms to retain tangible goods and sell service flows?
From tangible to knowledge resources. Tax policy to encourage investments in education and skill development vs. housing. From operand to operant From value in exchange to resources. value in use. Public policy to Public data collection on encourage collaboration vs. value in use and home competition. production.
The Inversion
S-D Logic
Goods Logic
Products
(units of output)
Service Logic
Service
(processesapplied competences)
Goods
Services
(Intangible goods)
Indirect
(Goods--Appliances)
Direct