Post on 27-Mar-2015
transcript
S-D Logic
The Service-Dominant Logic
of Marketing
Presented By: Presented To:
Robert F. Lusch MMA Annual Conference Professor of Marketing Chicago, Illinois University of Arizona
March 16, 2006
S-D Logic
Advancing Theory: The Role of the Funeral
Scientific theories, however, are fundamentally different. They are constructed to be blown apart if proved wrong, and if so destined, the sooner the better. “Make your mistakes quickly” is a rule in the practice of science. I grant that scientists often fall in love with their own constructions. I know; I have. They may spend a lifetime vainly trying to shore them up. A few squander their prestige and academic capital in the effort. In that case – as economist Paul Samuelson once quipped – “funeral by funeral, theory advances.”
(Edward O. Wilson. Consilience: the Unity of Knowledge. 1998; p. 52).
S-D Logic
Contrasting G-D Logic and S-D Logic
Goods-dominant logic is similar to Theory X management where the worker is treated as someone that has to be controlled and managed. Goods- dominant logic viewed the consumer as someone to control and manage. S-D logic views the customer as a collaborative partner and co-creator of value. In a way it is similar to Theory Y management.
S-D Logic
The Traditional Logic: Operand Resource
Employee Need to Persuade Need to Extract
Work Need to Tightly
Manage & Control Need to Extract
Maximum Productivity
Consumer Need to Persuade Need to Extract
Money Need to Capture &
Control Need to Extract
Maximum Profit
S-D Logic
All Exchange is Service Centered
“the great economic law is this: Services are exchanged for services…. It is trivial, very commonplace; it is, nonetheless, the beginning, the middle, and the end of economic science….”
- Frederic Bastiat 1860
“services are the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself.”
- (Vargo and Lusch 2004)
S-D Logic
Growth of Markets & Marketing
G oo ds M o n ey O rg an iza tio ns
M a rke ts
D iv is ion o f L a b or
C o m m e rc ia l o rC iv il S o c ie ty
Institutions Institutions
Institutions Institutions
Institutions Institutions
Service for ServiceGoods, Money,
Organizations are Intermediaries
S-D Logic
Evolving To a New Frame of Reference
To Market(matter in motion)
Market To(management of
customers &markets)
Market With(collaborate with
customers & partnersto produce & sustain value)
Through 1950 1950-2010 Future
S-D Logic
Conceptual Transitions in Marketing
G-D Logic Transitional S-D LogicGoods Services ServiceProducts Offerings ExperiencesFeature/attribute Benefit SolutionValue-added Co-production Co-creation of valueProfit maximization Financial Engineering Financial feedbackPrice Value delivery Value propositionEquilibrium system Dynamic system Complex adaptive
systemSupply Chain Value-Chain Value-creation networkPromotion IMC DialogTo Market Market to Market withProduct orientation Market Orientation S-D Orientation
S-D Logic
CollaborateWith
Customers &Partners
Collaborate:Customers &
Partners
Overcome
Resistances
Co-CreateServiceOffering
Co-CreateValue
Proposition
Co-CreateConversation& Dialogue
Co-CreateValue
Processes &Network
Draw UponResources (internal & external)
S-D Logic as a
Theory of Marketing
S-D Logic
The Nature of Marketing?
Division of Labor
Exchange Change
Increasing Degree of Change in Society
S-D Logic
Where Do We Go From Here?Nature & Scope of Marketing
Commercial Society
World of Work
World of Consumpti
on
Condition Division of Labor
Specialized Competence
s
Specialized Competence
s
Means Exchange Labor Market
Consumer & Business Market
End Change Value Value
S-D Logic
Where Do We Go From Here?Frontiers in Research
Co-Production & Collaboration
Dialog & Conversation
Value Propositions &
Networks
Feedback & Adaptation
Business Processes &
Service Flows
Knowledge & Competitive Advantage
Meaning of Consumption &
Work
Markets, Marketing & Class Conflict
Marketing & Macroeconomic
Policy
S-D Logic
Marketing Curriculum Reform
Fundamental of Marketing (service
dominant)
Competency Building and Competitive Advantage
Managing Cross Functional Business Processes
Designing Value Propositions &
Pricing Strategy
Integrated Marketing
Communication
Managing ValueNetworks &
Constellations
Consumer Buying, Usage & Co-
Creation
Designing and Delivering
Service Flows
The Role of Marketing in
Society
S-D Logic
Postscript
“The fundamental purpose of the corporation is not wealth creation. It is job creation and collaborating with all stakeholders (including the customer) to co-create value.”
Robert F. Lusch
“The extent of the market may be a function of the division of labor; however if society does not benefit from the division of labor and the fruits it bears then markets and marketing will be replaced by other institutions.”
Robert F. Lusch
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
S-D Logic
Timeline of SD-Logic
Initial Draft 1995 Refinement 1996-1999 Summer 1999 Submission Summer 2000 Submission Summer 2001 Submission Summer 2002 Submission Winter 2003 Submission Spring 2003 Paper
Accepted Published January 2004
Four major revisions Two editors Six reviewers One strong reviewer
advocated from beginning
Sixth reviewer became advocate for publishing with commentaries
Editor Ruth Bolton coached and guided along the way
S-D Logic
Is It All About Services: A Paradigm Inversion
(1999)
“While your manuscript has interesting ideas, the current positioning of the paper leaves one feeling that there is not much new in the paper.”
- JM Editor David Stewart (November 1999)
“The author(s) are to be applauded for taking on such an extremely ambitious essay. To propose a true Khunian paradigm shift in marketing and to succeed is to try to do something that no theoretical paper has achieved that I am aware of—although historians of science will ultimately be the judges of such matters.”
- JM Reviewer (November 1999)
"Every once in a while a paper comes along that is truly exciting--that has the ability to change the way people think. This is one of those papers. If this paper is published in JM, then it has the opportunity to be a classic in our field. I wish that I had written it.”
- JM Reviewer (November 1999)
S-D Logic
Is It All About Services: A Paradigm Inversion
(2000)
“The primary concern of the reviewers remains focused on the incremental contribution of the paper.”
“…it is probably too strong to conclude that all goods represent services in disguise.”
“…identify the boundary conditions of your premises.” -Editor David Stewart
S-D Logic
Is It All About Service (2001)
Revision of this manuscript has taken longer than intended. However, we should mention that one of the reasons it has taken ten months to complete this revision is that we kept trying to revise based on the individual comments of the reviewers and finally decided to start anew. Importantly the suggestion of reviewer #5 to organize the manuscript around a set of propositions (and your mentioning of this suggestion in your letter of September 19, 2000) while simultaneously encouraging us to significantly reduce the length of the manuscript led us in this direction. For your information the manuscript has been reduced by approximately 30%. Consequently, this manuscript is almost a total rewrite and is now organized around eight key propositions from which we derive thirteen managerial and societal implications.
Steven L. Vargo & Robert F. Lusch
Resubmission Letter to Editor Stewart
S-D Logic
Transition & Convergence: From an Output to a Process Centered View of Marketing
(2002)
“All three reviewers praise you for undertaking the challenging task of writing a paper that synthesizes a diverse marketing literature (over a substantial period of time)—and attempts to crystallize the debate about the meaning and direction of marketing.”
“As you may recall, I invited a new reviewer (Reviewer 6)…He/she found the paper “interesting and provocative” and rightly observes that it is unlikely (and perhaps undesirable) for the reviewers to converge in their opinions.”
“I ask you to create a shorter and more focused paper (that retains your key arguments). Then, if your paper is accepted for publication, it can provide the basis for invited commentaries by distinguished scholars.”
- Editor, Ruth Bolton
S-D Logic
Evolving to a New Dominant Logic for Marketing (2004)
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 co-creation 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.
Abstract, Journal of Marketing (January 2004), p.1
S-D Logic
Invited Commentaries: Day, Deighton, Narayadas, Gummesson,
Hunt, Prahalad, Rust, Shugan
Vargo & Lusch (2004) observe that an evolution is underway toward a new dominant logic for marketing. The new dominant logic has important implications for marketing theory, practice, and pedagogy, as well as for general management and public policy. … The ideas expressed in the article and the commentaries will undoubtedly provoke a variety of reactions from readers of the Journal of Marketing.
- Ruth Bolton, Editor, Journal of Marketing (2004)
S-D Logic
The Service-Dominant Logic: Dialog, Debate and
Directions M.E. Sharpe (2006) Distinguished Group of Scholars Identify areas
of Consensus, Dissent, and Future Directions. Essays contributed by Achrol, Arnould, Brodie,
Day, Gronroos, Gummesson, Holbrook, Hunt, Jaworski, Kohli, Kotler, Levy, Penzola, Price, Oliver, Rust, Sawhney, Wilkie, Woodruff, and others
Lusch & Vargo contribute integrative essays dealing with economic and marketing history, public policy, marketing management, and toward a general theory of marketing.