SDL Marketing Management Chicago (1)

8/3/2019 SDL Marketing Management Chicago (1)

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S-DLogic

The Service-Dominant Logicof Marketing

Presented By: Presented To:

Robert F. Lusch MMA Annual ConferenceProfessor of Marketing Chicago, Illinois

University of Arizona

March 16, 2006


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S-DLogic

Advancing Theory:The Role of the Funeral

Scientific theories, however, are fundamentally different. Theyare constructed to be blown apart if proved wrong, and if so

destined, the sooner the better. Make your mistakes quicklyis a rule in the practice of science. I grant that scientists oftenfall in love with their own constructions. I know; I have. Theymay spend a lifetime vainly trying to shore them up. A fewsquander their prestige and academic capital in the effort. Inthat case as economist Paul Samuelson once quippedfuneral by funeral, theory advances.

(Edward O. Wilson. Consilience: the Unity of Knowledge.1998; p. 52).


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S-DLogic

Contrasting G-D Logic and S-D Logic

Goods-dominant logic is similarto Theory X management wherethe worker is treated as

someone that has to becontrolled and managed. Goods-dominant logic viewed theconsumer as someone to control

and manage. S-D logic views thecustomer as a collaborativepartner and co-creator of value.In a way it is similar to Theory Ymanagement.


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S-DLogic

The Traditional Logic:Operand Resource

Employee

Need to Persuade

Need to Extract Work

Need to TightlyManage & Control

Need to ExtractMaximum Productivity

Consumer

Need to Persuade

Need to Extract Money

Need to Capture &Control

Need to ExtractMaximum Profit


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S-DLogic

All Exchange is Service Centered

the great economic law is this: Services areexchanged for services. It is trivial, verycommonplace; it is, nonetheless, thebeginning, the middle, and the end ofeconomic science.

- Frederic Bastiat 1860

services are the application of specializedcompetences (knowledge and skills) through

deeds, processes, and performances for thebenefit of another entity or the entity itself.

- (Vargo and Lusch 2004)


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S-DLogic

Growth of Markets& Marketing

Goods Money Organizations

Markets

Division of Labor

Commercial orCivil Society

Institutions

Institutions

Institutions

Service for ServiceGoods, Money,

Organizations are

Intermediaries


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S-DLogic

Evolving To a New Frame of Reference

To Market

(matter in motion)

Market To

(management of

customers &

markets)

Market With

(collaborate with

customers & partners

to produce &

sustain value)

Through 1950 1950-2010 Future


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S-DLogic

Conceptual Transitions in Marketing

G-D Logic Transitional S-D LogicGoods Services Service

Products Offerings Experiences

Feature/attribute Benefit SolutionValue-added Co-production Co-creation of value

Profit maximization Financial Engineering Financial feedback

Price Value delivery Value proposition

Equilibrium system Dynamic system Complex adaptivesystem

Supply Chain Value-Chain Value-creation network

Promotion IMC Dialog

To Market Market to Market with

Product orientation Market Orientation S-D Orientation


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S-DLogic

Collaborate

WithCustomers &

Partners

Collaborate:

Customers &

Partners

Overcome

Resistances

Co-Create

Service

Offering

Co-Create

Value

Proposition

Co-Create

Conversation

& Dialogue

Co-Create

Value

Processes &

Network

Draw Upon

Resources (internal & external)

S-D Logic as a

Theory of Marketing


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S-DLogic

The Nature of Marketing?

Division of

LaborExchange Change

Increasing Degree of Change in Society


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S-DLogic

Where Do We Go From Here?Nature & Scope of Marketing

CommercialSociety

World ofWork

World ofConsumption

Condition Division ofLabor

SpecializedCompetences

SpecializedCompetences

Means Exchange Labor

Market

Consumer &BusinessMarket

End Change Value Value


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S-DLogic

Where Do We Go From Here?Frontiers in Research

Co-Production &Collaboration

Dialog &Conversation

ValuePropositions &

Networks

Feedback &Adaptation

BusinessProcesses &

Service Flows

Knowledge &CompetitiveAdvantage

Meaning ofConsumption &

Work

Markets,Marketing &Class Conflict

Marketing &Macroeconomic

Policy


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S-DLogic

Marketing Curriculum Reform

Fundamental ofMarketing (service

dominant)

CompetencyBuilding andCompetitive

Advantage

Managing CrossFunctionalBusiness

Processes

Designing ValuePropositions &Pricing Strategy

IntegratedMarketing

Communication

Managing Value

Networks &Constellations

Consumer Buying,Usage & Co-Creation

Designing andDelivering Service

Flows

The Role ofMarketing in

Society


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S-DLogic

Postscript

The fundamental purpose of the corporationis not wealth creation. It is job creation andcollaborating with all stakeholders (includingthe customer) to co-create value.

Robert F. Lusch

The extent of the market may be a function ofthe division of labor; however if society does

not benefit from the division of labor and thefruits it bears then markets and marketing willbe replaced by other institutions.

Robert F. Lusch


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S-DLogic

Thank You!

For More Information on S-D Logic visit:

sdlogic.org

We encourage your comments and input. If you would like yourworking papers or teaching material and/or links to your researchdisplayed on the website, please e-mail us

Steve Vargo: [email protected] Bob Lusch: [email protected]


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S-DLogic

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 frombeginning

Sixth reviewer becameadvocate for publishingwith commentaries

Editor Ruth Boltoncoached and guidedalong the way


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S-DLogic

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 extremelyambitious essay. To propose a true Khunian paradigm shift in marketingand to succeed is to try to do something that no theoretical paper hasachieved that I am aware ofalthough historians of science willultimately 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)


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S-DLogic

Is It All About Services:A Paradigm Inversion (2000)

The primary concern of the reviewers remains focused on theincremental contribution of the paper.

it is probably too strong to conclude that all goods representservices in disguise.

identify the boundary conditions of your premises.-Editor David Stewart


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S-DLogic

Is It All About Service (2001)

Revision of this manuscript has taken longer than intended. However, weshould mention that one of the reasons it has taken ten months tocomplete 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 manuscriptaround a set of propositions (and your mentioning of this suggestion inyour letter of September 19, 2000) while simultaneously encouraging us tosignificantly reduce the length of the manuscript led us in this direction.

For your information the manuscript has been reduced by approximately30%. Consequently, this manuscript is almost a total rewrite and is noworganized around eight key propositions from which we derive thirteenmanagerial and societal implications.

Steven L. Vargo & Robert F. Lusch

Resubmission Letter to Editor Stewart

Transition & Convergence:


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S-DLogic

Transition & Convergence:From an Output to a Process

Centered View of Marketing (2002)

All three reviewers praise you for undertaking the challenging taskof 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 observesthat it is unlikely (and perhaps undesirable) for the reviewers toconverge in their opinions.

I ask you to create a shorter and more focused paper (that retainsyour key arguments). Then, if your paper is accepted forpublication, it can provide the basis for invited commentaries bydistinguished scholars.

- Editor, Ruth Bolton

E l i N D i


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S-DLogic

Evolving to a New DominantLogic for Marketing (2004)

Marketing inherited a model of exchange from economics, whichhad a dominant logic based on the exchange of goods, which

usually are manufactured output. The dominant logic focused ontangible resources, embedded value, and transactions. Over thepast several decades, new perspectives have emerged that havea revised logic focused on intangible resources, the co-creation ofvalue, and relationships. The authors believe that the newperspectives are converging to form a new dominant logic formarketing, one in which service provision rather than goods isfundamental to economic exchange.

Abstract, Journal of Marketing(January 2004), p.1

Invited Commentaries:


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S-DLogic

Invited Commentaries:Day, Deighton, Narayadas, Gummesson, Hunt,

Prahalad, Rust, Shugan

Vargo & Lusch (2004) observe that an evolution is underwaytoward a new dominant logic for marketing. The new dominantlogic has important implications for marketing theory, practice,and pedagogy, as well as for general management and publicpolicy. The ideas expressed in the article and the

commentaries will undoubtedly provoke a variety of reactionsfrom readers of the Journal of Marketing.

- Ruth Bolton, Editor, Journal of Marketing (2004)


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S-DLogic

The Service-Dominant Logic:Dialog, Debate and Directions

M.E. Sharpe (2006)

Distinguished Group of Scholars Identify areas ofConsensus, 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 theoryof marketing.

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