Transcript Market To - Service

The Service-Dominant Logic
of Marketing
S-D
Logic
Presented By:
Presented To:
Robert F. Lusch
Professor of Marketing
University of Arizona
MMA Annual Conference
Chicago, Illinois
March 16, 2006
Advancing Theory:
The Role of the Funeral
S-D
Logic
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).
Contrasting G-D Logic and S-D Logic
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. Goodsdominant 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.
The Traditional Logic:
Operand Resource
S-D
Logic
Employee
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Need to Persuade
Need to Extract Work
Need to Tightly
Manage & Control
Need to Extract
Maximum Productivity
Consumer
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Need to Persuade
Need to Extract Money
Need to Capture &
Control
Need to Extract
Maximum Profit
All Exchange is Service Centered
S-D
Logic
“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)
Growth of Markets
& Marketing
Institutions
S-D
Logic
Commercial or
Civil Society
Division of Labor
Institutions
Institutions
Markets
Goods
Service for Service
Money
Organizations
Goods, Money,
Organizations are
Intermediaries
Evolving To a New Frame of Reference
S-D
Logic
To Market
(matter in motion)
Through 1950
Market To
(management of
customers &
markets)
Market With
(collaborate with
customers & partners
to produce &
sustain value)
1950-2010
Future
Conceptual Transitions in Marketing
S-D
Logic
G-D Logic
Transitional
S-D Logic
Goods
Products
Feature/attribute
Value-added
Profit maximization
Price
Equilibrium system
Services
Offerings
Benefit
Co-production
Financial Engineering
Value delivery
Dynamic system
Supply Chain
Promotion
To Market
Product orientation
Value-Chain
IMC
Market to
Market Orientation
Service
Experiences
Solution
Co-creation of value
Financial feedback
Value proposition
Complex adaptive
system
Value-creation network
Dialog
Market with
S-D Orientation
Draw Upon
Resources (internal & external)
S-D
Logic
Co-Create
Service
Offering
Co-Create
Value
Proposition
Collaborate
Collaborate:
With &
Customers
Customers
Partners&
Co-Create Partners
Value
Co-Create
Processes &
Conversation
Network
& Dialogue
S-D Logic as a
Theory of Marketing
Overcome
Resistances
The Nature of Marketing?
S-D
Logic
Division of
Labor
Exchange
Increasing Degree of Change in Society
Change
Where Do We Go From Here?
Nature & Scope of Marketing
S-D
Logic
Commercial
Society
World of
Work
World of
Consumption
Condition
Division of
Labor
Specialized
Competences
Specialized
Competences
Means
Exchange
Labor
Market
Consumer &
Business
Market
End
Change
Value
Value
Where Do We Go From Here?
Frontiers in Research
S-D
Logic
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
Marketing Curriculum Reform
S-D
Logic
Fundamental of
Marketing (service
dominant)
Competency
Building and
Competitive
Advantage
Managing Cross
Functional
Business
Processes
Designing Value
Propositions &
Pricing Strategy
Integrated
Marketing
Communication
Managing Value
Networks &
Constellations
Consumer Buying,
Designing and
Usage & Co-Creation Delivering Service
Flows
The Role of
Marketing in
Society
Postscript
S-D
Logic
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“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.”
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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: [email protected]
Bob Lusch: [email protected]
Timeline of SD-Logic
S-D
Logic
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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
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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
Is It All About Services:
A Paradigm Inversion (1999)
S-D
Logic
“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)
Is It All About Services:
A Paradigm Inversion (2000)
S-D
Logic
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“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
Is It All About Service (2001)
S-D
Logic
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
Transition & Convergence:
From an Output to a Process
Centered View of Marketing (2002)
S-D
Logic
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“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
Evolving to a New Dominant
Logic for Marketing (2004)
S-D
Logic
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
Invited Commentaries:
Day, Deighton, Narayadas, Gummesson, Hunt,
Prahalad, Rust, Shugan
S-D
Logic
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)
The Service-Dominant Logic:
Dialog, Debate and Directions
S-D
Logic
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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.