The Service-Dominant Logic of Marketing

Dialog, Debate, and Directions

Robert F. Lusch, Stephen L. Vargo

• Editorial: Routledge
• Año: 2014
• ISBN:
  9781317454632
• Edición: 1
• Categoría: Business
• Categoría: Business General

Expanding on the editors' award-winning article "Evolving to a New Dominant Logic for Marketing, " this book presents a challenging new paradigm for the marketing discipline. This new paradigm is service-oriented, customer-oriented, relationship-focused, and knowledge-based, and places marketing, once viewed as a support function, central to overall business strategy. Service-dominant logic defines service as the application of competencies for the benefit of another entity and sees mutual service provision, rather than the exchange of goods, as the proper subject of marketing. It moves the orientation of marketing from a "market to" philosophy where customers are promoted to, targeted, and captured, to a "market with" philosophy where the customer and supply chain partners are collaborators in the entire marketing process. The editors elaborate on this model through an historical analysis, clarification, and extension of service-dominant logic, and distinguished marketing thinkers then provide further insight and commentary. The result is a more comprehensive and inclusive marketing theory that will challenge both current thinking and marketing practice.

PART I

FOUNDATIONAL ASPECTS OF THE SERVICE-DOMINANT LOGIC OF MARKETING

____________________________________

____________________________________

As we begin to explore the dialog, debate, and suggested directions the service-dominant (S-D) logic of marketing has stimulated, it is useful to examine the foundational aspects of S-D logic. We start with the reprinting, as Chapter 1, of “Evolving to a New Dominant Logic for Marketing,” which appeared in the January 2004 issue of the Journal of Marketing. Ruth Bolton was editor of the Journal at the time and had the courage to publish this controversial article and the foresight to include a series of commentaries by marketing thought leaders. From the outset, we knew the article would be contentious; however, it stimulated even more dialog and debate than we had imagined. As we presented the central ideas and philosophy of S-D logic at dozens of forums and conferences around North America and beyond, we found, similar to what we had found in the review process associated with the original article, that people variously thought the article (1) was seminal and offered ideas that, if not revolutionary, certainly represented an positive inflection point in normal discourse in marketing thought; (2) communicated ideas that had already been presented, if not accepted; or (3) was outright wrong.

Because we were so constrained by space in our initial article, we felt it necessary to provide an expanded treatment of the historical perspectives of the S-D logic; joining us in this effort is Fred W. Morgan. “Historical Perspectives on Service-Dominant Logic” appears as Chapter 2. Some of the material in this chapter was in the original submission to the Journal of Marketing and was removed due to space constraints. Other parts are expanded on in an article by Steve Vargo and Fred Morgan in the June 2005 issue of the Journal of Macromarketing. And yet other parts attempt to show how many of the early approaches to the study of marketing, such as the functional and institutional approaches, were essentially service based. That is, the traditional functions of marketing—buying, selling, transportation, storage, information gathering, sorting, financing, and risk taking—all represented the performance of service by the seller, although often associated with a tangible product. Overall, it suggests that S-D logic represents the confluence of a number of streams of thought and research that were previously viewed as diverse.

From the start of the dialog and debate around the rather simple idea of the need for a service-dominant logic of marketing, we also noted considerable misunderstanding in just what S-D logic represents. We attempt to clarify and correct these misunderstandings and occasional misattributions in Chapter 3, “Service-Dominant Logic: What It Is, What It Is Not, What It Might Be.”

Most of the confusion has involved issues of what S-D logic is versus what it is not. We have repeatedly seen—including in some of the essays in this collection—that the following imprecise, if not inaccurate, statements have been attributed to S-D logic: (1) It is a reflection of the transition from an industrial era to a services era; (2) it portrays service(s) as more important than goods; (3) it is merely a restatement of customer orientation; (4) it is justified by the superior customer responsiveness of services firms; (5) it is an alternative to the exchange paradigm; (6) it employs service as another word for utility or value-added; (7) it argues against and does not acknowledge the role of value-in-exchange; (8) it is only applicable to profit-oriented firms because financial feedback implies profit; and (9) it is primarily managerial in orientation. We try to explain why none of these characterizations of S-D logic is accurate or valid. Looking to the future, we offer our vantage point on what S-D logic might be. We argue that S-D logic is perhaps the foundation of a paradigm shift in marketing, the basis of a new theory of the firm, a prescription for a reorientation of economic theory, and a rationale for a theory of society.

Part I concludes with Chapter 4, “How New, How Dominant?” a provocative essay by Sidney Levy. Few scholars in their eighth decade of life continue to come to the office almost daily, lecture around the world, read daily, and write often. As winner of virtually every major award for scholarship in marketing and consumer behavior and simply as a wise older one, we should listen carefully. Professor Levy observes, “Even the innovators stand on the shoulder of those who came before”; we wholeheartedly agree. As with the reactions to “Evolving to a New Dominant Logic for Marketing” during the review process and since, we found in reading the essays for this volume that people often have strong, varied views about S-D logic. As Professor Levy states it: S-D logic will be met with “interest and mixed support.” We would rather have it this way than to just have total agreement, which would suggest we were not upsetting the status quo, or total rejection, which would suggest our ideas are not worthy of further dialog and debate. In fact, it is our goal with this collection of essays by marketing thought leaders to provide a platform for the identification and exploration of the areas of agreement and disagreement. In the spirit of S-D logic, our value proposition is to co-create a new paradigm for marketing—one that is generalizable to marketing practices, offerings, industries, and societies of varied types. For this to occur a dialog and continuing conversation is of paramount importance.

1

____________________________________

____________________________________

EVOLVING TO A NEW DOMINANT LOGIC FOR MARKETING

STEPHEN L. VARGO AND ROBERT F. LUSCH

The formal study of marketing focused at first on the distribution and exchange of commodities and manufactured products and featured a foundation in economics (Marshall 1927; Shaw 1912; Smith 1904). The first marketing scholars directed their attention toward commodities exchange (Copeland 1923), the marketing institutions that made goods available and arranged for possession (Nystrom 1915; Weld 1916), and the functions that needed to be performed to facilitate the exchange of goods through marketing institutions (Cherington 1920; Weld 1917).

By the early 1950s, the functional school began to morph into the marketing management school, which was characterized by a decision-making approach to managing the marketing functions and an overarching focus on the customer (Drucker 1954; Levitt 1960; McKitterick 1957). McCarthy (1960) and Kotler (1967) characterized marketing as a decision-making activity directed at satisfying the customer at a profit by targeting a market and then making optimal decisions on the marketing mix, or the “4 P’s.” The fundamental foundation and the tie to the standard economic model continued to be strong. The leading marketing management textbook in the 1970s (Kotler 1972, p. 42, emphasis in original) stated that “marketing management seeks to determine the settings of the company’s marketing decision variables that will maximize the company’s objective(s) in the light of the expected behavior of noncontrollable demand variables.”

Beginning in the 1980s, many new frames of reference that were not based on the 4 P’s and were largely independent of the standard microeconomic paradigm began to emerge. What appeared to be separate lines of thought surfaced in relationship marketing, quality management, market orientation, supply and value chain management, resource management, and networks. Perhaps most notable was the emergence of services marketing as a subdiscipline, following scholars’ challenges to “break free” (Shostack 1977) from product marketing and recognize the inadequacies of the dominant logic for dealing with services marketing’s subject matter (Dixon 1990). Many scholars believed that marketing thought was becoming more fragmented. On the surface, this appeared to be a reasonable characterization.

In the early 1990s, Webster (1992, p. 1) argued, “The historical marketing management function, based on the microeconomic maximization paradigm, must be critically examined for its relevance to marketing theory and practice.” At the end of the twentieth century, Day and Montgomery (1999, p. 3) suggested that “with growing reservation about the validity or usefulness of the Four P’s concept and its lack of recognition of marketing as an innovating or adaptive force, the Four P’s now are regarded as merely a handy framework.” At the same time, advocating a network perspective, Achrol and Kotler (1999, p. 162) stated, “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.” Sheth and Parvatiyar (2000, p. 140) suggested that “an alternative paradigm of marketing is needed, a paradigm that can account for the continuous nature of relationships among marketing actors.” They went as far as stating (p. 140) that the marketing discipline “give up the sacred cow of exchange theory.” Other scholars, such as Rust (1998), called for convergence among seemingly divergent views.

Fragmented thought, questions about the future of marketing, calls for a paradigm shift, and controversy over services marketing being a distinct area of study—are these calls for alarm? Perhaps marketing thought is not so much fragmented as it is evolving toward a new dominant logic. Increasingly, marketing has shifted much of its dominant logic away from the exchange of tangible goods (manufactured things) and toward the exchange of intangibles, specialized skills and knowledge, and processes (doing things for and with), which we believe points marketing toward a more comprehensive and inclusive dominant logic, one that integrates goods with services and provides a richer foundation for the development of marketing thought and practice.

Rust (1998, p. 107) underscores the importance of such an integrative view of goods and services: “[T]he typical service research article documented ways in which services were different from goods. … It is time for a change. Service research is not a niche field characterized by arcane points of difference with the dominant goods management field.” The dominant, goods-centered view of marketing not only may hinder a full appreciation for the role of services but also may partially block a complete understanding of marketing in general (see, e.g., Grönroos 1994; Kotler 1997; Normann and Ramirez 1993; Schlesinger and Heskett 1991). For example, Gummesson (1995, pp. 250–51, emphasis added) states the following:

Customers do not buy goods or services: [T]hey buy offerings which render services which create value. … The traditional division between goods and services is long outdated. It is not a matter of redefining services and seeing them from a customer perspective; activities render services, things render services. The shift in focus to services is a shift from the means and the producer perspective to the utilization and the customer perspective.

The purpose of this article is to illuminate the evolution of marketing thought toward a new dominant logic. A summary of this evolution over the past 100 years is provided in Figure 1.1 and Table 1.1. Briefly, marketing has moved from a goods-dominant view, in which tangible output and discrete transactions were central, to a service-dominant view, in which intangibility, exchange processes, and relationships are central. It is worthwhile to note that the service-centered view should not be equated with (1) the restricted, traditional conceptualizations that often treat services as a residual (that which is not a tangible good; e.g., Rathmell 1966); (2) something offered to enhance a good (value-added services); or (3) what have become classified as services industries, such as health care, government, and education. Rather, we define services as the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself. Although our definition is compatible with narrower, more traditional definitions, we argue that it is more inclusive and that it captures the fundamental function of all business enterprises.¹ Thus, the service-centered dominant logic represents a reoriented philosophy that is applicable to all marketing offerings, including those that involve tangible output (goods) in the process of service provision.

Figure 1.1 Evolving to a New Dominant Logic for Marketing

...

Table 1.1
Schools of Thought and Their Influence on Marketing Theory and Practice