(3) New Perspective in Service Dominant PDF

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New Perspective in Service Dominant Customers have problems and the purpose of business is to solve these problems. Goods Dominated Logic and Services Dominated Logic. One looks from a customers point of view and one is a services dominated logic. ! If customers do not receive value then they will move from your business to another, we must not confuse value with price. ! Companies have to tailor make a product to what the customer requires and deliver this within a short amount of time. !

Traditional form of Marketing Traditional view - focus on differences. Variability, inseparability, perishability and intangibility ! •

Service dominant logic (SDL) focus on commonalities!

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Underpinning SDL is the notion of ‘value’ and ‘branding’!

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Looks beyond traditional neoclassical economic view of exchange and value creation!

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SDL = service is understood as the process of applying competences (e.g. skills and knowledge)!

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Goods and services are not mutually exclusive!

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Focus on ‘activities’ and ‘processes’ !

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Importance of application and resources, knowledge and skills!

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The product needs to be of value and meet their requirements dependent on the service !

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Every year peoples expectations expand, companies need to produce something new for customers each year !

Service Dominant Logic Vargo and Lusch, 2004a:! •

Traditional characteristics that distinguish goods from services don’t hold in practice!

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Distinctions are only meaningful to manufacturer !

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Imply inappropriate normative strategies !

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Marketers need to break free from traditional distinctions !

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People will move if you make a cheaper offer unless you can secure an element of brand identity, at the higher level price is irrelevant !

Myths of Services Marketing Intangibility: ! The myth - !

- Services lack tactile quality of goods ! - Continuum shows its not that simple !

New perspective - !

- Services often have tangible results ! - Goods can have intangible benefits ! Implication - !

- Concentrate on branding not tangibility ! Variability:! The myth - !

- Unlike goods, services cannot be standardised ! New perspective - !

- Services can be standardised! - Tangible goods can be variable too ! Implication - !

- Move towards customisation ! - Dell, Nike, Mini! - Avoid separability ! Inseparability: ! The myth - !

- Unlike goods, services are simultaneously produced and consumed ! New perspective - !

- Many physical goods also require customer involvement in consumption process ! - Services can be produced separate from the customer ! Implication - !

- Maximise customer involvement to create value! - “Customerisation” ! - Different customers will have unique demands and preferences ! Perishability: ! The myth - !

- Services cannot be produced ahead of time and inventoried ! New perspective - !

- Tangible goods can also be perishable and many services have lasting benefits ! Implication - !

- Always assume perishability ! - Styles, tastes, trends, needs change over time !

Underpinning Axioms 1. Service is the basis of exchange !

- Its all about exchange! - Its about the process rather than just the outputs!

- Knowledge, skill competences = source of value ! - Operant Resources = tangible assets ! - Operant Resources = Intangible skills & knowledge ! GDL = exchange for products ! SDL = service is the source of exchange! GDL = customer is recipient! SDL = customer is co-producer of the service! GDL = wealth is owning, controlling and producing operand resources ! SDL = wealth is the application and exchange of skills and knowledge ! 2. Value is co-created ! GDL = value is linear process! SDL = not created and delivered but co-created! •

Role of customer is defined!

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Collaborations and relationships are key!

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Shift from marketing ‘to’ customer to ‘with’ customer !

Class Exercise What / where is the value or benefits in the below exchanges: ! •

Watching a Youtube video explaining how to use an Apple Pencil !

- For Apple it saves a large amount of costs, there is no need to print manuals or to hire staff to answer queries about the pencil !

- For consumers, it is much easier than ringing up! - You can do it from the comfort of your own home ! •

Doggy day care!

- Dog gets looked after so the owner doesn’t have the guilt of leaving it at home ! - Saves time for the consumer as the dog is at home ! - Convenience and a cheap quick option !

Example of SDL in Practice: IBM •

Transitioned from GDL to SDL company!

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One of the world’s largest PC hardware producers 1950s-70s!

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Growth focused on smaller, faster, more reliable, cheaper hardware than competitors !

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Problems = focus on standalone !

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Mid/late 1990s, shift to software and services, networked systems !

Service Dominant Logic : Critique O’Shaughnessy and O’Shaughnessy (2009):! • Theoretical critique ! • No ‘one best’ perspective - dilutes / blurs ! • SDL is narrow minded ! • “we cannot adopt a standard perspective when standard conditions do not exist” (p. 792)! • But Lusch and Vargo 2011 disagree, not narrow-minded but ‘inclusive’ and ‘transcending’ ! Gronroos and Voima (2013):! • Theoretical critique! • Fuzzy concept, better definitions are needed ! • Value is a “ill-defined and elusive concept” in services marketing (p. 134)! Brown and Patterson (2009):! • Practical critique ! • “the shift from goods-dominant to service dominant logic is much less straight forward in empirical practice than in academic theory”...