MKT-Theory: Service Dominant Logic

exchangeService Dominant Logic or S-D Logic is a proposed reformulation of marketing thought by the authors Vargo and Lush. The main proposition is, that marketing thinking needs to move away from thinking in terms of exchanging and marketing goods (e.g. Goods Dominant Logic) and to see marketing more in terms of an exchange of mutually beneficial service, or reciprocal use of competencies (N.B. this is not the same as “services” in the sense of service industry!). In particular, they argue that marketing used to market “to the market” in the 1950s, changed to “marketing to”, i.e. the management of the consumer and the market – and now has evolved into a collaborative effort, i.e. a place where customers and partners produce and sustain “value”.

Underlying the Service Dominant Logic model are 10 foundational premises (see table below).

FP1 Service is the fundamental basis of exchange.
FP2 Indirect exchange masks the fundamental basis of exchange.
FP3 Goods are a distribution mechanism for service provision.
FP4 Operant resources are the fundamental source of competitive advantage.
FP5 All economies are service economies.
FP6 The customer is always a cocreator of value.
FP7 The enterprise cannot deliver value, but only offer value propositions.
FP8 A service-centered view is inherently customer oriented and relational
FP9 All social and economic actors are resource integrators.
FP10 Value is always uniquely and phenomenologically determined by the beneficiary

A shift towards Service Dominant Logic implies a number of conceptual transitions taking place: For example while “old style” marketing has focused on products, contemporary marketing is transitioning via the use of offerings to marketing of experiences.  Similarly, a historical focus on price is shifting towards a focus on value delivery while ultimately aiming to reach a position of reciprocal value propositions being made. In terms of marketing communications, promotions are replaced by contemporary integrated marketing communications – and shifting towards constant dialogue.

So – is S-D Logic something completely new? Well, the answer is probably not. Rather it is an evolution of previous concepts that emerged over the last decade or so: For example, relationship marketing already moved from a “promoting to” perspective to a customer retention (and collaboration) perspective. Similarly, Integrated Marketing Communications also shifted the focus from individual promotions to customers to a more integrated approach (although traditionally has stopped short of co-creation).  S-D Logic has become quite popular in many marketing circles and applied to different marketing contexts: For example, to Social Marketing in this post by Lefebvre or to commercial marketing in this post by Iqbal or this post by Gray.

For more on S-D Logic, see the SDLogic website – and also the various publications.

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