Service Dominant Logic
A Product is a Service Avatar
Only the customer can determine value. Your product or service has zero value in it. You cannot build value or even create it through clever marketing. Value is only created when a customer puts it into use. This is Service Dominant Logic Thinking (Vargo and Lusch (2006).
In The Service-Dominant Logic of Marketing edited by Robert Lusch and Stephen Vargo they present the case to use SD-Logic as a foundation versus a total integrative marketing method. I believe that Lean viewed through the lens of PDCA as a knowledge creation platform can serve as the vehicle for implementation of this Logic. The principles of SD-Logic cannot be implemented in various silos of an organization, just as the basic principles of Lean cannot. It requires a cultural and fundamental shift within the organization placing the customer and user experience becoming the center.
Let me start by listing the foundational principles of Service Dominant Logic described in the before mentioned book. These principles were later developed into 10 (Vargo and Lusch, 2008a)
- Service is the fundamental basis of exchange.
- Indirect exchange masks the fundamental basis of exchange.
- Goods are a distribution mechanism for service provision.
- Operant resources are the fundamental source of competitive advantage.
- All economies are service economies.
- The customer is always a co-creator of value.
- The enterprise cannot deliver value, but only offer value propositions.
- A service-centered view is inherently customer oriented and relational.
- All social and economic actors are resource integrators.
- Value is always uniquely and phenomenologically determined by the beneficiary.
Essential concepts in the new way of thinking about marketing is that customers are always co-creators of value. It’s the way that the customer sees value, whether it’s in the physical good, or if it’s in a service or a combination of both of those and if they don’t see a benefit to them they’re not going to engage with you.
Is your marketing firm or department having this conversation with you? Are words like SD-Logic, Service Dominant, Co-Creation, Value in Use, Customer Decision Making Process, Experience Economy, etc. part of your normal marketing conversation. If not, you may need to re-consider your marketing communication efforts.
The Video is from University of Queensland Business School. With dual accreditation from the world’s two pre-eminent education accrediting bodies, and a 5 star rating for its MBA program, University of Queensland Business School is among the ranks of elite global leaders. It was the first business school in Australia to meet the high standards of the world’s most influential accrediting bodies – the US-based AACSB International and Europe’s EQUIS accreditation.
Service Dominant Logic by Stephen Vargo and Robert Lusch
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