S-D Logic

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Introduction to Service Dominant (S-D) Logic
Recently there has been a shift away from the traditional product-orientated marketing perspective to a more service-orientated one which focuses on “intangible resources, the co-creation of value and relationships” (Vargo and Lusch, 2004). Merz, He & Vargo (2009) commented that goods were a “vehicle for service”, and whilst the provision of goods was still an important part of a transaction, there will always be some element of intangible service attached to each product, which develops relationships and delivers value to the consumer (Ballantyne & Varey, 2008).
Vargo and Lusch’s literature (2008) gives ten foundational premises implying a complete change in perspective from a tangible
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The Customer Loyalty Ladder (Nyrandas (2005) attempts to differentiate and rank customers on the level of loyalty they display towards the business. Relationship marketing techniques used in S-D logic, such as implementing a customer relationship management (CRM) system, aim to move customers up the pyramid so that they appear in one of the higher ranking levels, such as the advocate level.
Relationship marketing is inextricably linked with the co-creation of value as outlined by Satish and Priya Nambisan (2008) who suggest that the process of product development can be aided by developing links with and learning from customers through virtual forums. Examples of this include product testing. The aim of Virtual Customer Environments is to enable to the customer to feel connected with the business and its products whilst enhancing business-customer relationships.
2. Co-creation of value
S-D logic presents the consumer as a co-creator of value (Vargo, 2008; West et al., 2010; Vargo & Lusch, 2004, 2006, & 2008; Prahalad & Ramaswamy, 2004). The traditional concept of the value chain, (Porter, 1980) where value is created solely by the company now seems to be outdated (Prahalad and Ramaswamy, 2004). However Ford et al, (2001) suggest that firms must exceed customer expectations in order to gain competitive advantage”, suggesting that businesses need to be dynamic; learning through a two-way process of
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