Professional Documents
Culture Documents
during
the course on Service Innovation. I have reviewed the two articles on Service Dominant logic
(S-D): continuing the evolution (Vargo and Lusch 2008) and Institutions, and axioms: an
extension and update of service-dominant logic (Vargo and Lusch, 2016).
The first article essentially modifies the preliminary fundamental premises described in the
initial S-D logic article published in 2004. While G-D logic was the primary lexicon used for
elaborating the introductory article, this one critically emphasizes on the utility of pursuing a S-D
logic. It further articulates that goods-dominant logic for classification of businesses is
inadequate for explaining several economics concepts like operant resources, customer focus
and value co-creation. Discussing S-D logic in an industrial context is undoubtedly very
interesting as it takes into account the importance of services and “product/service systems”
(PSS) for manufacturing firms (Gebauer, 2008; Kindström, 2009; Sakao and Lindahl, 2009).
G-D logic (Vargo and Lusch 2004) is built on the assumption that economic value is added
through industrial processes, embedded in goods, distributed, and then realized in exchange in
a transactional manner; that is, value-in-exchange. Under S-D logic (Vargo and Lusch 2008) , in
contrast, goods are seen as distribution mechanisms for service provision. S-D logic has been
identified as an appropriate philosophical foundation for the development of service science
(Maglio et al. 2009).
The idea behind SD - Logic is built upon how value is (or benefits) uniquely experienced by
each customer when they use a service – not in how creatively we 'package' it or persuasively
‘sell it.’ The S-D logic proposes that, “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” (Vargo & Lusch 2008).
3) explain the central idea and line of reasoning, conceptual models or something similar,
In FP #1, Vargo and Lusch (2008) stated that service is the fundamental basis of exchange,
rather than goods. This fundamental premise is a complete paradigm shift from traditional
marketing philosophy. Vargo stated “the application of operant resources (knowledge and
skills), “service,” is the basis for all exchange. The modified foundational premises are
explained with examples: Knowledge and skills,“service” is the basis for all exchange, (e.g.
Bank teller, customs duty personnel, electronics engineer). As service providers we tend to
internalize are special skills and knowledge. We can only determine value by using the product,
this then determines the degree of service, e.g. Night’s stay at a hotel. The more knowledge and
skills we acquire the greater the competitive advantage, e.g. customs duty personnel learning
newest tracking system. Insurance agents know all new product offerings. 5. The more
knowledge and skills we acquire the greater the competitive advantage, e.g. customs duty
personnel learning newest tracking system. Insurance agents know all new product offerings.
Service (singular) is a process—distinct from “services”—particular types of goods, e.g. Inbound
customer service, outsourced to a foreign country, India. Implied value creation is interactional.
Firms do not create value, customers do., e.g. HP computers offer special customization of
components to their customers. The firm can only offer its resources collaboratively, it is the
customer who must be active in the process for value to occur, e.g. A travel website is only
effective when customer accepts its value and transacts. Insurance quotes. The customer
determines whether the service is valuable not the firm. This relates to the value chain, each
member works in network with another constantly collaborating and integrating to produce the
most effective product or service, e.g. insurance agents and their brokers. Value is idiosyncratic,
which means a structural or behavioral characteristic peculiar to an individual or group are
different, e.g. The value of air travel derived for one person may not be the same for another.
In FP#2, Vargo and Lusch assert, “Indirect exchange masks the fundamental basis of
exchange” (Vargo, 2009). A further explanation for this FP states, goods, money, and
institutions mask the service-for-service nature of the exchange. In FP#3, Vargo and Lusch
assert, “Goods are distribution mechanisms for service provision”. They further justify that
“goods (both durable and non-durable) derive their value through use – the service they
provide.”
For FD #4 Vargo and Lusch asserted, “Knowledge and skills are the fundamental source of
competitive advantage” (Vargo, 2009). This justification states the comparative ability to cause
derived change drives competition (Vargo, 2009). Vargo and Lusch’s fundamental premise #6
purports that the customer is always the co-creator of value.
Initially most of the companies like car producers, furniture manufacturers, manufacturing firms,
computer organizations started being product focussed but they are gradually moving towards
being more customer centric and creating economies of co-created value. We can take a look at
Apple and Ikea to understand the change in their product portfolio to take into consideration the
requirements of end customers and stakeholders. FMCG companies, sports equipment
manufacturers, tourism companies, video game producers, media and production companies
who were initially focussed on their customers, collaborators and end users are now moving into
co-creation. Disney, Nike, Pixar Animation studios are some of those companies who have
moved into co-creation from customer centricity. On the other hand some organizations such as
Uber, Ola, Airbnb, Netflix have embraced co-creation through innovation in the sharing
economy through which the actors evolve together. In a value co-creation ecosystem,
customers, competitors, collaborators, complementors and all other actors provide input and
everyone derives value out of it.
S-D logic embraces the concepts of “value-in-use” and “co-creation of value” as opposed to
“value-in-exchange” and “embedded-value”, typical for G-D logic. Lusch and Vargo note,
“instead of firms being informed to market to customers, they are instructed to market with
customers (emphasis added), as well as other value-creation partners in the firm’s value
network”.
5) Similarities and differences between the two articles /written by the same authors, and how
have they developed their understanding, framework, concepts
My Phd project is concerned with an interpretation of the following topics: marketing innovation
through gamification and innovation processes followed during the production or creation of a
gamified application and interaction between the various players within the ecosystem. I will
also investigate about strategies of implementation of corporate gamification. Contemporary
mechanisms for utilizing gamification for online digital mobile marketing, advertising, experience
economy and branding industry are also very important in my project. Serious games is an
ingenious technique for educating and empowering people. I would try to frame research
questions from the articles outlined before about serious games. Fundamental premises of S-D
logic are an invaluable framework for the analysis of gamification as an ICT based service
innovation.