Transcript Slide 1

Foundations of Service-Dominant Logic
S-D
Logic
Naples Forum on Service
Capri, Italy
June 17, 2009
Stephen L. Vargo
University of Hawai’i at Manoa
Robert F. Lusch
University of Arizona
Suddenly, Service(s) is Everywhere
S-D
Logic
Apparent transitions
• From manufacturing economy to service economy
• From goods-oriented firms to services firms
Manifestations
• Services marketing
• Services operations
• Service factories
• Servitzation
• Service-oriented architecture
• Software-as-a-service
• Service systems
• Services science
The Message
S-D
Logic
The transitions are mythical
The apparent transitions are driven by an
inadequate logic of the market
• “arm-flapping” logic?
The real transition is in the basic logic of
economic exchange markets
• Emerging from diverse disciplines & Sub-disciplines
• Pointing to a more robust logic of exchange
The Prelude: The Blasphemy of
the Alternative Logic
S-D
Logic







There is no new service economy
There are no producers and consumers
Goods are not “goods.”
Firms do not create value
There is no B2C
There are no services
There are no markets

And yet there are
The meaning of logic
S-D
Logic

The underlying philosophy for
organizing and understanding a
phenomena




Pre-theoretical
Paradigm level of thought
The lens that provides the perspective
Different from formal scientific and
mathematical logic
The Importance of the Right Logic
S-D
Logic

Without changing our pattern of thought, we will not
be able to solve the problems we created with our
current pattern of thought


The greatest danger in times of turbulence is not the
turbulence: it is to act with yesterday’s logic.


Peter F. Drucker
The main power base of paradigms may be in the fact
that they are taken for granted and not explicitly
questioned


Albert Einstein
Johan Arndt
What is needed is not an interpretation of the utility
created by marketing, but a marketing interpretation of
the whole process creating utility.

Wroe Alderson
From Arm-Flapping to Airfoil Logic
S-D
Logic
Goods-dominant (G-D) Logic
S-D
Logic



Purpose of economic activity is to make and
distribute units of output, preferably tangible
(i.e., goods)
Goods are embedded with utility (value)
during manufacturing
Goal is to maximize profit through the
efficient production and distribution of goods

goods should be standardized, produced away
from the market, and inventoried till demanded
Firms exist to make and sell
value-laden goods
Value Production and Consumption
S-D
Logic
Supplier
Supply/Value Chain
Producer
Consumer
Services: The G-D Logic Perspective
S-D
Logic
Value-enhancing add-ons for goods, or
A particular (somewhat inferior) type good,
characterized by (IHIP):
•
•
•
•
Intangibility
Heterogeneity (non-standardization)
Inseparability (of production and consumption)
Perishability
Services Economy = Post Industrial = Lessthan-desirable economic activity
Problems with Goods Logic
S-D
Logic
Goods are not why we buy goods
• Service (benefits) they render
• Intangibles (brand, self image, social connectedness, meaning)
• Experiences
Goods are not what we fundamentally “own” to exchange with
others
• Applied knowledge and skills (our services)
Customer is secondary and seen as value receiver and
destroyer
• “Consumer orientation” is an add-on--does not help
IHIP characteristics do not distinguish services vs. goods
• But they do characterize value and value creation
G-D Logic Background
S-D
Logic
Smith’s Bifurcation
• Positive foundation of exchange:
• specialized knowledge, labor (service), Value-inuse
• Normative model of (national) wealth creation:
• Value-in-exchange and “production”
• Creation of surplus, exportable tangible goods
Say’s Utility:
• Usefulness (value-in-use)
• Morphed into a property of products (value-inexchange)
G-D Logic Background (2)
S-D
Logic
Bastiat (1848):
• “Services are exchange for services”
Development of Economic Science
• The “Producer” – “Consumer” distinction
• Built on Newtonian Mechanics
• Matter, with properties
• Deterministic relationships
• The science of exchange of things (products), embedded with
properties (“utiles”)
Marketing (Business Disciplines) Built on G-D Logic
Foundation of Economic Science
What Has Changed?
Nothing and Everything
S-D
Logic
Exchange is about the reciprocal application
of knowledge skills (specialized information)
• Service for service
“Dematerialization” and “liquification”
(IT and ICT)
• The ability to separate and transport information apart
from and matter (and people) (Normann 2001)
• Makes Service-logic compelling
A Partial Pedigree
S-D
Logic

Services and Relationship Marketing


Theory of the firm


(Hakansson and Snehota 1995)
Interpretive research and Consumer Culture theory


Hunt (2000; 2002); Constantine and Lusch (1994)
Network Theory


(Prahalad and Hamel (1990); Day 1994)
Resource-Advantage Theory and ResourceManagement Strategies


Penrose (1959)
Core Competency Theory


e.g., Shostack (1977); Berry (1983); Gummesson (1994) ;
Gronroos (1994); etc.
(Arnould and Thompson 2005)
Experience marketing

(Prahalad and Ramaswamy 2000)
Service-Dominant Logic Basics
S-D
Logic
Service, rather than goods, is the basis of economic and
social exchange
• i.e., Service is exchanged for service
Essential Concepts and Components
• Service: the application of competences for the benefit of another
entity
• Service (singular) is a process—distinct from “services”— particular
types of goods
• Shifts primary focus to “operant resources” from “operand resources”
• See value as always co-created
• Sees goods as appliances for service deliver
• Implies all economies are service economies
• All businesses are service businesses
Foundational Premises (Revised)
S-D
Logic
Premise
Explanation/Justification
FP1
Service is the fundamental
basis of exchange.
The application of operant resources
(knowledge and skills), “service,” is the
basis for all exchange. Service is
exchanged for service.
FP2
Indirect exchange masks
the fundamental basis of
exchange.
Goods, money, and institutions mask the
service-for-service nature of exchange.
FP3
Goods are distribution
mechanisms for service
provision.
Goods (both durable and non-durable)
derive their value through use – the
service they provide.
FP4
Operant resources are the
fundamental source of
competitive advantage
The comparative ability to cause desired
change drives competition.
FP5
All economies are service
economies.
Service (singular) is only now becoming
more apparent with increased
specialization and outsourcing.
Foundational Premises (Revised)
S-D
Logic
Premise
Explanation/Justification
FP6
The customer is always a
co-creator of value
FP7
The firm can offer its applied resources
The enterprise can not
deliver value, but only offer and collaboratively (interactively) create
value following acceptance, but can not
value propositions
Implies value creation is interactional.
create/deliver value alone.
FP8
A service-centered view is
inherently customer
oriented and relational.
Service is customer-determined and cocreated; thus, it is inherently customer
oriented and relational.
FP9
All economic and social
actors are resource
integrators
Implies the context of value creation is
networks of networks (resourceintegrators).
FP10
Value is always uniquely
and phenomenological
determined by the
beneficiary
Value is idiosyncratic, experiential,
contextual, and meaning laden.
Resource Integration
S-D
Logic
Economic
Currency
Market-facing
Resource
Integrators
Private
Resource
Integrators
Social
Currency
Resource
Integrator
(individual,
family, firm,
etc.)
Public
Resource
Integrators
Public
Currency
New
Resources
Value
Clarifications: Service vs. Services
S-D
Logic


Services = intangible
products
The application of
knowledge and skills
Goods
Products
Services
Service =The process
of using one’s
competences for the
benefit of some party


G-D Logic
S-D Logic
Service
Service transcends
“goods and ‘services’”
Direct
Indirect
Goods
Money
•
There
are No “Services” in Service-Dominant Logic
Clarifications:
Cocreation vs. Coproduction
S-D
Logic
Integration
With PublicFacing
Resources
Direct
Service
Provision
Provider of
Operand &
Operant
Resources
Coproduction
Service
Beneficiary
Service
Provision
via
Goods
Coproduction is relatively optional.
Cocreation
of Value
Value in
Context
Integration
With PrivateFacing
Resources
Value is always cocreated
What S-D Logic Might be
S-D
Logic
Foundation of a paradigm shift in
marketing
• Perspective for understanding role of markets in
society—Theory of market
• Basis for general theory markets and marketing
More generally, basis/foundation for
• “Service science”
• Theory of the firm
• Reorientation for economic theory
Service Exchange through Resource
Integration and Value Co-creation
S-D
Logic
Resource
Integrator/
Beneficiary
(“Firm”)
Resource
Integrator/
Beneficiary
(“Customer”)
= Resource
Integrators
Markets (and Market Actors) as
Service Systems
S-D
Logic
Service Systems
Resource
Integrator/
Beneficiary
(“Firm”)
Resource
Integrator/
Beneficiary
(“Customer”)
Service science = the study of the
creation of value within and among
service systems (resource integrators)
An Extended Pedigree
S-D
Logic

Social Network Theory


New Institutional Economics


Donaldson and Preston (1995)
Service Science


Insiti and Levien (2004)
Stakeholder Theory


e.g., Hawley (1986);
Business Ecosystems


North (2005); Menard (1995)
Human Ecology


e.g., Giddens (1984); Granovetter (1973)
e.g., Spohrer and Maglio (2008)
Market Practices and Performances

Araujo (2008), Kjellberg and Helgesson (2008)
What is needed
S-D
Logic

Foundations for Positive theory

Shift from products as unit of analysis to collaborative value
creation and determination


Refocus on operant resources as source of value



B2B marketing/network theory
Inframarginal analysis
Models of emergent structure and processes



Resource-based theories of the firm; resource advantage
theory
Elimination of producer/consumer distinction


B2B, service, and relationship
Complexity theory
Interpretive research
Theory of resource integration and exchange

Theory of the market to inform normative marketing
theory
The Market,
Marketing, and Economics
S-D
Logic

Other disciplines have found it convenient to
institutionalize the distinctions between applied
and basic science... In marketing, the problem
is rather one of spinning off a basic science
from a problem solving discipline.


“Paradoxically, the term market is everywhere
and nowhere in marketing.”


(Arndt 1985)
Venkatesh, Penaloza, and Firat (2006)
It is a peculiar fact that the literature on
economics…contains so little discussion of the
central institution that underlies neoclassical
economics – the market

North (1977)
Issues for a Theory of the Market
S-D
Logic

The performative nature of markets



The market is a function of the marketing
(and other business disciplines)
e.g., Araujo (2009)
Markets do not exist


They are images of service potential
Markets as practices


e.g., Kjellberg and Helgesson ( 2008)
…and yet they do


Intersubjective realities
Intuitions
Markets: Shared or (Co)Created
S-D
Logic
The MP3-Player Market
Or
The customizableentertainment- storageorganizer-and-personalassistant-and-lifeapplications-with-aWOW-factor-platform
market
The mineral-oil market
Or
The baby-butt-rash-avoidancemommy-guilt-reducingbody-massage-andsexual-lubricant market
The sodiumbicarbonate market
Or
The occasional-bakingBut-primarily-refrigeratorfreshening-teeth-cleaningclothes-brightening market
The Messages of S-D Logic
S-D
Logic
There are no services
• There is only service
There is no new service economy
• All economies are service based
There are no producers and consumers
• All parties are resource integrators (i.e., Bs)
The Messages of S-D Logic (2)
S-D
Logic
Goods are not “goods.”
• “Goods” are value propositions for service provision
Firms do not create value
• Value is always co-created
Markets do not exist
• The are imagined and created by linking resources
with peoples lives
• And yet they do – because we act as if they do.
Key S-D Logic
Publications
S-D
Logic
Frontiers in Service Conference






World’s leading annual conference on service research in its
18th year
Honolulu, Hawaii, Oct. 29 – Nov. 1, 2009
Hosted by the Shidler College of Business, University of
Hawaii at Manoa
304 abstracts submitted, 39 countries
Emphasis on Service Science trend
Brian Arthur and John Seely Brown confirmed plenary
speakers
Center for Excellence in Service
S-D
Logic
Thank You!
For More Information on S-D Logic visit:
sdlogic.net
We encourage your comments and input. Will also post:
• Working papers
• Teaching material
• Related Links
Steve Vargo: [email protected] Bob Lusch: [email protected]
Resource Integration: The
Practices Perspective
S-D
Logic
Exchanging
Service via
resource
integration
Normalizing
Partially adapted from
Kjellberg & Helgesson
(20056
Representing
The New Fractal Geometry
of the Market
S-D
Logic
External
Resources
RI
Resistances
Resistance Reduction
Resource
Integration
Exchange
RI
RI
Resistances
Customers
Resistances
Value Co-Creation
Stakeholders
S-D Logic Influence on Service Science
 Understanding service and service
innovation requires new abstractions.
 Service is the application of
competence for the benefit of another.
 Service involves at least two entities,
one applying competence and another
integrating the competences with other
resources and determining benefit
(value co-creation) – these interacting
entities are service systems.
•
•
•
Forms of
Service Relationship
(A & B co-create value)
Individual
Organization
Public or Private
Individual
Organization
Public or Private
Forms of
Forms of
Responsibility Relationship
Ownership Relationship
C. Service Target: The reality to
(A on C)
(Bbe
on C)
transformed or operated on by A,
for the sake of B
•
•
•
•
Resource
Integrator/
Beneficiary
(“Firm”)
People, dimensions of
Business, dimensions of
Products, goods and material systems
Information, codified knowledge
Resource
Integrator/
Beneficiary
(“Customer”)
 An atomic service system has no
service systems as operand resources.
37
•
•
•
Forms of
Service Interventions
(A on C, B on C)
 A service system is a dynamic value
co-creation configuration of resources,
including people, organizations, shared
information, and technology connected
to other service systems by value
propositions.
 A service interaction includes proposal,
agreement, and realization.
B. Service Client
A. Service Provider
Source: Maglio (2009)
S-D
Logic
Exchange
Practices
Normative
practices
Representational
Practices
S-D Logic Influence on Service Science (2)

Given our service system abstraction and the servicedominant logic on which it depends, we can define service
science and its variations:



39
Service science is the study of the application of the resources of
one or more systems for the benefit of another system in economic
exchange.
Normative service science is the study of how one system can
and should apply its resources for the mutual benefit of another
system and of the system itself.
Service science, management, and engineering (SSME) is
the application of normative service science.
Source: Maglio 2009
The Source of the “New”
Service(s) Economy
S-D
Logic
G-D logic
classification
Increasing
division of
labor
Outsourcing
Apparent
New
Service
Economy
Potential Implications
S-D
Logic
Making “services” more “goods-like” (tangible,
separable, etc.) may not be correct normative
marketing goal
• Make goods-more service-friendly.
Reconsider the primary nature of the firm
• From manufacturing (make and sell) to marketing
• Service Providers
• Outsource non-core manufacturing and other non-core functions
• Virtual, “on demand” modular marketing organizations
• Resource integrators vs. resource owners
Potential Implications (2)
S-D
Logic
Selling service flows rather than ownership, even
when goods are involved
Shifting to Value-Based Pricing
• Based on value-in-use/value-in-context
Network/Ecosystems approaches to value creation
•Experience-”platform” creation
•Co-creation of value, brands, and markets
What is needed
S-D
Logic

Foundations for Positive theory

Shift from products as unit of analysis to collaborative value
creation and determination


Refocus on operant resources as source of value



B2B marketing/network theory
Inframarginal analysis
Models of emergent structure and processes



Resource-based theories of the firm; resource advantage
theory
Elimination of producer/consumer distinction


B2B, service, and relationship
Complexity theory
Interpretive research
Theory of resource integration and exchange

Theory of the market to inform normative marketing
theory
Service Ecosystems
S-D
Logic

An economic community supported by a
foundation of interacting organizations
that co-create value through service
exchange . It includes:






“Suppliers” “
“Producers”
Competitors
Customers
Customer’s network of resources
Other social and economic stakeholders
Lego
S-D
Logic
Boeing
S-D
Logic
S-D
Logic
S-D
Logic
Threadless.com
Jones Soda
S-D
Logic



Relatively new brand, actively solicits
and applies user input from the onset
Largely inorganic - corporately created
brand community
Consumer packaged good
Firefox: Consumer Generated
Content
S-D
Logic
Firefox
S-D
Logic






Free open source platform
Cross-platform browser
Supports MS Windows, Linux, Mac OS X
As of September 2007
%15 of US users
%28 of European users
Firefox
S-D
Logic
How is Firefox spreading?
 Word of mouth- many
 people are passionate about it
 Company runs contests for consumer
generated ads
 http://www.spreadfirefox.com
 Consumers run their own campaigns to
spread Firefox
 http://www.mouserunner.com
Sub-disciplinary Divergences and
Convergences
S-D
Logic
Business-to-Business Marketing
• From differences
• Derived demand, professional buyers, fluctuating demand, etc
• To emerging new principles
• Interactivity, relationship, network theory, etc
Service(s) Marketing
• From differences:
• Inseparability, heterogeneity, etc.
• To emerging new principles:
• Relationship, perceived quality, customer equity, etc.
Other Sub-disciplines
Other Intra-marketing initiatives
• e.g., interpretive research, Consumer culture theory, etc.
• From deterministic models to emergent properties
• From products to experiences
• From embedded value to individual meanings and life theme
What S-D Logic is Not
S-D
Logic
Reflection of the transition to a services era
• In S-D logic, all economies are service economies
A Theory
• S-D logic is a logic, a mindset, a lens, but not a theory
(at least yet)
Restatement Of The Consumer Orientation
• Consumer orientation is evidence of G-D logic, not a
fix to it
• Joint, firm/customer orientation is implied by S-D logic
What Has Changed? IT & ICT
S-D
Logic
“Dematerialization” and “liquification” (IT and ICT)
• The ability to separate and transport information apart from
and matter (and people) (Normann 2001)
G-D logic (perhaps) was adequate as long as
information and goods are integrated
•Applied knowledge skills (specialized information – division of
“labor”) has always been the core of economic exchange
Economic exchange is (has always been) service
based – service is exchanged for service
Markets (and Market Actors) as
Service Systems
S-D
Logic
Service Systems
Resource
Integrator/
Beneficiary
(“Firm”)
Resource
Integrator/
Beneficiary
(“Customer”)
Service science = the study of the
creation of value within and among
service systems (resource integrators)
Service Ecosystems
S-D
Logic

An economic community supported by a
foundation of interacting organizations
that co-create and exchange service. It
includes:





“Suppliers” “
“Producers”
Competitors
Customers
Other social and economic actors
An Extended Pedigree
S-D
Logic

Social Network Theory


New Institutional Economics



North (2005); Menard (1995)
Human Ecology and Business Ecosystems


e.g., Giddens (1984); Granovetter (1973)
e.g., Hawley (1986); Insiti and Levien (2004)
Stakeholder Theory
Service Science

e.g., Spohrer and Maglio 2008
Marketing and Market Science
S-D
Logic

Other disciplines have found it convenient to
institutionalize the distinctions between applied
and basic science... In marketing, the problem
is rather one of spinning off a basic science
from a problem solving discipline.


“Paradoxically, the term market is everywhere
and nowhere in marketing.”


(Arndt 1985)
Venkatesh, Penaloza, and Firat (2006)
It is a peculiar fact that the literature on
economics…contains so little discussion of the
central institution that underlies neoclassical
economics – the market

North (1977)
Marketing’s Inverted Foundation
S-D
Logic
Normative marketing theory
(Prescriptive knowledge)
• is (should be) built on positive market/marketing theory
Positive market/marketing theory
(Propositional Knowledge)
• is built on positive economic theory
Positive economic theory
• is built on a goods-dominant (G-D), normative theory national
wealth creation
The Value Proposition:
S-D
Logic

There are alternative logics for
understanding markets, marketing, and
management

One is more robust and better suited to
the long-term viability and application.
Forum on Markets and Marketing:
Extending S-D Logic (Dec. 4-6)
S-D
Logic

Sponsor:


Major Themes




Australian School of Business, UNSW
Marketing Systems
Grand or General Theory of the Market &
Marketing
Marketing and Value(s)
Joint, Special-Issue Journal Publication




Australasian Marketing Journal
European Journal of Marketing
Marketing Theory
Journal of Macromarketing
Continuing Misconceptions
S-D
Logic

Reflection of the transition to a services era


Replacing goods with services as the basis of
exchange


S-D logic is grounded in “service” (a process) not “services”
(intangible units of output)
The meaning of co-creation of value


In S-D logic, all economies are service economies
Superordinate to co-production
A Theory

S-D logic is a logic, a mindset, a lens, but not a theory
S-D
Logic
Integration
With PublicFacing Resources
Direct
Service
Provision
Provider of
Operand &
Operant
Resources
Coproduction
Service
Provision
via Goods
Service
Beneficiary
Cocreation
Integration
With PrivateFacing Resources
Value in
Context
Sub-disciplinary Divergences and
Convergences
S-D
Logic
Business-to-Business Marketing
• From differences
• Derived demand, professional buyers, fluctuating demand, etc
• To emerging new principles
• Interactivity, relationship, network theory, etc
Service(s) Marketing
• From differences:
• Inseparability, heterogeneity, etc.
• To emerging new principles:
• Relationship, perceived quality, customer equity, etc.
Other Sub-disciplines
Other Intra-marketing initiatives
• e.g., interpretive research, Consumer culture theory, etc.
• From deterministic models to emergent properties
• From products to experiences
• From embedded value to individual meanings and life theme
A Partial Pedigree
S-D
Logic

Services and Relationship Marketing


Theory of the firm



Hunt (2000; 2002); Constantine and Lusch (1994)
Network Theory


(Prahalad and Hamel (1990); Day 1994)
Resource-Advantage Theory and ResourceManagement Strategies


Penrose (1959)
Core Competency Theory


e.g., Shostack (1977); Berry (1983); Gummesson (1994) ;
Gronroos (1994); etc.
(Hakansson and Snehota 1995)
Interpretive research and Consumer Culture theory
Experience marketing

(Prahalad and Ramaswamy 2000)
Key Related Works
S-D
Logic
Vargo, S. L. and R.F. Lusch (2004) “Evolving to a New
Dominant Logic of Marketing,” Journal of Marketing


Harold H. Maynard Award for “significant contribution to
marketing theory and thought.”
Vargo, S.L. and R. F. Lusch (2004) “The Four Service
Myths: Remnants of a Manufacturing Model” Journal
of Service Research


Lusch, R.F. and S.L. Vargo, editors (2006), The
Service-Dominant Logic of Marketing: Dialog,
Debate, and Directions, Armonk, NY: M.E. Sharpe
Vargo, S.L. and R.F. Lusch (2007) “Service-Dominant
Logic: Continuing the evolution?, Journal of the
Academy of Marketing Science
67
Resource Integration and Value Cocreation Opportunities
S-D
Logic
Resource
Integrator/
Beneficiary
(“Firm”)
Resource
Integrator/
Beneficiary
(“Customer”)
Recreation
Offerings as Platforms
S-D
Logic
Social identity
Inspiration
Self image
Social
connectedness
Stimulation
Facilitation
Ecosystem
Platform
Meaning
Access to
resources
Recreation
Knowledge Entertainment
What S-D Logic Might be
S-D
Logic
Foundation for a paradigm shift in marketing
Perspective for understanding role of markets
in society—Theory of Markets
• Basis for general theory markets and
marketing
• Basis for “service science”
• Foundation for theory of the firm
• Reorientation for economic theory
G-D Logic: A Logic of Separation
S-D
Logic
Producer
Knowledgeable
Innovative and Creative
Produces /Creates Value
Separation
Experienced
Consumer
Inexperienced
Unknowledgeable
Passive/Dull
Consumes/Destroys Value
S-D Logic: A Logic of Cocreation
S-D
Logic
Firm
Cocreating
Customer
Sensing & Experiencing
Sensing & Experiencing
Creating
Creating
Integrating Resources
Integrating Resources
Learning
Learning
Cocreating
Uneasiness with Dominant Model
S-D
Logic 
“The historical marketing management function, based on
the microeconomic maximization paradigm, must be
critically examined for its relevance to marketing theory and
practice.”


“The exchange paradigm serves the purpose of explaining
value distribution (but) where consumers are involved in
coproduction and have interdependent relationships, the
concern for value creation is paramount…There is a need
for an alternative paradigm of marketing.”


Webster (1992)
Sheth and Parvatiyar (2000)
“The very nature of network organization, the kinds of
theories useful to its understanding, and the potential
impact on the organization of consumption all suggest that
a paradigm shift for marketing may not be far over the
horizon.”

Achrol and Kotler (1999)
Problems with Goods Logic
S-D
Logic
Goods are not why we buy goods
• Service (benefits) they render
• Intangibles (brand, self image, social connectedness, meaning)
• Experiences
Goods are not what we fundamentally “own” to exchange with
others
• Applied knowledge and skills (our services)
Customer is secondary and seen as value receiver and
destroyer
• “Consumer orientation” is an add-on--does not help
IHIP characteristics do not distinguish services vs. goods
• But they do characterize value and value creation
Value Production and Consumption
S-D
Logic
Supplier
Supply/Value Chain
Producer
Consumer
Reflections of the G-D Logic
S-D
Logic
Marketing is:
• The “creation of utilities” (Weld)
• Time, place, and possession
• “production function”
• Concerned with value distribution
Orientations
• Production and Product
• distribution vs. value-added
• Consumer Orientation
• Evidence of problem vs. correction
• Marketing management and Consumer Behavior
Disconnect between marketing theory and marketing practice
Sub-disciplinary divisions
What S-D Logic is Not
S-D
Logic
Reflection of the transition to a services era
• In S-D logic, all economies are service economies
A Theory
• S-D logic is a logic, a mindset, a lens, but not a theory
(at least yet)
Restatement Of The Consumer Orientation
• Consumer orientation is evidence of G-D logic, not a
fix to it
• Joint, firm/customer orientation is implied by S-D logic
Getting the Logic Right
S-D 
Logic
The greatest danger in times of turbulence is
not the turbulence: it is to act with yesterday’s
logic.


Peter F. Drucker
The main power base of paradigms may be in
the fact that they are taken for granted and not
explicitly questioned

Johan Arndt
Value Proposition: There are alternative logics
for understanding markets and marketing

One is more robust and better suited to the longterm viability of marketing
Domestication and Liquefication
of Resources Drives Mobility
S-D
Logic
From Somatic Mobility to
Extra-Somatic Mobility
Domesticate
Wind:
Domesticate
Animals:
Somatic
Mobility:
Walking &
Running
Sailing Ships
Domesticate
Carbon:
Petro Powered
Transportation
Domesticate
Silicon &
Spectrum:
Extra-Somatic
Mobility
Horse &
Buggy
From Lusch, R.F. (2008)
Evolution of Marketing & Web
S-D
Logic
To
Market
Marketing To
Marketing
With
Web
Plumbing
Web 1.0
Retrieve &
Read
Web 2.0
Co-Create
Service Science is about building common language
An analogy can be made with
Computer Science. The success of
CS is not in the definition of a basic
science (as in physics or chemistry
for example) but more in its ability
to bring together diverse disciplines,
such as mathematics, electronics
and psychology to solve problems
that require they all be there and
talk a language that demonstrates
common purpose.
Service Science may be the same
thing, only bigger: an
interdisciplinary umbrella that
enables economists, social
scientists, mathematicians,
computer scientists and legislators
(to name a small subset of the
necessary disciplines) to cooperate
to achieve a larger goal - analysis,
construction, management and
evolution of the most complex
systems we have ever attempted to
construct.
81
Source: Maglio (2009)