Evolving To A New Dominant

Logic For Marketing

Presented To :- Dr. Pragya Awasthi

Presented By :- Ritika Saxena

Shreya Jaiswal

Nikhil Nigam

Vikas Kumar Verma

Yuvraj Sarin

Introduction

“Evolving To A New Dominant Logic For Marketing” ,this concept was given by “Vargo & Lusch” . The new dominant logic has essential implications for marketing theory, practice and pedagogy as well as general management and public policy.

The term Dominant Logic relates to the main means a company uses to make a profit.

The “new” dominant logic includes service marketing, market orientation, customer relationship management, networked markets, mass customization and interactivity.

Continued..

They believed that they passed the tipping point in the

transition from a goods-centered to a service-centered

logic for marketing.

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.

Continued..

They also believed that marketing should be at the

center of the integration and coordination of the cross

functional processes of a service-centered business

model but this depended on what is meant by

‘marketing’.

Pre 1900 21st Century

Goods centered

model of exchange

Concept leaders in marketing

continually move away from tangible

output with embedded value in which

the focus was on activities directed at

discrete or static transaction. They

move toward dynamic exchange

relationships that involve performing

processes and exchanging skill and

services in which value is co-created

with the consumer.

Service centered

model of exchange

Research Methodology

There are two types of methodologies used in this research:-

Operand Resources: These are the resources on which an operation or act is performed to produce an effect. E.g. Factors of production.

Operant Resources: These are the resources which are based on typically human skills & knowledge, market segment, competitors, technology, relationship with competitors, suppliers and customers.

The concept of Operand Resources and Operant

Resources is used to make the distinction.

1.) Role of Goods – In traditional goods-centered

dominant logic, marketers take matter and change its

form, place, time and possession. The end results are

goods which are operand resources while in

emerging service-centered dominant logic, goods are

embedded with knowledge and skills and are mere

transmitters or vehicles for the same. Another way,

they appliances used by customers in their value

creation processes which are operant resources.

2.) Role of Customer - In traditional goods-

centered dominant logic, customer is an operand

resource. The marketer does things to them:

segment, penetrate, distribute to them and so on

while in emerging service-centered dominant

logic, customer is a co-producer of service and not

a mere recipient. Marketing is a process of doing

things in interaction with the customer. The

customer is primarily an operant

resource functioning only occasionally as

an operand resource.

3.) Determination & Meaning of Value - In

traditional goods-centered dominant logic, value

is determined by the producer and is embedded in

the goods and is defined in terms of the value of

exchange while in emerging service-centered

dominant logic, value is perceived and determined

by the consumer on the basis of “value in use”.

Value results from the beneficial application

of operant resource sometimes transmitted

through operand resources .Firms can only make

value propositions.

4.) Primary Unit of Exchange - In traditional goods-

centered dominant logic, people exchange for goods

as operand Resources while in emerging service-

centered dominant logic, people exchange to acquire

the benefit of specialized competences (knowledge

and skills) or services operant Resource.

5.) Firm-Customer Interaction - In traditional

goods-centered dominant logic, firm acts upon the

customer because customers are considered as

operand resources while in emerging service-

centered dominant logic, customers are active

participants in relational exchange and coproduction

and thus are operant resources.

6.) Source Of Economic Growth- In traditional

goods-centered dominant logic, wealth is obtained

from surplus tangible resources and goods. Wealth

consists of owning, controlling and

producing operand resources while in emerging

service-centered dominant logic, wealth is

obtained through the application and exchange of

specialized knowledge and skills. It represents the

right to future use of the operant resources.

Relevant Factors To This

StudyThe three foundational premises of a new logic of

marketing are in which service provision is the

unifying concept:-

The application of specialized skills and knowledge is

the fundamental unit of exchange.

Indirect exchange masks the fundamental unit of

exchange .

Goods are distribution mechanisms for service

provision .

Continued..

Marketing in now evolving toward a dynamic,

evolutionary-process, service-centered view that is

informed by resources-advantage theory, competence,

knowledge and relationship marketing.

Value is defined by and co created with the consumer.

Competition is an evolutionary, disequilibrating,

dynamic process that involves firms that use operand

and operant resources in their search for competitive

advantages and superior financial performance.

Continued..

Service-dominated economies replace manufacturing-

dominated economies, most transactions involve

government, high-end business services, health care,

legal services, transportation services, evolving

communication, multichannel retailing, financial

services and personal services.

Recommendations

Implementing marketing in an operations-dominated

environment.

Developing new series in which implementation is

more critical than design.

Measuring the impact of marketing strategies on short

and long both term profits.

Managing demand and enhancing profits.

Increasing sales and profits when teams deliver the

services.

Using marketing to train effectively and to retain

employees.

Continued..

Balancing self-services and employee-delivered

services.

Developing internal marketing programs to motivate

services employees .

Developing creative pricing ideas for services.

Building network externalities for services.

Measuring the impact of more service on customer

welfare .

Determining the optimal amount of customization in a

rate-based pricing environment.

Conclusion

Marketing is entering a new era and mainstream marketing in the new era will closely resemble the business to business/service/relationship marketing. The reason for the shift is the advance of information technology which has resulted in the services revolution and the use of information to understand and enhance customer relationships.

The conclusion from this research is that a service perspective is superior to a good-centered view because it emphasizes solutions and points to opportunities for expanding the market by assisting the consumer in the process of specialization and value creation.