Marketing Strategy
in Service Business
- amegaro@unisa.it -
Programme
• Marketing and Service Marketing: an overview
• Marketing plan
• New marketing strategies approaches: Relationship Marketing
and Many-to-Many network; Experiential marketing; Nonconventional
marketing
• New marketing vision: Service Research - from S-D logic &
Service Science to service ecosystems & service systems
Case studies
Examples
Project work
Agenda: Lesson 4
• New marketing vision (I part): Service Research - from S-D
logic & Service Science to service ecosystems & service
systems
o Value co-creation
o S-D logic & service ecosystems
Examples
Value co-creation
4.1
G-D logic, the past
G-D logic describes production and exchange phases as
essential elements of business and economy; it
substains that production and distribution of tangible
goods are the main purposes of an organization.
G-D logic is closely linked to the neoclassical economy,
for which actors are rational, companies are aiming at
maximizing profit and customers at maximizing utility.
G-D logic, the past –
«producer vs. consumer»
Probably one of the most harmful conceptualization
of G-D logic is the contrast between “producerconsumer”,
with this implication: some actors (ex.
companies) “produce” (create) value (value-added),
while others (es. consumers) “consume” (destroy)
that value (value-destroyers).
G-D vision of producers and
consumers
SUPPLIER PRODUCERValue chain
Value and product
distribution
Exchange of money
with goods
CONSUMER
G-D logic, the past –
«producer vs. consumer»
https://www.youtube.com/watch?v=Nc-2dhw6ZsI
What about value?
• What is value?
• When can we say that something (a product, a
process, a relationship) has elements of value?
• And for whom?
Nothing can be attributed in a completely objective
way unless confirmed by a personal evaluation.
• Value is something that cannot be standardized,
imposed, duplicated.
• Anything that has value for an actor (a person, a
customer, a supplier, a company, the community) may
not have it for a different actor.
• Value is something subjective, variable in time,
influenced by the values ​​possessed by each one, by
external contingencies, by trends of the moment, by
changing needs over time.
What about value?
Value represents what you are willing to give “in
return”.
In order to obtain something valuable for someone,
one can be willing to give up a large number of
resources (time, money, work done, or other
elements), even important ones.
This trade-off is related to value.
What about value?
The production and supply of any product and/or
service therefore represents only a first phase of the
value generation process
Value proposition (potential value)
What about value?
This process must be completed downstream of a
simple proposition by an equally important process
of “confirmation”, which can be realized through
the purchase, collaboration, mutual satisfaction of
a need by the recipient of the offer
Value-in-use (actual value)
What about value?
The consumer, historically seen as a destroyer of
value (because after the process of consumption
and use, the product no longer presents value), is
more than a simple actor of value creation: the
consumer is a fundamental figure for the very
definition of value of products he decides to buy.
Value co-creation
What about value?
Specifically, value is given by consumers’ choices/preferences, by
customer use of the purchased product (value-in-use) and
benefits from the connected service.
Value is function of the specific context in which the consumer is
(value-in-context) and for this reason it may change in the time
and in the space.
The focus of decision making and a new interpretation of value
co-creation have to be both internal (resources improvement)
and external (collaborative relationships).
About value creation
Individuals are the key players in the co-creation
process, combining resources coming from
different market sources (organizations and
other actors), private sources (themselves,
friends, family, etc.) and public (governmental
and community institutions , etc.).
The centrality of human
factors
• Prahalad and Ramaswamy, 2003, 2004a, 2004b: value cocreation
improves the experience of consumption and use by
stimulating innovation on the service side and on the
product side;
• Vargo and Lusch, 2008: value co-creation is a general
concept that embraces every event in the theoretical and
practical dynamics in the relationship between companies
and customers, contributing to the emergence of value
through interaction (interaction between the actors).
Value co-creation
Value co-creation
Value co-creation is the phenomenon through
which value is now thought to be realized,
disseminated and enjoyed among the actors
involved in its generation process, meaning
value above all as a common benefit
(sometimes also collectively), obtained only
thanks to the intense collaboration between the
parties.
Value co-creation
Production Co-creation
Customers are hence crucial for
product enrichments and are thus
addressed as prosumers; they are
considered fundamental for
competitive advantages. The value
creation process involves clients in
a personal consumption process,
considering them as real strategic
value co-creators, thus suggesting
that firms may be the integrators
and managers of necessary
resources for the benefit of
competitive behaviour.
Co-creation advantages –
viewed by observers
Static
elements
Dynamic
elements
“business-to-business” (B2B)
“business-to-consumer” (B2C)
“consumer-to-consumer” (C2C)
“Actor-to-actor” (A2A)
FROM TO
Co-creation advantages –
viewed by observers
Dal Mercato Col MercatoVerso il Mercato
“Matter in Motion”
Management dei
Clienti e del Mercato
Collaborazione con Clienti
e Partner per creare e
sostenere il valore
Management of
Customers and Market
Collaboration with Customers
and Partners to create and to
substain value
To the Market From the
Market
With the
Market
Evolution of the relationship
with the market
Value creation processes suggest a change of roles and
relevance dimensions.
Clients do not acquire value directly from product
purchases but they derive it from products’ use,
transformation and consumption; a firm doesn’t
autonomously create value for clients, but can only offer
value propositions that clients may choose, experiencing
them and transforming them into value through use.
Why value?
• the consumer is no longer seen exclusively as a target (value
destroyer);
• companies may only make their own proposal (value
proposition);
• consumers are considered active players of production (value
co-creators and prosumers) within a complex system of service
delivery (service system);
• consumers may benefit not only from the products purchase,
but also from the process, use and consumption of the
products (value in use), because they are active (participant) in
the value generation process;
• decision making is heavily influenced by value co-creation
process, in fact the co-creative purpose, shared with
customers, supports the sustainability of their value
proposition.
Value co-creation insights
Co-creation fundamentals:
• An active role for all the actors (decision makers)
involved, including end-users (final customers);
• a constant collaboration, multi-directional, multi-forms,
multi-part;
• a development of reticular relationships;
• a continuous release of resources by everyone;
• strategic sharing of information and objectives.
Value co-creation insightsValue co-creation insights
Co-creation involves:
• A growing mutual satisfaction;
• a better result than that achieved by
working independently;
• greater sustainability of the offer, given the
convergence of purposes.
Value co-creation insights
Supplier Producer Consumer
Value
Distribution
Value
of the supply-chain
Value
of co-production
Value co-creation insights
Value co-creation for
competitiveness
Value co-creation takes place when a potential resource becomes an
effective specific benefit, it implies the active multi-actor contribution,
so it may be considered as a dynamic flow of interactions among
different actors possessing critical resources and the desire to reach
collective mutual satisfaction
‘Harmony’ between actors can be understood as a fusion of listening
skills, considerations, dialogues qualify competitiveness in business by
value co-creation phenomena.
Service-Dominant Logic
4.2
Service Research
In the past, according to classical perspective,
«extractive» sector was considered primary,
«manufacturing» sector as secondary and
what remains was usually considered as
«services», named «tertiary», because it can
not be classified in the previous categories
(i.e. consulting context, transportation, waste
management, other utilities).
G-D logic, the past –
«services=service industry»
G-D logic, the past –
«services=service industry»
Directs
(Services)
Products
(output)
Goods
(tangibles)
Indirects
(Goods)
Service
(Processes and
applied
competences)
Services
(Intangibles)
Service-oriented new economy
paradigm (change in perspective)
Services = intangible products
Products
Goods
Services
Service
Direct
Indirect
Goods
Money
G-D Logic
S-D Logic
There are No “Services” in S-D Logic
Service = process of using one’s
competences for the benefit of some
parties (The application of knowledge and
skills)
Service transcends “goods and
‘services’”
Clarifications: Service vs. Services
S-D logic
• Service-Dominant (S-D) Logic is a mindset for a
unified understanding of the purpose and nature
of organizations, markets and society.
• The foundational proposition of S-D logic is that
organizations, markets, and society are
fundamentally concerned with exchange of service
- the applications of competences (knowledge and
skills) for the benefit of a party.
In S-D logic the main purpose of an enterprise is to serve
itself by serving others, integrating its internal resources
with others available from public and market sources and
to create additional resources to be applied for the
benefit of other actors (individuals, family, companies,
etc.).
Service opportunities change because the available
resources continuously change.
S-D logic and centrality of
«Market-ing»
S-D logic
S-D logic is inspired by the fundamentals of network theories
and is focused on:
- new value «generation» processes,
- modern (entrepreneurial) interactions,
- new forms of network integration of resources,
in the attempt to set a closer approach to current marketer
specifications and more adhering to reality, and developed
around a new service idea.
Goods-services Continuum
Goods and service represent
neither a dichotomy nor a continuum
Change of Perspective
SDL
“is concerned with the vertical
relationship between service
and goods,
rather than the horizontal
difference
between services and goods”
(Vargo and Lush, 2008:29)
Goods
(tangibles)
Services
(intangibles)
Products
Indirect
(goods)
Direct
Service
The Service Dominant Logic (SD logic) represents a
theoretical proposal mainly related to marketing studies
that highlights the change of perspective compared to
traditional interpretative models (defined as a whole
Good Dominant Logic - GD logic), more focused on the
importance of goods and characterized by the historical
difference between goods and services.
S-D logic - Definitions
Innovative contributions: Service
The S-D logic defines the service as:
«Application of skills through actions,
processes and performance aimed at
producing a benefit for themselves and for
third parties, directly or indirectly
connected».
Ref. (Vargo and Lusch, 2004; Vargo and Lusch, 2008)
Innovative contributions: Service
Service-for-service exchange
Not only the barter may clarify
the “service-for-service
exchange”: even exchanging
something for money means
that each actor is providing
other actor with a service.
Goods appear as instrumental
tools (appliance) for the supply
(provision) of service.
FPs and Axioms
The authors have produced different
representations of their theory and synthesized in
10 fundamental points (foundational premises FPs),
then became 11. From these fundamental
premises, thought has recently evolved towards the
definition of 4 Axioms, from which numerous other
authors have been inspired for a new interpretation
of the commercial, managerial and strategic logics
of our economy.
The Axioms of the S-D logic
A1
• Service is the fundamental basis of the exchange.
A2
• Customer is always value co-creator.
A3
• All the economic and social actors are resources integrators.
A4
• Value is always uniquely and phenomenologically determined
by the beneficiary.
Axioms & Foundational Premises
(FPs) of S-D Logic
S-D logic: today – «Axiom n.1»
The first axiom is based on the application of operant
resources for the benefit of another actor.
The service is always exchanged with another service,
which implies that:
1. Goods are devices to provide a service
2. Operant resources are fundamental for service
provision
3. All economies are service economies
“A1 (FP1) Service is the fundamental basis of
exchange.”
Company
Actor
Customer
Actor
Innovative contributions: the
goods-service relationship
The set of resources available to a company,
consisting of specialized skills and adequate
knowledge are key elements for success and
survival (FP1).
In practice, the service represents the general
case of which the good can be considered a
particularity, "it is the service that is always
exchanged".
Innovative contributions: service
exchange
The S-D logic interprets the condition of exchange
differently (FP2), asserting that its intrinsic nature is
exclusively linked to service, no longer understood as a
marginal or functional element. The goods do not
represent the only object of transaction, rather they
appear as an instrumental element (appliance) for the
supply (provision) of the service themselves (FP3),
observed as the real protagonist of the interactions and
agreements between the parties of an exchange.
Innovative contributions:
exchange purpose
The authors use the term "service" always singular to
better reflect the purpose of producing a benefit to a
recipient and differentiate this indication from the
concept of simple unit of output implicit in the
expression in the plural (services), proper to the G-D
logic.
Ultimately, even when a customer purchases a physical
product, he essentially buys (and above all benefits)
the service directly connected to it.
For this reason all the economies have to be considered as
service economies (FP5).
Innovative contributions:
Knowledge and Resources
The SD Logic privileges the importance of
intangible resources, and in particular of
knowledge, as a competitive factor (FP4),
considering that physical resources and often
inert (defined as operand) imperatively require
certain intangible and much more dynamic
activities (defined operant), related to them, in
order to be made usable and really useful.
Human knowledge and skills, cultural and social resources usually
intangible and dynamic which act on operand resources to create
value and competitive advantage.
Natural or economic resources usually tangible and static which
require some alterations to assume value.
They represent the distrIbution mechanisms of service.
OPERANT RESOURCES
OPERAND RESOURCES
The sinergy deriving from user’s, provider’s (and each member’s)
personal resources gives birth to a unique result, superior to the
simple sum of the single individual contributions.
Operand and operant
resources
Operand resources are static resources on which
an action is necessary for achieving value. Goods
(devices) are operand resources.
A natural resource, such as gold, is an example
(operand resource). The gold must be found,
extracted, refined, shaped and used (operant
resources).
Operand and operant
resources
Operant resources are resources capable of
acting on other resources to create value (under
suitable circumstances).
Knowledge and skills which can be used in
action to create value, such as the ability to
find, extract, refine, shape and use gold.
Operand and operant
resources
The second axiom is opposed to the G-D logic, which
sees the company as the only creator of value; the value
is always co-created through the interaction of the
actors, both directly and through the goods.
[E.g. A doctor who provides patient with a service cocreates
value with him, never independently, and the
drug (a good) given by the doctor is seen as a device to
facilitate the provision of the service and the co-creation
of value.]
S-D logic: today – «Axiom n.2»
“A2 (FP6) Value is always co-created by multiple actors,
including the beneficiary.”
Actor ActorActor/
Beneficiary
Actor/
Beneficiary
The value is determined by the final consumer
(FP6), by his / her choices / preferences, by the
way in which he / she makes use of the
purchased product (value-in-use) and benefits
from the connected service.
Value is also a function of the specific context in
which the consumer is located (value-in-context)
and this can also vary in time and space.
Innovative contributions:
Value
Innovative contributions:
the indispensability of the Service
The S-D logic explains that the price of all products
(value-in-exchange) only represents the provision of a
"priceless" experience linked to the interconnected
service; even the first (the product) could not even
exist without the second (the service). Companies
only have the opportunity to make their own value
proposition to offer in the market (value proposition)
(FP7).
The authors Steve Vargo and Bob Lusch has
shared a new vision on the "service", according
to which an innate sense/need always emerges
for all organizations to "do something" (provide
a service) "for" and above all together "with"
other parts, completely modifying the supplier
(supplier)/customer (user) relationship (FP8).
International Accreditation
The third axiom shows how the integrable resources
come from a multiplicity of sources: private sources (eg
oneself, friends, family), market sources (ie from other
actors, through barter or economic exchange) or from
public sources (ie access collective from community and
government sources) or, more likely, through the
provision of services from different sources, often at the
same time.
S-D logic: today – «Axiom n.3»
Actor ActorActor/
Beneficiary
Actor/
Beneficiary
“A3 (FP9) All social and economic actors are resource
integrators.”
Resource
Integrator/
Beneficiary
Resource
Integrator/
Beneficiary
Resource Integration
(operant) resources are both source and outcome of
service-for-service exchange.
Resource integration
3. All social and economic actors are resource
integrators.
 The context of co-creation is a network of
networks
 What we really do as individuals, organizations,
families etc. is getting resources through service
exchange and integrate them in a unique way.
1.Service2.Co-creat.3.Res.Int.4.Value5.Institut.
The fourth axiom of the S-D logic reflects the
generic nature of the actors and reinforces the
idea that the value is phenomenological (FP10).
Particular attention was paid to the choice of the
phenomenological word, rather than "empirical",
because the second term often evokes something
similar to a Disneyworld event - always positive,
pleasant and so on.
S-D logic: today – «Axiom n.4»
S-D Logic Axiom n.5
A5 Value cocreation is coordinated through actorgenerated
institutions and institutional arrangements
Institutions provide the glue for value cocreation
through service-for-service exchange
• Institutions: humanly devised rules, norms, and
beliefs that enable and constrain action and make
social life predictable and meaningful
• Institutional arrangements: higher-order sets of
interrelated institutions
Institutionalization
Two main enablers and coordination mechanisms of value cocreation
(strictly interconnected):
The two enablers permit to perform activities and exchange in a
«natural» and «coordinated» way in line with the rules
determined a priori.
rules, norms, meanings,
symbols, practices and
agreement that govern actor’s
collaboration
interdependent assemblages of
institutions: essential
facilitators for value co-creation
in markets and society
FP11: Institutions and
institutional arrangements
INSTITUTIONS INSTITUTIONAL ARRANGEMENTS
“Humans create institutions to coordinate their
behaviours " (Barile et al., 2016).
Luca Carrubbo – Brno 2017
Service Ecosystems
“relatively self-contained, self-adjusting system[s] of
resource-integrating actors connected by shared
institutional logics and mutual value creation through
service exchange”
Lusch and Vargo (2014, p. 161)
Starting from the «social shift» of SDL (11 FP), Vargo and Lusch
proposes a new conceptualization of networks based on the
transcending and systems perspective of service
Value co-creation involves complex networks of actors and
supply chains (rather than dyads)
THEN, new multi-actor models are required to reread the
mechanisms for competitive advantage
Luca Carrubbo – Brno 2017
Service Ecosystems
Luca Carrubbo – Brno 2017
Service Ecosystems: an example
Luca Carrubbo – Brno 2017
INSTITUTIONS
Service Ecosystems: main dimensions
IT and ICTs based platforms that make
exchanges more efficient and accelerate
innovation
RESOURCE
INTEGRATION
Coordination mechanisms for exchanges based
on preexisting shared rules (socially and
commonly accepted) that act as enablers of
resource integration
Exchange of resources occurring in the
multiple interactions between actors (from
pre-delivery, design to post-delivery)
The actors, nested within the different service
ecosystem levels, are related by value
propositions (shared purpose).
TECHNOLOGY
VALUE
PROPOSITION
Antonietta Megaro
amegaro@unisa.it
THANK YOU.
Questions? Comments?