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In-Depth Information
The service-dominant logic
Vargo and Lusch (Lusch and Vargo 2006; 2004a; 2005) refl ect on the development of economic
activity and argue that marketing inherited a goods-centred view from economics, which
emphasized producing tangible outputs, completing transactions, and maximizing profi ts. They
argue that marketing is evolving toward a service-centred logic, which:
1 views service as the common denominator of exchange;
2 focuses on process rather than output;
3 argues value is not embedded in product or unilaterally defi ned by manufacturer, but
co-created with customers (Merz, He and Vargo 2009: 328).
After multiple rounds of revision (Lusch and Vargo 2006; Vargo and Lusch 2004a, 2006), Vargo
and Lusch concluded that SDL involves a total of ten foundational premises (FPs), including:
FP1: Service is the fundamental basis of exchange
FP2: Indirect exchange masks the fundamental basis of exchange
FP3: Goods are a distribution mechanism for service provision
FP4: Operant resources are the fundamental source of competitive advantage
FP5: All economies are service economies
FP6: The customer is always a cocreator of value
FP7: The enterprise cannot deliver value, but only offer value propositions
FP8: A service-centred view is inherently customer oriented and relational
FP9: All social and economic actors are resource integrators
FP10: Value is always uniquely and phenomenologically determined by the benefi ciary.
(2008a: 7)
At the core of this view is service, which is defi ned as 'the application of specialized competences
(knowledge and skills) through deeds, processes, and performances for the benefi t of another
entity or the entity itself ' (Vargo and Lusch 2004a: 2). Note that, to emphasize the focus of SDL
being the process rather than a special type of output, Vargo and Lusch (2008a, 2008b) switched
from using the plural term 'services', to the singular term 'service'. Service is considered the basis
for all exchanges, whereas goods are identifi ed as vehicles for service provision (FP1 and 3)
(Merz, He and Vargo 2009). However, because service provision usually involves complex
combination of goods, money, and institutions, the service basis of exchange is not always evident
(FP2). Organizations engage in and win competition by their knowledge and skills (FP4).
Because ultimately value is idiosyncratically and experientially determined by the benefi ciary
(i.e. clients or customers in most cases) (FP10), fi rms cannot independently create or deliver
value (FP7). Instead, they may offer value propositions for customers' consideration. The value
creation process is interactional and collaborative (FP6), and the co-creation process implies that
SDL is inevitably customer-oriented and relational (FP8).
Finally, Lusch and colleagues (Lusch, Vargo and Malter 2006; Lusch, Vargo and Tanniru 2010)
suggest that SDL implies eight shifts in thinking, including:
(1) a shift to a focus on the process of serving rather than the creation of goods; (2) a shift
to the primacy of intangibles rather than tangibles in the fi rm's marketplace offering, (3) a
shift to a focus on the creation and use of dynamic operant resources as opposed to the
consumption and depletion of static operand resources, (4) a recognition of the strategic
