preview

Goods Dominated Logic in Marketing

Decent Essays

MK0388 Marketing Management and Strategies Assignment Part 1 Goods-Dominated (GD) logic has been instilled in contemporary thinking since the industrial era, stemming from the fact that economic growth was achieved through a country’s ability to produce excess quantities of goods and export the excess for wealth. Although when this logic is extended into services it results in reducing service offerings into man hours, information and other ‘exchangeable’ units. Whereas recently, literature has proposed the concept of a Service Dominated (SD) logic where the customer and the firm are involved in co-creating value-in-use, rather than value-in-exchange, within a service system (Vargo et al 2008). In this SD logic Vargo & Lausch …show more content…

And the results of the EQ program can be seen to support this as, with the company instilling IM techniques such as job rotation by allowing all employees to take part in training programs, productivity rose by 40% whilst “error points” fell from 100 to 30 as employees were more motivated to undertake different tasks and this focus on quality led to higher customer satisfaction and therefore a higher co-created value, as the true value of the offering is only realised in consumption (Ballantyne & Varey 2008). And so in conclusion while Goods-Dominated logic creates a distinct separation between producer and consumer until the point of exchange (Vargo et al 2008). In G-D logic the customer was considered as an ‘operand’ resource that must be acted upon to be useful and was considered to be passive and outside of the value creation process. Information had to be targeted towards the customer as they were unknowledgeable but could be encouraged to purchase and “consume” the firm’s output or production. Thus, he was the “destroyer” of value. Whereas in contrast to that, the consumer plays an active, if not equally central, role in S-D logic and is a key part of the value creation process. He is now considered as ‘operant’ resource that is capable of acting and producing effects in other resources. As FP6 states, “the customer is always a co-creator of value” (Vargo & Lusch, 2008a). Not only consumers but

Get Access