Perspectives. Perspectives on Marketing - What is Service Logic? Staffan Hård af Segerstad Liu School of Management 1

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1 Perspectives on Marketing - What is Service Logic? Staffan Hård af Segerstad Liu Engineering What creates value for the customer? Customer Value through: Core product Service Price Image differentiation Competitor Firm 2 Perspectives From transactions to relationship From adding value to value in use From logic to service logic 3 Liu 1

2 Marketing-mix (4P) Product Price Place Promotion 4 Relationship marketing A perspective a way-ofthinking How to take care of customer relations? Not tools 5 Industrial relationship marketing Technological bonds bonds Time Time bonds bonds BUYER BUYER Knowledge bonds bonds Social Social bonds bonds Econ Econ /legal /legal bonds bonds SELLER 6 Liu 2

3 A case of relationship marketing 7 Story about Ming Hua a case of relationship marketing (adopted from Grönroos, 2007) How can he change his perspective from exchange to relationship? What does he need to change in his way-of-thinking? What do you suggest him to do? How can he earn more money? 8 Story about Ming Hua II Relationship strategy - tactical elements Seek direct contacts with the customers Build a database Develop a customer-centric service system Relationship strategy - strategic elements Redefine the business as service business Management of processes Partnerships networks to hle the processes 9 Liu 3

4 Exchange versus the relationship perspective in the marketing process (Sheth & Parvatiyar, 1995) Process Relationshipperspective Exchangeperspective Valuedistribution Valuecreation Outcome 10 Inherent values in realtionship transaction marketing (Sheth & Parvatiyar, 1995) Mutual interdependence Relationshipmarketing Competition conflict Transaction marketing Mutual cooperation Independence 11 Relationship based marketing Marketing is the business task of establishing, maintaining enhancing relationships with customers other parties defined as stakeholders at a profit so that the objective of all parties involved are met (Grönroos, 2000) RM is marketing seen as relationships, networks interactions (Gummeson, 1997) 12 Liu 4

5 From 4Ps to 30R Gummesson, 1994 Relationships Price Product Marketing mix Product Place Price Promotion Networks Interaction Relationship Marketing (RM) Relationships Networks Interaction Place Promotion 13 Theories practicies leading towards RM (Gummesson, 1995) Empirical base Massproduced Massproduced Consumer Consumer Services Industrial Industrial services services Quality Quality on on services services Org. Org. behaviour behaviour structure structure Specific theory Marketing Mix, Mix, 4P 4P Service Service Marketing Network approach Quality Quality Management Management Organisation Organisation theory theory General theory Practical experience, judgement intuition intuition RM RM RELATIONSHIP MARKETING Adapt Adaptto to different marketing situations 14 What characterises a relation? In Private in Business? 15 Liu 5

6 Characteritics of a relation Trust generalized trust, system-trust, personality based trust, process-based trust Commitment motivation to do business Attraction financial, social or technological factors 16 What is a relation when? A relation is etstablised when the customer think that a mutal way of thinking is estabished. The relation has to be earned by the supplier/service provider. (Grönroos,2007) An attitude! To do something WITH or FOR, not TO the customer. Mutual understing Cooperation interaction Win-win-situation 17 Are all customers relation oriented? When is a customer a customer? Are all customers interested in relationship? Transactional mode Active relational mode Passive relational mode What kind of students are you? 18 Liu 6

7 Relationship as a metaphore? 19 Is relationship a useful metaphore in consumer markets? O Malley & Tynan, 1999 Massmarket what possibilities? Do you have a relation with your suppliers? From manipulation to genuine customer involvement? From telling selling to communicating sharing knowledge? Metafors liberates our imagination yes but.? No evidence that marketing is now more about mutuality than manipulation It has ignored the fact that RM was intended as an alternative apporach to marketing in contexts which differed significantly from mass marketing situations where high personal involvement occurs. 20 On defining marketing Customer value Value-in-product Value-in-use 21 Liu 7

8 Adoptning a Service logic for marketing Grönroos, 2006 Consumptions of a black box for the marketer Services consumption production partly simultainly Value-in-use value emeges for the customer when services DO SOMETHING FOR THEM, the value-creation is done by the consumers. 22 On defining marketing Managing customer relationship Different definitions meanings! The Customer decide! 23 A promise management definition (Grönroos, 2006) 1. Value-in-use-notion suppliers support customer value creation 2. Potential to develop relations for those who are in a relational mode 3. Several organisational functions have to take responsibility for marketing 4. Decision-making area not included i the definition (4P) 5. Enabling promises internal focus support 6. Communication value propositions making promises set expectations that have to be met! 24 Liu 8

9 Implications for marketing practice Breaks free from one-function, marketing department based view Process nature helps to locate the firms true marketing resource All contacts with customers are customer focused No structure definition (4P) on what resurces are included i marketing Not determined what is included by fore h From marketing-mix metafore to promise metafore 25 The product marketing triangle FIRM Marketing/sales staff Enabling promises Continous product development Making promises External marketing Sales PRODUCT Keeping promises Product features MARKET 26 The service marketing triangle FIRM Full time marketers salespeople Enabling promises Continous development Intenal marketing Making promises External marketing Sales PERSONNEL TECHNOLOGY GOODS KNOWLEDGE CUTOMER CUSTOMER S TIME Keeping promises Interactive marketing Part-timemarketers customer-oriented technologies systems CUSTOMERS 27 Liu 9

10 Service dominat logic conceptual transitions Lusch & Vargo, 2006 Goods-dominant logic concept Goods Products Feature Value-added Price Promotion To market Transitional concepts Services Offerings Benefit Co-production Value delivery Integrated marketing communications Market to Service-dominant logic concepts Service Experience Solution Co-creation of value Value proposition Dialogue Market with 28 Your final course Implications for market communication? 29 Liu 10