Summary of Dominant logic marketing

Marketing : The new logic

I am going to sum up the text "Evolving to a New Dominant Logic For Marketing" by S.T Vargo and R.F Lusch. After a brief analysis of the document I will introduce myself. Enjoy reading !  

Dominant Logic Marketing summary

        Traditionally Marketing is explained by the rule of 4P, or marketing mix. In the 1900, there were the logic of goods-dominant view, in which operand resources, tangible output and discrete transactions were at the heart of the thought. Then other schools were born: The service-dominant view, where exchange processes, relationships, intangibility, and knowledge are central.  The authors would rather use the 8 FP rules to describe marketing actually. To understand this shift of thought we must make the difference between the operand resources and the operant resources. First one is the material or resource on which an operation or act is realized to produce a finite result. The operant resources are necessary resources to perform the operations on the operand resources or other operant resources. Currently an act is executing by resources that produce an effect. We can sum up the differences in the table below :

         The authors describe the notion of vertical marketing (in opposition with the horizontal marketing) in the new dominant logic. To be closer to the customer needs, the firm should improve the workers’ specialization and narrow-skilled proficiencies. These microspecializations are able to know precisely what the clients want and answer more efficiently to their needs. This type of marketing is proactive and is more flexible face to the competition. Processes are not more performed by only one entity, but it is subdivided in multiple of specialized departments. People are constantly moving toward more specific specialties.

         In addition to this vertical marketing, knowledge in the specialization is a pillar of competition and the economic wealth growth of the firm. Thanks to skills (which are operant resources) the firm keeps a technologic advantage in comparison with the competitors. These skills allow having a better storage, transport, and yield.  It allows having an intangible product with a high value-added. According to Srivastava, Shervani and Fahey the 3 core processes of a company are:

-Product development management

-Supply chain management

-Customer relationship management

          The different economic activities focus on the increase of skills or operant resources exchanges. Even if every firm tries to perform into a specific activity, the exchanges of knowledge allow staying in the market.

         Contrary to the goods dominant view, production and sale of the product is not the final process. It is a tool that provides a service for the consumer. The goods become a service for the customer’s well-being. The value is embedded in goods, even for the tangible products. People are continuing the marketing consumption, and are continuing the marketing process. They become a coproducer of the product, not only the final target. This vision places the consumer as operant resource. Consumer wants a better living environment, and to perform that, he needs services that satisfy his hobbies. The products will bring this wellbeing and the benefit. The value-added is the relationship between the customer and the firm. The process what follow the sale is more important that the transaction itself because the trust maximize the dynamism of a brand for future product. The transactions or the productions as final process in a goods-centered model  are replaced in a service-centered model by consumer coproduction and relationships. The firm performance and firm offering can be improved by the analyses of the financial performance, and the marketplace feedback. The customer, the brand, the equity network should be considered as value-added.

     

             The authors criticize the marketing scholars which stay with the 4P system. This concept is outdated according to them and the way of thinking in the marketing school must evolve and follow the service-centered view. The reorientation of the courses includes the end of the target marketing, marketing segmentation and marketing mix concepts. Academic marketing may need to  revise some of the lexicon.

         A summary of this text is the growth of intangible product in the marketing, such as skills, knowledge, relationships, information, and trust. These new data in the vertical marketing orient the place of the consumer, who becomes a coproducer and an operant resource. 

Discussion

       I did not know the concepts of the marketing; this paper helps me to have an historical approach and a first view on the marketing schemes.The paper is a good synthesis, not too complex to understand but with several important points. The authors do not explain the details and give many examples and quotations.  However the authors confirm something I have already known. The knowledge and skills enable to increase the value of an object. Services are the future of the tangible product, and only the innovation, the specialization and the research and development can perform a brand and allow durability in the relationships between the customer and the firm. I think it is the most important operant resource. In the Energetic field, the companies try to find the maximum yield for the photovoltaic panels or the best technology to optimize the energetic costs, for example with the smart cities. 

        In my study in an engineering school, I learned in some courses to decrease the complexity thanks to computer program, or improve a process thanks to a mathematical formula. I think that the engineer must always find the most efficient technical solution. Knowledge and skills are the tools of an engineer, and this year I think I will learn how to have the most management solution.   

Presentation

          I’m Maxime Richebois, a French student from Paris. I have learned in an engineering school (EFREI), and an option in financial markets.  I must finish my last semester with EFREI in 2014, and I should have the possibility to study abroad.

         I like travelling around the world, and discover new places totally different like Island, Malaysia, Costa Rica or United States. My other hobbies are sport (collective and individual), mountain activities such as skiing, hiking, climbing or paragliding. 

        I think this degree program is able to bring me new keys to understand the company language, how to manage employees. Energetic field is huge and permit many possibilities, as transport, storage, environmental matter, new types of energy, etc… Later I would like to manage a team of people on a technical project based on Energetic questions. I want to associate my technical skills with an marketing and management processes. 

          Thanks to my technical background and this Master I could have better responsibilities, and a career more interesting. I have already participated to a business game. I hope it will be as instructive and funny as last year.  I think that the program is more professional and less academic. The different projects will be more realistic, with concrete cases, and not only a theory about management or marketing. I agree with the point emphasized by the authors. Schools are by moments too far from the reality and what students have learned for years don’t match the company expectations.