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Servitization course - Webinar 2 - What is a service
- 1. What is service? Webinar 2 Servitization HT2019 PhD Nina Löfberg
- 2. WHAT DOES SERVICE MEAN TO YOU AND YOUR COMPANY?
- 3. Services Old School - Goods service continuum Pure Goods Core Goods Core Services Pure Services Goods Services Claude Jr, R. Martin, and David A. Horne. "Restructuring towards a service orientation: the strategic challenges." International Journal of Service Industry Management 3.1 (1992): 0-0.
- 4. Services Old School - IHIP • Intangibility – Services lack the tactile quality of goods • Heterogeneity – Unlike goods, services cannot be standardized • Inseparability – Unlike goods, services are simultaneously produced and consumed • Perishability – Services cannot be produced ahead of time and inventoried
- 7. Traditional goods dominant logic Emerging service dominant logic Primary unit of exchange People exchange for goods People exchange to acquire the benefits of cometences (knowledge and skills) Role of goods Goods are end products Goods are distribution mechanisms for services Role of customer The customer is a recipient of goods The customer is a co- producer of service Determination and meaning of value Value is determined by the producer (value-in-exchange) Value is perceived and determined by the consumer (value-in- use) Firm-customer interaction Customers are acted on to create transactions Customers are active participants in relational exchanges and co-production Adapted from: Stephen L. Vargo, Robert F. Lusch (2004), Evolving to a New Dominant Logic for Marketing, Journal of Marketing, January 2004, Vol. 68, No. 1, pp. 1-17.
- 8. SOME MEAN EVERYTHING CAN BE SEEN AS A SERVICE. WHAT DO YOU THINK?
- 9. DOES IT MATTER WHETHER YOU CONSIDER YOUR OFFERING TO BE A PRODUCT OR A SERVICE?
Editor's Notes
- Early service research saw service as something different from goods. This is the goods service continuum that shows how offerings can consist of either pure goods or pure services, or they can be dominated by either of them, but at the same time contain the other. What service researchers in the 70s and 80s focused on, was to define what the differences between goods and services were.
- They came up with IHIP, which has for a long time dominated service research and thas been taught to students in marketing courses for a long time now. IHIP stands for… Output - perspective. But what happens if we don’t see products and services as different types of outputs, but focus on a more abstract level to see what it is that customers really want. Is it the output per se, or the service that the output creates?
- If you buy a car, do you do that just in order to have it, or do you do it in order to be able to transport yourself to work and home again. Or maybe to want to show off to your friends or neighbours? This is the basic idea behind the service dominant logic, that is a growing marketing perspective, especially in the service field. The idea that people buy goods for the services they render, was what made Vargo and Lusch think about service as a perspective rather than on output of production.
- They presented their idea in an article in the Journal of Marketing in 2004, and argued that service should be seen as a perspective rather than an outcome. I’m going to tell you just briefly how they distinguish between a traditional goods dominant logic and a service dominant logic.
- Primary unit of exchange: What is it that people actually want? Is it the good per se or the benefits and service it provides? Depending on what view a company or an organisation has, it will influence a number of other things. If it is the service that people demand, then the role of the goods changes. It is not the end product but rather a mean to achieve the benefit or service that the customer wants. Example: Car. With the GDL, the producer would think that the deal is closed and over when the car is delivered. With the SDL, This is when the service starts and the value is actually created. And if value is created when the customer is used, the role of the customer changes as well. The customer does not only receive the good, in this example a car, but is actually involved in co-creating value when driving the car. The value then is not only dependent on the producer and the qualities embedded in the car, it will also depend on the customer driving it. E.g how good a driver he or she is, if he or she learn to use the different settings and so on. If value is created when a product or service is used, then the customer must be the one that determines value. Finally, in the traditional GDL, companies want to market their products and sell as many units as possible. However, if value is determined by the customer when using a product, relations and customer involvement becomes more important. If the general idea in a car producing company is that value is determined by a person driving his or her car, the producer will probably become more interersted in and wants to learn more about what actually creates value for that person. This was just a short description of SDL and if you are interested in knowing more about it, I’ve put the article as reference reading and a video explaining I found on youtube that expalains it in more detail.