Free Marketing Dissertations - Critique Of Vargo, S.l. And Lusch, R.f. (2004) "evolving To A New Dominant
Critique of Vargo, S.L. and Lusch, R.F. (2004) "Evolving to a New Dominant Logic", Journal of Marketing, vol. 68(1):1-17
The traditional dominant logic on which the understanding of exchange and marketing is based is centered on a manufactured output, which is grounded heavily in microeconomic theory developed during the Industrial Revolution. In Evolving to a New Dominant Logic for Marketing Lusch and Vargo explore the evolving logic, and the shift away from the exchange of tangible output toward the exchange of services, defined as the application of specialized competencies through deeds, processes and performances for the benefit of another entity or the entity itself. (Bayus et al, 2004) In fact, to make decisions, managers often simplify market realities, and in reality, demand for one product can depend directly and indirectly upon the existence of and marketing efforts involving products in different categories. As a result, Vargo and Lusch (2004) reached several conclusions in search of their new ‘dominant logic’. Firstly, they propose that it’s time that marketing makes a shift towards aiming to create a meaningful dialogue with consumers instead of messages directed at them. Meanwhile, marketing academics must rethink the lexicon of marketing, subordinating many of the traditional goods-centred concepts to revised, service-centred, concepts, and focusing less on providing a rigid service, and more on manipulating decision variables, such as the five P’s and five C’s of marketing.
Payne and Frow (2005) claim that this new dominant logic, which has evolved from earlier thinking in business-to-business and services marketing, now views the customer as a co-creator and co-producer (Payne and Frow, 2005). These benefits can be integrated in the form of a value proposition that defines a relationship between the performance of the product, the fulfilment of the customer’s needs, and the total cost to the customer and the business over the customer relationship life cycle. This thus gives a new model for businesses looking to evaluate the benefits of their marketing: rather than using the traditional criteria of fixed term boosts to sales or revenue, they can now examine long term performance effects.
However, Vargo and Lusch (2004) are not alone in emphasizing firm performance and customer value: many other theorists now talk about the dual creation of firm and customer value, including Payne and Frow (2005) and also Rogers (2005). Indeed, Boulding et al (2005) raise the important question of whether the field’s focus on CRM sheds light on the understanding of customer and firm behaviour or whether it just creates more ‘heat’. (Boulding et al, 2005) Many theorists now argue that CRM requires a paradigm shift in firm behaviour and, if this is true, CRM is truly a really big idea, with the potential to change the way firms market themselves and their products.
