Class 1 Flashcards
Classical approach of marketing (1985)
Process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy indivifual and organisational goals.
Current approach of marketing (2019)
Activity, set of institutions, and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large
Product Dominant Logic of Exchange - PDL (concepts)
Tangibles, statics, discrete transactions and OPERAND resources
Service Dominant Logic of Exchange - SDL (concepts)
Intagibles, competences, dynamics, exchange processes and relationships and OPERANT ressources
Evolving to a new dominant logic in business
- Moving away from tangible output with embeded value in which the focus was on activities directed at discrete or static transaction
- Towards dynamic exchange relationships involving performing processes and exchanging sklls or services in which value is co-created with consumers
- Worldview changes from a focus on resources on which an operation or act is performed (OPERAND ressources) to ressources that produces effects (OPERANT resources)
Evolution of Marketing : 1800-1920
Classical and Neoclassical Economies
Evolution of Marketing : 1900-1950
Formative marketing thought : marketing institutions, marketing functions
Evolution of Marketing : 1950-2000
Marketing School of Thought: Customer orientation, value determined in marketplace, marketing science emerges and emphasizes use of optimisation techniques
Evolution of Marketing : 1980 - today
Marketing as a social process: market orientation processes, services marketing processes, relationship marketing processes, quality management processes, value and supply management processes.
Co-evolution of Marketing
See slide 10 - CM1
PDL Postulates
- Purpose of economic activity is to make and distribute things that can be sold
- Must be embeded with utility and value during production and distribution and must offer superior value in relation to competitors offerings
- Firm should set all decision variables at a level that enables it to maximise the profit from the sale of output
- For maximum production control and efficiency, good should be standardized and producd away from the market
- Good can be inventoried until demanded and delivered to consumer at a profit
SDL Postulates
- Identify or develop core competences, fundamental knowledge and skills of an economic entity that represent potential competitive advantage
- Identify other entities (potential customers) that could benefit from these competences
- Cultivate relationships that involve the customers in developing customized, competitively compelling value propositions to meet specific needs
- Gauge marketplace feedback by analyzing financial performance from exchange to learn how to improve the firms offering to customers and improve firm performance
PDL vs SDL
See slide 13-14 CM1
Operand vs Operant Ressources
Operand:
- Tangible
- For the Company: Static, usually inert. Require other, more dynamic resources to make them useful (i.e. natural resources)
- Consumers operand resources: income/wealth and goods that the consumer uses to carry on consumption projects
Operant:
- Intangible
- For the Company: often intangible (knowledge and skills). Capable of acting on operand resources and even other operant resources to create value
- Consumers operant resources: physical (energy, emotion, strength), social (famiiy, tribe, commercial relationships and cultural (specialized knowledge and skills, life expectancies, imagination)
Conception transition: PDL to SDL
Goods —> Services
Products —> Experiences
Feature/attribute —> Solution
Value-added —> Cocreation of value
Profit maximisation —> Financial feedback/learning
Price —> Value proposition
Equilibrium systems —> Complec adaptive systems
Supply chain —> Value-creation network
Promotion —> Dialogue
To market —> market with
Product orientation —> Service orientation
PDL vs SDL: Value Creation
PDL: Value is something that is added to products in the production process and at point of exchange is captured in value-in-exchange
SDL: Value can only be created with and determined by the user in the consumption process and through use (value in use). Thus it occurs at the intersection of the offer and the customer over time, either in direct interaction or mediated by a good (goods are distribution mechanisms for service provision)
Value in Exchange and Value in use
Provider sphere (potential value) meets customer sphere (real value) in between delivery and usage : value in exchange.
Value in use is after the product has been acquired
Joint sphere is where the real value is : value creation in interaction
See slide 18-19 CM1
Process of SDL
Generic actors involved in —> Ressource integration and —> service exchange enabled and constrained by —> endogeneously generated Institutions and instituational arrangeements —> Establishing nested and overlapping service ecosystems
Value cocreation
- Technologies
- Market practices
- Business models
Concept of value (2 perspectives)
Customer value :
- Based on the added value that a producer brings in making a good/service
- Value of labor is incorporated into the produced good
- Exchange value results from a confrontation between the benefits and the sacrifices associated with consumption.
Consumer value :
- A relative preference (comparative, personal, situational), characterizing the experience of an individual in interaction with an object
- Derived from its components : main benefits arising from consumer experiences, according to their meanings for the consumer (instrumental, emotional, symbolic, social)
- Perceived benefits/perceived sacrifices = ratio —> global perceived value
Perceived Sacrifices
- Price
- Costs
- Risks
Types of consumer value (perceived benefits)
- Utility
- Knowledge
- Self expression
- Social Link
- Experiential stimulation
- Spiritual value
Holbrook’s typology of consumer value
extrinsic/intrinsic, self-oriented/other-oriented, active/reactive
Economic value, hedonic value, social value, altruistic value
See slide 31 CM1
