Companies today are interested in gaining the lifetime value of the consumer. In this dynamic world of information technology, organizational strategies are focusing on customer service as a competitive advantage. Where lean manufacturing, low price, and cost cutting logic was once a primary approach of operation managers, these same firms have determined that by utilizing a Service Dominated Logic approach or (SDL), they are gaining competitive advantages that prove to have a longer lasting effect on the consumer, and maintaining a lifetime loyalty from these customers. These loyal customers then provide the number one form of marketing which is “word of mouth”. Brand awareness is also heightened and return on investment (ROI) is gained by shareholders. This paper will first discuss an overview of SDL, describing the overall theory and components, while providing a brief historical background of SDL. Next, it will identify critical foundational literature in the development of service theory. This document will then compose a timeline analyzing changes in service theory linking these changes to important developments in service industries. Finally, it will identify critical components of service theory. Service Dominated Logic Theory and Historical Background Adam Smith (1776/1904) who is commonly known as “the father of economic thought” developed modern day economics not by his intention. According to Vargo, Lusch, & Morgan, 2004 Chapter 2: Smith’s purpose was to integrate and explore the preceding views into a model of the normative economics of national wealth creation. In so accomplishing this objective, he created bifurcations in the treatment of the concepts of ‘productive’ services and ‘value’ that t... ... middle of paper ... ... Sheth, Jagdish and A. Parvatiyar (2000), “Relationship Marketing in Consumer Markets: Antecedents and Consequences,” in Handbook of Relationship Marketing, Jagdish Sheth and A. Parvatiyar, eds. Thousand Oaks, CA: Sage Publications. Shoestack, G. Lynn (1977). Breaking Free from Product Marketing. Journal of Marketing, 41(April), 73-80. Retrieved from Jstor.org Web site: http://www.jstor.org/discover/10.2307/1250637?uid=3739256&uid=2129&uid=2&uid=70&uid=4&sid=21103723085277 Vargo, S., & Lusch, R. (2004). Evolving to a New Dominant Logic for Marketing. Journal of Marketing, 68(1), 1-17. Retrieved from sdlogic.net Web site: http://sdlogic.net/JM_Vargo_Lusch_2004.pdf Vargo, S., Lusch, R., & Morgan, F. (2004). Historical Perspectives on Service- Dominated Logic (Vol. 1). Retrieved from sdlogic.net Web site: http://www.sdlogic.net/historical_persp_on_sd_logic.pdf
Armstrong, Gary, and Philip Kotler. Marketing: an introduction. 11th ed. Upper Saddle River, NJ: Pearson Prentice Hall, 2013. Print.
As you can see, labor and trade are the key importance to modern wealth. Production and trade are not just needed but are essential for a country to survive. Smith makes it ideal for countries to interact and trade. Trade means you get more directs workers into jobs in which they have a comparative advantage, which means more
Let’s get started with Adam Smith and his second coming. Adam smith was one of the greatest economics minds that have ever existed, teaching us that our wealth is not just in gold and silver but in the products that we produce and commerce we engage in! Much like today we can understand the idea of Gross National Product and how we can better adjust our habits and ourselves. Smith unlike most economists of that age understood the value in hard work and social aspect behind our decisions.
Kotler, Philip, and Kevin Lane Keller. Marketing Management 12e. Upper Saddle River: Pearson Prentice Hall, 2006.
He postulated that a free market economy was entirely natural and was consistent with human nature as each person has a drive to improve their own lives. Each man pursuing his own interests and competing would make society better by guaranteeing a fair price for goods and services while also spurring constant economic innovation to keep pace with growth. In Smith 's mind, competition was responsible for keeping the prices of goods and services low because if a person was unhappy with a business they could simply choose to patronize another establishment. Unequal distribution of power was viewed as an imperfection in Smith 's ideal system so he left government intervention as an option if the inequality became detrimental to the free market. This theory, known as the 'invisible hand ' was, to Smith, the ideal system for the flourishing of a society because it allowed for capitalism with minimal intervention from the government. Smith saw the functions of society and the economy as outcomes of individuals, he put a great premium on the actions of individuals acting purely out of self interest as the catalyst for economic success and the well being of society. Smith 's individualistic view was summed up in his most popular work The Wealth of Nations. He wrote, “It is not from the benevolence of the butcher, the brewer, or the baker, that we
Smith began his book with a radical definition of "national wealth." He rejected the old mercantilist definition of acquiring gold and silver. Nor did he fully accept the Physiocrat view that wealth consisted solely of the produce of a nation’s farms. Instead, Smith proposed that the wealth of a nation consisted of both farm output and manufactured goods along with the labor it took to produce them. To increase its wealth, Smith argued, a nation needed to expand its economic production. How could a nation do this? Smith thought the key was to encourage the division of labor.
Adam Smith is widely regarded as the father of modern economics and one of the greatest economists throughout the course of history. He is mainly famous for two books that he wrote, these two books are considered the base and infrastructure of the world of economics. The two books he wrote were, “The Theory of Moral Sentimental” and “The Wealth of Nations”. But although Adam Smith was such a great economic philosopher, he wasn’t a very good forecaster or future predictor. The economic scenario now is very different from the economic landscape of the 1700’s.
Adam Smith is often considered to be the father of modern economics or the first world’s free market capitalist and. As Smith was living in the middle/late 18th century his works were written in the early stage of industrialization in Great Britain. Because of the development of a factory system there was a demand for more sophisticated capital investment planning and distribution, organization of production process and management of employee performance. Smith was interested in new producing system and he noticed that the expanding market and labor specialization plays a major role in increasing the life standards of citizens. Therefore, he has developed a model in which the user 's material well-being has been defined as a goal; assets are
Cravens, D. W., & Piercy, N. F. (2009). Strategic marketing (9th ed.). New York, NY: McGraw-Hill.
Kotler, P & Keller, L (2009). Marketing Management (Thirteenth ed). New Jersey: Pearson Prentice Hall.
Smith and Marx both have diverse theories as to what would lead nations to a stable and efficient economy. Smith wrote his famous “Wealth of Nations” in 1776, which became one of his greatest works. The changes in the European economy and industrialization had an impact on Smith which is reflected in his writings. The complex formation of today’s economy throughout the world is highly influenced by Smiths take on capitalism. Despite the fact that Smith’s approach might have a more conclusive stance in the
Petty Ross D. Editor's Introduction: The What and Why of Marketing; American Business Journal, Vol. 36, 1999
Adam Smith believed that a nation's wealth was not derived by how much they had in resources, or in an exchangeable commodity, but rather by the labor that its residents produce. "The annual labor of every nation is the fund which originally supplies it with all the necessaries and conveniences which it annually consumes." (Wealth of Nations, p. 1) He stated that a nation could increase the efficiency of the potential of its people by increasing these two aspects of the work force: (a) Skill, dexterity, and judgement with which labor is applied, and (b) Proportion of those employed in useful labor to those not so employed.
—— 2002, 'Relationship Marketing in the New Economy', Journal of Relationship Marketing, vol. 1, no. 1, pp. 37-57.
VARGO, S. L. & LUSCH, R. F. 2004. Evolving to a New Dominant Logic for Marketing. Journal of Marketing, 68, 1-17.