Service-Dominant Logic

SECTION A

Service-Dominant Logic

Service-Dominant logic is a new way of viewing organizations, markets, and society founded on the principle that all businesses are primarily concerned with the exchange of services. The traditional economic perspective recognized the exchange of goods and services as the fundamental economic principle. This economic view has been developed, and in recent times firms are viewed as service firms where service is exchanged for service.

This concept also suggests that all markets, economies and societies focus on the exchange of service and could thus be said to be service based. For instance, manufacturing firms may be perceived to be concerned with the marketing of goods through the traditional goods-dominant logic. The service-dominant logic suggests that service marketing should not be separated from goods marketing. Instead, the practice of marketing has to adopt the concepts of value-in-use and co-creation presented by the service-dominant logic. The paradigm shift from the concept of goods dominant logic through the evolution of the service-dominant logic has led to new marketing practices in the context of B2B marketing.

Marketing practitioners should recognize the new developments by adequately understanding the core aspects of the service-dominant logic. These aspects include viewing business success objectives as an end-product of a marketing process where skills and knowledge are the fundamental unit of exchange obscured by the indirect exchange. Furthermore, applying this concept also means that practitioners should view goods as a distribution mechanism for services, consumers are co-producers, and all economies are service economies. In recognizing these fundamentals, practitioners will be able to understand the significance of knowledge as a competitive advantage and that a business can only measure success as an achievement of value propositions. Successful application of the service-dominant logic is inherently centred on customers and practitioners in the current operating environment should be able to understand its fundamental aspects.

Smart Connected Products

The rapid development of technology has reshaped the marketing environment by driving up competition based on the efficient utilization of modern technological tools in almost every process within the value chain. In the contemporary economic environment, technology is reshaping the way market players operate in response to the technological revolution. The once-dominant mechanical approach to business operations has been replaced by complex mechanisms that involve software, internet connectivity, hardware requirements, and microprocessors. The embodiment of these new technological innovations has revolutionized products into what is referred to as “smart connected products” that have occasioned a new age of competition.

Smart connected products are based on both connectivity and smart components. Businesses should be concerned with the continued development of such products and their ability to not only strengthen the capacity of their physical components but also enable such components to exist in digital form. Marketing practitioners should expect significant improvements to their value chain models.

The adoption of smart connected products by businesses across the value necessitates proper anticipation for the effect the products have on B2B relationships. This is supported by the need to align operations and output to the technological needs of not only customers but other businesses that are also adopting similar innovations. Optimizing business processes to produce these smart connected products must follow the proper evaluation of the most dynamic capabilities that will ultimately deliver value to consumers and strengthen the competitiveness of the business. Marketing practitioners could, for instance, apply monitoring capabilities based on quality control through autonomous systems that are geared towards creating additional value throughout the supply chain. Successful implementation of such innovations that can be characterized as smart connected products should eventually lead to increased capabilities and efficiency through the value chain. Such actions can be incorporated into the organizational structure to deliver the competitive advantages of smart connected products.

Network Thinking

Networking can be described as the exchange of information between people, groups of people and institutions to develop valuable relationships. In the digital age, the exchange of information, services, and products is mostly carried out over the internet. Consumers also interact with businesses online affecting the way businesses share information to consumers and other businesses. This aspect of modern-day marketing necessitates a new way of thinking for marketing practitioners as they engage with other businesses in developing mutually beneficial relationships. The embodiment of this revolutionary approach to the marketing practice is referred to as network thinking.

The fundamentals of network thinking calls for an understanding of the effects brought about by the network effect and the capacity of the approach to deliver value to consumers. For example, a network effect was created when owning a telephone was advantageous but was watered down if other persons could not access a telephone. The advantages of owning a telephone could, therefore not be derived due to weaknesses in the network structure. This effect l be replicated in today’s world when the available technological innovations are not fully utilized due to weaknesses in the business relations that create a network. Businesses should, therefore, adopt a network thinking in ensuring that value is delivered throughout the value chain. The adoption of such measures is likely to strengthen the position of a business network when expansion strategies are harmonized through network thinking.

Customer Lifetime Value (CLV)

The contemporary practice of marketing views products as an exchange of services through a process that eventually delivers value to the consumers. Throughout this process, businesses interact with other businesses with the exchange in services delivering economic benefits throughout the lifetime of the B2B relationship. Customer Lifetime Value could, therefore, be perceived as the value accrued over the existence of a valuable business relationship.

Marketing practitioners should be aware of the existence of measurable performance indicators such as Customer Lifetime Value in developing their organizational performance strategies. This necessity is based on the significant implications of B2B customer values on an organization’s profits. The modern practice of B2B marketing should thus focus on optimizing Customer Lifetime Value to drive their performance objectives.

Customer Experience (CX)

How businesses interact with their customers has evolved throughout the years. The modern competitive environment is characterized by increasing demand for more efficient ways of exchanging information with customers. The consumer market is also characterized by increasing customer demands based on speed, quality and affordability. Customer experience can thus be described as the value that consumers derive from their interaction with businesses.

Despite the advancements made in optimizing customer experience for business relationships with their customers, there has been relatively less progress in tailoring B2B customer experience to the needs of the modern world. Improving customer experience through adopting new technologies such as social media marketing can eventually lead to increased revenues as well as strengthening the competitive positioning of businesses. Marketing practitioners should, therefore, be concerned with improving B2B customer experience as they pursue more efficient ways of improving consumer value.

SECTION B

Short Essay 1

Social media and digital marketing channels have changed how many business customers compare alternatives and make B2B purchasing decisions. The internet revolution has led to new ways of customer interaction that do not only define B2C relationships but B2B buying decisions.

The sharing of information among businesses across the value chain has moved to online spaces through social media. Online retail has also been accelerated by the challenges brought about by the interruption of the global supply chain. Customer engagement seems to be responding to these market shifts by preferring online interaction. The exchange of information for B2B relationships should also respond to the growing technological capacities and consumer demands by adopting marketing channels such as social media marketing through digital platforms such as Facebook and other B2B platforms.

Consumers are continuously utilizing social media to not only compare products on price, quality, and efficiency but also use such digital platforms to draw comparisons between other service providers. Social media, therefore, creates an alternative to traditional customer interaction models with businesses being forced to adapt to the new consumer demands by developing alternative marketing channels that are most efficient in creating consumer value.

Short Essay 2

Consultative selling refers to the sales technique that focuses on understanding the consumer and market environment better to provide viable solutions to solve an organization’s specific challenges. An extensive understanding of any changes in the consumer market and how to respond best to the emergence of market uncertainties are embodied in the underlying aspects of consultative selling.

Business marketing should be well conversant with the market within which they operate. The possession of such skills will aid marketing practitioners to develop better models for interaction with consumers to provide solutions to challenges experienced when marketing complex business solutions. The capacity to have a comprehensive understanding of the market dynamics, tastes and preferences could be utilized in tailoring complex business solutions to the specific needs of a customer. The exercise of this marketing principle is likely to lead the decrease in complexity of business solutions since such solutions address only the specific needs of an organization.

SECTION C

Question 1

Psychex is a proper embodiment of a service-based business based on its core business model as an outsourcing company delivering value to its B2B customers through taking on various organizational operations that impede their customers from focusing on their core business operations. The value delivery mechanism employed by Psychex sees the company attend to staff compensation, filing of tax returns, and retirement benefits, among other duties and responsibilities. The company also utilizes key marketing strategies such as a strong brand and enhanced capacity levels to not only retain existing customers but attract new ones. The company exhibits the characterization of a market environment driven by a service-based logic in creating value through B2B partnerships.

Question 2

The outsourcing of payroll operations draws some clear distinctions from the sale of products such as photocopying equipment in several ways. Most notable is the nature of the two products based on the service delivery mechanism. As outlined in the case study, Psychex cites a sustainable value deliver channel, which involves selling outsourced services to consumers who are often hesitant to change their outsourced operations such as payroll and tax calculation mechanisms. The company’s strong brand also cited as one of the reasons customers choose Psychex over new market entrants on account of a high level of consumer confidence.

The sale of appliances that can be easily replaced with available alternatives differs from the service-based model exemplified by Psychex. First, consumers can easily switch between photocopy machine brands based on their needs. Their buying decisions are subject to their tastes and preferences. Although strategies such as brand loyalty are available, they can hardly compare to the nature of service-based models such as payroll to increase customer retention.

Question 3

Psychex could be understood to exhibit the characteristics of a direct channel model. This model is based on how consumers can interact on a one-on=one basis with manufactures. In the case of B2B relationships, Psychex interacts directly with its customers to deliver business solutions that should meet the specific demands of every customer. In doing so, the company must exchange information with clients more efficiently to satisfy specific customer needs. The necessity created by this need to tailor business solutions to particular customer needs requires a reduction in the complexity of business solutions offered. The direct channel model can thus be used to describe the operations of Psychex.