Sample Marketing Essay

Question:

Customer experience management.

You should answer both of the following questions. The two questions are equally weighted.??
1. The service-dominant logic emerged as a key marketing concept. Critically discuss the evolvement of this logic using key concepts and theories.

2. Critically discuss the role of relationships in defining the customer experience. You should make reference to underpinning theories.
You should produce an individual essay of about 2000 words.

You should cite relevant academic literature and acknowledge all sources used in your evaluation. A good answer will include at least 10 references to well respected and relevant journal articles. 

Answer:

Title: Customer experience management

1. The service-dominant logic emerged as a key marketing concept. Critically discuss the evolvement of this logic using key concepts and theories.
   
   

The emergence of the service-dominant logic occurred as a result of an evolvement process that has been going on for many decades. According to Vargo & Lusch (2004), marketing has for many decades been based on a model of exchange that was inherited from economics. Economists have traditionally been using the goods-dominant approach. In this model, all concepts and theories were based on manufactured output in the form of ‘goods’. Tangible resources, the value embedded in them, and the transactions involved, were the main reference points in the analysis of the goods-dominant logic.

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However, this logic started evolving and new perspectives emerged. In these new perspectives, the focus was on intangible resources. In recent times, the new dominant logic has come to be known as the service-dominant logic. In this form of logic, the focus is on service delivery, co-creation of value, and relationships. As the service-dominant logic continues to evolve, various theories and concepts are being developed.

Vargo & Lusch (2004) were the first scholars to use the term ‘service-dominant logic’. Vargo & Lusch (2004) argued that service provision is fundamental to economic exchange. Most of their arguments focused on reasons why service delivery rather than ’goods’ should be regarded as the fundamental component of all economic exchange activities. Today, the service-dominant (S-D) logic is widely accepted as the new dominant logic in marketing.

Since the introduction of this new concept, various scholars have engaged in discussions and made important contributions. In the course of these discussions, various issues have arisen and the need for clarifications on certain concepts and theories has been emphasized. Moreover, it has been necessary for the foundational principles of the S-D model to be updated and directions for future research to be provided. In this way, the service-dominant logic has continued to evolve to what it is today.

Marketing thought has been heavily influenced by the tendency by economists to emphasize on ‘goods’ as opposed to service provision (Lusch, Vargo, & O’Brien, 2007). This influence was evident during the early 1900s. During this time, classical and neoclassical economists had influenced marketing thought to the extent where the role of service provision was never appreciated. This was because most of the attention was on lengthy descriptions of commodities, marketing functions, and institutions. It is for this reason that three main schools of thought emerged: the commodity school, the functional school, and the institutional school (Lusch, Vargo, & O’Brien, 2007).

However, during the 1950s, marketing started breaking away from this tradition by focusing more on the customer (Levitt, 1960). During the 1960s, marketing was identified as an activity that entails making decisions with the aim of satisfying the customer (Rathmell, 1966). At this point, the concept of the marketing mix was introduced. During the 1980s, services marketing emerged as a sub-discipline in marketing. During this time, scholars appeared to be ‘breaking free’ from the notion of ‘product marketing’ (Lusch, Vargo, & O’Brien, 2007).

At the turn of the 21^st century, a lot of interest was on the search for a paradigm that could replace the ‘marketing mix’ model. The marketing mix model appeared inadequate in accounting for the continuity that exists in relationships among various marketing actors. At this time, marketing thought was considerably fragmented. The future of marketing was uncertain and services marketing had already created controversy; this controversy arose from calls for it to be made into a distinct field of study (Lusch, Vargo, & O’Brien, 2007).

At this point, Vargo & Lusch (2004) introduced the concept of service-dominant logic. They argued that perhaps marketing thought was not fragmented at all; instead, it was evolving towards an entirely new dominant logic (Vargo & Lusch, 2004). Since this observation was made, marketing has been evolving from the exchange of tangible resources to that of intangible goods. Examples of these intangibles include knowledge, specialized skills, and processes. According to Vargo & Lusch (2004), marketing is moving towards an inclusive dominant logic. This dominant logic is characterized by the integration of goods with services to provide a better foundation for marketing theory and practice. Such an integrated view is necessary because there is a very close relationship between goods and services. By focusing on goods only, marketing scholars were failing to appreciate the crucial role that services play in the economy.

An analysis of the goods-centered view of marketing shows the extent to which ‘goods’ were detached from ‘services’ (Lusch & Vargo, 2006). In this view, the core objective of all economic activities was the making and distribution of things that could be sold. The goods had to be embedded with value and utility. Profit maximization was a crucial factor in all decision-making processes in the firm. Moreover, a lot of emphases was on production control (Lusch & Vargo, 2006). For this reason, production centers were situated away from the target market. Inventorying was also necessary so that the goods could be delivered and sold to consumers at a profit immediately demand them arose.

Today, the service-dominant logic has transformed the marketing thought in very significant ways. Marketing is viewed as a series of socio-economic processes through which the firm uses operant resources to strive for better value propositions. In the contemporary world of the free enterprise system, firms compete to provide better value propositions. Firms always have an opportunity to serve their customers better. This makes the new marketing thought to be seen as a continuous learning process. In this continuous learning process, core competencies are identified and developed. This creates opportunities through which firms can create a competitive advantage. It also involves identifying other entities, in this case, potential customers, who can benefit from the competencies.

Another element of this process is the establishment of relationships on the basis of different value propositions. Feedback from the marketplace is also crucial as it creates opportunities for improving firm performance. In this evolvement process, a significant contribution has arisen from the resource advantage theory (Srivastava & Fahey, 2001). In this theory, core competencies are identified as intangible processes and not physical assets. From the point of view of the resource advantage theory, these processes are comprised of idiosyncratic actions, routines, and operations (Lusch, Vargo, & O’Brien, 2007).

Since Vargo & Lusch (2004) wrote the first article on S-D logic, commentaries and reactions on this evolvement have largely been positive. Many scholars have made important contributions to the debate (Lusch, & Vargo, 2006); Vargo & Lusch, 2008). However, a number of marketing researchers have been skeptical of the S-D logic (Lusch, Vargo, & O’Brien, 2007). Critics have pointed out that an overly-managerial approach was used, and that too much focus was on terminologies relating to the goods-dominant approach (Vargo & Lusch, 2008). Moreover, the critics have noted that at its inception, the S-D logic did not capture the highly interactive nature of the value creation process (Vargo & Lusch, 2008). In terms of the way forward, proponents of the S-D logic have to develop law-like generalizations that can be used to explain and predict phenomena before their ideas can be regarded as a theory. 

• Critically discuss the role of relationships in defining the customer experience. You should make reference to underpinning theories.
  

Relationships play a crucial in defining the customer experience. According to Garbarino & Johnson (1999), there are many theories of relationship marketing that define the variations in the relations between customers and firms. In these theories, there are two ends of the relationship continuum. In one end, there are transactional bonds while in the other end there are highly relational bonds (Garbarino & Johnson, 1999).

However, only a few studies segment an organization’s customer base into high and low relational groups (Payne & Frow, 2005). This research gap has created problems in efforts to define customer experience. Consequently, it becomes difficult for researchers to measure the possible future intentions of customers as well as satisfaction attitudes in specific contexts. As a solution to this problem, Garbarino & Johnson (1999) propose the use of the structural equation analysis. In their study, Garbarino & Johnson (1999) used the structural equation analysis to analyze relationships relating to satisfaction, commitment, and trust among customers. Garbarino & Johnson (1999) found out that for low relational customers, satisfaction is a critical factor in determining attitudes towards a business organization as well as future intentions. In the case of highly relational customers, commitment and trust emerged as the main factors that influence future intentions and attitudes (Garbarino & Johnson, 1999).

The transactional-relational continuum plays a crucial role in defining the customer experience. Transactional relationships are highly discrete exchanges between the buyer and the seller (Payne & Frow, 2005). The seller exchanges a good or service with the buyer in an environment where there are minimal personal relationships. Moreover, the parties to such a transaction have no obligation or anticipation of such future exchanges (Garbarino & Johnson, 1999). Highly relational relationships, on the other hand, are characterized by actions that are intended to increase the level of cooperation between the buyer and the seller. Both parties make mutual adjustments and anticipate that there will be future exchanges between them.

The customer experience demonstrated in transactional relationships differs remarkably from the one that is demonstrated in relational relationships. However, in real-life situations, it is rare to find relationships that are purely discrete or transactional. Garbarino & Johnson (1999) note that an element of ‘relationalism’ tends to emerge in most exchanges between sellers and buyers. One of the theories that define the customer experience from the perspective of the transactional-relational continuum is the theory of partnering. A major proposition in this theory is that variations in commitment and trust between the seller and the buyer are important in distinguishing between customers who buy only once and those who might engage in repeat transactions.

It is also important to assess relationships in terms of what customers are looking for. It helps a great deal in efforts to define the customer experience. As Coulter & Ligas (2004) point out, customers not only focus on functional benefits; they are also interested in relational benefits. There are different forms of relationships that develop between buyers and sellers. Some of them include professional relationships, friendships, personal acquaintances, and casual acquaintances. These relationships help enhance customer experience in many ways. For instance, when the customer is emotionally attached to the service provider, he can easily seek personal advice. Moreover, the customer experience can be greatly enhanced when buyers and sellers hope to socialize outside of the transactional encounter (Payne & Frow, 2005).

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According to Payne & Frow (2005), relationships tend to differ depending on the type of service being offered. Customer experience managers should understand these differences in order to be able to cater to the customer experience needs of a specific industry. For instance, the relationships that are formed in healthcare differ in certain ways from those that are formed in the financial services industry. Coulter & Ligas (2004) give an example of the hair-care service relationships, which are somewhat different from those that develop during automotive repair services. According to Coulter & Ligas (2004), these differences can best be appreciated on the basis of relational factors.

In conclusion, it is important for service providers to understand what valuable customer experience means for customers. On this basis, the service provider should decide on the type of experience that is worth implementing. The focus should be on the development of relationships that are mutually beneficial. Moreover, such relationships should make a contribution to the company’s bottom line. As Payne & Frow (2005) point out, when customer value is enhanced, shareholder value is enhanced as well.

The theory of partnering is important particularly in enabling service providers to understand the role of commitment and trust in relationships with buyers. The theory also provides valuable insights into different forms of relationships and their role in defining the customer experience. At the strategic level, there are far-reaching implications of viewing customer relations management as a process that leads to the creation of customer value. This customer value brings about improvement in shareholder value, thereby contributing to the company’s bottom line.

References

Coulter, R. & Ligas, M. (2004). A typology of customer-service provider relationships: The role of relational factors in classifying customers. Journal of Services Marketing, 18(6) 482 – 493.

Garbarino, E. & Johnson, M. (1999). The Different Roles of Satisfaction, Trust, and Commitment in Customer Relationships. Journal of Marketing. 63(2) 70-87

Levitt, T. (1960). Marketing Myopia. Harvard Business Review. 38 (July–August) 173-181.

Lusch, R. & Vargo, S. (2006) Service-dominant logic: Reactions, reflections, and refinements, Marketing Theory, 6(3), 281-288.

Lusch, R., Vargo, S., & O’Brien, M. (2007) Competing through service: Insights from service-dominant logic. Journal of Retailing, 83(1) 5–18.

Payne, A. & Frow, P. (2005). A Strategic Framework for Customer Relationship Management, Journal of Marketing, 69(4), pp. 167-176.

Rathmell, J. (1966). What Is Meant by Services? Journal of Marketing, 30(2) 32–36.

Srivastava, R. & Fahey, L. (2001). The Resource-Based View and Marketing: The Role of Market-Based Assets in Gaining Competitive Advantage. Journal of Management, 27(6) 777–802.

Vargo, S. & Lusch, R. (2004). Evolving to a New Dominant Logic for Marketing. Journal of Marketing, 68(1) 1–17.

Vargo, S. & Lusch, R. (2008) Service-dominant logic: Continuing the evolution. Journal of the Academy of Marketing Science. 36(1) 1–10.