Exploring Customer Value Formation: A Customer Dominant Logic Perspective

This paper extends current discussions about value creation and proposes a customer dominant value perspective. A customer-dominant marketing logic positions the customer in the center, rather than the service provider/producer or the interaction or the system. The focus is shifted from the company´s service processes involving the customer, to the customer´s multi-contextual value formation, involving the company. It is argued that value is not always an active process of creation; instead value is embedded and formed in the highly dynamic and multi-contextual reality and life of the customer. This leads to a need to look beyond the current line of visibility where visible customer-company interactions are focused to the invisible and mental life of the customer. From this follows a need to extend the temporal scope, from exchange and use even further to accumulated experiences in the customer´s life. The aim of this paper is to explore value formation from a customer dominant logic perspective. This is done in three steps: first, value formation is contrasted to earlier views on the company’s role in value creation by using a broad ontologically driven framework discussing what, how, when, where and who. Next, implications of the proposed characteristics of value formation compared to earlier approaches are put forward. Finally, some tentative suggestions of how this perspective would affect marketing in service companies are presented. As value formation in a CDL perspective has a different focus and scope than earlier views on value it leads to posing questions about the customer that reveals earlier hidden aspects of the role of a service for the customer. This insight might be used in service development and innovation.

Rethinking Service Companies’ Business Logic: Do We Need a Customer-Dominant Logic as a Guideline?

Purpose –This paper explores and expands the roles of customers and companies in creating value by introducing a new a customer-based approach to service. The customer’s logic is examined as being the foundation of a customer-based marketing and business logic. Design/methodology/approach – The authors argue that both goods-dominant logics and service-dominant logics are provider-dominant. Contrasting the customer-dominant logic with provider-dominant logics, the paper examines the creation of service value from the perspectives of value-in-use, the customer’s own context, and the customer’s experience of service. Findings –Moving from a provider-dominant logic to a customer-dominant logic uncovered five major challenges to service marketers: Company involvement, company control in co-creation, visibility of value creation, locus of customer experience, and character of customer experience. Research limitations/implications – The paper is exploratory. It presents and discusses a conceptual model and suggests implications for research and practice. Practical implications –Awareness of the mechanisms of customer logic will provide businesses with new perspectives on the role of the company in their customer’s lives. We propose that understanding the customer’s logic should represent the starting-point for the marketer’s business logic. Originality/value – The paper increases the understanding of how the customer’s logic underpins the customer-dominant business logic. By exploring consequences of applying a customer-dominant logic, we suggest further directions for theoretical and empirical research.

Re-Conceptualizing Value-Creation From Industrial Business Logic to Service Business Logic

There is an urgent interest in marketing to move away from neo-classical value definitions suggesting that value creation is a process of exchanging goods for money. In the present paper, value creation is conceptualized as an integration of two distinct, yet closely coupled processes. First, actors co-create what this paper calls an underlying basis of value. This is done by interactively re-configuring resources. By relating and combining resources, activity sets, and risks across actor boundaries in novel ways actors create joint productivity gains – a concept very similar to density (Normann, 2001). Second, actors engage in a process of signification and evaluation. Signification implies co-constructing the meaning and worth of joint productivity gains co-created through interactive resource re-configuration, as well as sharing those gains through a pricing mechanism as value to involved actors. The conceptual framework highlights an all-important dynamics associated with ´value creation´ and ´value´ - a dynamics the paper claims has eluded past marketing research. The paper argues that the framework presented here is appropriate for the interactive service perspective, where value and value creation are not objectively given, but depend on the power of involved actors´ socially constructed frames to mobilize resources across actor boundaries in ways that ´enhance system well-being´ (Vargo et al., 2008). The paper contributes to research on Service Logic, Service-Dominant Logic, and Service Science.

Towards Service Logic: The Unique Contribution of Value Co-Creation

The underpinning logic of value co-creation in service logic is analysed. It is observed that three of the ten foundational premises of the so-called service-dominant logic are problematic and do not support an understanding of value-co-creation and creation that is meaningful for theoretical development and decision making in business and marketing practice. Without a thorough understanding of the interaction concept, the locus and nature of value co-creation cannot be identified. Based on the analysis in the present article it is observed that a unique contribution of a service perspective on business (service logic) is not that customers always are co-creators of value, but that under certain circumstances the service provider gets opportunities to co-create value together with its customers. Finally, the three problematic premises are reformulated accordingly.

What Can A Service Logic Offer Marketing Theory

The goods-dominated marketing model has major shortcomings as a guiding marketing theory. Its marketing mix approach is mainly geared towards buying and does not include consumption as an integral part of marketing theory. Although it is during the process of consuming goods and services that value is generated for customers and the foundation for repeat purchasing and customer relationships are laid, this process is left outside the scope of marketing. The focus in service marketing is not on a product but on interactions in service encounters. Consumption has become an integral part of a holistic marketing model. Other than standardized goods-based value propositions can be better understood when taking a servicebased approach. It is concluded that marketing based on a goods logic is but a special case of marketing based on a service logic and applicable only in certain contexts with standardized products.

Marketing and the Logic of Service: Value Facilitation, Value Creation and Co-creation, and Their Marketing Implications

The discussion of a service-dominant logic has made the findings of decades of service marketing research a topic of interest for marketing at large. Some fundamental aspects of the logic such as value creation and its marketing implications are more complex than they have been treated as so far and need to be further developed to serve marketing theory and practice well. Following the analysis in the present article it is argued that although customers are co-producers in service processes, according to the value-in-use notion adopted in the contemporary marketing and management literature they are fundamentally the creators of value for themselves. Furthermore, it is concluded that although by providing goods and services as input resources into customers’ consumption and value-generating processes firms are fundamentally value facilitators, interactions with customers that exist or can be created enable firms to engage themselves with their customers’ processes and thereby they become co-creators of value with their customers. As marketing implications it is observed that 1) the goal of marketing is to support customers’ value creation, 2) following a service logic and due to the existence of interactions where the firm’s and the customer’s processes merge into an integrated joint value creation process, the firm is not restricted to making value propositions only, but can directly and actively influence the customer’s value fulfilment as well and extend its marketing process to include activities during customer-firm interactions, and 3) although all goods and services are consumed as service, customers’ purchasing decisions can be expected to be dependant of whether they have the skills and interest to use a resource, such as a good, as service or want to buy extended market offerings including process-related elements. Finally, the analysis concludes with five service logic theses.

Towards Service Logic: The Unique Contribution of Value Co-Creation

The underpinning logic of value co-creation in service logic is analysed. It is observed that three of the ten foundational premises of the so-called service-dominant logic are problematic and do not support an understanding of value-co-creation and creation that is meaningful for theoretical development and decision making in business and marketing practice. Without a thorough understanding of the interaction concept, the locus and nature of value co-creation cannot be identified. Based on the analysis in the present article it is observed that a unique contribution of a service perspective on business (service logic) is not that customers always are co-creators of value, but that under certain circumstances the service provider gets opportunities to co-create value together with its customers. Finally, the three problematic premises are reformulated accordingly.

Models of Dispersal and Diversification

Ecology and evolutionary biology is the study of life on this planet. One of the many methods applied to answering the great diversity of questions regarding the lives and characteristics of individual organisms, is the utilization of mathematical models. Such models are used in a wide variety of ways. Some help us to reason, functioning as aids to, or substitutes for, our own fallible logic, thus making argumentation and thinking clearer. Models which help our reasoning can lead to conceptual clarification; by expressing ideas in algebraic terms, the relationship between different concepts become clearer. Other mathematical models are used to better understand yet more complicated models, or to develop mathematical tools for their analysis. Though helping us to reason and being used as tools in the craftmanship of science, many models do not tell us much about the real biological phenomena we are, at least initially, interested in. The main reason for this is that any mathematical model is a simplification of the real world, reducing the complexity and variety of interactions and idiosynchracies of individual organisms. What such models can tell us, however, both is and has been very valuable throughout the history of ecology and evolution. Minimally, a model simplifying the complex world can tell us that in principle, the patterns produced in a model could also be produced in the real world. We can never know how different a simplified mathematical representation is from the real world, but the similarity models do strive for, gives us confidence that their results could apply. This thesis deals with a variety of different models, used for different purposes. One model deals with how one can measure and analyse invasions; the expanding phase of invasive species. Earlier analyses claims to have shown that such invasions can be a regulated phenomena, that higher invasion speeds at a given point in time will lead to a reduction in speed. Two simple mathematical models show that analysis on this particular measure of invasion speed need not be evidence of regulation. In the context of dispersal evolution, two models acting as proof-of-principle are presented. Parent-offspring conflict emerges when there are different evolutionary optima for adaptive behavior for parents and offspring. We show that the evolution of dispersal distances can entail such a conflict, and that under parental control of dispersal (as, for example, in higher plants) wider dispersal kernels are optimal. We also show that dispersal homeostasis can be optimal; in a setting where dispersal decisions (to leave or stay in a natal patch) are made, strategies that divide their seeds or eggs into fractions that disperse or not, as opposed to randomized for each seed, can prevail. We also present a model of the evolution of bet-hedging strategies; evolutionary adaptations that occur despite their fitness, on average, being lower than a competing strategy. Such strategies can win in the long run because they have a reduced variance in fitness coupled with a reduction in mean fitness, and fitness is of a multiplicative nature across generations, and therefore sensitive to variability. This model is used for conceptual clarification; by developing a population genetical model with uncertain fitness and expressing genotypic variance in fitness as a product between individual level variance and correlations between individuals of a genotype. We arrive at expressions that intuitively reflect two of the main categorizations of bet-hedging strategies; conservative vs diversifying and within- vs between-generation bet hedging. In addition, this model shows that these divisions in fact are false dichotomies.

Mathematical modelling of groundwater pollution in a small heterogeneous aquifer at Kärkölä, southern Finland

Yhteenveto: Kärkölän likaantuneen pohjavesialueen matemaattinen mallinnus

Making Sense of Value and Value Co-Creation in Service Logic

In order to further develop the logic of service, value creation, value co-creation and value have to be formally and rigorously defined, so that the nature, content and locus of value and the roles of service providers and customers in value creation can be unambiguously assessed. In the present article, following the underpinning logic of value-in-use, it is demonstrated that in order to achieve this, value creation is best defined as the customer’s creation of value-in-use. The analysis shows that the firm’s and customer’s processes and activities can be divided into a provider sphere, closed for the customer, and a customer sphere, closed for the firm. Value creation occurs in the customer sphere, whereas firms in the provider sphere facilitate value creation by producing resources and processes which represent potential value or expected value-in use for their customers. By getting access to the closed customer sphere, firms can create a joint value sphere and engage in customers’ value creation as co-creators of value with them. This approach establishes a theoretically sound foundation for understanding value creation in service logic, and enables meaningful managerial implications, for example as to what is required for co-creation of value, and also further theoretical elaborations.