Three perspectives on service management and marketing: rival logics or part of a bigger picture?
David Ballantyne
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To cite this document:
David Ballantyne, (2006),"Three perspectives on service management and marketing: rival logics or part of a bigger picture?",
Journal of Services Marketing, Vol. 20 Iss 1 pp. 73 - 79
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Review article
Introduction
This is a comparative analysis of three recent texts in the
service management and marketing literature. The authors
are all well-known and respected as leading contributors to
marketing theory and practice. To varying degrees, all three
texts bring a service perspective and a relationship perspective
to their subject matter. In other words, the authors have
chosen to bring both service and relationship perspectives
together as one.
My interest in this article is to locate the underlying
dominant logic of each author based on the evidence of the
text. My approach is essentially interpretive I review each text
in turn, outline the main features of each, and locate the
underlying common logic and points of variance with
practical implications in the context of an emerging service
dominant marketing theory.
The three authors are:
1 Berry, Leonard L. (1999).
2 Gronroos, Christian (2000).
3 Storbacka, Kaj and Lehtinen, Jarmo R. (2001).
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David Ballantyne
Values-driven leadership
The core values of Berrys exemplar companies were
excellence, innovation, joy, teamwork, respect, integrity, and
social profit. Of these, social profit is perhaps the most
interesting. Berry defines social profit as occurring when the
actions of companies produce net benefits to society beyond
the marketing of goods and services and the creation of
employment opportunities [which are] the necessary
instruments of economic profits (Berry, 1999, p. 36).
Many businesses of course are involved in community support
programs but the strategic intent here is central to
organisational purpose and mission.
The critical point that Berry has gleaned from his research
is that good works are not just a dividend to the community
from a firms economic profits but good works are a
contributor to those economic profits.
Whatever the particular core values of leaders, they need to
be demonstrated in action and connect with employees
aspirational values to sustain high levels of employee
discretionary effort. These values are a companys reason for
being, and a foundation for the other eight success drivers
which follow.
Trust-based relationships
Trust-based relationships provide confidence for interaction
between key stakeholder groups. In Berrys sample
companies, this means between a company and its
customers, its suppliers, and its employees. In customer
relationships, gains might come in the form of the relatively
lower cost of keeping customers rather than going out and
getting new ones. In supply relationships, the practical benefit
of trust becomes visible through the sharing of information
and resources with consequential cost savings.
For Berry, trust is the basis of all relationships and this takes
hold when specific business interactions cease to be viewed in
isolation and start to be seen as a progression of past
experiences likely to continue into the future (Berry, 1999,
p. 124). In other words, a tipping point is reached when trust
develops sufficiently to give structural support for exchanges
of value in the future.
Strategic focus
Values provide the focus and strategy is the means of their
achievement. Berry distinguishes between core strategy
which seldom changes, and the crafting of sub-strategies
that reflect changing business activities and their design and
redesign. What is interesting is that in Berrys sample
companies, the core strategies share some common traits: a
market-focus rather than a product-focus, a tendency to serve
underprovided market needs, and to do so in a superior
manner. These core strategies are implemented through
sub-strategies and market offerings.
The key point is that core strategies are fairly stable over
time whereas sub-strategies change in response to innovation
and market need.
Executional excellence
Berrys sample companies show a deep concern for
continuous improvement; that is, learning from what has
gone before. This included finding the right people to deliver
the service, people whose personal values match the core
values of the company. Also, as front line service performance
can be stressful work, this needs to be recognised and
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David Ballantyne
Acting small
Berry recommends that exemplar firms constantly challenge
and change the way they do business, at the detail level, to
make it easy for customers to deal with them. Acting small
means a willingness to tackle a multitude of job design policies
and technical procedures which do not adequately serve the
customer. In growing enterprises, it is more difficult to keep
acting small without making a special effort. However, in
Berrys formulation, challenging and changing the rules
becomes an antidote to bureaucratic inertia.
Brand cultivation
The common view is that service offerings are intangible,
heterogeneous, and produced and consumed at the same
time. The meaning of brands in a service context therefore
has particular significance, because the provider company is
the brand, and the integrity of the brand is the integrity of the
company. In other words, to experience the service product
is to know it.
The more a service dominant logic underpins a firms offer,
the more the shift from product brand to company brand
takes hold (p. 199). Also, in relatively labour intensive service
businesses, human interaction with customers has a critical
role in building and positioning a brand. In my view, these
issues are not widely understood by practitioners.
Relationships as processes
Storbacka and Lehtinen choose to view relationships as
processes because relationships may contain (or support)
many encounters (or episodes) over time. The idea that a
relationship is a process is epistemologically contestable,
however Storbacka and Lehtinen wish to emphasise that a
broadening of all kinds of mutual benefits and cost savings
(not just gaining recurrent sales) will help the longevity of the
relationship through which both sides win.
As the authors say, Without a thorough understanding of
value creation, it is difficult to develop a relationship which is
beneficial to both customer and provider (Storbacka and
Lehtinen, 2001, p. 6). In other words, the question becomes
what is my customer trying to do, and can I help improve
on it? This approach makes clear that the provider is
concerned with transferring competence, in whatever form
useful to the customer. Given this, any discussion about
whether the offering is a product or a service becomes
redundant, and traditional product differentiation becomes a
special form of process differentiation (p. 11).
Storbacka and Lehtinen summarise their perspective on
CRM on this way:
.
To emphasise a catalyst role for helping customers to
create value for themselves.
.
To participate in customer value creation as a process,
where exchange includes the interaction between provider
Generosity
In using the term generosity Berry has in mind a firms
community obligation to be fair in policies and practices, and
how this impacts on its financial performance as part of a
virtuous circle (p. 217). For Berry, generosity is not an
outcome of success but a critical input. This is strategic
philanthropy, where generous acts benefit the company as
well as the recipients, strengthening the organisation and its
stakeholder community.
Interest in broadening a firms stakeholder group has
attracted considerable comment in the strategic management
literature since the publication of an influential text by
Freeman that contained a deceptively simple but broad
definition of stakeholders, viz. . . . all of those groups and
individuals that can affect, or are affected by, the
accomplishment of organizational purpose (Freeman,
1984, p. 46).
Discussion
How do great service companies stay great? The evidence
from Berrys sample companies is that each of the nine
drivers contributes something important to sustainable
success. However, taking the nine drivers together, as a
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David Ballantyne
David Ballantyne
Discussion
As Storbacka and Lehtinen acknowledge, their interest is the
potential for matching customer value creating processes and
provider processes, in a disciplined way at the strategic level,
at the customer interface, and in operational knowledge
management support. Their perspective involves a shift in the
traditional concept of marketing exchange, to remove the
nexus between transactions and exchange, and allow for the
inclusion of unexpressed customer needs and all kinds of
future value previously outside discrete transactionally
determined time horizons. Overall, the authors logic follows
the path chosen by Normann and Ramirez (1993) in seeking a
strategic fit between customer relationships and organisational
competencies.
David Ballantyne
Technology-based CRM?
In many ways the relationship sustaining promise of CRM
technology is deceptive. Customer data can certainly be
captured, warehoused and mined for internal
circulation. Yet firms do not just capture and process
information from the market and adapt to it. To generate
new knowledge, organisations must also reshape (or reframe)
common assumptions within the firm on which their existing
knowledge is built (Zuboff, 1988). To say that this is a matter
of culture change is to abstract the nature of the problem
David Ballantyne
Rival logics?
Putting all this together, I see Berrys perspective as leadership
centred, one in which the transformational approach of the
leader makes a difference within the firm, and between the
firm and its customers. This is similar to what Tichy and
Caldwell (2002) have called a virtuous teaching cycle,
where a combination of strategy, values and emotion are acted
out and the results then selectively used to determine the next
steps.
The main theme in Storbacka and Lehtinen is an
elaboration of the logic and operational techniques for use
by managers within a customer relationship strategy. Their
book hardly mentions CRM technology and yet the role of
technology might be expected to dominate a CRM text.
Having said that, it is clear to the reader where technology
interfaces might be located as enablers.
Gronroos perspective sits between the other two, with his
customer relationship approach evolving from the service
logic he has adopted. For Gronroos, service is unavoidably
relational, which is a consequence of customer/supplier
interaction, thus a service perspective requires a customer
relationship approach.
In a related way, Vargo and Lusch (2004a, b) have recently
proposed a view of marketing where value is co-created
through service experiences and relationships in the sharing of
resources, which leads to the production of goods.
Furthermore, goods function as service distribution
mechanisms, post-sale. In other words, service is dominant.
This service dominant challenge to marketing orthodoxy is
gaining attention in academic circles, with special sessions
scheduled at the American Marketing Associations summer
conference (2004), the European Academy of Marketings
annual conference (2005), and the Australia and New
Zealand Marketing Academy annual conference (2005).
Taking a three-way view of the dominant service logics
expressed in the texts under review in this article, it comes
down to this: Berrys thesis is concerned more with what
managers can do and the values that might inspire it;
Gronroos more with why they should do it; and Storbacka
more with how it should be done. In this way, any apparent
epistemological pluralism is resolved. The authors are not in
conflict with each other, and each makes a complementary
contribution to our understanding of service concepts and
relationship values in marketing, in what is emerging as a new
theory-based pedagogical development in marketing.
Further reading
Holmlund, M. (1997), Perceived Quality in Business
Relationships, Report No. 66, Center for Relationship
Marketing and Service Management (CERS), Swedish
School of Economics and Business Administration,
Helsinki, p. 96.
References
Corresponding author
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