Monthly Archives: February 2007

A New Dominant Logic for Marketing

These are my initial notes on a journal article I’ve been reading the past few days. I will try to come up with a more comprehensive commentary in the next few weeks. But in the meantime, here is what I’ve gathered from it.

The dominant logic for marketing in the early days was directly inherited from economics and it focused largely on the movement of goods from the producer to the consumer. As one academic articulated back then, marketing is about “applying motion to matter”. In the next few decades up until the early parts of the 90’s this was the unchallenged paradigm.

After that period, however, scholars and practitioners alike started to question the discipline’s microeconomic basis. Furthermore, the conventional view of marketing as adding properties to matter became problematic when applied to the production of immaterial goods. This inability to resolve the inconsistency has led to the separation of marketing into two subdisciplines namely goods marketing and service marketing. Scholars argue, however, that this separation looks more like a patchwork effort to keep the idea of marketing from falling apart.

What this paper by Vargo and Lusch proposes is to change our view of Marketing such that we see it as, primarily, a service providing activity, or a “service-dominated view” as they called it. They argue that all firms sell services to customers and that those that produce goods only produce those goods as a medium for their service to the customer. One simple example they provided is that of a safety razor. Companies such as Gillette do not actually sell these tangible products called safety razors. Rather, they sell the service of a barber through the razor.

What the paper proposes is very intriguing and appears to present a view of Marketing that is more unified and consistent across all industries. However, I did notice as I read the article that what the authors are presenting appears not so much a revolution, but a description of what’s already happening today. We’re already on our way there, they simply articulated it for us.

Another thing that keeps coming up in my head as I read the paper is the question about the relevance of this finding to Marketing practitioners. How does this finding improve the returns of a firm? Also, does this new logic apply to fledgling economies where the concern is still on transporting commodities as efficiently as possible to consumers?

I will be posting a more detailed interpretation of the paper here in the weeks to come. But for now, if anyone is interestd, the title of the article is “Evolving to a New Dominant Logic for Marketing” by Stephen L. Vargo and Robert F. Lusch published in the Journal of Marketing on January 2004.

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Knowledge Management in SMEs

Has Knowledge Management made a significant and positive impact on the small and medium-sized enterprise sector in the past decade and is it still relevant today?

Studying the progress of small and medium-sized enterprises (SMEs) is an activity that no country can take lightly because of the sector’s significance in a nation’s economy. In Germany, for example, 97.9% of all companies fall within the SME category (Wickert and Herschel 329) providing 36% of all industrial investments (Wimmer and Wolter, 2000). Likewise, in Australia, SMEs account for 97% of all private sector businesses and produce 30% of the nation’s output (ABS 1). Among the various types of studies conducted within the SME sector, Knowledge Management (KM) is one that has recently seen an increased level of interest. This is mainly due to the realisation of many practitioners and experts such as Desouza and Awazu that SMEs are in a unique situation where their most significant assets are intangibles comprised mainly of knowledge (33).

This paper will examine the progress of the KM movement within the SME sector through the use of findings from studies conducted by experts in the field. First, it will put KM in context by showing its significance as a crucial tool for the sustainability of SMEs. Second, it will present recent data pertaining to the impact of KM within the sector. Finally, this paper will show that, despite its inconsistent outputs within the SME sector, KM is still a mission-critical business component today and will continue to be in the years to come.

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