Service Dominant Logic free essay sample

The following paper aims to analyze a current conglomerate in the light of modern marketing theory, using the collection of articles provided by Jonathan Schroeder as a conceptual platform to make evident the application of theory to practicality. The Oxford English Dictionary defines marketing simply as the promotion or selling of products. However, the school of thought around this facet of business that has arisen over the past several decades reveals a far more complicated and intricate world. The formal study of marketing focused at first on the distribution and exchange of commodities and manufactured products and featured a foundation in economics. The first marketing scholars directed their attention toward commodities exchange, the marketing institutions that made goods available and arranged for possession, and the functions that needed to be performed to facilitate the exchange of goods through marketing institutions. However, as evolution in the field continued into the 1950s, â€Å"the functional school began to morph into the marketing management school, which was characterized by a decision-making approach to managing the marketing functions and an overarching focus on the customer. We will write a custom essay sample on Service Dominant Logic or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page † (Vargo, 2004, pg 1) The contention that marketing is a discipline geared towards services shall be applied to a modern marketing practitioner. Specifically, this paper shall focus on the theory of a service-dominant logic for marketing, investigating the marketing workings of Universal Studios Orlando, a major theme park in the central Florida area. A brief introduction into the company currently under investigation is required. â€Å"With its grand opening in 1990 Universal Studios Florida became the first real challenge to Disneys dominance of the Orlando tourism market. † (http://www. wdwinfo. com/universal/universal-studios-florida/History-of-universal-orlando. tm) The first incarnation was found at the Universal Studios lot in Hollywood, California. Beginning as a simple backstage tour of the lot, it eventually developed into a fully fledged theme park. â€Å" It was the success of that venture that inspired Universal to eventually invest the princely sum of $250 million in 1990 to launch an east coast version of its theme park – this one designed to challenge Disney head on. † (http://www. wdwinfo. com/universal/universal-studios-florida/History-of-universal-orlando. tm) Despite a substantial rough patch upon its opening, including malfunctioning rides, long lines and general dissatisfaction (providing the park a significant premiere black eye), Universal was able to become a key player in the Orlando theme park market. In order to further challenge the Disney dominance, by 1996 Universal had decided that they needed to create an entire resort destination. The expansion included a second theme park (Islands of Adventure), a night-life district (CityWalk), and an eventual three hotels (Hard Rock, Portofino Bay, and the Royal Pacific). Thanks to this major new expansion, the tourism downturn that nearly decimated most of the industry in 2001 and 2002 had little impact on Universal†¦ Rumours of expansion are back in the air – venues have been added, or remodelled at CityWalk (including the popular Red Coconut Room nightclub), the once venerable â€Å"Back to the Future† attraction at Universal Studios has been closed to make way for a new A-List attraction (rumoured to be based on the upcoming movie â€Å"The Simpsons† – from the Fox TV Show), and rumours persist that Harry Potter may be coming to Islands of Adventure – whether the specifics of these rumours are accurate remains to be seen – what has been confirmed is that major expansion is planned for the next three years. † (http://www. wdwinfo. com/universal/universal-studios-florida/History-of-universal-orlando. htm) While perhaps not the premiere resort/theme destination of the central Florida region as Disn ey is, Universal Orlando has certainly become a significant force. Before exploring how the marketing theory can be applied to Universal’s efforts in the Orlando theme park market, it is essential that one has an adequate understanding of the specific theory being applied. Stephen L. Vargo and Robert F. Lusch in their work â€Å"Evolving to a New Dominant Logic for Marketing† provide the basic foundational framework for this paper’s service-dominant logic theory. They declare that â€Å"marketing has moved from a goods-dominant view, in which tangible output and discrete transactions were central, to a service-dominant view, in which intangibility, exchange processes, and relationships are central. † (Vargo, 2004, pg 2) That is to say, marketing is a discipline geared towards services. They define services â€Å"as the application of specialized competencies (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself. (Vargo, 2004, pg 2) According to their view, the older way of thinking in the marketing discipline was the value comes from the product; this has passed, the newer mode of thinking being that value is embedded in the experience, and the consumers interaction in the brand community. It is this interaction in the brand community that can be seen in the Universal effort in Orlando. The producer and the consumer work together in a co-creation of value. While any consumer in the Orlando theme park market can stay in any hotel and enjoy the benefits of both Disney and Universal, consumers will often make the choice to revel in the ‘Universal resort experience. That is to say, localizing and centralizing their activities to the Universal Studios Orlando, staying among the choice of hotels, going to the multiple theme parks, and enjoying the nightlife offered in the CityWalk adult-oriented venues. Universal offers holiday packages that you can customize to create your own ‘ultimate holiday experience’ (located on their website http://www. universalorlando. co. uk/holidays. html). In the service-centred dominant logic, â€Å"the customer is a co-producer of service. Marketing is a process of doing things in interaction with the customer. † (Vargo, 2004, pg. 7) While the goods offered by Universal and the revenue taken in are certainly econom ic indicators of their marketing success, by co-producing their holiday experience, the customer is participating in an interaction with the brand of Universal itself. According to Vargo and Lusch, â€Å"in both the classification of economic activity and the economic eras, the common denominator is the increased refinement and exchange of knowledge and skills†¦Virtually all the activities performed today have always been performed in some manner; however, they have become increasingly separated into specialties and exchanged in the market. † (Vargo, 2004, pg. 10) So while the products offered by Universal are nothing new to the market, the service-oriented branding of a ‘holiday experience’ is in line with Vargo and Lusch’s service-dominant logic. George S. Day et al provide a responsive commentary on Vargo and Lusch’s working theory. Day believes that the dispersal of information technology has allowed the various tributaries of the marketing terrain (such as services marketing, market orientation, customer relationship management, networked markets, mass customization, and interactivity) to converge in the past decade. This connected knowledge system enables the real-time coordination of dispersed organizational activities and groups, the management of cross-functional processes, and the synchronization of the myriad points of customer contact that are integral to the new dominant logic. † (Day et al, 2004, pg. 18) This allows the various services provided by universal (not only in the theme park and resort market, but the very movie-producing studio in Hollywood) to create an overarching ‘Brand Universal’ that consumers can theoretically interact with. C. K. Prahalad, while congratulating Vargo and Lusch on their work, argues that they do not go far enough in the exploration of the customer a s a co-producer. One phase of co-producing the Prahalad evokes is that of â€Å"an experience in which the firm creates a context and the consumer is part of it (e. g. Disney World). The consumer is involved and engaged, but the context is firm driven. This is labelled the ‘experience economy. ’† (Day et al, 2004, pg. 23) Universal, as Disney’s competitor, operates in the same manner, creating the context in which the consumer is involved and engaged. Like Day, Prahalad sees a convergence due to modern information technology.