Introduction
Marketing has seen many paradigm shifts from “commodities, to goods and services and presently to experiences” (Bhattacharya, 2015, p.36). Creating a superior customer experience has become a core focus and objective in today’s business environment as it is argued that this can result in competitive advantage for firms (Verhoef et al, 2009). In agreement, Accenture (2015) found that among executives improving the customer experience had the most number one rankings as a top priority for the coming year (link Lemon and Vehoef, 2016, p. 69). However, Homburg et al (2015) argue that the consumer experience is not a new concept but to have roots founded from marketing concepts. This introduces the question whether the customer experience is a new concept or another form of marketing?. This paper looks to answer this question by looking at the evolution of marketing to identify marketing practices and concepts that have contributed towards the literature for the consumer experience. The theory of service-dominant logic and value co-creation (Vargo and Lusch, 2004) will be used within this paper as a theoretical lens and critically discussed before examining the consumer experience itself.
Main Body
Marketing Evolution
Scholars and Institutions have provided varying definitions of marketing. For example, The American Marketing Association (AMA, 2012) defined marketing as “…creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large”. Comparatively, . Although the statements differ similarities can be made between the two. They both acknowledge the need to adhere and deliver to needs and wants with an exchange of offerings or value. Furthermore, they indicate a customer-centric orientation with the aim of creating a profitable relationship (Lovelock, 2011). Liu (2017) specifically praises the definition by the AMA (2013) for highlighting critical elements of marketing but Zinkhan et al (2007) argues it is too narrow in focus as it appears to disconnect from recent conceptulisations of the field. However the author acknowledges that due to the constant change in technology and business environment the definition of marketing is difficult to define and likely to change.
As with the changing business environment, the concept of marketing can be seen to have changed. For example, the fundamental goods marketing mix also known as the 4P’s as refined by McCarthy (1960) was later developed to include three further resource components (people, processes, physical evidence) by Booms & Bitner (1981) known as the the 7P’s of service marketing. This was because scholars critiqued its lack of relevance and application to “the needs of the service providers customer” (Ivy, 2008 p.289). This critique was shared by Day and Montgomery (1999) who question the usefulness of the 4P’s with the characteristics (expand) of services demanding a unique strategy. However, not all scholars find the 4P’s model to be redundant, Zineldin and Philipson (2007) promote the traditional marketing mix as a fundamental requirement for building customer relationships. (why) Relationship Marketing has been described as a modern marketing paradigm with the goal of creating customer loyalty by providing superior value to customers and improving customer satisfaction (Ravald and Gronroos, 1996). Although service and relationship marketing are different, consumer satisfaction and value can be seen to underpin both concepts. Which coincides with Day (1994) who comments that marketing strategy regardless of school of thought should aim to satisfy customer needs.
The objective of offensive and defensive marketing strategies set out to do just that. Whereas offensive strategies look to obtain new customers through marketing instruments such as price promotions (Stenkaamp et al, 2005) defensive strategies look to reduce customer turnover by creating long-lasting customer relationships (Johnson and Selnes, 2004). Offensive strategies are usually formed by the marketing department which contains full-time marketers (FTM). Contrastingly, Part-time marketers (PTM) can be both internal and external stakeholders who influence customer relationships which Gummesson (1991) classify as part of the marketing function. However, Woodall (2004, p .568) asks for these marketing strategies to be “re-imagined” as many conventionally defensive or offensive strategies can work to both retain or acquire customers and both have value promising and Value delivering components. In regards to value, Narayandas and Rangan (2004) have found that there is a shift towards value creation through relationship marketing to sustain competitive advantage. As a result, we can see a change from marketing to customer to marketing with customers (ref). Coinciding with this Prahalad and Ramaswamy (2004, p. 5) raise awareness of a shift in power to the consumer that has occurred as they are “armed with new connective tools” due in part with new technologies that make it easier to interact with organisations. As a result, the role of the consumer has changed from previously being passive to active participants in value creation (ref). This accompanies into the developing marketing theory of service-dominant logic.
Service Dominant Logic
Over the past century the marketing mindset has moved from a Goods-Dominant Logic (GDL), which concentrates on products as being both “tangible (goods) and intangible (services) as the basis for exchange” (Vargo et al 2010, p. 1). To a service-dominant logic (SDL) as proposed by Vargo and Lusch (2004). This is because…. The 10 foundational premises (FPs) (see appendix 1) challenge the traditional marketing assumptions of GDL as service is centred as the fundamental basis of exchange (Vargo and Lusch, 2004; 2008). However, there are four FPs that underpin SDL (see figure 1) for which the others have arguably derived from known as axioms. Under this logic, service drives firm performance with the “application of operant resources (knowledge and skill) for the benefit of another actor” (Lusch and Vargo, 2009 p. 13). Consequently, goods are argued to be appliances and act as intermediaries in service provision.
Figure 1: The Axioms of S-D Logic
As can be seen by A4 in figure 1, value is determined by the beneficiary. This implies that suppliers do not create unique value instead they make value propositions (Ballantyne et al, 2011). This viewpoint contradicts GDL because value was argued to be determined solely by the organisation (Vargo and Lusch, 2008). Therefore, value propositions are unrealised value until the customer realises it through consumption also known as ‘value-in-use’ under SDL (Lusch and Vargo, 2006). Which implies that both the organisation and the customer are co-creators of value (Smith and Maull, 2014).
Axiom 2 states that ‘the consumer is always a co-creator of value’. This relates to the notion of value propositions being realised and determined by the consumer at the point of consumption (value-in-use) (Vargo and Lusch, 2004; 2008). Which is different to GDL which suggests value is captured in value-in-exchange. Another significant difference is the idea of co-production, with consumers participating in creating the “core offering itself” (Lusch and Vargo, 2006, p.284). Therefore, providing substance to the argument from Prahalad and Ramaswamy (2000; 2004) that consumers are becoming active participants of value creation through direct and indirect collaboration with an organisation. As a result, this participation provides opportunities to develop customer relationships to create satisfaction and loyalty (Silva et al, 2015). Furthermore, these opportunities are argued to increase when organisations create and facilitate a personalised consumer experience (Prahalad and Ramaswanmy, 2004).
Value Re-defined
SDL provides one classification of value but this term can be seen to be used in a variety contexts (Payne and Holt, 2001). One broad context is in the definition of marketing itself as provided by the American Marketing Association (AMA, 2013). Value here is part of creating and delivering offerings for customers and other stakeholders. Another context is in the theory of customer-perceived value by Woodruff (1997). Here, value is focused in a solely transactional context in accord with the traditional theory of GDL with organisations deciding what is of value (Prahalad and Ramaswamy, 2004). (link) Therefore, value can be seen from the customers perspective and the organization’s perspective (Landroguez et al, 2013). However, due to the complex concept of customer value defining it can be difficult, giving credit to the suggestion by Hogan (2001) that value is a construct that deserves various interpretations.
One framework that provides an indication of this complexity is provided by Woodall (2003). By looking at two specific dimensions of customer value (Marketing VC and Derived VC) under this framework (see figure 2) we are able to draw comparisons specifically with the new concept of SDL (Vargo and Lusch, 2004).
Figure 2: Woodall (2003)
Marketing VC refers to the perceived benefit from the attributes that the customer values in an offering. These are created and delivered by the organisation and are what the organisations believe the customer values (Woodall, 2003). Arguably, this is a value proposition which relates directly to FP7 (see appendix 1) of SDL (Vargo and Lusch, 2004). Therefore, if the customers do not realise the value of the attributes in the proposition it is arguably not a source of value (Buttle, 2000). Researchers have commented that this realisation through consumption can vary greatly between individuals (Gronroos, 2011). It is therefore unique to the individual in agreement with FP10 of SDL (Vargo and Lusch, 2004).
This “consumption-related experience” is conceptualised under Derived VC of Woodalls framework (2003, p. 8) and coincides FP6 of SDL (Vargo and Lusch, 2008). As a result of this consumption there is also value for the organisation because they are utilising the operant resources (knowledge and skills) that consumers have to improve their value propositions (Prahalad and Ramaswamy, 2000). (link to CE). As such providing premise for suggestions from researchers such as Lemon et al (2016) who argue value for the customer is an experiential journey with interaction between the organisation and customer.
Consumer Experience
Early scholars such as Abbott (1955) proposed that consumers don’t want products but desire satisfying experiences. Traditionally focus has been on service quality (expand) Since then the consumer experience have been developed to include the active role of consumers beyond purchasing and the role of emotions in consumer purchase behaviour (Addis and Holbrook, 2001). The consumer experience gained attention from Pine and Gilmore (1999) suggesting we are entering an ‘experience economy’ with experiences being the new economic offering. However, (definition) \Subsequently, definitions of the consumer experience recognise it is a multi-dimensional concept that is holistic and subjective in nature resulting in psychological and behavioural responses from an organisational interaction (Verhoef et al, 2009; Schmitt, 2011).
Pine and Gilmore (1999) emphasise that price and service are insufficient as management strategies and a focus needs to be on the customer experience. Howevever, Sale VC (Woodall, 2003) describes a situation where they are valued above a customer experience with some customers solely look for value from reducing (monetary) sacrifice. Which we can see through the success of low-budget airlines and one-pound stores. This example, reverts back to the traditional GDL with price being the offering and consequently making the customer experience irrelevant. However, in agreement, Prahalad and Ramaswamy (2003) describe how there is a shift towards personalised consumer experiences with the interaction between the consumer and organisation occurring at a multitude of touchpoints. As argued with the principles of SDL customer-centric organisations provide situations for consumers to co-create their experiences (Prahalad and Ramaswamy, 2004). For example, self-service technology allow customers to customise and therefore optimise their experience to a more positive one which is argued to result in long-lasting and profitable relationships (Peppers, 2017). Although Verhoef et al (2009) argues that creating a customer experience can be an expensive endeavor it has been found that the profit from long-lasting customers is far greater than the cost and profit in gaining a new customer (Reichheld and Sasser, 1990).
Touchpoints are the direct and indirect interactions a customer has with a company (Becker, 2018). Schmitt (2003) argues that it is imperative that organisations track and enrich experiences throughout the customer purchase journey (pre, core and post). This differs from a service experience which only focuses on the core-purchase stage of the customer journey (Voorhees et al, 2017). However, this is becoming increasingly difficult to manage with the complex myriad of touchpoints and only some being under the organisation’s control (Lemon et al, 2016). Thus, some researchers disagreeing that the customer journey is still provider-centric (Kennedy et al, 2015). According to Akaka and Vargo (2015) this represents an evolution from service encounters (customer and frontline employee) to ecosystems (variety of connected actors). In agreement, Tax et al (2013) suggests that customers engage with multiple organisations during an experience and Mickelsson (2013) identifying activities not involving with an organisation that influenced the consumer experience. Consequently, organisations are required to work effectively with internal and external business functions and partners for a successful customer experience (Lemon and Verhoef, 2016).
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