Australian National University · FACULTY OF MARKETING

MKTG2023 Chap.2 Productisation and Service-Dominant Logic

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Chapter 2 of 12 · MKTG2023

Productisation and Service-Dominant Logic

Making a service behave like a product

Productisation packages a service with a clear scope, a standard process and a defined price and set of deliverables. Fixed-fee legal packages and tiered software plans are typical. The benefits answer the IHIP problems directly: clearer value propositions answer intangibility, and repeatable delivery answers heterogeneity.

The continuum runs from bespoke project work to standardised self-service, and every move along it gives something up.

A different starting point for marketing

Vargo and Lusch argue that the split between goods and services is the wrong place to begin.

In service-dominant logic all exchange is service, goods are distribution mechanisms for service, and value appears only when a beneficiary uses and integrates resources in their own context.

The chapter sets out the foundational premises, including the 2016 axiom that value cocreation is coordinated through institutions, the rules of the game rather than the organisations that play it.

From dyads to ecosystems

Service ecosystems replace the firm and customer pair with networks of actors who all integrate resources, which changes how a value proposition should be written and tested.

In this chapter

What this chapter covers

  • 01

    Productisation and its five benefits

  • 02

    The productisation continuum and servitisation

  • 03

    Goods-dominant versus service-dominant logic

  • 04

    Foundational premises FP1 to FP10

  • 05

    FP11: institutions and institutional arrangements

  • 06

    Service ecosystems and the actor-to-actor view

Worked example · free

Place three offers on the productisation continuum

Q [6 marks]. AskSia-authored practice. Place a bespoke wedding-planning service, a three-package photography studio and a self-service photo-booth app on the productisation continuum, and say what each would lose by moving one step to the right. The marks shown are an AskSia study allocation, not an official University marking scheme.
The productisation continuum.The productisation continuum. Boxes run from bespoke project work on the left to standardised self-service on the right; the arrow shows the direction productisation pushes an offer, which is also the direction in which customisation is given up.Fully customisedproject-based, bespokeModular packagessemi-standardisedFully standardisedself-service, softwareLow productisationHigh productisationProductisation moves an offer right
The productisation continuum. Boxes run from bespoke project work on the left to standardised self-service on the right; the arrow shows the direction productisation pushes an offer, which is also the direction in which customisation is given up.
  • 1Wedding planning is fully customised project work, at the low-productisation end.
  • 1Moving it right into modular packages would gain clear pricing but lose the room to shape every detail around one couple.
  • 1The three-package studio is a modular, semi-standardised offer in the middle of the continuum.
  • 1Moving it right to full standardisation would gain scale but lose the photographer’s judgement on the day.
  • 1The photo-booth app is fully standardised self-service, at the high-productisation end.
  • 1It cannot move further right; its risk is that customers who want guidance find no person to ask.
Low, medium and high productisation respectively. Each step right buys consistency, scale and easier pricing at the cost of customisation and human judgement, which is the trade-off the continuum exists to make visible.
Sia tip — Never place an offer without naming what the move costs; the seminar’s closing question is always what is lost.
Glossary

Key terms

Goods-Dominant Logic
View that value is manufactured into a good by the firm and exists once production is complete, before any use.
Value Proposition
In service-dominant logic, an offer of potential value that the firm can make but cannot deliver alone, since value arises in use.
Institutions
Humanly devised rules, norms and beliefs, such as contract law or social conventions, that make exchange predictable; distinct from organisations.
Service Ecosystem
Largely self-contained network of actors who integrate resources, adjust to one another and are held together by shared institutions and the service they exchange.
FAQ

Productisation and Service-Dominant Logic FAQ

Is productisation the same thing as servitisation?

No. Productisation moves a service toward a standardised, packaged offer, such as a fixed-fee audit. Servitisation goes the other way: a goods firm wraps its product in ongoing service, such as engine maintenance sold by the hour. The lecture treats them as two sides of the same convergence between goods and services.

What is the difference between an institution and an organisation?

An institution is a rule, norm or belief that shapes behaviour, such as contract law, property rights or a social convention. An organisation is an actor, such as a bank or a university. Following North, institutions are the rules of the game and organisations are the players, and service-dominant logic relies on that distinction.

Why does service-dominant logic say firms cannot deliver value?

Because value is determined by the beneficiary in use. A firm can design and offer a value proposition and take part in creating value, but whether value appears depends on the customer’s own context, skills and effort. That is premise FP7, and the seminar audits AI-written offers for wording that assumes value is simply handed over.

What are operant resources and why do they matter?

Operant resources are knowledge and skills, the resources that act on other resources rather than being acted on. Premise FP4 makes them the fundamental source of strategic benefit, which is why the Week 1 seminar asks what operant resource the customer must contribute before an offer can create any value at all.

Study strategy

Assessment move

Make a two-column card for goods-dominant and service-dominant logic with the unit of exchange, the customer’s role, where value comes from and the marketing task on each side. Then write FP7, FP10 and FP11 in your own words and test them on one subscription you pay for: what must you contribute before it is worth anything?

Working through Productisation and Service-Dominant Logic in MKTG2023? Sia is AskSia’s AI Marketing tutor — ask any MKTG2023 Productisation and Service-Dominant Logic question and get a clear, step-by-step explanation grounded in how MKTG2023 is taught and assessed. Read this chapter free, then take your hardest questions to Sia.

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