​​Service-Dominant Logic
Creation of Value

Service-Dominant Logic (Vargo and Lusch (2004a, b) propagate that Service is the appropriate Logic for marketing (Vargo and Lusch (Journal of Marketing, 68:1–17, 2004a, Journal of Service Research, 6:324–335, b)). It is a process where the participants, an enterprise, and it’s a customer or an enterprise. Another enterprise (e.g., producer /manufacturer and it’s supplier /vendor) engage with each other to do something for the other (Vargo and Lusch (Journal of Marketing, 68:1–17, 2004a, Journal of Service Research, 6:324–335, b)) that is valued by both. And this, therefore, creates a business relationship. Service-Dominant Logic (S-D Logic) states that Value is not created when the exchange happens between, say a producer of goods, and the customer who buys it. Value is created when the customer uses the product. Therefore, Value is not created at the point of exchange, but the Value is created in use (Alderson 1957; Danner 1976; Grönroos 2000; Holbrook 1999). This has far-reaching implications, including a paradigm shift from our traditional goods-dominated Logic of marketing. Where we defined Value being created by enterprises (e.g., a producer/manufacturer of goods – with its product features and functionalities), and when sold, the customer weighs the benefits to cost (price) paid for the product/goods, and Value is created. Service-Dominant Logic (S-D Logic), however, now states that enterprises cannot create Value at the exchange. They can only provide a value proposition. This implies enterprises that produce goods actually do not create Value in exchange when the goods are sold. Prior to the industrial age, individuals and families used to produce goods (e.g., grow food, make clothing, tools) and used to either sell to local communities and/or consume it themselves. Or barter in most cases. So the producer (individuals, group of individuals, and families) and consumers were one and the same or at very close proximity. Skills were available with individuals, and they brought complementary skills. Farming skill versus textile skill. And they would leverage each other’s skills. (Toffler (1980)) The industrial revolution built large production and manufacturing facilities. They hired the skills and made them available at one place within the manufacturing facility. And with this, the producer was separated or distanced from the consumer. Marketing bridged the distance between producer and consumer, enabling exchange. And with this, the goods that were produced by individuals or families or groups of individuals for their personal use now had marketable exchange value (Smith 1759/2002, 1776/1970). So with the industrial revolution, we moved to value in exchange. And the basic premise of Goods Dominant Logic (see Dixon, 1990) in Marketing.

Data analysis method

​​The interview data from the Focus group was analyzed through Cross-Tabulation to map: (a) Occupation (referred to in the interview as Skill), Age Cross-Tabulation with the seven motivating reasons for individuals to opt for independent Work and find independent Work online (b) Age, Occupation, Gender Cross-Tabulation with the choice of Independent Work as Primary Income versus Independent Work as Extra Income
Data Analysis in SPSS: (a) Correlation between all the seven motivating reasons for individuals to opt for independent Work and find independent Work online (b) Correlation of Age, Gender, Occupation, Marital Status with all the seven motivating reasons for individuals to opt for independent Work and find independent Work online (c) Frequency Means analysis across all seven motivating reasons selected by respondents.
Sentiment Analysis in NVIVO. (a)  Overall Sentiment analysis of the Focus Group (Negative, Positive or Neutral) to Covid-19 impact on job security and income, as an input to the creation of Value Proposition (b) Review of the 80 transcripts and coding them into Word Clouds, TreeMap, Hierarchy charts

Service Ecosystem

As we discussed on the co-creation of Value, participants will have to give up their traditional roles as suppliers, producers, and not have the ‘supply chain’ create Value at each step, serially.  S-D Logic, therefore, propagates each participant to engage in service provision. Service for Service (S.L. Vargo, R.F. Lusch). This then also questions the traditional roles of the seller, buyer, producer, and also marketer. S-D Logic service ecosystem can, at best, be referred to as an A2A (Actor to Actor). And the marketer as an integrator (S.L. Vargo, R.F. Lusch). The network of participants or actors will, in a sense, therefore, work towards the welfare of the individual and, ultimately, the wellbeing of the entire ecosystem of participants or actors.This implies the service ecosystem has a purpose (S.L. Vargo, R.F. Lusch). This is the underlying aspect that will be understood and applied to the ‘gig’ economy to understand how enterprises who plan to build and grow a ‘gig’ Platform create a Platform of purpose, leading to value co-creation. A Platform that adapts and grows.

Data collection method


Data on the Online Talent Platform was available from https://ilabour.oii.ox.ac.uk/ and research papers were published by the Oxford University research team working on the iLabour project. Data was also collected from secondary sources like research papers on Independent Work in India and Globally, including a forecast of the impact of the Online Talent Platform.
India demographic data, working population projections, independent work data were available from secondary data through research papers and articles.
A Focus group interview was conducted for 80 individuals: Focus group participants were selected to include individuals who have delivered independent Work and also those who are planning to onboard Online Talent Platforms. Gender considerations. Age groups 25 or less (Youth), 25-50, 50+ (Seniors). Marital Status (Married or Single). Occupations as classified by https://ilabour.oii.ox.ac.uk/ Software and tech, Creative and multimedia, professional services. The Top 3 occupations that are Online for independent Work
Data was collected from Focus Group on their motivations to opt for Independent Work and be engaged on Online Talent Platform, as critical inputs to constructing Value Proposition for firms venturing into the businesses of building an Online Talent Platform
Also collected feedback from respondents on their sentiment regarding the current Covid-19 (Mar 2020 onwards) pandemic impact on job security and income, as another input to constructing Value Proposition for firms venturing into the businesses of building an Online Talent Platform

This paper will contribute to extending Service-Dominant Logic (Vargo and Lusch (2004a, b), in helping marketing managers and academia with constructing Value Proposition (Lanning and Michaels (1988)) from an Outside-In approach. Extending Service-Dominant Logic to create a communication plan for marketing managers to communicate Value Proposition to customers. Construct and communicate the value proposition, in the context of ‘Gig Economy,’ for firms that run or are planning to build an Online Talent Platform. Online Talent Platform is a platform where enterprises can advertise Independent Work, and individuals can find Independent Work.

The Covid-19 pandemic situation has impacted enterprises, individuals, and families since December 2019. The ‘New Normal’ (Peter M. Sandman and Jody Lanard) is leading enterprises and individuals to learn and adapt, build resilience, and re-draw way-forward. Against this backdrop, the ‘gig economy’ or ‘Platform economy’ (Professor Carliss Y. Baldwin and Dr. C. Jason Woodard) has received attention from enterprises and individuals. With individuals first moving remote and starting to work from home (WFH) to then seeking Work Online on these ‘gig’ Platforms. Enterprises are also looking at new business models of engaging with the remote workforce and also seeking opportunities that may now exist in the ‘New Normal.’ Start-ups have cashed in on this situation, and there is a burgeoning of Online ventures. Online on portals and also on mobile applications. There are also start-ups and enterprises building new ‘gig’ Platforms for B2B and B2C to engage and search skills, find Work and earn from home. There is also an increase in Online workers on the ‘gig’ Platforms, including first time Online workers. The demographics of Online workers are also seeing an impact on women and seniors (over 50 years) taking to ‘gig’ Platforms for Work and income. This, in addition to youth (25 years or below) looking at these Platforms for part-time Work and extra income. Against this backdrop, this paper extends Service-Dominant Logic to understand it’s relevance and application to building a ‘gig’ Platform.

DOT1 Solutions Private Limited

The value proposition of ‘Gig’ Economy

​​​Co-Creation of Value
The participants’ role, for example, supplier and producer, is now to provide goods as a means to service the customer and create value through the use of that product. So now suppliers and producers will work closely with the customer to create value as they use the product. Opportunities to create Value now exist with the customer and not with the producer. So now, suppliers and producers work closely with their customers and take their feedback from usage. This leads to another key concept within the S-D Logic of co-creation of Value (Ballantyne, D. and Varey, R.J., 2008). Co-creation (Lusch and Vargo 2006b ) of Value in S-D Logic is an important aspect to be differentiated from terms like co-production and collaboration. Co-creation leads to the creation of a unique Value. In contrast, co-production is using known resources and capabilities. Another important aspect of co-creation in S-D Logic is it is created when the customer uses the goods, so co-creation is dynamic (Ballantyne and Varey 2006b). For co-creation to succeed, it implies the ‘supply chain’ of suppliers, producers, and the customers need to work together. This then means the traditional ‘supply chain’ will no longer be linear (Grönroos (2000: 48), where each participant plays a role in the chain, and Value is created in steps. Under the backdrop of co-creation of Value, the role of the market will need to be reviewed as value creation happens at customers’ end with their usage. Moreover, the marketing imperative will now be whom enterprises will serve and build relationships with; and who will serve them (Ballantyne, D. and Varey, R.J., 2008).

Conceptual Transition


As we have seen in the earlier sections, Service is now the common denominator in Service-Dominant Logic. And the key to co-creating value is a high level of interaction between participants. In the 1800s, we have the Goods Dominant Logic that ultimately had an economic orientation (Robert F. Lusch, Stephen L. Vargo). Then we moved to Services Marketing in the 1980s and now the Service-Dominant Logic. The transition (Goods to Service Marketing to Service-Dominant Logic) may be understood with the following (Robert F. Lusch, Stephen L. Vargo): (1) the transition from goods to services to Service (2) the transition from products to offerings to experiences (3) the transition from features to benefits to the solution (4) Value add to co-production to co-creation (5) Price to value delivery to Value Proposition

References
Homburg, C., & Jensen, O. (2007). The thought worlds of marketing and sales: Which differences make a difference? In Journal of Marketing. https://doi.org/10.1509/jmkg.71.3.124

Lawson, R., & Wooliscroft, B. (2004). Human nature and the marketing concept. Marketing Theory. https://doi.org/10.1177/1470593104047641

Sivakumar, K., & Nakata, C. (2001). Instituting the Marketing Concept in a Multinational Setting: The Role of National Culture. Journal of the Academy of Marketing Science.

Ballantyne, D., & Varey, R. J. (2008). The service-dominant logic and the future of marketing. Journal of the Academy of Marketing Science. https://doi.org/10.1007/s11747-007-0075-8

Viswanathan, M., Rosa, J. A., & Ruth, J. A. (2010). Exchanges in Marketing Systems: The Case of Subsistence Consumer–Merchants in Chennai, India. Journal of Marketing. https://doi.org/10.1509/jmkg.74.3.001

Vargo, S. L., & Lusch, R. F. (2006). Service-dominant logic: Reactions, reflections, and refinements. Marketing Theory.

Vargo, S. L., & Lusch, R. F. (2004). Evolving to a New Dominant Logic for Marketing. Journal of Marketing. https://doi.org/10.1509/jmkg.68.1.1.24036

Vargo, S. L., & Lusch, R. F. (2008). Service-dominant logic: Continuing the evolution. Journal of the Academy of Marketing Science. https://doi.org/10.1007/s11747-007-0069-6

Summary & conclusions


Service-Dominant Logic propagates the Co-creation of Value. This requires suppliers, producers, and customers to work closely to create Value in use. This implies the creation of a value constellation, or service ecosystem, a network of participants where we have Actor-To-Actor engagement to Co-create Value.
Online Talent Platforms are driven by digital technologies and therefore allows such level of interactions in a service ecosystem. Co-creation of Value is a concept from Service-Dominant Logic that can be extended to ‘Gig’ or ‘Platform’ or Online Talent Platform.
Service-Dominant Logic also propagates that firms create a Value Proposition. But the Value Proposition is not created by the firm and communicated to the customer. But it involves listening to the customer, understanding their requirements, and then constructing a Value Proposition.
Extending Service-Dominant Logic, we have therefore added to the knowledge of Value Proposition creation using Service-Dominant Logic thru a Focus Group interview and analysis. This paper has provided a method of listening to the customer and their sentiments to construct a Value Proposition as a firm centered around the customer.
Seven Motivational reasons were identified for individuals to opt for Independent Work, and we reviewed that (Table 10- Correlation Analysis) (a) “Ability To Choose Working hours.” (b) ‘Work-Life Balance” (c) “Flexibility to work online and remote.” (d) and “Level Of Income.” came out as Motivational reasons that could be the basis for the creation of Value Proposition across individuals
Based on Sentiment Analysis, we identified that the following are key inputs to the Value Proposition of ‘Gig’ or ‘Platform’ or Online Talent Platform (Table 3): (a) Quick Search (ability to search jobs quickly online) (b) Team-rooms online (collaboration online) (c) Learning new skills and training (online)