The first fundamental premise of the service-dominant (S-D) logic says that service is the fundamental basis of exchange . In other words ─ all business is actually service business. This sounds quite straightforward. However, in order to truly capture what is meant by this statement we need to make clear distinction with services as traditionally understood and service as defined in the S-D logic.
In my previous post I told how I was struggling with the awkward division between services and products before I found the S-D logic literature. Traditionally, we view services and products as something very different from each other, to an extent that there seems to be quite strong confrontation between the two. Due to the triumphs of the industrial era, our attention has been steered towards making tangible outputs, i.e. products. For a long time, service was ignored almost altogether and treated either as an add-on to the core product or as a residual. These intangible outputs are described with the plural term of “services”. Many times the nature of services is mainly described by listing how they differ from products (e.g. charahteristics such as intangibility, heterogeneity, inseparability, perishability). Services are thought to be something tied to a direct interaction among people, while products are easily distributed and stored.
One of the aims of the S-D logic is to overcome the products versus services (or tangible vs. intangible output) divide by offering a transcending concept of service . The singular term service, as used in the S-D logic, focuses on the processes of serving rather than on the form of output. Therefore, service in the S-D logic is defined as the application of specialized competences (such as knowledge and skills) for the benefit of another actor . Hence, service is a process that respresents the basis of all social and economic exchange.
This transcending view enables us to examine all kinds of market offering independent of their form and output related characteristics. What this means is that, ironically, there are no services in S-D logic. Products, however, still exist and they have an important role as vehicles for service provision. In other words, a service can be delivered to a customer indirectly through a product. Service (the process of applying one’s resources for another’s benefit) can therefore be seen as a continuum where there exists both direct service and indirect service.
I’ll give an example of this. If I would be telling you this same thing face to face, hence applying my knowledge for your benefit, it would be regarded as a service also by the traditional thinking. In the S-D logic this would be considered as a direct service. If I would write the same thing down on a piece of paper and print a book out of it, it would be regarded as a product by the traditional logic, though the same underlying service still exists. With the S-D logic lenses on we will still acknowledge the underlying service, though this time it is provided indirectly through a service vehicle, the tangible book, through which I am able to offer my service more independent of time and my physical location. Hence, it is unnecessary to make a divide between products and services, especially as this kind of division seems to steer our attention so much to the particular service vehicle that we forget the underlying service altogether.
Usually, the increasing attention towards service(s) is seen necessary due to the emerging “services revolution” (e.g. that approximately 70 % of economic activity in developing countries is in something categorized as services, i.e. non-products). If we adopt the transcending concept of service implied by the S-D logic, we can see that it has always been service that has been exchanged (either directly or indirectly through a product). Hence, what we are witnessing is not so much a service revolution, but a service realization .
 Vargo, S.L. & Lusch, R.F. (2008) Service-Dominant Logic: Continuing the Evolution. Journal of the Academy of Marketing Science 36, 1-10.
 Vargo, S.L. & Lusch, R.F. (2011) It’s all B2B…and beyond: Toward a systems perspective of the market. Industrial Marketing Management 40, 181-187.
 Vargo, S.L. & Lusch, R.F. (2004) Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (January), 1-17.
 Vargo, S.L. & Akaka, M.A. (2009) Service-Dominant Logic as a Foundation for Service Science: Clarifications. Service Science 1(1), 32-41.