Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds.

(2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Introducing a dialogical orientation to the

service-dominant logic of marketing
David Ballantyne
Associate Professor of Marketing
Department of Marketing
University of Otago
New Zealand
Richard J Varey
Professor of Marketing
The Waikato Management School
University of Waikato
New Zealand

Introduction

We are very interested in the service-dominant logic of marketing thesis. Stephen

Vargo and Robert Lusch have skillfully brought together a number of previously
disparate marketing concepts, ideas and perspectives in a way that is likely to
challenge the presumptions of mainstream theory and practice. However, it seems to
us that there is still more to be done in understanding what a service-dominant logic of
marketing (S-D logic) might entail, and shifting marketing thought in this direction.
We are pleased to collaborate in this work in progress.

The S-D logic thesis gives support to much of our own work on relationship
development, knowledge application and communicative interaction in marketing
(Ballantyne 2004b; Christopher et al. 2002; Varey 2000; Varey 2002a; Varey and
Lewis 2000). We clearly see these three strands of thought intertwined in the new SD logic. However, in this chapter we are particularly interested in exploring the role

Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

of dialogue as a form of communicative interaction. We also want to broaden the

framework of marketing communication, through which buyers and suppliers make
their value propositions (offerings). This is not given any depth of treatment in the SD logic thesis, although there are supportive references (Vargo and Lusch 2004).

We see dialogical interaction as an ideal form of communication within the S-D

logic because it supports the potential for co-creation of value and sustainable
competitive advantage. It also makes a strong counterpoint to mainstream
marketings monological assumptions and the constraints on innovation that flow
directly from that. First, we will reflect a little on the validity of the common sense of
communication. Next, we clarify our understanding of the concept of dialogue. We
then consider the potential for marketing to be dialogical. Our discussion will then
move on to critically discuss four of the fundamental premises of the S-D logic as set
out by Vargo and Lusch (2004). We conclude with some related thoughts on
communication, relationship, and knowledge.

The Common Sense of Communication

Several related observations are worthwhile at the outset. First, the dominant forms of
marketing practice operate as one-way message making systems. In this context,
commonplace thinking has come to accept as normal the decoupling of interaction
and communication. Second, in everyday use the term dialogue is unreflectively
taken to mean an extended conversation among two or more people. In other words,
confusion and detachment abound. By way of contrast, our notion of dialogue
embodies a pre-industrial perspective on human interaction. We see dialogue as an

Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

interactive process of learning together (Ballantyne 2004a). Third, dialogical

interaction fits well with the notion of relationship development and knowledge
generation in marketing, even in an epoch of e-commerce (Varey 2002b). We want to
put the variety of marketing interaction back together again, but set in the context of
post-industrial marketing.

Marketing communication is the underlying process through which marketing activity

and resources are converted into economic outcomes. However, when we constantly
emphasize outcomes, we miss the point that marketing processes are grounded in
purposeful social interaction (Varey 2002a). Managers tend more to strive to control
their own destiny and that of their firm, rather than anticipate and respond to service
needs (including provision of service-able goods). Ethical questions disappear in the
assumed appropriateness of self-interested profit maximization. This control-driven,
self-interest finds expression in the monological (one-way) mode of marketing
communication that is dominant today. Managers and firms gain short-run advantage
from this, but it is unclear how societies or indeed any of a firms constituent
stakeholders benefit in the long run.

We need to regain the sense of marketing as a social phenomenon as implied by the

idea of Relationship Marketing and also evident in the S-D logic of marketing. This
would require recognition of markets as comprising sellers and buyers, all of whom
are social actors who interact to construct economic exchange outcomes. Such a shift
in marketing theory and practice would require some rethinking of marketings
reliance on the efficacy of communicating at long distance through media-tors to a
homogenous mass market. In fact, this kind of communication the act of uttering

Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

is not really communication at all but simply message making. As put by Luhmann
(Luhmann 2000):

communication only comes about when someone watches, listens, reads

and understands to the extent that further communication could follow on.
The mere act of uttering does not constitute communication.

On this basis, much so called marketing communication comprises unopened

messages, unrequited messages, and deliberate message avoidance on the part of the
targeted receiver. In this, the marketer seeks to manipulate and works insincerely,
assuming that this behaviour is taken for granted by participants and observers. Yet,
while advertising may indeed declare its motives, it refines and often conceals its
methods. The intention is to control purchase and consumption by reminding people
that there is something to buy and that a particular name or product deserves special
attention. In other words, consumers recognize that what they see is advertising, but
not how they are influenced. Ironically, we are all free to choose whenever we want
something.

This kind of convoluted communication logic does not begin to explain the variety of
ways in which we might reconnect communication with interaction, to generate and
circulate information, co-create meaning, acquire knowledge, achieve flashes of
inspired understanding, and make value together.

We need to escape from this 20th Century monological communication model that
converts all explanation into discrete message particles for mechanistic transmission

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and gives primacy to the role of sender as the dominant agent. The agent controls the
mechanisms to enable the flow of information and also attempts to control the
communicative event with the chosen receiver. The problem is, of course, that the
agent defeats his or her best intentions by so doing, cutting off the spontaneous nature
of continuing interaction and collaboration that is implied in the term marketing
exchange. This model remains the dominant communication logic in marketing texts
and in use, notwithstanding the emergence of more interactive perspectives over the
last decade in Direct Marketing and Integrated Marketing Communication (see also
(Duncan and Moriarty 1998; Gronroos and Lindberg-Repo 1998).

The potential for broadening the variety of forms of communicative interaction, from
monologue to dialogue, has been developed as a communication matrix by
(Ballantyne 2004a). This matrix includes one-way message making, directed to or for
a firms customers and other parties, where to means the basic offering, and for
means a more value added and targeted format. As well, there is recognition of twoway communication with customers and other parties; and also the relatively
unexplored zone of potential represented by dialogical interaction, between the focal
firm and its customers and other parties (see Figure 1).

FIGURE 1 here

One of the authors has recently seen a software product brochure that claims that the
product makes sure you ask the right people about the relevant issues at the right
time by engaging them in one-to-one interactive dialogues at key touch points in the
relationship. What does this promise mean? What would a dialogue that is not

Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

interactive be like? Further, in a recent article by a leading US brand consultant, it is

claimed that a marketing dialogue between brands and consumers is replacing the
one-way conversation of advertising. How does a collection of signs and artefacts
interact with a person such that dialogue is possible? Confusion abounds. We need to
return to an earlier common sense notion of what it once meant to be dialogical in
communication.

Clarifying the Concept of Dialogue

We define dialogue as an interactive process of learning together (Ballantyne 2004b).

This is close to the original meaning, from the Greek dialegesthai, which was to think
and speak about something in such as way that the thing the speakers were talking
about was recognized as different, and, in talking together, the speakers were able to
move toward a new intellectual understanding. Dialogue holds the promise of
revealing something new, and implies a developmental shift in the relationship
between the parties involved. Dialogue is also a useful communicative approach to
knowledge development within and between firms. In dialogue, the co-creation of
knowledge is possible. Or a dialogical approach may well allow participants to
disagree on what those new knowledge positions ought to be. It follows that dialogue
cannot be reduced to one persons activity alone, or reduced to one persons
perspective alone it is inherently relational. Clearly, the intention in engaging in
dialogical interaction is not unidirectional, self-serving, or accomplishment by
control. On the contrary, the purpose is open ended, discovery oriented, and value
creating.

Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

The first problem in using the term dialogical interaction is linguistic and semantic.
Much so-called dialogue in practice is no more than two-way combative (dialectical)
monologues, or at best, message making with feedback the hoped-for prize is
acceptance of one partys asserted claims in support of an ideological or commercial
preference exclusively for self-interest. However, in dialogue participants speak and
act between each other, not to each other. We take the view that all marketing
outcomes are fulfilled through social processes (directly or indirectly) so there are a
range of social values likely to be fulfilled as well, according to time, place and
circumstances. As long as no party is treated as a means to an exclusively private end,
the process may proceed, and indeed be repeated again another time. This ethical
underpinning for dialogue can best be experienced through interactions built on trust.
Without receiving the trust of another, and being trustworthy, dialogue comes to an
end soon enough. Dialogue it seems to us is an essential basis for the authentic
pursuit of innovation and creativity in markets, within firms, and between firms.
Yesterday, today and tomorrow, by whatever name it travels under, it is an interactive
process of learning together. It creates value in new and surprising ways, disrupts
market norms and challenges societal behaviors in the broadest sense.

Can Marketing really be Dialogical?

Of course, marketing, in its modern principles and in practices, has not been seen as a
dialogical activity. Yet, the central concept of marketing is exchange, and is not
exchange a reciprocal event? What detracts from the fluidity of the 20th Century
marketing concept is the almost universal presupposition of unidirectional, goalseeking behavior where marketing is seen to be successful at the point that the

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targeted object (buyer) yields to the persuasion of the seller. While it is not often put
like this, marketing is living a life for profit of a vastly restricted value.

The bigger picture, better understood in the relationship marketing literature, is that
marketing is interactions within networks of relationships (Gummesson 1999). This
redefines marketing exchange as an open ended process in terms of time and place.
Interactions over time are the enactments of the exchange process (Ballantyne 2003) .
Moreover, the spatial setting (or servicescape) in which various episodes of
interactions are embedded is critical to how a sellers offer is valued by the buyer.
Furthermore, these interactions can be viewed as part of a customer relationship
development process, or as a process from which the customer determines what is of
value. And in these interactions, it is through service that the sale takes place in a
virtuous cycle of service and sales. This is not news in the relationship marketing,
B2B marketing, or services marketing literature, but traditional consumer product
dominant marketing texts tend to footnote it because what is offered is of intangible
value, of a kind that cannot be exclusively controlled by the seller through a
unidirectional communication system.

While marketings embedded motives remain control and profit maximization, it

becomes difficult to imagine how marketing interaction could also be driven by a
genuine concern for customers. Yet these positions are not irreconcilable. Such
reconciliation requires a longer-term view and a learning perspective in which
dialogue might find a place. Any charge of naive altruistic intent can be addressed
rationally on the basis that respect for the needs of the other is a prerequisite for our
own need fulfillment. In co-creating value through dialogue and learning, the

Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

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reciprocal success benchmark becomes If it is better for us, then it becomes better for
me. This involves a shift in strategic perspective to recognize a broader view of
stakeholder interests, which in turn requires a shifting of mental models to
accommodate the idea of a market as a socially constructed network of relationships
where interactions have economic consequences.

We conceive of marketing as grounded in interaction in potentially three ways. First

as informational, second, as communicational, and third, as dialogical (see Table 1).

TABLE 1 here

These categories are conceived of as ideal types following Weberian tradition. In

other words, they are pure constructs and some category overlap is likely in practice.
We do not claim that they are moral or ethical categories. The informational mode
includes all message-making which has the useful intention to inform. The more
manipulative practices of transactional marketing and much of what currently passes
as CRM are extreme versions of this. Next, much of marketings current relationship
oriented aspirations are grounded in the communicational mode, where listening and
informing are the product of interaction, especially in services marketing, and B2B
marketing.

Finally, our view of marketings unrealized potential is in the dialogical mode. This
potential is always available. However, without a legitimizing framework, perhaps
only the brave will succeed. In this spirit, we hope that our classification hastens a
break-free from myopic monological straight jackets. Marketing communication

Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

has been locked into a way of thinking that sees message making as the dominant
mode. Working on the false notion that a message can possess a fixed meaning,
marketing has focused attention and resources on the means of coding these messages
and regulating their transmission. This is done for the purpose of trying to change
other peoples choices. This is how it has been in the past, and this is what has been
carried forward relatively unchallenged to the present time.

Dialogue as Learning Together

Dialogue as we have defined it brings opportunities for learning together and

generating value in new ways, both within the firm and between firms, as co-created
solutions for market and supply problems and opportunities. Furthermore, the
particular circumstance of value creation means it is difficult for competitors to copy.
Of course there are constraints to increasing the spiral of communicative reciprocity,
which have to be acknowledged as well. Dialogue in marketing is not so much a
method of communication but an orientation to it. There is always potential for the
frustration of intentions between buyer and seller, and indeed other stakeholders.
There is the possibility of a mismatch of expectations. Or one party may attempt to
control the interaction by establishing a purely informational engagement.
Alternatively, one party may attempt to interact in dialogical mode, but is met by an
informational response. And perhaps some of the time the parties involved will
understand each other quite well but just dont want to agree! Again, our test for
dialogical authenticity is whether, or not, interaction brings opportunities for learning
together. We suggest that such a test might focus on constructing understanding,
creating common agreement and disrupting assumptions:

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1. Dialogue aims at developing an understanding of each participants point

of view and interaction sets up suitable conditions for listening and learning
together. Dialogue in marketing is much more than alternating monologues,
and covers the joint investigation of needs, wants, desires, problems, issues,
and decisions to be made. To achieve this grand aspiration, at least some of
the time, we have to do better than attending to service quality issues and
identifying mechanistic CRM mediated contact opportunities as touch points.
Instead, we suggest that marketers might experimentally and selectively
engage in dialogical inquiry (listening and learning) and so become more
reflective of the consequences of past actions. Dialogical outcomes go beyond
ones own understanding and so finding creative solutions to previously
intractable problems is quite possible.

2. Dialogue may lead to common agreement on any particular issue, or

perhaps a variety of different interpretations will remain in play. It is quite
possible to achieve understanding even if the parties agree to differ.
Dialogical interaction means becoming more aware of routine but hidden
thought patterns and assumptions held by ourselves and by others. In dialogue,
an attempt is made to query your participants assumptions and prejudices and
likewise to confront your own, some of which are always really difficult to
access. We conclude that the mutual checking of assumptions is fundamental
to learning together, and helpful in reaching more enlightened exchanges of
mutual value.

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3. Dialogue creatively disrupts the taken-for-granted and unspoken

assumptions that restrict commitment and satisfaction to the ordinary.
Dialogue is not simply a two-way dissemination of information for decisionmaking and action. Any cognitive dissonance induced by dialogue can be
positive if there is mutual effort and trust. We conclude that not everyone is
ready for dialogue but this can be tested in practice, interactively, and
incrementally. Give or take some attempts at persuasion at the outset, and then
some experience in mutual informing and listening, extraordinary exchanges
can occur when the trust level is adequate to the anticipated risk involved.

Reflecting on the S-D Marketing Logic

So far we have reflected on the common sense of marketing communication, and also
the lack of it. Then we clarified our understanding of the concept of dialogue. We
then considered the potential for marketing to be dialogical. The concepts of
relationship development and knowledge application are strongly featured in the
original S-D logic (Vargo and Lusch, 2004). There are also references in support of
dialogue, which has been the platform for our discussion about the variety of
communicative interaction, through which buyers and suppliers might agree their
value propositions (offerings).

Vargo and Lusch have said that the application of specialized skills and knowledge is
the fundamental unit of exchange. However, we believe that three strands make up a
fundamental conceptual unity of exchange activities: communicative interaction,

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relationship development, and knowledge application. This we see as the way

forward for the S-D logic of marketing (see Figure 2).

FIGURE 2 here

We find it difficult to isolate one strand of exchange activity and its effects without
reference to the others. We also find it reassuring that Alderson, writing at the time of
the then emerging managerial perspective of marketing, located exchange as the joint
activity that identified marketing (Alderson 1957). Thus:

Marketing is the exchange which takes place between consuming groups and
supplying groups.

It is not clear to us why Vargo and Lusch (2004, p. 6) have added a unit of exchange
perspective to the application of specialized skills and knowledge at the fundamental
level. If this unitized exchange is intended for use as measurement, then, hopefully, a
new controversy can be avoided about how marketing adds value, and how much
value does it add?

Taking a tripartite view of the fundamentals of S-D marketing, communicative

interaction in its various forms supports learning about the customer, and this learning
supports trust and the appropriate knowledge application and development of the
relationship. This also prevents both parties from having to reinvent the wheel of
relationship specific knowledge with every new transaction. If both parties go further
and trust each other in dialogue, the co-creation of knowledge might generate value in

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new ways, and cost efficiencies may result through interdependencies so created. The
application of knowledge can be explicit or tacit, co-produced or co-created together.
Here we are making a distinction between co-production of knowledge through
communicational interaction (an exchange) and co-creation through dialogical
interaction (something unique and new). Customer value becomes something a seller
proposes and a customer then judges in two forms - exchange value is one kind of
judgment made by the customer, and because a product is a store of value, judging
value-in-use is its confirmation. And so the cyclical S-D logic of marketing turns.

We agree (subject to the above comments) on four of the foundational premises

proposed by Vargo and Lusch (2004) and comment on the remaining four below in
terms of what we see as necessary links to communicative interaction and dialogue.

Critique on Four of the Foundational Premises of the S-D Logic

FP4: Knowledge is the fundamental source of competitive advantage

We would add that it is the renewal of knowledge that is more aptly the fundamental
source of competitive advantage. Following Nonaka and Takeuchi, knowledge takes
two forms tacit and explicit (Nonaka and Takeuchi 1995). Vargo and Lusch have
recognized the fundamental importance of human skills, competencies and the
accumulated work experiences of employees, which is another way of saying tacit
knowledge. Tacit knowledge operates more or less at an unconscious level of
application, which means it tends to be under-recognised as a firm-based resource.
However, tacit knowledge is gained through observation, imitation and mutual

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experience. The second form of knowledge, explicit knowledge, is media-based and

can be digitized and circulated. Both forms of knowledge are valued as resources,
but are different. The first is applied directly in creating value. The second is a store
of knowledge that can be usefully accessed in creating value. The first is an operant
resource and the second is an operand resource, in the way that Vargo and Lusch
(2004) use these terms. Many firms can get side tracked in building up explicit
knowledge, using expensive data-warehousing or customer relationship management
(CRM) systems and ignore the active resource within, their operant resource, or
employees tacit knowledge.

The point we make especially is this: While competition between firms stimulates
knowledge discovery at the macro level (Vargo and Lusch, 2004, p. 9), we want to
give equal or more emphasis to the knowledge renewal processes operating at the
micro level because these can be activated in communicative interaction. At the level
of the firm, explicit knowledge, expressible in a speech or writing, can be exchanged
with fluency within networks of trust-based relationships. Skills-based tacit
knowledge can also be learned or co-created to great effect through dialogue,
especially when a strategic approach to internal marketing communication is taken
allied to a process of knowledge renewal (Ballantyne, 2003; Varey and Lewis, 2000).
Also, if we conceive of firms as networks of relationships, then the boundaries of trust
between firms can be extended by mutual agreement, and we might do better to talk
of clusters of collaborating firms as knowledge networks competing with knowledge
networks (Normann and Ramirez 1993). We see such networks as a consequence of
relationship development, whether intentional or otherwise.

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What is critical for knowledge renewal is the willingness of employees to pass on

what amounts to their know-how, their tacit knowledge. To do this, they need to trust
the firm and others motives. Many managers do not understand that the quality of
the relationships between employees has a strong impact on learning and therefore on
knowledge renewal within the firm. When you look at the three core knowledge
exchange patterns within firms, as described in Figure 3, the nature of the constraints
working against knowledge renewal within firms becomes clear. The hierarchical
exchange pattern is so pervasive that the other two knowledge exchange modes
become ineffective or are ignored.

FIGURE 3 here

Knowledge sharing and its application in creating customer value is a hidden source
of competitive advantage whether working together as employees across functional
borders to achieve cost efficiencies, or working with customers to improve customer
value. The particular point of interest to us here is that a knowledge renewal strategy
demands open communicative interaction and especially frequent dialogue within the
firm, between firms, and between supplier firms and customers. In this way,
managers and other employees can constantly re-examine what they have previously
learned and now take for granted.

FP6: The customer is always a co-producer

We also take the view that the customer is a co-producer of value, and support the
idea of value-in-use as one aspect of the determination of value by the customer post

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sale, as part of as a continuing process within the buyer-seller relationship. We also

see the co-production of value as embedded in any useful communicative interaction,
prior to any sale and post-sale, quite apart from any residual of value represented by
the goods component of that value assessment. However, we prefer to reserve the
terms co-creation of value and co-creation of knowledge for more spontaneous,
generative dialogical approaches, where putting things together that others do not
think go together achieves something new and of unique value in the process. It is in
this endeavour that competitive advantage might be found. The interesting question
seems to be just where to delimit marketing activity, even though the customers value
determination as a co-producer may extend beyond the point of sale, over time and
place. To paraphrase McKenna, marketing is everything but not everything is
marketing (McKenna 1991)! For example, what if we choose to boil potatoes for
dinner (customer as operant resource, still in co-production mode, and potatoes as
operand resource in transformation)? Is this really a continuous part of marketing
activity? We think not.

FP7: The enterprise can only make value propositions

The enterprise (firm) can only make value propositions (offerings), since it is the
customer who determines value for themselves and co-produces it. This means that
exchange value for the customer includes the estimated value-in-use of any goods
exchanged. We would want to add that there can be no expectations of a satisfactory
relationship developing unless suppliers also determine their own sense of value,
which means that value propositions should be conceived, from the outset, as
particular proposals to and from suppliers and customers seeking equitable exchanges

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of value. It is not often recognized that one value proposition is always offered for
another, yet both are enjoined in exchange, or there will be no exchange! To achieve
this end a negotiated agreement may be needed which in turn may require some depth
of dialogical interaction.

Vargo and Lusch (2004, p. 12) have said:

Even in the case when the firm does not want to extend or repeat patronage, it
is not freed from the normative goal of viewing the customer relationally.

We agree. And one aspect of viewing the customer relationally is to balance the
interests of the customer and the supplier over time within a relational context. While
marketing is inherently customer oriented, suppliers determine their own value in
exactly the same way as customers do. These value perspectives are two sides of the
one coin. This point is so obvious that it can be overlooked, hence our emphasis on
the reciprocity of value propositions.

FP8: A service-centered view is customer-oriented and relational.

Service interaction and the co-production of value demand viewing the customer
relationally. We agree. However, we would argue that communication is the conduit
for the S-D marketing logic and within that, dialogical interaction is the fast track to
learning together and hence to knowledge renewal. We would add that relationships
are emergent, and a consequence of learning together over time.

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Instead of managing communication, knowledge, or relationships as top-down

activity, as is common practice, each perhaps supported by separate enabling
technologies, all three make sense enjoined within a pragmatic S-D logic, as discussed
earlier and shown in Figure 2. In this light, S-D logic can be seen as a strategy for reestablishing the centrality of interaction (or the encounter, as it was called in the
services literature of the 1980s) as a grounded form of micro-economic practice. As
value is a descriptor for the consequences of interaction between buyers and sellers,
we understand this term as meaning a preferential judgment (Holbrook 1994), whilst
values are the criteria, or guiding principles, by which the judgment is made. We
find this distinction helpful.

Postscript

Marketings role as a facilitator of exchange within the S-D marketing logic becomes
clear but challenging. If core competencies are to be identified, further developed and
framed as value propositions, new knowledge must be generated and applied within
the firm and between the firm and its stakeholders. This means that communication
will necessarily be more fluid and interactive. The whole value creating enterprise
will only function if marketings involvement is collaborative, and seen to be so.

Thus marketing management becomes market oriented. This agenda will be a

daunting prospect for traditional marketing warriors, however for others much of the
problem will be adjusting to new language and meanings. In moving to explore the SD logic further, issues surrounding relationships, communication, and knowledge

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stand out. Introducing a dialogical orientation to learning together may be a fast-track

approach.

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Abstract
Much of our own work in relationship development, knowledge application and
communicative interaction gives support to the new S-D marketing logic. First, we
reflect on the validity of common sense notions of communication, and distinguish
between informational and communicational forms. Next, we consider the potential
for dialogical interaction as a basis for learning together and co-creating value. Our
discussion then moves on to critically discuss four of the fundamental premises of the
new S-D logic. We conclude that the S-D marketing in practice is essentially a
collaborative function and that introducing a dialogical orientation may be a fast-track
approach.

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Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Biographies
David Ballantyne
David Ballantyne is an associate professor of marketing at the University of Otago,
School of Business in New Zealand, and an International Fellow at the Centre for
Relationship Marketing and Service Management, Hanken Swedish School of
Economics in Helsinki. He is a co-author with Martin Christopher and Adrian Payne
of Relationship Marketing: Bringing Quality, Customer Service and Marketing
Together (1991), the first text published internationally in this rapidly expanding field
of inquiry. A second edition was published in 2002 as Relationship Marketing:
Creating Stakeholder Value. David is a past director of the Total Quality Management
Institute of Australia, and has held senior executive positions in marketing research,
public relations, strategic marketing and service management. He is a member of the
British Academy of Management and a member of the editorial review boards of the
Journal of Business-to-Business Marketing, Management Decision, and the
International Marketing Review. His research interests are internal marketing,
knowledge management, and dialogue as a co-creative learning mode in marketing.
E-mail address: dballantyne@business.otago.ac.nz
Richard J Varey
Richard Varey is Professor of Marketing and Chair of the Department of Marketing
and International Management at The Waikato Management School, Hamilton, New
Zealand. He was previously Director of the Communication and Knowledge in
Management Research Unit, in the Faculty of Business and Informatics at the
University of Salford, England. His research interests are presently focused on
participatory and ethical issues in managed communication and information systems.
Richard completed his Doctorate by research at the Manchester School of
Management (UMIST). He received the British Institute of Management Young
Manager of the Year Award in 1991, an International Association of Business
Communicators Research Foundation Best Paper Award in 1997, and (jointly with
Professor Barbara Lewis) the Outstanding Paper Award from the European Journal of
Marketing in 1999. He co-edited (with Professor Barbara Lewis) Internal Marketing:
Directions for Management (Routledge, 2000), and more recently authored Marketing
Communication: Principles and Practice (Routledge, 2002), and Relationship
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Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Marketing: Dialogue and Networks in the e-Commerce Era (Wiley, 2002). He is a

member of the editorial review boards of the Journal of Communication Management,
the Journal of Marketing Communications, and the Atlantic Journal of
Communication.
Email address: rvarey@mngt.waikato.ac.nz

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Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Figures and Tables

Figure 1: Marketing Communication Matrix
Source: (Ballantyne 2004a)
ONE - WAY
The conventional
managerial approaches,
giving prominence to the
planning and crafting of
persuasive informational
messages
(Many messages will
remain unopened, unseen
and unheard)

Communication
to

Communication
for

Planned persuasive
messages
aimed at
securing
brand
awareness
and loyalty

Planned persuasive
messages but
with
augmented
offerings for
targeted
markets

e.g. Communicating
the unique selling
proposition to the
mass market in
concrete and symbolic
terms

e.g. Communicating
targeted customer life
cycle products; product
or service guarantees;
loyalty programs

TWO - WAY

Communication
with

Communicative interaction,
both formal and informal,
which may be prompted by
planned messages to or
for customers, as above
(This includes more
spontaneous and
dialogical approaches
between participants that
give prominence to
listening and learning)

Mass markets

Communication
between

Integrated mix of
planned messages and
interactively shared
knowledge

Dialogue between
participants based on
trust, learning and
adaptation, with cocreated outcomes

e.g. Face to face

encounters
e.g. Direct (data-base)
marketing
e.g. Call centers
e.g. Interactive B2B
internet portals.

e.g. Key account

liaison between two
or more firms
e.g. Expansion of
communities of
common interest,
often Internet based
e.g. Teamwork
between staff project
groups within one
firm, or between
firms

Portfolio/
Mass-customized

Discrete/
Networks

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Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Table 1: A Classification of Interaction Modes

Mode of interaction

Informational:
Persuasive message
making
Communicational:
Informing and listening

Dialogical:
Learning
together

Underlying
political and
decision
practices

Source
Of value

Form of market
system coordination

Controlling and
dominating

Supplied by persuasive
selling of the benefits

Hierarchy

Integrated
communicative
interaction and
stakeholder equity

Negotiated value coproduced through

promise-making and
promise-keeping

Interactive

Finding a voice in
co-determination

Emergent value cocreated in learning

Network

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Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Figure 2: Tripartite Fundamentals for S-D Marketing

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Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Figure 3: Knowledge Exchange Patterns within Organizations

Source: Ballantyne, 2003

Pattern 1: Hierarchical exchanges

Expert knowledge is exchanged and
legitimised through formal hierarchical
channels. The dominant distribution path is
from the top of the organisation to the bottom.
Upward moving knowledge claims also
occur, subject to explicit rules or implicit
constraints.

Pattern 2: Inter-functional exchanges

Knowledge is exchanged between internal
suppliers and internal customers along value
chains, end to end. Knowledge claims are
legitimised by reference to external
customers needs. The utility of these
internal exchanges is often constrained by a
lack of customer consciousness, producing
self-serving links in the value-chain.

Pattern 3: Network exchanges

Knowledge is generated and circulated by
exchanges within spontaneous, internal
communities. Common social or economic
interest drives these voluntary, employee
networks. They may seek to legitimise their
knowledge claims through the hierarchical
organisation in which they are embedded.

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Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

References
Alderson, Wroe (1957), Marketing Behavior and Executive Action. Homewood, IL.:
Irwin.
Ballantyne, David (2004a), "Dialogue and its role in the development of relationship
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---- (2004b), "A Relationship Mediated Theory of Internal Marketing." Helsinki:
Swedish School of Economics & Business Administration.
---- (2003), "A Relationship Mediated Theory of Internal Marketing," European
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Christopher, Martin, Adrian Payne, and David Ballantyne (2002), Relationship
Marketing: Creating Stakeholder Value. Oxford: Butterworth-Heinemann.
Duncan, T. and S E. Moriarty (1998), "A Communication-based Marketing Model for
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Gronroos, C and K Lindberg-Repo (1998), "Integrated Marketing Communications:
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Gummesson, E. (1999), Total Relationship Marketing: Rethinking Marketing
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Holbrook, M B (1994), "The Nature of Customer Value," in Service Quality: New
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Thousand Oaks, CA.: Sage Publications.
Luhmann, N. (2000), The Reality of the Mass Media (K Cross, Trans.). Stanford, CA.:
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McKenna, R. (1991), Relationship Marketing: Own the Market Through Strategic
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Nonaka, I. and H. Takeuchi (1995), The Knowledge-Creating Company: How
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Normann, Richard and Rafael Ramirez (1993), "From Value Chain to Value
Constellation: Designing Interactive Strategy," Harvard Business Review, 71 (JulyAugust), 65-77.
Varey, R J and B R Lewis Eds. (2000), Internal Marketing: Directions for
Management. London: Routledge.

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Forthcoming, as a chapter in Vargo, S. and Lusch, R. eds. (2005), Toward a Service

Dominant Logic: Dialog, Debate, and Directions, M.E. Sharpe.

Varey, R J. (2000), "A Critical Review of Conceptions of Communication Evident in

Contemporary Business & Management Literature," Journal of Communication
Management, 4 (4), 328-40.
---- (2002a), Marketing Communication: Principles and Practice. London: Routledge.
---- (2002b), Relationship Marketing: Dialogue and Networks in the E-Commerce
Era. Chichester: John Wiley & Sons.
Vargo, Stephen L and Robert F Lusch (2004), "Evolving to a New Dominant Logic
for Marketing," Journal of Marketing, 68, 1-17.

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