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1 Introduction

Academics and practitioners recognize the need for a deeper understanding of the role of customer experiences in marketing phenomena (Edvardsson, Gustafsson, & Roos, 2005; Holbrook & Hirschman, 1982; Tynan & McKechnie, 2009). In this context, 3D3C worlds (Sivan, 2008) provide sites for engaging consumers in deeper and more sustaining ways, suggesting an important role in providing customer experience. 3D3C worlds provide interactive customer experiences to educate, entertain, display information, or offer an appealing visual aesthetic encounter.

We see a conjunction of the development of experience marketing with the emerging concept of service-dominant logic (S-D logic). A foundational premise of S-D logic is that the customer is always a collaborator in the co-creation of value. Previous writers connect collaboration and value co-creation with the concept of customer experience, a conclusion important for S-D logic and marketing (Pine & Gilmore, 1999; Smith & Wheeler, 2002; Vargo & Lusch, 2004). As a topic, S-D logic has moved in a relatively short time to the forefront of marketing research. Nonetheless, although for S-D logic “information technology is a pivotal force” (Lusch, Vargo, & O’Brien, 2007: 11), existing research focuses mainly on S-D logic within the offline context. Despite the growing concept of the experience economy (Pine & Gilmore, 1998) and the development of customer experience frameworks in offline contexts (e.g., Verhoef et al., 2009), 3D3C world retailers are still short of such frameworks.

We argue that the concepts of service-dominant logic present a means to reframe and improve experience marketing for increased relevance and impact within 3D3C worlds, and develop an integrated conceptual framework for the virtual experience grounded in this concept.

2 Service-Dominant Logic

2.1 Principles of Service-Dominant Logic

Originally devised as ten foundational premises (FPs), a re-organisation now presents four foundational axioms underpinning S-D logic, from which the other FPs result (see Table 1) (Lusch & Vargo, 2014; Vargo & Lusch, 2008). Vargo and Lusch (2004) assert that S-D Logic is a “reorientation rather than reinvention”, indicating that adoption does not mean the negation of traditional core marketing concepts, such as the marketing mix, target marketing, market segmentation.

Table 1 Service dominant logic foundational premises and axioms
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The principal tenet of S-D logic is that service is the fundamental basis of exchange. ‘Service’ is an interactive process of “doing something for someone” that is valued. Service (in the singular) is the core concept replacing both goods and services, defined as “the application of specialized competences (operant resources—knowledge and skills), through deeds, processes, and performances for the benefit of another entity or the entity itself” Vargo and Lusch (2004: 2). Simply, service involves applying resources for the benefit of others or oneself. This mind-set is applicable to business organizations, government organizations, non-profit organizations, households, and individuals (Lusch & Vargo, 2014).

S-D logic rejects the common distinction between goods and services (i.e., alternative forms of products) and there is no good-versus-service winner or loser in S-D logic (Lusch & Vargo, 2006). Service is what is always exchanged; it represents the common denominator of any exchange process. Goods, when provided, are aids to the service-provision process (Vargo & Lusch, 2008). Table 2 presents the essentials of S-D logic.

Table 2 Conceptual transitions
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S-D logic views resources as anything an actor can draw on for support (Vargo & Lusch, 2004). Vargo and Lusch (2008) highlight the importance of operant resources (FP4) (as distinct from operand), which are typically human (skills and knowledge of customers and employees), organizational (routines, cultures, competencies), informational (knowledge about markets, competitors, and technology), and relational (relationships with competitors, suppliers, and customers) (Hunt & Derozier, 2004). Operand resources are typically physical (raw materials or physical products and static in nature, while operant resources are dynamic and can be rejuvenated and replenished. In S-D logic, knowledge is the operant resource, the foundation of competitive advantage and the only sustainable source of wealth. All social and economic actors are resource integrators (FP9) (Vargo & Lusch, 2008). Baron and Harris (2008) provide insights into the process of consumer resource integration through which consumers are effective participants in shaping their own experience. Jointly created value surpasses that which results from each actor alone.

Another S-D logic tenet is the conceptualization of value and value creation. Value is traditionally viewed as embedded in a product that is exchanged on basis of value-in-exchange. Vargo and Lusch (2004) propose that the firm cannot create value but can only offer value propositions (FP7) and then collaboratively create value with the participants (FP6). Value only occurs when the offering is useful to the customer or beneficiary (value-in-use), mediated and monitored by value-in-exchange and this is always value-in-context (Vargo & Lusch, 2008). This shift in the locus of value creation requires transforming our understanding of value from one based on outputs to one based on processes that integrate resources of different actors. Thus, all participants in the value-creation process, including customers, are dynamic operant resources, capable of creating value. Value is always uniquely and phenomenologically determined by the beneficiary (FP10), consequently customers must be the main source of value creation (Lusch & Vargo, 2006) and value is idiosyncratic, experiential, contextual and meaning-laden (Vargo, 2009; Vargo & Lusch, 2008). Figure 1 reflects a summary of these ideas.

Fig. 1
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Summary of S-D logic perspective

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Some relevant literature focuses on the refinement of S-D logic theoretical frameworks (Ballantyne & Varey, 2008; Vargo & Lusch, 2008), and co-creation and co-production (e.g. Etgar, 2008; Payne, Storbacka, & Frow, 2008; Xie, Bagozzi, & Troye, 2008). Most apposite to this chapter, Zwass (2010) proposes an inclusive taxonomy of Web-based co-creation. Though drawn upon multiple literatures, none of these have linked or investigated S-D logic within the context of the 3D3C worlds.

2.2 Service-Dominant Logic and 3D3C Worlds

Naturally, any application of S-D logic in 3D3C worlds cannot be made without proper consideration for the nature of the platform that produces the 3D3C environment. Very recently, Vargo and Lusch (2014: 3) emphasize that “the overall narrative of S-D logic, at least in its present state, becomes one of (generic) actors co-creating value through the integration of resources and exchange of service, coordinated through actor-engendered institutions in nested and overlapping service ecosystems.” The distinctive characteristics of 3D3C worlds and their similarities with real life allow actors within 3D3C worlds to co-create value through an integrated system of resources. Hence, we believe that the virtual experience can be better and more accurately understood by defining its nature and scope using a service-dominant-informed perspective. In order to show the relevance of S-D logic within 3D3C worlds, Table 3 links the S-D logic premises to the context of 3D3C worlds.

Table 3 Axioms of S-D Logic and its application to 3D3C worlds
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Since the nature of S-D logic is influenced by the type of environment and context within which services are designed, produced and delivered, the axioms of S-D logic as determined and influenced by 3D3C worlds context are as follows:

  • Axiom 1: service is the most fundamental basis of exchange. Within 3D3C worlds, customer, virtual retailers and the providers of 3D3C worlds exchange knowledge, skills and resources in order to provide an enjoyable virtual experience and improve service quality and offerings.

  • Axiom 2: customers are co-creators of value through continuous interaction between all actors. Within 3D3C worlds, interaction includes the entire community within which virtual retailers and 3D3C world providers must develop their understanding and knowledge of customers’ needs and wants. Such interaction and understanding will allow virtual retailers and 3D3C world providers to offer a remarkable virtual experience that facilitates customer engagement in value co-creation. This engagement is vital for all actors within the community.

  • Axiom 3: all actors, both social and economic actors, are integrators of resources through network integration that allows for value creation. Within 3D3C worlds, the role of both the virtual retailer and 3D3C providers is essential in driving and enabling the integration of resources to create value for both social and economic actors.

  • Axiom 4: value is always unique and determined by the beneficiary. Such value is dependent on the experience, the context and meaning constructed by the beneficiary and valued through that personal lens. In 3D3C worlds, the uniqueness of value is similarly determined by the beneficiary but their motives are shaped by the virtual context within which such experience and meaning are perceived and profoundly judged. Thus, the virtuality of 3D3C world is also an influencer of value and value uniqueness.

The process of value creation is rapidly shifting from a product-and firm-centric view to personalized consumer experiences (Prahalad & Ramaswamy, 2004). Prahalad and Ramaswamy (2004) posit that co-creation converts the market into a forum for dialogue among the consumer, the firm, consumer communities, and networks of firms. Such activities of co-creation are essentially driven by the experience as perceived and felt by actors within the market where interactions take place. In return, the type of marketing experience enhances and encourages further engagement in the process of value co-creation. Thus, understanding experiential marketing within different contexts is important to the process of co-creation.

3 Conceptualization of Experience in 3D3C Worlds Using S-D Logic

This section reviews the concept of experiential marketing, then uses S-D logic can to reframe experience marketing for improved relevance to 3D3C worlds.

3.1 Experiential Marketing

Although introduced in the business field by Pine and Gilmore (1998), it was Holbrook and Hirschman (1982) who theorized that consumption has experiential aspects (see also Babin, Darden, & Griffin, 1994). Holbrook and Hirschman (1982) felt that consumer research neglected important consumption phenomena involving fantasies, fun, aesthetic enjoyment, and emotional responses. The experiential view of marketing emphasizes the symbolic meaning, subconscious processes, and nonverbal cues resulting from consumption.

Experience marketing is a relatively recent concept popular in different fields such as tourism (Leighton, 2007), retailing (Grewal, Levy, & Kumar, 2009; Verhoef et al., 2009), branding (Brakus, Schmitt, & Zarantonello, 2009; Gentile, Spiller, & Noci, 2007), entertainment and arts (Petkus, 2004). Within this chapter, we will focus on customer experience within the retailing field.

Consumer and marketing research on experience marketing is still emerging (Schmitt & Zarantonello, 2013) with key contributions by Carbone and Haeckel (1994), Pine and Gilmore (1998), Gilmore and Pine (1997) and Schmitt (1999, 2003, 2011). Popular management books (e.g., Pine & Gilmore, 1999) emphasize that firms must focus on customer experience, differentiation strategies based on service and price are no longer sufficient. Schmitt (1999) differentiates experiential marketing from traditional marketing on four characteristics: a focus on customer experience, a focus on consumption as a holistic experience, customers are rational and emotional animals, and methods and tools are eclectic. However, despite contributions to advance theory, knowledge and understanding on experiential marketing (Arnold & Reynolds, 2003; Carù & Cova, 2003; Grewal et al., 2009; Verhoef et al., 2009), the literature is arguably still in its early stages toward the development of a comprehensive theory/framework of experiential marketing as determined and conditioned by different contexts and environments.

Experience marketing is generally based on experience economy theory. Pine and Gilmore (1998) claim experiences to be the fourth economic offering (see Table 4). These authors explain the progression of value from commodities to experiences by showing how experiences differ from goods and services. Table 4 explains the Pine and Gilmore (1998) perspective and emphasizes how economic value at a societal level has progressed through three stages, and that we are entering a fourth stage: the experience economy.

Table 4 Economic distinctions
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Note the existing diversified relevant terminology of the term ‘experience’ in marketing and management literature, such as “experience economy” (Pine & Gilmore, 1998), “experiential marketing” (Schmitt, 1999), “entertainment economy” (Wolf, 1999), “a dream society” (Jensen, 1999), “emotion economy” (Gobé & Zyman, 2001), and “attention economy” (Davenport & Beck, 2002).

Pine and Gilmore (1998) conceptualize experiences across two dimensions: customer participation (active/passive) and the connection, or environmental relationship (absorption/immersion), that unites customers with the event or performance. Pine and Gilmore (1998, 1999) define the four realms or so called “four Es” of a consumption experience: entertainment, educational, escapist, and (a)esthetic, by using these two dimensions (see Fig. 2). Experience marketing creates emotions in the consumer through entertainment, escape from the reality, education or giving them aesthetic objects or places to see (Pine & Gilmore, 1999). Companies can stage an experience whenever they engage customers in a personal, memorable way (Pine & Gilmore, 1998).

Fig. 2
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The four realms of a consumption experience. Source: Pine and Gilmore (1998: 102)

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With this background, we consider the potential for customer experience in the rapidly growing context of 3D3C worlds.

3.2 The Logic of Experiential Marketing in 3D3C Worlds Is Different

To extend the work by Pine and Gilmore (1998) to 3D3C worlds, Table 5 shows first how the four realms of the experience in the traditional offline context can fit into and directly be applied to 3D3C worlds. Second, areas of irrelevance or inconsistency are evident, so we raise questions concerning the relevance of the Pine and Gilmore’s (1998) conceptualization to 3D3C worlds. The critique is based on the following two arguments:

Table 5 The four realms of experience marketing by Pine and Gilmore (1998) and its applications to the 3D3C worlds
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  • First, Pine and Gilmore (1998) believe customer participation is one dimension that characterizes the experience, we agree that participation and interaction is vital but we reject the divide between passive and active participation. We believe all users are active participants creating their own experiences because even if they are not interacting with other users, they are interacting with the virtual environment itself or even with their own avatar. They affect the virtual experience by just being present in the 3D3C worlds because without this presence, the virtual world will be empty.

  • Second, according to Pine and Gilmore (1998), the connection with the environment is another dimension that characterizes the experience. Acknowledging the importance of this connection, nevertheless, we reject the divide between absorption and immersion. The virtual experience is all about immersion. Being an immersive context is one of the main features that define 3D3C worlds.

Clearly, differences between environments and contexts must be taken into account when marketers consider customer experience. Table 5 provides a detailed discussion on the Pine and Gilmore (1998) conceptualization, highlighting gaps that necessitate a fresh view about 3D3C worlds. S-D logic can provide a broader conceptualization of 3D3C worlds without limiting it to the Pine and Gilmore (1998) dimensions (i.e., passive/active versus absorption/immersion).

4 Re-framing Experience Marketing in 3D3C Worlds Using S-D Logic

Recent research stresses the importance of the virtual consumption experience (e.g. Jung & Pawlowski, 2014). Yet, less is known about the holistic nature of the virtual experience. The adoption of S-D logic enables us to devise a holistic perspective to overcome inconsistencies identified in the previous section. Building on Pine and Gilmore (1998), we offer a broadened view of virtual experience marketing guided by service-dominant logic. With value, as determined by the context (value in-context), in the centre of the virtual consumption experience, virtual experience can be understood across two dimensions (see Fig. 3):

Fig. 3
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The four pillars of a virtual experience

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  1. 1.

    Type of Interaction: where at one end of the spectrum lies individual interaction (i.e., interaction with the environment). At the other end of the spectrum lies Actor-to-Actor interaction (e.g., interaction with other avatars; interaction with in-world companies).

  2. 2.

    Type of Consumption (Context of Interaction): where at one end of the spectrum lies virtual consumption, at the other end, real life consumption.

4.1 Type of Interaction: Individual Versus Actor-to-Actor Interaction

Two types of interactions form the basis of the virtual experience that will lead to resource integration within 3D3C worlds: individual where users interact with the virtual context and actor-to-actor interaction where users interact with different actors. From an S-D logic perspective, all social and economic actors are resource integrators (FP9/axiom 3). There are three different actors: customers, virtual retailers and providers of 3D3C worlds. The three actors are involved in economic exchange through resource-integration. Consistent with S-D logic, the traditional divide between consumers and producers is not applicable within the virtual context.

For individual interaction, the contents of a 3D3C world such as Second Life are created by the users. Users are empowered to freely create and control their environment. “To me, that’s the beauty of Second Life: all we’ve created is a platform, an almost empty world; where we got lucky is in the fact that you [users] came along and breathed life into it. If Second Life is a world at all, it’s because you’ve created it.” (Philip Rosedale, quoted in Rymaszewski et al., 2006: iv). Each consumer in Second Life brings a set of creative skills and capabilities that, when effectively used, produces superior resources/services/offerings to the Second Life community (all other actors). Linden Lab has embraced the interactive consumer through the open nature of its user platforms. Interactions with the context range from interacting with existing offerings simply to enjoy them or to create something new, e.g., choosing and clothing an avatar from an existing range, to full scale adaptation and creation of entirely new virtual goods and landscapes. Virtual worlds afford a much greater opportunity for co-creation, since the players actually create the world (Zwass, 2010).

Generally, virtual worlds allow people to come together virtually and engage with each other. Hence, the second type is actor-to-actor interaction. Vargo and Lusch (2011) use a generic “Actor-to-Actor” (A2A) designation, emphasizing that actors are constantly dropping and forming new connections; contexts, thus are always in flux and the experience of value is dynamic. This is evident in the context of 3D3C worlds. Fetscherin and Lattermann (2008) argue that cooperation and communication are the most important determinants of virtual worlds. Similarly, Papagiannidis and Bourlakis (2010) confirm that the distinctive active-avatar, participatory-based approach provides a unique experience wherein users can co-create their experience whilst fulfilling needs for self-expression, identity, and social interaction with others. This is relevant to the concept of the customer as always a collaborator; both a foundational premise (FP6/axiom 2) of S-D logic and a main component of the virtual experience.

4.2 Context of Interaction: The Interplay Between Virtual and Real Life Contexts

The context of interaction is the second dimension that shapes the virtual experience. First, virtual consumption is one of the popular activities that attracts different customers. Much purchasing in 3D3C worlds is of digital goods, fulfillment is immediate and these goods are also mostly ‘consumed’ in the 3D context. The distinct characteristic of virtual goods and services (virtual items, characters, currencies, premium memberships) is that they do not have a clear atomistic equivalent or component in them (Fairfield, 2005), and they can only be consumed and have value inside a specific virtual environment. Kish (2007) indicates that trusted relationships, both personal and professional, emerge quickly in these environments and can carry over into the real world. Thus, using a holistic approach, dictates that we go beyond the virtual consumption context to consider the interplay with real life.

Second is the real life context. The virtual experience (e.g. behavior and activities within the 3D3C world context) is not isolated from the rest of the electronic space or the real world itself (Castronova, 2005), there is interplay between virtual and real-world purchasing behavior. Although virtual products do not have physical existence; they exist digitally and socially (Brey, 2003), appearing to us as physical objects that we interact with in a manner similar to real physical objects (Brey, 2014). Moreover, Jung and Pawlowski (2014) suggest that users see their virtual activities as reflecting their social experiences in real life. Nah, Eschenbrenner, and DeWester (2011) demonstrate that pleasurable experiences with a brand in the virtual world translate into a willingness to also engage with the brand in the offline setting and Shelton (2010) finds motivations for using Second Life correlate with the purchasing of both virtual and real-life products. Bainbridge (2014) supports this user perception that virtual consumption is somehow equivalent to real-world consumption (Jung & Pawlowski, 2014), explaining that 3D3C worlds are larger than they might seem, because the social life they support extends to wikis and other forms of online communication and also to memory. Nevertheless, there are differences, for example, virtuality differentiates hedonic consumption in the virtual context from the real-world context due to the relaxation/removal of constraints (e.g. cultural, social, personal and structural) and users more freely express their individuality within a complex world (Bainbridge, 2014; Jung & Pawlowski, 2014).

To sum, it is important to consider the holistic customer experience taking into consideration all possible types of interactions between all actors that might take place in different contexts. From this perspective, the interaction between the extremes of the two dimensions as in Fig. 3 produces the following four pillars:

  • The first pillar is concerned with ‘esthetic’ resulting from the synergy between individual interaction and virtual consumption. The value in context produced by this segment stems from the focus on the self and personal consumption of the environment where consumers engage freely with their virtual environment and construct the experience they enjoy most (see Fig. 4). This allows customers to experience the virtual environment the way they want. This segment represents the simple form of interaction within 3D3C worlds. Actors within this segment are interested in consuming the beauty of the virtual context over socializing with other actors. They appreciate the effort and time taken in creating the virtual context such as Hype Park, creative architecture, attractive store designs. Hence, as an ‘escapist’ shopping for virtual products, the first thing that will attract them to virtual stores is beautiful, creative and novel designs.

    Fig. 4
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    The ‘esthetic’: interacting with and consuming the beauty of the virtual context

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  • The second pillar concerns the interface between actor-to-actor interaction and virtual consumption. The value in context is shaped by the ‘escapist’ collaborative consumption of virtual products. In addition to virtually consuming the environment (i.e., ‘esthetic’ grouping), actors in this segment are interested in virtual ownership of digital products as well (see Fig. 5). Hence, actors within this segment could be both ‘escapist’ and ‘esthetic’. Interaction within this segment allows actors to express their individuality and virtual persona as they desire. Such interactions influence the way actors feel about their avatar appearance or the appearance of other possessions such as cars, islands, furniture, houses, etc. Offering aesthetically pleasing, up-to-date stores and an appropriate variety of digital products represents a straightforward approach for virtual retailers to attract actors within this segment.

    Fig. 5
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    The escapist: buy virtual products for avatars, this store sell virtual shoes that have programming for dances or other movement

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  • The third pillar concerns fulfilling personal needs for real products. Value-in-context is shaped by a customer desire to generate their own experience and fulfillment through the consumption of real products, such as books or music but through a virtual world (see Fig. 6). The customer may have fulfilled some other need concurrently, such as, ‘aesthetic’: enjoying the architecture and design of a virtual bookshop and/or ‘escapist’: buying virtual books to decorate his/her virtual house. Paradoxically, this mixture of virtual and ‘real’ consumption may mean these consumers are especially engaged within 3D3C worlds as they are choosing to stay within the virtual to fulfill ‘real world’ consumption. This is an interesting segment for virtual retailers as providing for such duality of consumption can extend the present 2D online store experience and the offline bricks and mortar experience. Virtual retailers might consider providing such virtual store experiences within bricks and mortar stores, with all the capacity for offering unique experiences and settings, e.g., for bookstores, interactions with historical writers and environments, or re-creation of historical libraries within which to make purchases (imagine interacting with a Greek philosopher in the library at Alexandria).

    Fig. 6
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    The fulfillist: fulfilling personal needs for real products such as listening to music in-world and downloading to your computer

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  • The fourth pillar is related to the actor-to-actor interaction as influenced by real life consumption. The value-in-context stems from the ‘realist’ collaborative consumption through the interaction of actor-to-actor to produce real products for real life consumption and/or to host events for real life causes (see Fig. 7). Such products are likely to be simulations, or related to design or fashion. There is a possible link here with the second pillar as virtual consumption can affect, motivate and inform real life consumption (Jung & Pawlowski, 2014). This segment represents the highest and most complicated form of interaction given the interplay with the real life context.

    Fig. 7
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    The Realist: hosting events for real life causes such as making strides against breast cancer to raise awareness about breast cancer

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4.3 Value in Context: Co-creation of Experiential Value

We have consistently acknowledged throughout this chapter that an S-D logic approach means that firms cannot deliver value; they can only offer a value proposition as an invitation to engage with the firm (and potentially other actors) for the co-creation of value. Vargo (2011) claims the closer the relationship between customers and providers, the more the emphasis of the value proposition can be placed on value-in-use. From an S-D logic perspective, value is always uniquely and phenomenologically determined by the beneficiary (FP10/axiom 4). Therefore, value-in-context is the center of the virtual experience, particularly, we also acknowledge that experiential value is a fundamental concept in experience marketing (Schmitt & Zarantonello, 2013) and that such experiential value resides in seeking out and processing information, and also importantly in the experience of consumption (Schmitt & Zarantonello, 2013). So, we argue that within 3D3C worlds, experiential values are achieved through different types of interaction in both virtual and real life contexts. Verhagen, Feldberg, Van den Hooff, Meents, and Merikivi (2011) confirm that experiential value is a strong and direct determinant of users’ satisfaction with virtual worlds, but Barnes (2011) emphasizes that whilst hedonic interactions are important, this is not at the expense of utilitarian benefits. Similarly, we posit that, in 3D3C worlds both types of values (utilitarian and experiential) mutually affect each other and the absence of either will negatively affect the virtual experience; however, it is the presence of the experiential benefits that provides a remarkable experience.

To conclude, we claim a particular relevance of S-D logic for experience marketing as it provides a broad-spectrum perspective that integrates: the type of interaction (i.e., the co-creator of the experience who interacts either the virtual environment and/or with other actors), the context of interaction (i.e., the interplay with real life: how the virtual might affect the real life context), and how these two dimension offer experiential values gained through immersing in the context of 3D3C worlds. Retail (and other) organizations can reflect on the possibilities offered by each segment to produce compelling value propositions, bearing in mind that they are not mutually exclusive.