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In the 1970s, marketing scholars faced a troubling observation: the dominant models of the day, built around the marketing of physical goods, seemed to break down when applied to services. A haircut, an airline flight, or a bank account did not behave like a packaged product. The core tension that gave rise to services marketing as a distinct subfield was this: either services were a marginal exception to the goods-dominant logic, or they demanded a fundamentally different way of thinking about exchange. The frameworks that followed—IHIP Characteristics, the Nordic School of Services, the Expanded Marketing Mix (7Ps), SERVQUAL, and Service-Dominant Logic—represent a half-century of debate over that question. Each framework responded to its predecessors, sometimes by narrowing, sometimes by broadening, and ultimately by transforming the very definition of marketing itself.
The first systematic attempt to carve out a separate space for services was the IHIP framework, which crystallized in the late 1970s and early 1980s. IHIP stands for Intangibility, Heterogeneity, Inseparability, and Perishability—four characteristics that, its proponents argued, distinguished services from goods. A service cannot be touched or stored (intangibility); its quality varies across providers and occasions (heterogeneity); production and consumption often happen simultaneously (inseparability); and an unused seat on a flight is revenue lost forever (perishability). For about fifteen years, IHIP served as the dominant lens for teaching and researching services. It gave managers a vocabulary for why service operations needed different strategies: because you cannot inventory a service, you must manage capacity; because quality is variable, you must invest in training and standardization.
Yet even as IHIP gained traction, its limitations became apparent. Critics pointed out that the four characteristics were not unique to services—a painting is intangible in its aesthetic value, a handcrafted good is heterogeneous, and a perishable good like fresh produce shares perishability. More fundamentally, IHIP described what services were not (not tangible, not storable) rather than what they were. It treated services as a deviation from a goods norm, reinforcing the very goods-dominant logic it sought to escape. By the mid-1990s, the framework had largely receded from active theoretical use, though its practical insights continued to inform operations management. The IHIP era left the subfield with a crucial unresolved question: if services are not simply goods with a few extra wrinkles, what positive theory could replace the deficit-based view?
While IHIP was still being refined, a group of Scandinavian scholars—often called the Nordic School of Services—began developing an alternative that shifted the focus from static attributes to dynamic processes. Emerging in the early 1980s and continuing to the present, the Nordic School argued that the core of service is not a set of characteristics but an interactive process between provider and customer. Rather than asking “what makes a service different from a good,” they asked “what happens when a customer participates in the production of value?” This led to concepts such as the service encounter, the service system, and, most influentially, co-creation of value.
The Nordic School directly reacted against IHIP’s static, attribute-based approach. Where IHIP saw inseparability as a problem to be managed, the Nordic School saw it as an opportunity for relationship building. Where IHIP emphasized the perishability of capacity, the Nordic School emphasized the ongoing nature of customer relationships that extend far beyond a single transaction. This relational turn did not simply add a new dimension to IHIP; it reoriented the entire inquiry. The Nordic School’s emphasis on process and interaction laid the groundwork for later frameworks, particularly Service-Dominant Logic, which would absorb and generalize its insights. Today, the Nordic School remains an active tradition, especially in Europe, where it continues to inform research on service design, customer experience, and value co-creation.
Alongside the Nordic School’s theoretical reorientation, two parallel frameworks emerged in the 1980s that aimed to give managers practical tools for service marketing. The first was the Expanded Marketing Mix, commonly known as the 7Ps. Building on the traditional 4Ps (Product, Price, Place, Promotion), Booms and Bitner added three new elements: People, Process, and Physical Evidence. People recognized that employees and customers themselves shape the service experience; Process addressed the procedures and flow of service delivery; Physical Evidence covered the tangible cues (like a clean waiting room or a polished website) that signal quality. The 7Ps framework did not challenge the goods-dominant logic of the marketing mix; it simply extended it to cover service-specific factors. It coexisted with IHIP and the Nordic School, offering a checklist that managers could use to design service offerings.
The second major managerial framework was SERVQUAL, introduced by Parasuraman, Zeithaml, and Berry in 1985. SERVQUAL operationalized service quality as the gap between customer expectations and perceptions across five dimensions: Reliability, Assurance, Tangibles, Empathy, and Responsiveness. It provided a standardized survey instrument that allowed firms to measure where service fell short. SERVQUAL’s gap model was a direct response to the challenge of heterogeneity—if service quality varies, how can you measure and improve it systematically? The framework quickly became the dominant tool for service quality research and practice.
Yet SERVQUAL also drew criticism, especially from the Nordic School. Nordic scholars argued that SERVQUAL’s focus on the outcome of service (the gap between expectation and perception) missed the processual nature of service quality. They proposed an alternative model that distinguished between technical quality (what the customer receives) and functional quality (how the service is delivered). This debate between the Nordic School’s process-oriented view and SERVQUAL’s outcome-oriented measurement remains unresolved. Both frameworks remain active today: SERVQUAL is widely used in industry for benchmarking, while the Nordic School’s process view informs service design and experience management. The 7Ps, meanwhile, has become a standard pedagogical tool, though it is often criticized for being a mere extension of the goods-dominant marketing mix rather than a fundamental rethinking.
The most transformative framework in services marketing arrived in 2004 with Vargo and Lusch’s Service-Dominant Logic (S-D Logic). S-D Logic did not simply add another perspective; it rejected the entire goods-versus-services dichotomy that had structured the field for three decades. Its central claim was that all exchange—whether of goods, services, or ideas—is fundamentally about the application of specialized skills and knowledge (operant resources) for the benefit of another party. Goods are merely distribution mechanisms for service provision. In this view, a car is not a product but a bundle of services (transportation, safety, status) that the customer activates through use. Value is not embedded in the output but co-created through interaction between provider and customer.
S-D Logic absorbed the Nordic School’s emphasis on process and co-creation, but it went further by generalizing those ideas to all marketing. It also directly challenged the Expanded Marketing Mix and SERVQUAL by arguing that the marketing mix is a remnant of goods-dominant thinking—it treats the firm as the active creator of value and the customer as a passive recipient. S-D Logic proposed a set of foundational premises (later refined into axioms) that reframed marketing as a collaborative, resource-integrating, and value-co-creating activity. The framework sparked an enormous wave of research, not only in services marketing but across the entire marketing discipline.
Despite its influence, S-D Logic is not without its critics. Some argue that its axioms are too abstract to guide empirical research or managerial practice. Others contend that it overstates the novelty of its ideas, pointing to earlier work in the Nordic School and in relationship marketing. Nevertheless, S-D Logic has become the leading theoretical paradigm in services marketing, and its concepts—value co-creation, service ecosystems, resource integration—now appear routinely in journals and textbooks.
Today, the five frameworks from the timeline occupy different roles in the subfield. IHIP is largely historical, though its four characteristics still appear in introductory textbooks as a starting point for discussion. The Nordic School remains a vibrant research tradition, especially in Europe, where it continues to develop process-oriented theories of service and relationships. The 7Ps and SERVQUAL are widely used in practice and in teaching, providing concrete tools for managers. S-D Logic is the dominant theoretical framework, shaping the direction of academic research.
What do the leading frameworks agree on? There is broad consensus that services are not simply goods with added features; that customer participation is central to value creation; and that relationships matter more than discrete transactions. The disagreements are more subtle. One ongoing debate concerns the appropriate level of abstraction: S-D Logic’s proponents argue that the field needs a unifying paradigm, while critics worry that such a broad framework loses the specificity needed for actionable insights. Another debate revolves around measurement: SERVQUAL’s gap model and the Nordic School’s process view offer competing accounts of service quality, and no synthesis has fully resolved the tension. A third debate questions whether the shift to S-D Logic has truly replaced the goods-dominant mindset or merely renamed it. These disagreements keep the subfield lively, ensuring that services marketing remains a domain where frameworks coexist, compete, and occasionally transform one another.