Deakin University – MMK251 – Services Marketing – DI 74.5/100

Topic: Students are required to source and apply services marketing theory and frameworks to an organisation and its operating environment in order to overcome ‘real-world’ marketing problems

  1. Choose a ‘service’ organisation in Australia affected by a macro-environmental factor(s) and evaluate the impact on customer demand for its services.

66.65% distributed on total GDP by services industrial in Australia 2018 (Statista, 2018) has provided the most critical position of it on the economic growth in Australia. Compared with the average increase by 3.4% in 2017, Australia has reached average the annual real GDP growth of 2.8% between 2019 and 2023 (Tang, 2018). Australia’s economy has reached the top of the darkness period at the end of 2019 and continues to fall nearly 1% in 2020 (Roach, 2020) because of the bush fires disaster. The natural disaster such as bushfire is the macro environment factor controlling the business predictions. In the PESTEL analysis, the macro environment factors include physical environment factor, which plays a huge part in the performance of any businesses (Toppr). In the bush fire crisis, the retailer reported a range of impacts due to the decreasing number of customers, however, food services as the only category has slightly higher at 0.4% raised (Chau, 2020). Usually, customer purchasing behaviors on food services do not impact due to natural disasters but rather on problems of price fluctuation (Netti, 2019). For instant, customers need to pay up from 20 cents to 50 cents for vegetable, milk, and meat during the bushfire crisis. It, therefore, makes customers less confident about purchasing more. However, the economic crisis resulted from natural disasters is not having any signs of stopping, Australia citizen has faced another disaster called Sars-COVID-2 influenza pandemic, spreading from Wuhan China at the end of 2019. Two disasters in two year – such a short time, have had significantly damaging impacts on Australian purchasing behavior on retailing services such as Coles stores. They felt out of control of many aspects of the pandemic, but they have selling power when they chose to stock up things. The feeling of tremendous leads people to worry about regret, not buying somethings (Novemsky, 2020). Therefore, even the Australia stock index has decreased by more than 27%, Cole’s supermarket stock has slightly raised because of the panic-buying of essentials and another household due to the outbreak and subsequent lockdown (Marsh, 2020).

  1. What strategies are currently in place to manage this impact?

During the pandemic crisis, things keep retailers such as Coles stores remaining and maintaining their business are sticking with loyal customers or frequent ones by corporate social responsibility (CSR) activities. Primarily, it is unambiguously selfless and consumer-focused such as free delivery services, free recycle masks, hand wash, cleaning stores, and medical treatment for staff. The strategy Coles store applied is to increase customer satisfaction and manage the communication crisis by understanding customer psychological needs and values. In the three-stage model of service consumption, Coles is always the leader of Australia market before the pandemic and they keep updating and expanding to reduce the damages of revenue at more several levels. In the pandemic crisis, stage two is to purchase and consume the most on the services purchasing process because it can make the best use of the supplementary services and reduce a managed cost. More specifically, Coles stores pay more attention, especially on service expectations, role and the cultivation of a possible mood. Going to supermarket requires customers to touch surfaces shared by other people such as trolleys, baskets, and the self-service check out. Hence, due to the self-protection for customers and staffs, Coles annotates to limit the number of customers entering each store. Therefore, customer may be asked to queue when they arrive. Supermarkets also increase efforts to clean up everything from trolleys to conveyor belts (Hayne, 2020). Coles also supports to supplementary services such as delivery, online shopping, and expands the opening hours to satisfy their customers (Coles). Besides, Coles stores make the best use of information technology when they frequently update their policy changes during pandemic on the website; therefore, customers can feel easy to keep track of the updated information. They also use the site to communicate their CSR actives, including Coles’s credit card, personal loans and insurance policy, refund and return policy, the new career opportunities, and donations to support the communities. The functional flexibility on the services purchasing process, and applying the marketing mix, especially the physical evidence and the process of service production, helps Coles peg the market and customer trust during this pandemic crisis period. Consequently, this company has increased the brand reputation into the customer perceptual and forced them to make purchasing again.

  1. Devise additional strategies that management can apply to further manage this impact and the customer demand for its services.

With so much uncertainty about how COVID-19 developing in the weeks and months ahead, the growing effects of this pandemic on the global economic, consumer spending, and business investment will be highly significant. The big service retailer as the Coles store need to prepare for any worst situation and keep supporting to the community. Coles store can improve supplementary services innovations. This chain of stores can follow another big retailer such as Walmart, Dollar General, Whole food, Albertsons to create reserving exclusive shopping hours for at-risk groups in order to ensure they can reduce stress and depression because of getting sick. Moreover, the Coles store can bring people together during the social distancing period by making use of their website, Facebook, or Twitter. They can offer resources to maintain social connections and goodwill so customers can use a website to post memes, positive stories, in-home exercise and cooking tips, playlist or post cast recommendation, keep communication open and upbeat with customers.

 

  1. References

Chau, D 2020, ‘Retail sales hurt by bushfire crisis, but no sign of coronavirus yet’, ABC News, 6 Mar, p.1, retrieved 7 April 2020, < https://www.abc.net.au/news/2020-03-06/retail-sales-january-bushfire-crisis-coronavirus/12032998>

Hanye, J 2020, ‘How to minimize your coronavirus risk while shopping at the supermarket’, ABC News, 31 Mar, retrieved 7 April 2020, < https://www.abc.net.au/news/2020-03-31/coronavirus-supermarket-risk-covid-19/12103374>

Marsh, S 2020, ‘Wesfarmer to sell five per cent stake of supermarket giant Coles’, 9News, 30 March, p.1, retrieved 7 April 2020, < https://www.9news.com.au/national/wesfarmers-to-sell-five-per-cent-stake-of-coles-supermarkets-australia-finance/e720ed68-79f1-4e95-809b-d040fe6c5608>

Netti, G 2019, ‘Purchase of consumer behavior in the event of natural disasters, shows new cultural value’, International Journal of Business and Management, vol 14, no 2, pp. 141-144, doi: 10.5539/ijbm.v14n2p141

Novemsky, N 2020, Why a pandemic leads to panic buying, Yale Insights, retrieved 7 April 2020, < https://insights.som.yale.edu/insights/why-pandemic-leads-to-panic-buying>

Roach, J 2020, ‘Australia’s wildfires will lead to GDP falloff in the billions, AccuWeather predicts’, AccuWeather, 21 January, p.1, retrieved 7 April 2020, < https://www.accuweather.com/en/business/australias-wildfires-will-lead-to-gdp-falloff-in-the-billions-accuweather-predicts/665738>

Statista 2018, Australia distribution of gross domestic product (GDP) across economic sector from 2008 to 2018, Statista, retrieved 7 April 2020, < https://www.statista.com/statistics/375558/australia-gdp-distribution-across-economic-sectors/>

Tang, E 2018, 2017-2018 GDP growth rate of 2.9% confirms the resilience of our economy, Australia Government, retrieved 7 April 2020, < https://www.austrade.gov.au/news/economic-analysis/2017-18-gdp-growth-rate-of-2-9-per-cent-confirms-the-resilience-of-our-economy>

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