Question

Designing a marketing mix (product, price, placement and promotion) is one of the critical challenges for marketers, especially implementing a balanced combination of each component. This is even more challenging for services products because of their intangible characteristics. So/For this reason, marketers need the “extended marketing mix” components (for example people, process, and physical evidence) for services product marketing. Considering the current crisis created by the Covid 19 virus, write an essay on how service producers in Australia (for example Commonwealth Bank or Flight Centre) should redesign their services marketing mix.

Answer 1

Asia-Pacific and Middle Eastern airport revenues are under tremendous pressure three months into 2020 amidst the impact of the COVID-19 outbreak. China and other Asian countries made significant efforts to contain the transmission of the virus however, as we know, it has spread to other regions of the world. We can expect the same pressure there and, by now, a global impact

The airline industry has been hit extremely hard by the COVID-19 crisis Airport revenue generation is directly linked to traffic levels. The flight bans and cancellations are leading to less flights, hence less aeronautical revenue coming in. Unlike other players in the aviation industry, when traffic demand falls, airports have limited ways of reducing costs. The cost of operating airport infrastructure remains the same, and airports can’t close down or relocate terminals and runways. With unprecedented consequences, many airlines have grounded all, or almost all, of the planes in their fleet. Several are now flying passenger aircraft as freighters. Most of the commercial, network, and operations teams are still scrambling to repatriate passengers and decide which flights to keep. Meanwhile, executives are in touch with governments, employee representatives, and suppliers to formulate responses under very dynamic circumstances

virus progression and government response

· government action for citizens with specific impact of travel

· virus severity and spread

· specific travel restrictions

· announced or expected duration of restrictions

· conditions for re-opening (such as: health screening, social distance, etc)

the flight plan for the new normal takes into account various air travel demand scenarios (which are in part a function of the duration of the COVID-19 Crisis) and airline market structure scenarios (shaped by, for example, airline failures, government intervention, and consolidation).

flight plan to succeed in this new normal

· demand recovery scenario (consumer sentiment and behaviour)

· market structure scenario

· flight plans in the new normal

DURATION OF THE COVID-19 CRISIS

The most critical question today concerns the duration of the crisis in light of government responses and the progression of the virus. While we would all like to believe that the crisis will resolve within a matter of weeks, the reality is that we don’t yet know how long it will last. What’s more, the duration is likely to differ by region and by country.

So, for now, we are considering various scenarios and observing key indicators to learn which of those scenarios are most likely to occur. For example, we are tracking the spread of the virus by country and gauging the responses by governments, including the type and duration of travel restrictions and the specific conditions under which they might be relaxed. We are also monitoring indicators that measure consumer sentiment, such as internet searches. Also, we expect that governments might begin imposing specific limitations for inbound and outbound passengers, including requirements before boarding (similar to the security measures put in place after terrorism events), such as mandatory health screenings or certificates.

The flight plan for flight centres to succeed in the new normal
Virus progression and government response	Demand recovery scenario	Market structure scenario	Flight plan in new normal
· virus severity and spread · specific travel restriction · expected duration of restriction · conditions for re-opening (health screening)	· overall and by segments(business vs leisure) and by markets. · impact of covid-19 on megatrends, such us ways of working and sustainability · level of trust and safety concern.	· Financial health of airlines at onset and actions taken to manage through the crisis( eg: liquidity management) · Level and type of financial support by government, banks and investors, joint ventures, and partnership	· start with optimizing or restructuring the network and fleet. · follow with a whole airline transformation using a zero based approach such as commercial, operations, and support functioning sizing. · financial restructuring(govt support and capital injection) · industry wide action · prepare for rebound

According to the flight plan, airlines should take the following actions:

· They should start by determining the optimal size and dimensions of their networks and fleet, and they should do so within the next few weeks. They should make big decisions—including which fleet types to recommission first and which routes are most likely to recover—on the basis of several demand and market structure scenarios and while optimizing for free cash flow. Digital Support Tool can provide network and fleet teams with the data-driven, granular simulations that help companies make the right big decisions on short notice.

· At the same time, airlines should consider M&A and consolidation opportunities. We expect that leading airline groups will be reviewing options, including potential divestitures and the sale or purchase of minority equity stakes.

· The next step is to resize and restructure the operating model and organization using a zero-based approach, which can be done in a matter of weeks. For example, BCG helped one global network carrier to redesign the entire organization—including process redesign, organization size, and structure—in four weeks. The same approach can also be applied to procurement (in order to manage external providers) and technology. This work adds value that will remain well after the crisis is over.

· Airlines should also prepare for ramping up, once airports and countries reopen. Our work with several leading carriers reveals that the period of ramping up will be even more challenging and dynamic than the one for ramping down. Network redesign (which typically occurs from 4 to 13 times a year, with time to subsequently validate and hand over the schedule to resource providers) will now likely have to be done weekly. What’s more, the time between developing and implementing the plan may be only a week or two—and will have to be accomplished despite the displacement of aircraft and staff. Designing this process, and again leveraging digital tools to make the right tradeoffs, will be a major challenge that airlines will need to address as soon as possible.

· Finally, of course, finance teams will need to be closely involved to protect cash levels, capture revenues as soon as possible, and delay cash-outs as much as possible. Airlines should establish a project management office to manage cash until the environment stabilizes and regular financial processes and routines can be implemented once again.

These are turbulent times for airlines, yet the industry’s response so far has been nothing short of impressive. Companies that take a data-driven, action-oriented, and digitally supported approach will have the best chance to emerge stronger from the COVID-19 crisis.