Blog 3

Service provider:  Save on Foods

Type of service: Grocery

Date: Over the course of several years up until present day

Price: Approximately $500 per month

Overall Satisfaction: 6.5/7

Chapters covered: 4 – 6

Topics covered (page numbers in textbook): Reliability (89); Recovery (99); Management listening to customers (139); Relationship Marketing (147); Customers as Friends (148); Special Treatment Benefits (154); Human Resources Management Benefits of Customer Relationships (156); Switching Costs (162); Level 3 – Customization Bonds (164-165)

Likelihood of Return: 7/7

As you will see from reading this article, Save On Foods has built a strong relationship that will definitely result in several purchases down the road; as of yet they have never given a reason to stop regularly purchasing from their store.

Encounter(s)

My family has been shopping at Save-on-Foods for our weekly groceries as long as I can remember.  Over the time that we have spent there the entire staff has made outstanding efforts to cultivate a relationship that will go on for many years to come.  Unlike some other grocery stores in town Save On has realized the value in retaining current customers over the long term rather than constantly seeking new customers (Zeithaml, Bitner, & Gremler, 2013, p. 147).

Briefing

As sales at grocery stores decline over time the industry becomes more and more competitive, with sales dropping 4-6% year over year as people find other ways to source their food the grocery store environment had become more competitive as stores struggle to differentiate themselves (C. Barnes & Co., 2013).  It is becoming increasingly challenging to get customers to purchase more products as they are much more likely to be budgeting and cutting back in these tough times.  As customers are bombarded by promotions from the public grocery stores must find new ways to separate themselves from the competition as they compete for a larger piece of an ever-shrinking pie (van Ittersum, Pennings, & Wansink, 2010, pp. 90-91).

Actions of Management

Save On values direct relationships between management and customers, to realize a maximum benefit from these relationships they often have their management team down on the floor interacting and helping customers, it adds “clarity and depth to managers’ understanding of customer expectations and needs” (Zeithaml, Bitner, & Gremler, 2013, p. 139) and also allows customers to give direct feedback to management so that any adjustments that might be necessary are relayed directly to the people with the power to make the decision.

Management is also forward-thinking enough to see past single customer interactions and instead see the bigger picture of the customer relationship.  For example, when a customer complains that the fruit they purchased on their visit to the store last week went moldy prematurely some stores might question this or put up resistance to giving a refund.  Instead, Save On management simply refunds the money without even asking to see the rotten fruit, creating a much more pleasant experience for everyone involved.  This is an excellent example of a strong service recovery that gives customers added confidence when they are purchasing from the store (Zeithaml, Bitner, & Gremler, 2013, p. 99).

Employees

Having worked for Thrifty Foods for some time I have some insight as to the differences between how the two companies are operated (much of which has changed since Thrifty Foods was bought out.)  The part that I find the most interesting is the differences in “reliability which has been consistently shown to be the most important determinant of perceptions of service quality” (Zeithaml, Bitner, & Gremler, 2013, p. 89) between the two companies.  This translates to customers being able to trust a firm to provide a consistent experience across several customer interactions.

Interestingly, the source of this consistency has to do heavily with the customer relationships that Save On has cultivated over time.  As a result of these customer relationships employees have built customers help to make their job easier; otherwise known as coproduction of the service (Zeithaml, Bitner, & Gremler, 2013, p. 156).  For example, when I am in the store I know exactly what to ask the employees for when I am looking for something specific which in turn makes it easier for the employee to provide a higher level of service.  The most noticeable effect of these positive relationships is employee retention; over the time that I have been going to Save On I have only interacted with a reasonably small group of employees which again results in a smoother experience for employees and customers alike (Zeithaml, Bitner, & Gremler, 2013, p. 156).  Other stores see front line employees as transient and move quickly between them over time which in the long run has a very negative effect on employee-customer interactions.

Customer Focus

As our family has continued to patronize Save On over the years we have developed close friendships with some of the employees and they have gained intimate knowledge of our family and our needs from their store (Zeithaml, Bitner, & Gremler, 2013, p. 148).  From these relationships we have received special promotions that would not be available to other customers, this serves to continually strengthen these ties to the firm.  Since Save On began their sponsorship of the local arena we have been given early access to some events and concerts; by leveraging this core differentiator (arena sponsorship) to provide special treatment benefits they have been able to further strengthen bonds between Save On and their customers (Zeithaml, Bitner, & Gremler, 2013, p. 154)

This customer intimacy and the resulting customization bonds make it very challenging to switch to another grocery store because these relationships would have to be re-created which would result in a loss of the one-to-one solutions that Save On already provides (Zeithaml, Bitner, & Gremler, 2013, pp. 164-165).

Conclusion

As a result of all of these efforts Save On Foods has successfully prevented our family from considering other grocery stores in an industry where switching costs are exceptionally low (Zeithaml, Bitner, & Gremler, 2013, p. 162).  This willingness to provide an extra level of service has made Save On our first choice by far when shopping for groceries of any kind.


 

Works Cited 

C. Barnes & Co. (2013). Barnes Reports: Grocery Stores Industry Capital & Expenses Report. United States: C. Barnes & Co. Retrieved from https://libsecure.camosun.bc.ca:2443/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=84382841&site=ehost-live

van Ittersum, K., Pennings, J., & Wansink, B. (2010). Trying Harder and Doing Worse: How Grocery Shoppers Track In-Store Spending. Journal of Marketing, 74(2), 90-104. Retrieved from https://libsecure.camosun.bc.ca:2443/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=47927918&site=ehost-live

Zeithaml, V., Bitner, M., & Gremler, D. (2013). Services Marketing. New York, NY: McGraw-Hill.

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