Impact of COVID-19 on People-Processing vs. Information-Processing Services: Case of Food Service and Banking Industries

Abstract

Although COVID-19 pandemic is a health crisis, it has and will continue to have serious repercussions on business activities and the global economy, as well as a strong societal impact. This chapter focuses on comparing and contrasting the banking services sector and the food service industry in Turkey in relation to how these industries were impacted by and responded to the crisis caused by COVID-19 pandemic. Banking services are information-processing services and the food service business for the most part is people-processing. The distinction is that information-processing services can be provided both face-to-face in a high-contact fashion, and online/through the phone in an untact fashion. People-processing services, however, are mostly high-contact services where the person receiving the service must be present when the service is provided (Lovelock in Journal of Marketing 47: 9–20, 1983). Naturally, this distinction creates a difference in the response of these two different types of services to the COVID-19 crisis. This chapter analyzes the economic and social developments during the COVID-19 outbreak in Turkey along with current and expected future action steps by the government and NGOs. Findings suggest that innovative products, market-linking capabilities and investment in digitalization and trust building activities are effective in dealing with the new normal.

Authors’ Insight

This is undoubtedly a very difficult time with all of its uncertainties and unknowns. Projections and forecasts are attempted as more and more data becomes available, but it is still very hard to predict how the pandemic will progress and how much longer the economy will have to continue to fight against it. As the “new normal” is unfolding, we are seeing that both the banking and the food service industries are increasing their marketing expenditures, mostly in the form of advertising spending. This seems to be a smart move since consumers are in need of reassurance and consumer trust on both how capable the firms are in handling the situation and what the future will bring needs to be re-established. The advertisements are more informational in nature than transformational. They mostly contain information on what precautions the sponsoring businesses are taking, how they are running their businesses when physical branches of banks or seated sections of restaurants are closed, and more general information on what to do to stay safe during the pandemic. We also see some corporate advertisement in these sectors highlighting what the company is doing to support the society during this time and assuring the audience that the brand or the company is not weakened by this health crisis. The latter is especially important for the food service sector for most restaurants and cafes were closed for almost three months and it is important to prove to their target markets that they are still strong despite what they are going through. Some unification and encouragement messages are present, as well underlining that these are extraordinary times, people should unite and help each other out, and this, too, shall pass. Going forward, it looks like firms would benefit from continuing their marketing communications activities in terms of showcasing the strength of their brand, building trust, and creating a sense of support and goodwill, as well as providing information about their response to the pandemic.

The government and the financial sector as a whole are cooperating better than in the beginning of other crises. Usually, with the first signs of an economic crisis banks behave more cautiously and stop credit lines and/ or call back loans. This exacerbates the economic crisis and eventually may turn into a financial crisis. This time, government, despite having limited resources, tried to use some of these through banks. Both public and private banks tried to help those customers in distress by rescheduling payments or restructuring loans. Furthermore, government provided extra support for consumer loans for housing and automotive industry. The latter seems more successful. The car factories had stopped production in March. With the new support for loans the demand for cars surged. Naturally, it takes time to get into full production levels; now there is a backlog. The support for housing will have a delayed effect, if at all. It just led to an increase in the prices of houses which are eligible for the support. On the other hand, car factories began production and everybody along the supply chain benefitted directly. The banking sector managed this process efficiently and effectively.