Marketing Strategies to Attract Buyers in Times of Financial Crisis - Essay Example

? Marketing Strategies to Attract Buyers in Times of Financial Crisis School Table of Contents Contents Page Numbers Marketing strategiesto attract buyers in times of financial crisis 3 1. Introduction 3 2. Current research on the topic 4 2.1 Effect of financial crisis on the customers’ behavior and companies market strategies in Romania 4 2.2 Effect of financial crisis on the customers’ behavior and companies market strategies in Turkey 4 2.3 Porter’s Five Forces Model 5 2.4 SWOT Analysis 6 2.5 Analysis 6 3. Conclusion 7 Works Cited 9 Marketing strategies to attract buyers in times of financial crisis 1. Introduction The recent global financial crisis has affected all sectors of economy all across the globe. Customers’ needs and preferences were considerably altered during the financial crisis. The aim of this paper is to find out how companies in different parts of the world have responded to the global financial crisis in terms of changing their marketing strategies to address the changed needs and preferences of the customers during the financial crisis. Questions that are answered in this paper include; what are the patterns of change in the needs and preferences of the customers during the financial crisis? What are the principles of successful marketing during the times of financial crisis? What should be the companies’ focus during financial crisis to sustain their business and profitability despite the economic pressure? A lot of research has been recently made to study the effects of the recent global financial crisis on the companies as well as the consumers. During any financial crisis, consumers generally become worried about their future psychologically whether or not they have experienced the physical effects of the financial crisis in terms of lack or insufficiency of money themselves. This causes the consumers to become very much concerned about proper use of their money. The preferences of consumers change from luxuries to basic necessities, and they become very critical about the quality of products they purchase. This has many implications on the companies because they need to redesign their marketing strategies to address the changed needs and preferences of the consumers. Findings of this research and the topic of this term paper is of huge significance to the companies that are doing business in the contemporary age when the economy is recovering from the effects of the recent global financial crisis. Also, companies can benefit from these findings in the future during any possible financial crisis. Answers to the aforementioned questions have been found from a review of literature based on the findings of latest researches made to study the effect of the recent global financial crisis on the consumers’ behavior and the market strategies of the companies. 2. Current Research on the Topic 2.1 Effect of Financial Crisis on the Customers’ Behavior and Companies Market Strategies in Romania (Nistorescu and Puiu) conducted a qualitative study to study the way marketing strategies were adapted by the Romanian retailers to the changed buying behavior of the consumers during the global financial crisis. To accomplish this, (Nistorescu and Puiu) collected the empirical data from two companies, namely Carrefour and Real Hypermarket that belong to the Romanian retail sector. The researchers collected the primary data from the information shared on their websites, articles, as well as their annual reports. (Nistorescu and Puiu) observed the implementation of similar changes in the needs and preferences of their consumers during the crisis. Accordingly, both companies adopted similar marketing strategies during the financial crisis e.g. both used loyalty programs and in-store commercial to strengthen their contact with their respective customers. 2.2 Effect of Financial Crisis on the Customers’ Behavior and Companies Market Strategies in Turkey (Koksal and Ozguk) conducted a quantitative research to examine the effect of financial crisis on the marketing strategies and the performance of the companies. To accomplish this, (Koksal and Ozguk) collected the data from 172 Turkish companies using a structured questionnaire that consisted of questions about 21 marketing strategies, and analyzed the data using factor analysis. The study led to the conclusion that companies need to modify their marketing strategies during financial crisis to sustain their performance. Results of the study led to several golden principles to be followed during the financial crisis; Profits are not raised at the same rate as the increase of companies’ sales volumes, companies need to increase the number of their distribution channels and the population of sales force, companies should increase the budget of research and development despite financial constraints, the negative impact of financial crisis can be countered by entering foreign markets, and companies should make every possible effort to communicate with the customers. The limitations of the research conducted by (Koksal and Ozgul) include subjectivity of the performance measures because of the lack of access to the objective financial data of the companies included in the study. 2.3 Porter’s Five Forces Model Porter’s five forces model is a model of pure competition according to which, firms and industries should have constant rates of return that are adjusted for risks. However, many economic researches to date have concluded that different industries tend to maintain different levels of profitability at different points in time and this is partly explained by the structure of a particular industry. According to Michael Porter, there are five forces that influence an industry, namely rivalry, threat of substitutes, buyer power, threats of new comers, and supplier power (“Porter’s Five Forces”). Porter’s five forces model can be best used by the strategic business managers who want to better comprehend the context in which the industry operates to gain competitive advantage. The Romanian retailers discussed in this paper did target these forces by strengthening their relationships with the customers. Koksal’s and Ozguk’s research suggests that Porter’s five forces model’s strategy of sustaining the same risk-adjusted rates of return is practicable provided that organizations follow their recommendations. 2.4 SWOT Analysis Both (Nistorescu and Puiu) and (Koksal and Ozguk) have commonly emphasized upon the importance of continuing research and development and implementing strategies to improve customer’s loyalty during financial crisis. The strength of this approach is that it thrives a company’s sales as its products are customized to the customers’ needs whereas its weakness is that it requires continued budgeting for research and development which incurs the companies a lot of cost. The opportunity is sustained profitability whereas the threat is even more reduction in profit if the research is inappropriate. 2.5 Analysis Customers living in a certain geographical region share the same culture. Since culture plays a decisive role in determining the needs and preferences of customers, customers sharing one culture require same changes in the marketing strategies in all companies in that region. Maintaining strong communication channels with the customers is extremely important for the companies during the financial crisis because this is how they follow the customers in the process of change in their needs and preferences. Customers become more conscious and particular about the reliability of information shared by the companies about their products in the commercials and advertisements during the financial crisis because they need to make informed decision to ensure that they are not wasting their money by investing in a certain product. This raises the need for the companies of sharing factual information about the products rather than making imaginary commercials so that the customers can trust their products. Companies need to “[b]olster trust [of the customers in the] brand by reinforcing consumers’ emotional connection to the brand and demonstrating empathy for their plight” (Quelch and Jocz 1). 3. Conclusion The purpose of this paper was to review the literature and identify useful changes in the marketing strategies implemented by companies in different parts of the world during the recent global financial crisis that have worked for them and have helped them sustain their profit-making ability during the tough times. Customers dwelling in a certain geographical region experience similar changes in their needs and preferences during the financial crisis, so research conducted by one agency to identify their changed needs and preferences can produce useful results for all interested companies that intend to adapt their marketing strategies to such changes. One of the most important principles to promote the products during financial crisis is to avoid making the attempts to reduce the promotion costs. Some of the key marketing strategies to enhance the profitability of business during the financial crisis include increasing the sales force, increasing the distribution channels, conducting research, entering foreign markets, and communicating with the customers constantly. Companies can improve their contact with the customers by using loyalty programs and in-store commercials. One strength of this research is that it encapsulates review of the latest research i.e. researches made in the last five years that have attempted to study the effects of the recent global financial crisis on the customers’ behaviors and needs and the marketing strategies of the companies. Also, this paper reviews case studies of companies from different countries e.g. Romania and Turkey so that the results can be generalized for a variety of cultures rather than one specific culture or geographical region. A weakness of this research is quick review of literature because of time constraints. Another weakness of this research is insufficient discussion of the marketing strategies during financial crisis because of volume constraints. Future research that aims at studying the impact of financial crisis on the performance of companies and the accorded changes in their marketing strategies should include real financial data obtained from the real companies in the analysis. Future research should also cross-index the findings by such variables as the resources of the companies, their skills and expertise, their size, market scope, and industry sector. Word Count: 1517 Works Cited: Koksal, Mehmet H., and Ozgul, Engin. “The relationship between marketing strategies and performance in an economic crisis.” Marketing Intelligence & Planning. Vol. 25. No. 4. (2007): 326-342. Nisorescu, Tudor, and Puiu, Silvia. “Marketing Strategies during the Financial Crisis: A Case Study of Real Hypermarket and Carrefour.” N.d. Web. 21 Oct. 2012. . “Porter’s Five Forces.” 2010. Web. 18 Nov. 2012. . Quelch, John A., and Jocz, Katherine E. “How to Market in a Downturn.” Harvard Business Review. April 2009. Web. 22 Oct. 2012. . Read More