Consumers, Businesses, and Governments During an Economic Crisis: A Marketing Perspective

Introduction

Crisis is an unexpected and negative issue affecting businesses or at least creating the impression that businesses are affected. Even when stakeholders have the impression that the business is affected from any variable, then the existence of a crisis can be talked about. Natural disasters, technological disasters, economic crises are all different types of crises; but in this section of the book, what is meant by crisis is the economic crisis faced by businesses stemming from different causes. As a result of globalization, all the markets across the world have become connected to each other; accordingly, when an economic crisis breaks out in the world, all the businesses are directly or indirectly affected (Candemir & Zalluhoglu, 2011; Grewal & Tansuhaj, 2001). Moreover, income levels of households are affected from economic crises and thus consumer behavior changes (Zurawickia & Braidot, 2005). Therefore, businesses have to develop new consumer-oriented strategies to cope with a crisis.

There are three factors shaping the effects of a crisis. The first of them is the structure of the crisis. A crisis can break out due to shortage of critical raw materials such as petroleum or due to failures in financial markets. The second factor is the country structure made up of elements such as functioning of business life, commercial freedom and socio-economic situation. The last factor is the culture of the consumers in the market (Ang, 2001). The effects of crises are determined by different variables and stakeholders try to take some measures to reduce adverse effects. These stakeholders primarily include businesses, consumers and governments. Businesses need to understand the behaviors of consumers in a crisis to construct their marketing strategies. On the other hand, during the past crises, governments took various precautions to protect their national economies against crises (see, Ang, 2001; Kotler & Caslione, 2009; Quelch & Jocz, 2009).

The stable periods of the economy are more suitable for the implementation of marketing mix elements. In such periods, as the financial situations of consumers are stable, it is relatively easier to make marketing decisions. In periods when economy is in a crisis, as many things including the financial situations of consumers undergo a change, decision makers need to come up with solutions to overcome these difficult times (Grundey, 2009). One of the main tools used by businesses to cope with a crisis is marketing. Yet, there is a gap in literature focusing on what strategies have been developed and how they are implemented to cope with crises by using marketing (Gulati, Nohria, & Wohlgezogen, 2010; Kaytaz & Gul, 2014; Srinivasana, Rangaswamy, & Lilien, 2005). A study that investigates how crises affect consumer preferences and businesses’ decisions from the perspective of marketing is believed to offer a holistic viewpoint. In this regard, in this chapter, first consumers’ reactions in crisis situations are discussed. Then, strategies developed by businesses to cope with crises in different conditions and marketing mix applications are addressed and finally government interventions that can affect marketing activities are discussed.