from crisis to opportunity - Academy of Marketing

FROM CRISIS TO OPPORTUNITY: THE ROLE OF PROACTIVE
MARKETING. A CASE STUDY
1. Introduction
The current crisis has been described as a structural break (Rumelt, 2008) or a phase shift
(Allen & Snyder, 2009) that can severely affect the performance of firms, and even their
survival (Srinivasan, Rangaswamy, & Lilien, 2005). While some firms make cuts and wait for
the turbulence to be over (Campello, Graham & Harvey, 2010), others decide to strengthen
their businesses, either by investing aggressively in marketing and innovation activities, or by
improving their competitive advantage (Köksal & Özgül, 2007; Tellis & Tellis, 2009).
Previous studies showed high performance in proactive companies due to their ability to
respond to market signals (Day & Wensley, 1988; Hughes & Morgan, 2007). However, there
is scarce research that explains why particular firms adopt investment strategies in the crisis
with positive results and how they make it possible (Shapiro y Shultz II, 2009).
This paper examines firms’ strategic responses during the economic crisis and tries to
contribute to current theories in the marketing literature that have studied how the
environmental changes influence on firms performance. Using the qualitative technique of
multiple case studies, we focused on two questions: Why and how Spanish firms that develop
a proactive marketing strategy in actual economic crisis achieve superior performance levels.
This paper is divided into four parts. The first part provides a synthesis of the findings from
the literature of the context created by the economic crisis and the marketing management in
these periods. The second part focuses on the description of the research design, research
questions, methodology, sample definition and analysis process followed. We conclude with a
discussion of the theoretical and managerial implications of our findings, commenting on
several limitations, and highlight potential opportunities for further research.
2. Literature review
The actual economic and financial crisis has conditioned countries and firms from 2008 to
present. Their principal effects are: increase of unemployment rates, reduction in credit
availability, reduction and price conscious consumer spending, reduction in value of
shareholder strategic development processes and lower return on investments (Stiglitz, 2009).
One of the most affected countries in the eurozone was Spain. The period from 2008-2011 is
characterised by recession, high unemployment rate and large government deficit (OECD,
2011).
Economic uncertainty decreases consumer confidence (Ang, 2001) and therefore diminishes
consumption. When consumers are not buying this accumulates inventories, production is
reduced and employees are laid off, which leads to a deepening economic crisis (Dhalla,
1980).
IMF (2011) presents new warnings of how the resulting debt crises could lead to fresh turmoil
in the global economy. As indications suggest that the recent financial turbulence will not
lessen quickly in the near future, it has become imperative for firms to attempt to understand
this volatility (Rosier, 2011). For many firms this crisis environment may seem as a threat but
for some this is the time to tap into opportunities and reap significant benefits (Wan & Yiu,
2009). Proactive marketing refers to “the organization’s interpretation of the recession as an
opportunity and the development and execution of a response to capitalize on the perceived
opportunity created by the change” (Srinivasan et al., 2005).

Indeed, the environment plays a major role in shaping firms’ business strategies (Teece,
Pisano & Shuen, 1997). While rivals are conserving resources, managers who take strategic
action to improve their firm’s performance achieve more favorable consequences through
amplified marketing efforts. Thus, marketing can be significantly more important to the firm
during a recession than at any other time (O'Malley, Story & O'Sullivan, 2011).
Firms are faced with two dilemmas, retrenchment or investment, or do both at the same time
(Kitching, Blackburn, Smallbone & Dixon, 2009). The retrenchment, especially in marketing
activities, is the instinctive response to the economic crisis in order to focus on conserving
scarce resources with the hope of surviving until the economy recovers. Notwithstanding,
strong evidence support the maintenance of marketing activities (Rodas & Stelter, 2009), as
found in several studies that reflect that strategies focused on investment, innovation and
market diversification, lead to higher levels of performance (Srinivasan et al., 2005; Naidoo,
2010).
O'Malley et al. (2011) show that arguments for invest in marketing during a recession include:
maintaining a firm’s competitive advantage in difficult times, responding to changes in
customer behavior and the need to maintain the firm’s value; consolidating key brand values
such as leadership and innovation, brand equity, convenience and tradition (Nielsen, 2010).
However, whilst some of the studies in the literature emphasize in general company measures
taken in an economic crisis and identify the importance of strategies to improve sales figures,
there is a distinct lack of investigation in respect to marketing strategy changes (Köksal &
Özull, 2007). Therefore, we pursue an academic effort to bridge the gaps in our understanding
of the appropriate choice and relative effectiveness of marketing response in economic crisis,
in order to generate insights that can guide firms in their decision making during the crisis
(Srinivasan et al., 2005).
3. Research Design
3.1. Research questions and methodology
Through this exploratory study, the objective is to determine “why” and “how” Spanish firms
that develop a proactive marketing strategy in actual economic crisis achieve superior
performance levels. The use of qualitative methods is appropriate when studying complex
processes (Eisenhardt, 1989; Yin, 2009). We chose a multiple case study due to the complex
nature of the issue, and the need to take into account a large number of variables. According
to Eisenhardt (1989), we use secondary data and multiple interviews in each case in order to
develop a rich vision and provide the basis for further transfer of results to other contexts.
The questions focused on gaining a descriptive perception of the crisis and the impact on the
organization, particularly in the performance; the role of marketing in the firm, the changes in
strategy and marketing activities, especially in the marketing mix; the mechanisms to adapt to
environmental changes and the behavior of the budgets for this area.
3.2. Sample, field work and analysis process.
The research was conducted with Spanish companies that maintained or increased their
marketing activities and also obtained a similar or better performance during the current
economic crisis. The following were used as selection criteria: diversity of economic sectors
and size, and this in order to eliminate bias in the results regarding the availability of human,
financial and technological resources. The sample firms were identified through specialized
websites on marketing and economics, as well as newspapers and magazines of the same

nature. From an initial list of 20 firms, direct contact was taken with the marketing manager
and marketing representative using LinkedIn. The group of six companies that comprise the
sample was defined depending on the availability of people. The sample size is based on the
adoption of the criterion of theoretical saturation (Glasser & Strauss, 1967) and
recommendation of Eisenhardt (1989), considering appropriate a range between four and ten
cases.
The participating firms are: i) Damm group: Spanish company manufacturing and distributing
drinks, primarily beer. It has a market share of 25%. ii) Nutrexpa, one of the most important
groups in Spanish food sector. It has international presence in Portugal, Chile and China. (iii)
LEDS-C4 is a manufacturer of lighting solutions. It has over 2,500 references. (iv) Evento
Plus: Business group that provides platforms and solutions for professionals and providers of
corporate events such as fairs, congresses and below the line marketing activities. (v)
Energivity Consulting: Consultant training in sales and marketing, with emphasis on small
and medium enterprises, and (vi) The Cosmetic Republic: Hair cosmetics company with sells
in Europe, Asia and Latin America. Table 1 presents a summary of the cases.
Company
Table 1. Companies involved in the Case Study
Damm Group Nutrexpa Leds C4 Evento Plus
Energivity
Consulting
The Cosmetic
Republic
Activity Food-drinks Food Lighting Event industry Consulting Cosmetics
Size/ employees Big / 2.153 Big / 1800 Big / 325 Small / 18 Small / 6 Small / 10
Sales
Source: Own elaboration.
2008 754 million € 500 million € 44 million € 1.2 million € 185,000 € 400,000 €
2009 782 million € 480 million € 38 million € 1.2 million € 340,000 € 700,000 €
2010 790 million € 500 million € 40.5 million € 1.5 million € 450,000 € 1 million €
Fieldwork was conducted during March and April 2011. Semi-structured interview
techniques, direct observation and secondary data analysis were used in order to contextualize
the interviews. We developed an interview protocol, tested with an expert, and adapted with
the first two interviews. Interviews were conducted by one researcher. Interviews were
transcribed using F4 Transcriptions V.3.1 software and processed with Atlas TI v.6.
4. Results
This section explains the findings that have emerged from the present analysis, based on the
examination of the six cases described above. We sought to answer why and how the firms
have managed the marketing strategy during the actual economic crisis.
For all firms interviewed, the crisis has forced them to revise many processes and optimize
resources to fit the situation. In this context, the crisis may be both a threat and an
opportunity. Thus, firms take advantage of opportunities to ensure the liquidity and planning
the growth, especially through the internationalization or new acquisitions. For example, for
Damm Group the ideal model of internationalization is through strategic alliances or
acquisitions in favorable conditions. The factory of Santarem (Portugal) was acquired in 2010
and has strengthened their international strategy. Nutrexpa in 2008, acquired the Spanish
largest biscuit firm for a very low price, consolidating the strategy of acquisition of leading
brands, and expanding and enhancing its product offer.

Besides the finding and opening of new markets to compensate the difficult situation of the
Spanish market, the analyzed firms have adapted their business models and the products and
services portfolio to the new conditions, rethinking its organizational design to be more
efficient and prioritizing the short-term vision, providing flexibility and rapid response to
changing conditions, keys aspects during periods of uncertainty (Hartman 2009).
Marketing is a strategic function that maintains an essential link between the customer and
various processes within the firm (Day, 1994). Each case defines marketing as essential in the
current strategy of survival and strengthening. The firms achieve consumer confidence
keeping the promise of quality, and proximity through an emotional speech. Firms have
understood that they have to connect with the client, who is more demanding and selective,
and with less income. Leds C4 changed their production orientation toward a customer focus,
adding to their standard product lines the Special Projects Division, which develops and
manufactures lamps to order. While Energivity Consulting reduced its range of action to
minimize travel times, so that they can dedicate more time and attention to each client.
Considering the classic marketing mix, all variables have been affected during the crisis. In
the current market situation, the customer is more sensitive to price changes. Evento Plus, for
example, has chosen to offer package services and optimize costs. Damm, meanwhile, has
believed that the key factor is to get a product that stands out for its price-value relation, and
to create a special feeling with the customer. Despite the competence reaction to reduce the
price, analyzed companies maintained the prices.
Advertising and communication have focused on highlighting the brands through more
rational and emotional messages. While competitors have cut their advertising activities and
budgets, our six cases continued their activities and campaigns, reaching the highest consumer
recall, particularly Nutrexpa and Damm in the mass media. The coincidence of the rise of
digital social networks with the crisis period has triggered a new way to communicate directly
with their clients. Growing social media marketing budgets is being so common, particularly
in smaller companies. Nowadays the investment in communication is more selective and
constant, always looking for a guaranteed ROI. In this way, advertising during a crisis not
only helps to engage customers, also helps to maintain shareholder´s confidence and therefore
helps to maintain the value of a firm (O'Malley et al., 2011).
Concerning the product variable, in large firm’s cases like Damm, Nutrexpa and Leds C4,
there´s evidence of multidisciplinary and multi area work, especially in R&D, in order to
develop adapted products with new materials and technologies to offer attractive products.
This is consistent with Tubbs (2007), who stated that firms that invest in R&D and product
development during recessions find it easier to capture market share and customer loyalty.
For the marketing professionals interviewed, innovation is a fundamental firm ability to adapt
and compete, because it facilitates to change its products and processes faster than
competitors, achieving greater profitability and better options when recovery comes. For The
Cosmetic Republic case, innovation is connected and opened, with the aim to identify market
needs and desires. Leds C4 used a mix of in-house innovation with open innovation processes
with design studios and engineering firms, something very common in the two analyzed food
companies, which launches a large number of products every year.
A common denominator emerges: companies and their directors are inclined to take businessrelated
risks, and promote change as a way to gain a competitive advantage (Srinivasan et al.,
2005). While competitors have cut the budget in an indiscriminate way, these organizations
have adapted their strategies to the economic context and consumer behavior. The
interviewees mentioned the use of completely flexible marketing plans, which vary according
the changing environmental conditions in order to exploit all the opportunities it offers.

Keeping marketing budgets, especially in advertising, has been fundamental to maintain
leadership in the areas where each company operates. In general, the plans are more realistic,
with budgets linked to a clear intention and thinking about the income statement.
Marketing literature suggests that firms use their capabilities to transform resources into
outputs based on their marketing mix strategies and that such marketing capabilities is linked
to their business performance. The marketing resources demonstrated which market-based
resources, such as customer-linking capabilities, reputational assets, market innovation
capabilities, and human resource assets, affect performance outcomes (Hooley, Gordon,
Greenley, Cadogan, & Fahy, 2005).
In summary, these analyzed companies have seen the crisis as an opportunity to strengthen
their businesses, invest aggressively and overtake their weaker competitors. This proactive
stance in hostile environments has resulted in a positive impact on performance (Covin &
Slevin, 1989), as evidenced by the sales achieved by each of the companies in the years 2008,
2009 and 2010 (see Table 1). The study results give evidence of the efforts to identify and
consolidate a proactive marketing response in crisis periods, enhancing their competitive
advantage, the strategic emphasis on marketing, a market orientation, the marketing
innovation and an entrepreneurial culture.
5. Conclusions, Limitations and Future Research
This exploratory study addresses two questions, why and how Spanish companies develop
proactive marketing strategy and get better performance in crisis. Although there is strong
theoretical and practical evidence that maintaining or increasing marketing activities during
crises provide significant advantages, marketing budgets are often under pressure (O'Malley
et al., 2011). Thus, perceiving the recession as an opportunity is not enough to make a firm
proactive, the firm must also be able to develop and implement a marketing program to
capitalize on the opportunity (Srinivasan et al., 2005).
Thus, the analyzed firms demonstrate the strategic role of marketing to provide value to firms
and ensure their survival in times of crisis. The cases show that aspects such as innovation,
market orientation, the strategic emphasis on marketing and entrepreneurial culture are keys
to proactively respond to the crisis and improve performance. All firms included in this study
evidence that in crisis times successful firms anticipate changing marketing conditions,
respond to customer needs and compete by offering superior value (MSI, 2010).
This study suggests several implications: Considering the position of the MSI (2010),
educators and business leaders have to recognize, appreciate, and understand the significance
of marketing in the dynamic but turbulent global world, and to propose new paradigms for
marketing’s prosperity and firm survival. In terms of limitations, it´s important to highlight
the sample size, being able to expand it to more firms in other sectors and economic activities.
However, the case study methodology does not perceive this as a limitation, but as an
opportunity to enrich the knowledge about a topic. Also, this is an exploratory work, so that
future research should help to understand better the phenomenon.
Among the future lines of research, could be considered: (i) to extend this case study to other
contexts, (ii) to conduct a quantitative study to identify whether the companies that manage a
proactive marketing in times of crisis get superior results compared to those who cut their
marketing budgets and act conservatively, (iii) to conduct a longitudinal study to determine
whether the companies that implement a proactive marketing in times of crisis achieve better
performance levels in recovery.

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