Master Thesis Master's Programme in Strategic Entrepreneurship for International Growth

A cross-case analysis of Swedish companies to investigate adaptations of the marketing mix to retain customers as a reaction to COVID 19

Business Administration, 15 credits

2021-05-26 Patricia Schwarzbach, Linda Onoh HALMSTAD UNIVERSITY

A cross-case analysis of Swedish companies to investigate adaptations of the marketing mix to retain customers as a reaction to COVID-19.

Supervisor: Venilton Reinert Examiner: Svante Andersson

ACKNOWLEDGEMENT

We would like to express our deepest appreciation to all of those who made this Master´s thesis possible. A huge thanks to our supervisor Ventilon, for his guidance throughout the entire project. We also deeply appreciate the time the respondents put in to answer all our questions as well as their willingness to cooperate. A big thank you to the both of you. Also, we are very grateful to be able to do the analysis of the two companies that we did. Therefore, thank you so much to the decision makers that made that possible. Finally, we would like to thank our family and friends that supported us during the entire project.

Thank you all,

Patricia J. Schwarzbach & Linda Onoh

2 ABSTRACT

Title: A cross-case analysis of Swedish companies to investigate adaptations of the marketing mix to retain customers as a reaction to COVID 19. Authors: Patricia J. Schwarzbach & Linda Onoh Level: Master thesis, 15 hp Keywords: COVID-19, Poters’ Generic Strategy, Marketing Strategy, Marketing Mix, Customer Loyalty Background: The impact of COVID-19 created change on the strategic operations of businesses. This change also brought about questions on how companies maintain and bolster their brand and customer base. Companies in the world are reevaluating their strategies in retaining their customers and Swedish companies are no different. During our research, we found out that there was little to no empirical data to suggest how companies are reacting to this disruptive change which led to this study. Research Question: How are companies adjusting their marketing mix to retain their customers and remain profitable during the pandemic? Purpose: This paper aims to explore how companies in different sectors in Sweden adjusted their marketing strategies to the disruptive circumstances caused by the COVID-19 pandemic to retain their customers and retain their competitive advantage. The paper further aims to recommend a suitable post-COVID-19 strategic business marketing model that may be useful for companies in the sectors that were most affected by the pandemic in Sweden. Method: The research applied a qualitative case study method. Questions were generated from the theoretical framework and were used in the interview of two companies. Theoretical Framework: Theories about Porter’s generic strategies, Marketing strategy and Marketing mix have been applied. Findings: The interviewed companies displayed similarities regarding their applied generic strategies, as both used a combination of two strategies. Moreover, the companies adjusted their pricing in a similar manner during the pandemic and maintained their switching barriers. On the other hand, the adjustments made during the pandemic in terms of product, place and promotion differed quite significantly.

3 TABLE OF CONTENTS

CHAPTER ONE 6 1.1 Introduction 6 1.2. Background of Theories to be reviewed 7 1.3. Statement of Problem 8 1.3.1. Impact on the global economy 8 1.3.2. Impact in Sweden 9 1.4. Aim of the Study 10 1.5. Objectives of the Research 11 1.6. Research rationale 11 1.7. Research Questions 11 1.8. Scope of the Study 11 CHAPTER TWO 12 LITERATURE REVIEW 12 2.1. Introduction 12 2.2. Porter's Generic Strategies and Competitive Advantage, Business Model and Porter's Five Forces 12 2.3. Marketing Strategy 17 2.4. Marketing Mix 20 2.4.1. Product 20 2.4.2. Price 22 2.4.3. Place 24 2.4.4. Promotion 25 2.5. Customer Loyalty 26 2.5.1. Types of Loyalty 27 2.5.2. Influences on Customer Loyalty 28 2.5.2.1. Satisfaction 28 2.5.2.2. Customer Value 28 2.5.2.3. Customer Involvement and Participation 29 2.3.2.4. Switching Costs 29 2.5.2.5. Other Influences 30 2.5.3. Customer Retention 30 2.6. Summary 32 CHAPTER THREE 33 METHODOLOGY 33 3.1 Research Philosophy 33 3.2 Research approach 34 3.3 Research Type 34

4 3.4 Research design and method 35 3.5 Data population 37 3.6 Data sampling method 37 3.7 Data collection 40 3.8 Data analysis 42 3.9 Research evaluation 42 CHAPTER FOUR 43 EMPIRICAL DATA 43 4.1. Interview 1 – Epton Trading 43 4.2. Interview 2 – 365id 45 4.3 Analysis 48 CHAPTER FIVE 57 SUMMARY, RECOMMENDATIONS, IMPLICATIONS, LIMITATION & FUTURE RESEARCH AND CONCLUSION 57 5.1. Summary 57 5.2. Recommendations 57 5.3. Implications 60 5.4. Limitation & Future Research 60 REFERENCES 62 APPENDIX 73

5 CHAPTER ONE

1.1 Introduction The outbreak of the 2019 novel coronavirus known across the World as COVID-19 brought about an unprecedented economic and public health issue, which has changed the way businesses operate now and, in the future (Donthu & Gustafsson, 2020). This change is not just limited to how businesses operate but has significant implications for how businesses maintain and grow their brand and customer base. How businesses promote their products and attract consumers has become a crucial issue resulting from COVID-19 (Sigala, 2020). Business survival and growth would depend majorly on its advertising, marketing and promotional practices.

According to the International Monetary Fund (2020), global growth in 2020 fell to minus -3 percent as a result of the implemented lockdowns and social distancing practices in different countries around the World. The industries that were hit hardest during this period include hospitality, energy, textiles, retail, aviation, furniture and appliances, etc. Hotel occupancy rates in most countries around the World fell below 20 percent, while aviation travel dropped down to about 95 percent compared to 2019 in the same period (IMF, 2020). However, some industries showed some growth during this period, such as food, logistics, chemical, electronic, plastic, golf and rubber products.

In an attempt to grow and maintain customer spending and interest, several businesses worldwide are re-evaluating their marketing strategies and media spending. Businesses are re- strategizing and refocusing their advertising, marketing and promotional efforts to maximize returns on business media spending (Roggeveen et al., 2020). Marketing and advertising departments of businesses have to rise up to the challenge and come up with creative and innovative marketing strategies and practices that would sustain and grow business through this new normal. This involves resolving issues resulting from market changes that have had an economic impact on all sectors; addressing sustainability, analyzing reputation issues relating to the brand, identifying and meeting customers needs and expectation through new products and services, carrying out innovative and creative marketing strategies, campaigns and targeted advertising, and effective application of social media (Karmaker et al., 2021).

According to Nicola et al. (2020), spending on advertising has decreased, as several stores have been forced to close and revenue declined as a result of COVID-19. Many businesses have

6 suspended most of their marketing activities in order to save revenue. Other businesses are re- strategizing their marketing activities to be more purpose-driven, mission-based and cause related to more effectively satiate consumers' growing media consumption as they work from the comfort of their homes. According to DiResta et al. (2020), 45 percent of consumers worldwide are spending more time on social media, there is a 26 percent increase in online video streaming, an increase of online gaming traffic, and food and essential goods deliveries have increased exponentially. Therefore, while some businesses and sectors are being negatively affected by COVID-19, other businesses were achieving sustained growth.

1.2. Background of Theories to be reviewed The marketing mix was originally developed by Jerome McCarthy and consists of the 4Ps (Dominici, 2009). Product, Price, Place and Promotion are all subsumed under the 4Ps (Kotler et al., 2020; Rafiq & Ahmed, 1995; Kwok et al., 2020). The marketing mix is a set of tools that firms use to position and differentiate their businesses in order to gain competitive advantage (Kwok et al., 2020) hence It is essential that all four components are coordinated together (Perreault et al., 2009). Therefore, businesses are challenged to find an optimal mix of the four factors in order to achieve a better performance than the competitors (Gummesson, 2002). However, the marketing mix is not the only factor that determines a firm’s competitive advantage. Other factors such as a firm’s applied business strategy also determine a firm’s positioning in the industry that enables them to gain competitive advantage (Aulakh et al., 2000; Porter, 1985; Salavou, 2015). A firm’s business strategy determines which of the four P’s will be emphasized by the firm (Sitorus, 2017). Porter’s generic strategies will be applied in this study as a theoretical framework that explains business strategies that firms apply to gain competitive advantage (González-Benito & Suárez-González, 2010; Salavou, 2015). Porter (1980, 1985) proposed and developed a theoretical framework comprising differentiation strategy, cost leadership strategy and focused strategy. These strategies and a further new variant (hybrid strategy) have been widely accepted as a theoretical tool that explains how companies behave in order to be in a defensive position that enables them to gain competitive advantage in their market (Claver-Cortés et al., 2012; Marques et al., 2000; Prince, 1992; Salavou, 2015). These strategies determine their operational and marketing strategies (Dasilva & Trkman 2014; Rothaermel, 2017; Sitorus, 2017). Hence, how a firm implements their marketing mix strategies are connected to their business strategy and Porter’s five forces

7 (rivalry amongst competitors, bargaining power of buyers, bargaining power of suppliers, threat of substitute product and threat of new entrants) (Dobbs, 2014; Sitorus, 2017). Hence these theories will be reviewed and used as a theoretical underpinning to analyze how companies have adjusted their marketing mix strategies to maintain and retain their competitive advantage despite the disruptive impact of COVID-19.

1.3. Statement of Problem In late 2019 the new virus Severe acute respiratory syndrome coronavirus 2 (short: SARS- CoV-2) was discovered in China. This is the virus that effectively leads to the respiratory disease called COVID-19 (van Walraven et al., 2021). In late January “the World Health Organization (WHO) declared COVID-19 […] to be a Public Health Emergency of International Concern” (Jiang et al., 2020, p. 1545). The virus spread quickly, reaching Europe in February, of 2020 and was identified in most parts of the world in April of 2020 (Caballero- Morales, 2021; WHO Regional Office for Europe, 2020). According to the WHO, by the end of February approximately 113,5 million cases of the disease were verified worldwide since the outbreak and more than 2,5 million people died from or with the virus (World Health Organization, 2021). Tracing the spread of the virus is complicated since persons with as well as without symptoms are able to transmit the virus (World Health Organization, 2020c). The majority of infected individuals (approximately 80 percent) experience a mild or moderate course of disease (World Health Organization, 2020a). Typical symptoms of the COVID-19 are loss of sense of taste and smell, fever, headache, feeling tired and being short of breath (Jiang et al. 2020; van Walraven et al., 2021). In order to reduce the spread of SARS-CoV-2, some precautionary measures are advised such as keeping physical distance, frequent handwashing and wearing a mask (Martinez et al., 2020; World Health Organization, 2020b). Measures concerning the temporary closure of facilities may differ in each country (Zipursky & Redelmeier, 2020). Moreover, in order to enable the healthcare system to treat illness adequately, some countries – e.g. the United Kingdom – enforced a lockdown (Carmody et al., 2020).

1.3.1. Impact on the global economy

The pandemic also had a major negative influence on the global economy (Carmody et al., 2020; Jena et al., 2021). According to the International Monetary Fund (2021), the global

8 economy decreased about 3.5 percent in 2020. However, global economic growth for the consecutive two years is estimated, indicating a fast recovery (International Monetary Fund, 2021). The rapid spread of the virus led to delivery problems and therefore to new challenges in supply chain management (Jena et al., 2021). As a result, many businesses – such as Nowchem (Paul & Chowdhury, 2020) and Volkswagen (Fernandes, 2020) – had to stop or slow down their production. As a consequence of certain measures and restrictions to reduce the spread of SARS-CoV-2, some sectors – such as hospitality, tourism, entertainment, sports and manufacturing – are heavily affected (Cai & Luo, 2020; Fernandes, 2020). Individuals working in the service sector were more likely – compared to other sectors – to lose their jobs. Furthermore, especially for females, young and less educated individuals the unemployment rate increased during the pandemic (International Monetary Fund, 2021; Jena et al., 2021; Mendez-Carbajo, 2021). Additionally, the risk of bankruptcy increased – especially for SMEs – since those usually have little reserves of capital (Cai & Luo, 2020). On the other hand, the International Monetary Fund (2021) observed fewer bankruptcies – compared to previous recessions – in advanced economies.

1.3.2. Impact in Sweden

The impact of COVID-19 has been felt across the world, affecting economies and businesses alike. The case in Europe and most especially in Sweden – although no national lockdown was imposed (Ludvigsson, 2020) – is no different, the economy and performances of businesses have been immensely affected. In Sweden, the Gross Domestic Product (GDP) shrank to a record 8.5 percent (The Washington Post, 2020). The demand and sales of businesses in Sweden experienced an unfavourable impact as a result of the pandemic in 2020 (Statista Research Department, 2021). Despite the challenges, problems and market changes resulting from COVID-19, several businesses have adopted and refocused their marketing strategies and were able to sustain their businesses and maintain growth. Therefore, it is necessary and beneficial for the business world to study the impact of COVID-19 on customer buying behavior and the marketing strategies used to retain customers and sustain growth. The findings of this study would be valuable for the future of businesses in Sweden and Worldwide. This research is also important from an academic point of view.

9 Ding and Li (2021) and Wang et al. (2020) suggest that the COVID-19 pandemic and the corresponding restrictions for businesses can lead to a variety of marketing innovations. In their articles, the authors outline how customer demands have changed due to the COVID-19 pandemic. Ding and Li (2021) suggest (marketing) possibilities for businesses to respond to those changes. However, no empirical data supports the presented suggestions. Wang et al. (2020) outline in their article four marketing strategies that may help businesses to survive the global crisis. They support their proposed strategies by offering examples of companies that adopted them. However, those examples are limited to Chinese businesses. Furthermore, Talarico (2020) suggests that the COVID-19 pandemic may affect the word choice for promotional activities. She believes that marketers will watch their wording more carefully and for example reduce urgency exclamations. Similarly, White et al. (2020) outline that promotions are quickly adapted to fit the COVID-19 pandemic. However, their article only focused on promotional activities in the food industry. Altay et al. (2021) investigated which criteria of the marketing mix have become more important to the customers during the pandemic. They found that a wide product portfolio is valued, and the price sensitivity has increased. However, their findings are limited to the on- demand grocery delivery service in Turkey.

Therefore, this study aims to identify – by collecting primary data through in-depth interviews – how Swedish companies in the golf and security industry adjusted their marketing mix as a response to the changes in customer demands due to the COVID-19 pandemic.

1.4. Aim of the Study

The aim of this paper is to explore how companies in different sectors in Sweden adjusted their marketing strategies to the disruptive circumstances caused by the COVID-19 pandemic in order to retain their customers and retain their competitive advantage. The paper further aims to recommend a suitable post-COVID-19 strategic business marketing model that may be useful for companies in the sectors that were most affected by the pandemic in Sweden.

10

1.5. Objectives of the Research

The objective that will be researched in this study is: ● To investigate how companies in Sweden strategize in terms of the marketing mix to overcome customer retention challenges and business profitability caused by the pandemic.

1.6. Research rationale

The rationale for carrying out this study in Sweden is because Sweden is among the countries affected by the SARS-CoV-2 in the developed nations of the world. Sweden experienced recession and some sectors such as hospitality, security, Golf, tourism, aviation (cargo and passenger), e-commerce, and sports were affected both positively and negatively by the pandemic. Some were affected negatively and trying to survive while some were booming. It is, therefore, necessary and beneficial for the business world to study the impact of COVID-19 on customer buying behavior in order to find out what lessons can be valuable for the future of businesses in Sweden.

1.7. Research Questions

The key research question posed in this research is: ● How are companies adjusting their marketing mix in order to retain their customers and remain profitable during the pandemic?

1.8. Scope of the Study This research is a qualitative case study review of the impact of the COVID-19 pandemic on the marketing mix strategy of companies in Sweden only and not globally. The study is not limited to a particular industry or sector but starts with businesses in general and narrows it down to the sectors that are most affected by COVID-19.

11 CHAPTER TWO

LITERATURE REVIEW

2.1. Introduction

This chapter will review the literature on subject areas that are relevant to the research topic. Hence, previous works by scholars on marketing strategies, models of business strategy, marketing mix, porter’s five forces, competitive advantage, customer loyalty and customer retention will be reviewed in this chapter to draw out business theories and principles that are being applied in the research and to raise questions as to how they affect marketing mix strategies of companies that have been affected both positively and negatively by COVID-19. Upon the premises of the foregoing, questions to be used during the interview will be developed in line with the research aim, objective and question which will be analyzed to answer the research question.

2.2. Porter's Generic Strategies and Competitive Advantage, Business Model and Porter's Five Forces

Porter (1980) proposed and developed generic business strategies which have become the conventional basis for testing, measuring and explaining business performances of firms across and business to customer (B2C) or end-users providers (Kim et al., 2004). The strategies are as follows: differentiation strategy, cost leadership strategy, focused strategy and hybrid (combination of differentiation and cost leadership) (Hyeock, 2016; Kim et al., 2004). According to Porter (1980), these strategies essentially enable companies to gain competitive advantage which enables a firm to be placed in a defensive position that makes them to make more profit compared to their competitors (Hudson, 2001; Hyeock, 2016). According to Porter (1985), cost leadership or low-cost strategy refers to when a firm’s production and overhead cost is low or reduced and focuses on the competitive advantage associated with economies of scale (Hyeock, 2016). The firm achieves economies of scale by expanding its customer base through aggressive marketing activities with emphasis on low price (Hyeock, 2016). However, Banker et al. (2014) argued that though low-cost strategy aims to achieve operational efficiency and economies of scale it may not be sustainable in many cases because competitors can possibly imitate such strategy and also achieve cost advantage and in the long run the initial

12 firm’s competitive advantage over its competitors will dissipate (Barney, 2001; Murray, 1988). Differentiation strategy on the other hand involves greater investments in research and development in order to develop special unique features in the final product and services so that firms can introduce innovations in their industry ahead of competitors thereby differentiating themselves and establishing first movers’ advantage in the market which creates strong brand (Hyeock, 2016). Islami et al. (2020) noted that organizations that pursue differentiation strategies distinguish themselves by offering products and services with unique and/or special attributes such that customers perceive their products and services to be worthy of paying premium prices (Berman et al., 1999; Porter, 1980). Hence, scholars have argued that organizations that pursue differentiation strategies make superior profits because customers perceive their products and services as unique and are willing to pay a premium price (Islami et al., 2020; Rothaermel 2017). Islami et al. (2019) noted that when companies are competing with a special unique product offering it also inhibits new entrants from entering the industry which also increases the profitability of incumbents (Islami et al., 2020). Furthermore, Salavou (2015) noted that differentiation strategy creates customer loyalty because of a superior brand which makes the demand for the firm’s products and services to be price inelastic leading to superior profits (Aulakh et al., 2000). Focus strategy according to Porter (1980, 1985) is either based on differentiation or low cost strategy or both of them but concentrates on a particular specific segment, it may be a specific geographical location or a particular segment of customers or focused on a narrow range of products which they produce more efficiently and effectively than competitors whose strategy are not focused (Salavou, 2015). Also, the focused strategy (of which broad market scope is the opposite) are both also classified as a scope of target market while low-cost or differentiation strategies are classified as a source of competitive advantage (Campbell-Hunt, 2000; González-Benito & Suárez- González, 2010; Salavou, 2015). Furthermore, several years after Porter’s generic strategies were tested, accepted and applied across a wide range of businesses in different industries and countries worldwide (Green et al., 1993; Kim & Lim, 1988; Liff et al., 1993; Marques et al., 2000; McNamee & McHugh, 1989; Prince, 1992) scholars began to debate about the exclusiveness of Porter’s generic strategies and many started arguing that these strategies can be compatible or mixed together to achieve better business performance (Acquaah & Yasai-Ardekani, 2008; Claver-Cortés et al., 2012; González-Benito & Suárez-González, 2010; Kim et al., 2004; Pertusa-Ortega et al., 2009; Salavou, 2015). Scholars argued that the low-cost and differentiation dichotomy are not purely opposites of each other but that low-cost strategy and differentiation can both be mixed to

13 achieve success though each of them requires different resources and organizational setup to harness their advantages (González-Benito & Suárez-González, 2010; Hill, 1988; Salavou, 2015). Prior to this time, Porter (1980, 1985) had argued that low-cost strategy and differentiation are purely exclusive business strategies that lead to superior performance and that when mixed or combined firms are stuck-in-the-middle and the result is poor business performance. Contrary to the foregoing, scholars started questioning the assertion by Porter (1980, 1985) and argued that hybrid strategies are different from stuck-in-the-middle because hybrid strategies refer to competitive organizational behavior that emphasize on more than one generic strategy whereas stuck-in-the-middle does not emphasize on any particular strategy (Pertusa‐Ortega et al., 2009; Salavou, 2015). Furthermore, stuck-in-the-middle also refers to when firms are unwilling to make a choice about how to compete in the market. It also refers to when firms’ cost of products and services are high with little or no differentiation and hence does not have any competitive advantage (Pertusa-Ortega et al., 2009; Salavou, 2015; Spanos et al., 2004). However, Parnell (1997) arguing against the efficacy of hybrid strategy noted that when firms combine strategies it might be done in a haphazard way such that results in poor performance while Campbell-Hunt (2000) argued on the contrary that the original theoretical framework on firm performance does not provide a universally accepted explanation of firm performance on the basis of the presence or absence of emphasizes in a particular competitive strategy (Pertusa-Ortega et al., 2009; Salavou, 2015; Spanos et al., 2004). Furthermore, scholars have identified different kinds of hybrid strategies such as hybrid strategy that emphasizes on two strategies, hybrid strategy that emphasizes on three strategies as well as hybrid strategy that emphasizes on a particular strategy but also adopt the other two strategies at an average level or low level emphasizes (Salavou, 2015). Some scholars further argued that firm hybrid strategy that emphasize on three strategies is better than emphasizes on two which also in turn is better than emphasizes on one strategy with a low emphasizes on the other two because the more a firm’s strategic profile is complex and multidimensional the more balanced and defensive the strategic positioning of the firm (Pertusa-Ortega et al., 2009; Salavou, 2015; Spanos et al., 2004). Some arguments made by scholars (Claver-Cortés et al., 2012; Gopalakrishna & Subramanian, 2001; Miller, 1992; Pertusa-Ortega et al., 2009; Proff, 2000; Salavou, 2015; Spanos et al., 2004) in support of hybrid strategies are as follows:

● That hybrid strategies that combine competitive advantages of differentiation and low cost are hard to imitate

14 ● That hybrid strategies are more flexible hence much more in a better position to adjust to ever-changing customer preferences and needs and marketing landscape ● Hybrid strategies can help companies secure several competitive advantages and hence become more balanced ● Competitive strategies that mix low cost and differentiation will be more effective and efficacious in times of hyper-competition.

Porters’ (1980, 1985) are also referred to as business models (Pretorius, 2008). Ritter and Lettl (2018) noted that there is no universally accepted or consensus on the concept of business model hence the term has remained ambiguous. Chereau and Meschi (2019) on the other hand noted that the term business model was first used in 1954 by Drucker (1954) and was further developed and formed into a concept by Magretta (2002) who argued that business model refers to the description of how firms generally carry out their business (Chesbrough & Rosenbloom, 2002). Dasilva and Trkman (2014) argued that business model entails among other things strategy, revenue model and economic model, while Zott and Amit (2008) described it as how firms choose to connect with factors affecting their business environment and their market. However, according to Chereau and Meschi (2019), the concept afterwards went through a period of debate after it was conceptualized in terms of acceptance of its definition and application until within the last decade when it was more widely referred to as the reflection of a firm’s practical or realized business strategy to gain competitive advantage and customer loyalty (Pucci et al., 2017). Furthermore, Miles and Snow (1978) developed a framework that explains an underlying relationship between a firm’s business model (which includes strategy) and its realized strategy as not a result of contingencies or unforeseen circumstances (like COVID-19) but as intended. In contrast, Zott and Amit (2008) argued that on many occasions companies apply strategies (such as Porter’s generic strategies) as an alternative plan of action for when contingencies arise rather than intended. Porter (1985) argued that sometimes cost leadership does not always fit with the company’s business model or realized strategy (Miller, 1992). Zott and Amit (2008) support Porter (1985) as they argued that differentiation strategy often fits with a firm’s business model or is often realized and hence produces a significant positive impact on business performance but not always the case with low-cost strategy (Walker-Orville & Ruekert, 1987). However, in 2010, Casadesus-Masanell and Ricart’s (2010) made a clear distinction between strategic choices that are based on an adaptive cycle which are usually a plan of action in case

15 of contingencies (such as COVID-19) arise and a business model that is described as intended and realized strategy. Therefore, based on the foregoing a firm’s realized business strategy determines how they apply marketing mix (Sitorus, 2017). If they practice differentiation strategy their marketing activities will emphasize more on products (e.g. Rolls Royce, Mercedes, British Airways or Apple laptops) while a firm that practices low-cost strategy will channel their marketing activities more on price and promotions (Dasilva & Trkman 2014; Kargar, 2004; Rothaermel, 2017). A focused strategy will emphasize more on people (that is their chosen market segment) or place (like a geographical market segment) and hybrid strategies will emphasize on all or some of the marketing mix (Kargar, 2004; Merrilees, 2001; Ritter & Lettl 2018). Furthermore, the impact of COVID-19 in the e-commerce industry has led to a boom in the industry with high competition and with Amazon in the far lead (Economic Times, 2020; NASDAQ OMX's News Release Distribution Channel, 2020). And as stated earlier by some authors (Gopalakrishna & Subramanian, 2001; Miller, 1992; Proff, 2000) that companies who combine low-cost strategies and differentiation strategies perform better than firms who apply other types of hybrid strategies during times of hyper-competition hence, do companies like Amazon combine low-cost and hybrid strategy? And if they do, do they combine it intentionally or as a response to unforeseen events like COVID-19? Or are they practicing only low-cost strategy as Marwa et al. (2019) argued that Amazon is practicing only low-cost strategy. How are companies in different sectors that practice the same strategies able to compete with their rivalries in terms of their business and marketing strategies in response to a contingency like COVID-19? Another theoretical framework that gives some explanation on how companies have adjusted their marketing strategy/mix in response to the COVID-19 pandemic are Porter’s five forces. Porter's five forces are competitive rivalry among existing firms, bargaining power of buyers, threats of potential new entrants, bargaining power of suppliers and threats of product substitute (Dälken, 2014; Grundy, 2006; Porter, 1980; Porter, 1985). Figure 1 shows a description of Porter’s five forces:

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Fig. 1: Porter’s five forces Source: Grundy (2006)

According to Dobbs (2014), Porter’s five forces is a framework developed by Michael Porter that explains outside economic forces from both consumers, suppliers and potential competitors that influence business and marketing strategies of already existing competitors in an industry. Hence, the impact of COVID-19 on certain industries such as e-commerce, oil and gas and automobiles reinforces these outside forces for example threats of electric cars and hydrogen cars replacing fueled cars as fuel was less in demand during the pandemic, increased bargaining forces from buyers online etc. (ReportLinker, 2020; TradeArabia, 2020). So, how did companies adjust their marketing mix in response to the impact of COVID-19 on their industry with considerations to the five forces and their business strategy?

2.3. Marketing Strategy

Marketing strategy is defined as “the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships'' (Kotler et al., 2020, p. 672). The marketing strategy of a company is usually closely linked to its business strategy and aims to

17 position the company (White & Griffith, 1997; Wind & Robertson, 1983). Prior to defining a suitable marketing strategy, it is crucial to examine the environment and industry (Rust et al., 2004; Slater et al., 2010). Furthermore, Gummesson (2002) and Chaffey and Ellis-Chadwick (2019) highlight the importance of clearly defined objectives, missions and visions in order to enhance the implementation of appropriate corporate culture and definition of marketing strategy. A well-developed and implemented marketing strategy should assist in gaining new customers, retaining already existing customers, increase brand awareness as well as sales and involve the customers (Olson et al., 2021). In order for entrants to be successful in a new market, it is necessary to have an innovative marketing strategy that differentiates and positions the business relative to its competitors (Slater et al., 2010). Scott (2013) and Gummesson (2002) state that the customer and his/her expectations and wishes have to be the priority for businesses and the starting point for the overall marketing concept. Providing demanded products can lead to increased customer lifetime value and customer equity for a business (Rust et al., 2004). According to Johnson and Gustafsson (2000), the strategy of a business should be targeted at a specific customer segment in order to apply the existing resources, capabilities and structures. By segmenting the customers, businesses can align their organisation and develop products more flexible to serve the wants and needs of their customers (Lowenstein, 1995). Customers that are similar – e.g. sharing the same attributes, beliefs or demographics – can be summarised as a segment (Chaffey & Ellis- Chadwick, 2019). Due to the customer’s similarity, the business can apply the same marketing strategy for all the customers in this segment (Budeva & Mullen, 2014). After the business decides which segment to serve, it has to target it specifically (Kotler et al., 2020; Perreault et al., 2009). For example, White and Griffith (1997) divide customers into three segments and provide explanations which strategy serves each group's needs and wants best. According to them, the segment of so-called international sophisticates – characterised by openness as well as interest in other cultures and foreign products – are best served by standardised products and marketing campaigns. The second segment, sophisticated customers, are generally interested in other cultures but simultaneously are aware of differences. This group is best targeted by a regionalised strategy (adapt the 4Ps to similar customers across different cultures). Lastly, the provincial segment exhibits little or no interest in other cultures and their products. Therefore, a localised strategy – adapting the marketing mix to each culture – is advised (White & Griffith,

18 1997). However, Budeva and Mullen (2014) state that members might change their classified segment over time. This implies that segments might be dynamic and therefore should be monitored by the businesses. Similarly, Scott (2013) developed a blueprint to reach (potential) customers effectively. Firstly, businesses have to examine who their customers are, what they are looking for (needs and wants) and how the offered products provide fulfillment. Based on that information, the company has to communicate – e.g. through their logo, storytelling, website and language – what type of business they are, how they can add value for customers and evidence of the latter (Scott, 2013). Businesses have to be aware of limitations when deciding on and implementing a marketing strategy. In order to deliver superior value to customers – compared to the products of competitors – the business has to accept trade-offs (Chaffey & Ellis-Chadwick, 2019; Rust et al., 2004). This notion is evident when the different types of companies and their corresponding strategies are observed. For example, companies pursuing a low-cost strategy and offering low prices for their products are less likely to develop innovative products. Moreover, they may be limited in regards to customisations. Similarly, differentiators may offer innovative products and charge premium prices but may also have fewer customers than companies pursuing a low- cost strategy (Olson et al., 2021; Slater et al., 2010; White & Griffith, 1997).

Ding and Li (2021) believe that disruptive circumstances – such as the COVID-19 pandemic – can have a positive impact on marketing strategies. Especially in countries with severe restrictions – e.g. lockdowns – businesses have to adapt and possibly innovate their marketing strategies to survive and stay competitive. According to Ding and Li (2021), marketing strategies during the pandemic will be focused on digital platforms. Advantages of digital marketing – compared to traditional strategies – include lower cost, fewer risks, flexibility and gaining information about the behaviour and interests of customers. Moreover, more (foreign) markets can be entered and customers targeted (Katsikeas et al., 2019).

19 2.4. Marketing Mix

The marketing mix was originally developed by Jerome McCarthy and consists of the 4Ps (Dominici, 2009). Product, Price, Place and Promotion – which will be explained in more detail below – are subsumed under the 4Ps (e.g. Kotler et al., 2020; Kwok et al., 2020; Rafiq & Ahmed, 1995). The marketing mix is a set of tools in order to position and differentiate businesses (Kwok et al., 2020) and is usually applied on mass-produced as well as on standardized goods. It is essential that all four components are coordinated together (Perreault et al., 2009). Therefore, businesses are challenged to find an optimal mix of the four factors in order to achieve a better performance than the competitors (Gummesson, 2002). Due to its simplicity, the marketing mix is well-known and applied by marketers to this day. Approximately two decades after McCarthy’s publication, three more aspects – namely participants, physical evidence and process – were added and therefore the model was extended to 7Ps (Rafiq & Ahmed, 1995). The extended framework is usually applied to assess services (Ivy, 2008). Moreover, a framework consisting of four Cs – customer needs, convenience, communication and cost to the customer – was developed at the end of the 20th century in order to evaluate the marketing mix from the customer’s view (Lin, et al., 2020; Lin et al., 2013). However, this study will focus on the original 4Ps.

2.4.1. Product

A product is defined as “anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need” (Armstrong et al., 2020, p. 230). As a result, products are not limited to physical objects, it also includes services and other intangible items such as events, destinations or humans (Perreault et al., 2009). Three layers of a product may be identified. Firstly, it consists of the customer value, which builds the core. This stage considers the fulfillment of needs and benefits a consumer receives by purchasing the product. The next layer builds the core product. In that stage, the focus is on delivering a complete product including multiple factors such as quality, branding as well as style. The last layer is the extended or augmented product. This stage describes additional benefits – such as support service – for customers of the product that may increase their satisfaction (Chaffey & Ellis-Chadwick, 2019; Kotler et al., 2020).

20 Products can be classified as consumer or business products. Consumer products are supposed to be used directly by the customer without further processing. Those products may be classified into four groups: convenience, shopping, speciality and unsought. Normally, little assessments are carried out for convenience products by the customer since they are inexpensive and frequently bought. Secondly, shopping products are evaluated and compared in detail before the purchase since they are usually higher in price and long-lasting – implying that they are less frequently bought. Comparison is low whilst the price is often high for speciality products since consumers are convinced that they want this specific product. Moreover, purchasers of specialty products are often willing to make an effort in order to acquire it. Lastly, unsought products are either not desired by – potential – customers or they are not aware of their existence (Perreault et al., 2009). Products either required for running a company or bought to be further enhanced or processed are called business products. They can be categorized into three groups: capital items, materials and parts and lastly supplies and services. Installations (e.g. property or specialized machines), as well as accessory equipment (e.g. tools or office equipment), are subsumed under capital items. The second category – materials and parts – consists of all types of raw and auxiliary material, goods in process and finished items. Operating materials (e.g. cooling liquid), services, as well as equipment for maintenance and repair (e.g. screws, cleaning) and lastly consulting services, are included in the third category – supplies and services – of business products (Armstrong et al., 2020).

Besides the actual product – and its quality – other influences are essential to be considered. Branding, packaging and support services will be described in the following paragraph. Names, slogans, designs, images or combinations of those are used to create a brand, effectively linked to the producer of the goods/services. By developing a strong brand, companies are enabled to position and differentiate their products from those of competitors. Moreover, customer’s perception of the offered product is likely to be influenced since a well-established brand might convey a certain quality standard and reliability. Customers' perceived value of a product might be linked to a brand and that might result in commitment to the business. Furthermore, by offering different brands, manufacturers are able to reach different target groups and markets more effectively. For example, large supermarkets usually offer own-label brand products, which tend to be – compared to the market leader – cheaper alternatives for more price- sensitive customers (Chaffey & Ellis-Chadwick, 2019; Kotler et al., 2020).

21 Packaging is another vehicle used to improve the awareness of products. Especially in stores, the packaging differentiates and positions the product to those of competitors and is a crucial instrument to attract the attention of (potential) customers. Furthermore, the packaging might enhance the recognition and perception – e.g. by using recycled materials – of a brand. Apart from promoting the product, the packaging aims to protect the product from damage during its delivery, from being shoplifted or – especially in case of groceries – from spoiling. Furthermore, well-designed packaging might make the usage of the actual product more convenient for the consumer (Kotler et al., 2020; Perreault et al., 2009). Lastly, the provided support services may influence customer’s attitude towards a brand. Those services are offered after the product is already sold. The aim is to keep customers satisfied and create a positive experience with the brand in order to establish a relationship and loyalty. Offering convenient interaction alternatives – such as phone calls, online assistance or local stores – and detailed information and help increase the value for the customers (Armstrong et al., 2020).

2.4.2. Price

Price is defined as “the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service” (Armstrong et al., 2020, p. 292). In order to position a brand, businesses may use a suitable pricing strategy. The low-cost-, premium-, focus and hybrid strategies are described in Chapter 2.2. In general, prices for products have an upper and a lower limit, called price ceiling and price floor respectively. If the price is above the upper limit, customers are not willing to buy the product (no demand). The costs of a product represent the lower price limit since no profits can be generated below this amount. Therefore, businesses set the price somewhere between those limits, in order to be profitable. Businesses may determine the price for a product by either the cost-based or the value-based approach. In the former, the costs for producing the product/service are calculated and a margin is added. On the other hand, the custom value- based approach identifies the desired value of the product before deciding on the sales price, which in effect determines the allowed costs for the following design and production of the product. In both approaches, it is recommended to take the price and perceived value of similar products offered by competitors into consideration (Kotler et al., 2020; Runia et al. 2019).

22 The aspired objectives of the business may influence the price since the demand responds quickly to changes. Firstly, objectives could be in terms of profit. For example, the aim could be to generate enough profits to continue the business, maximize profits or based on financial ratios (e.g. a certain ROI for a product). Secondly, objectives could be related to sales. In such a case a company might aim to increase the market share of a product. And lastly, businesses might aim to keep the status quo. That is usually the case when the current market share and profits are considered satisfactory (Perreault et al., 2009).

In decisions concerning changes in sales prices, the price elasticity of the demand concept needs to be included. The core of this concept is that changes in price causes changes in the demand for products. However, the effects depend on the price sensitivity of the customers. The elasticity can be calculated as follows:

With 훥d : (absolute) change in demand (e.g. -10 units) d: demand prior to a change in price 훥p : (absolute) change in price (e.g. -1$) p: price prior to the change

Demand is classified as inelastic when Ɛ > −1 and as elastic when Ɛ < −1. This means that in the case of elastic demand, a slight increase in price results in a relatively higher reduction of demand and vice versa. On the other hand, increases in price for inelastic products may result in overall higher turnover since the demand decreases less proportional. Therefore, it is essential for businesses to have knowledge of how sensitive the demand responds to changes in price before making that decision. Figure 2 illustrates the price elasticity of demand for an elastic product. The price reduction from originally p1 to p2 effectively increases the demand for that product from d1 to d2 (Chaffey & Ellis-Chadwick, 2019; Runia et al. 2019)

23

Fig. 2: Price elasticity of demand

2.4.3. Place

Place is defined as an “element of the marketing mix that involves distributing products to customers in line with demand and minimizing cost of inventory, transport and storage” (Chaffey & Ellis-Chadwick, 2019, p. 521). Perreault et al. (2009) emphasise the importance of the location and an appropriate amount of the product offered to the customer.

Manufacturers have the choice to either distribute the product directly – without the involvement of third parties – to the final customers or cooperate with one or more intermediaries (indirect distribution). The latter case often involves wholesalers, retailers or business distributors. Various factors – such as costs and logistics – influence the decision of the distribution channel (Kotler et al., 2020). Direct distribution is more common for business products since often large quantities are ordered and customers might be dense in certain locations. Although, e-commerce offers producers the opportunity to sell their products directly to consumers as well. According to Chaffey and Ellis-Chadwick (2019), distributing products online has the advantage that more potential customers – e.g. in other regions – can be reached and specifically targeted (e.g. by developing different web presences for each country/region). Regardless of the target group, when selling products directly, producers are solely responsible for the whole marketing activities and are able to adapt them quickly to perceived changes in customer behaviour. Another reason for direct distribution may be that the manufacturer did not find a suitable distributor for cooperation (Perreault et al., 2009).

24 Consumer products are often sold indirectly. Intermediaries might solve the mismatch of quantity. In that case, manufacturers produce many units of their goods and intermediaries offer smaller packages to the final customers. Moreover, intermediaries manage the discrepancy of product lines. That means that they offer complementary products from different businesses. For example, one business specialises in producing pet food only and another offers toys for pets. Both companies let their products be distributed by the same intermediary and therefore customers are only required to visit one store. Apart from the benefits for the customers, distributors might have facilities in different areas and effectively reach more customers than the manufacturer could on his own. Furthermore, intermediaries might offer the distribution more cost-efficiently than producers due to established processes, technology or skilled personnel (Perreault et al., 2009). The relationship between manufacturer and intermediary needs to be managed carefully since otherwise, conflicts may arise. Conflicts occur especially in terms of differences in aspired objectives (e.g. the intermediary wants to sell products exclusively while the producer intends to sell them in as many locations as possible) and the distribution of power (e.g. who determines which products are distributed by the intermediary – producer or intermediary itself?). Unclear or insufficient communication between the parties may also be a cause for conflict (Meffert et al., 2012).

2.4.4. Promotion

Promotion is defined as “communicating information between the seller and potential buyer or others in the channel to influence attitudes and behavior” (Perreault et al., 2009, p. 368). The methods applied to promote a product depend on the objectives. Since promotional activities are hard to measure, businesses often set goals in terms of changes in attitudes and perception. For example, a business may aspire to increase the overall brand awareness or to illustrate the difference and value of their products compared to those offered by competitors. Forming emotional attachments and possibly influencing purchase intentions and loyalty to a brand could be another aim (Meffert et al., 2012). One method to promote a company’s products is personal selling. In this case, the seller outlines the product features and benefits directly to potential buyers. Instant feedback from the customer and the possibility to adapt the promotion strategy accordingly are advantages of this approach, but it is also relatively cost-intensive. Mass selling is another promotion method and on the other end of the spectrum. This approach intends to reach many potential customers

25 simultaneously and is rather standardized. Advertising is a common instrument in this method. Compared to personal selling, mass selling might be less cost-intensive. Another method to increase awareness is sales promotion. Besides the final customers, this approach might be targeted at distributors or the manufacturers own employees. The fast implementation and corresponding quick results are advantages of this approach (Perreault et al., 2009). Ideally, promotional activities arouse customer behaviour to follow the so-called AIDA model. Firstly, generating awareness (first A in the model) is often achieved by providing information about the product. Subsequently, the customer becomes interested (I in the model) in the offer. Selective advertisement and other promotional methods might develop the customers’ desire (D in the model) which precedes the purchase (Action – final A). Depending on the previous awareness of the product, the promotional activities either need to inform customers in detail, persuade them to acquire it or sometimes reminders are sufficient to generate sales (Perreault et al., 2009; Runia et al. 2019) In order to achieve the intended results of the promotion, it is crucial for businesses to understand the communication process. This process starts with the sender aiming to transfer a message correctly to the receiver (here: the customer). Words, images and sounds are used by the sender to encode and deliver the meaning of the message. A suitable channel – e.g. TV, radio or posters – are used to reach the targeted receiver. Typically, the customer has to decode them to fully understand the message of the sender. The challenge in this process is to encode the message very clearly to avoid wrong decoding and misunderstandings. Distractions during the communication process – called noise – complicate the correct transfer of the message. Regardless of whether the message is delivered correctly or not, feedback from the receiver – e.g. by increased sales or a response message – is valuable for the sender to assess the effectiveness (Kotler et al., 2020; Perreault et al., 2009).

2.5. Customer Loyalty

Iglesias et al. (2020, p. 155) define customer loyalty as “the customer’s willingness to build a long-term relationship with a specific brand, and recommend such brand to other people”. Businesses benefit from loyal customers since they repeatedly purchase their products and generate turnover and growth (DeWitt et al., 2008; Goncalves & Sampaio, 2012; Oliver, 1999; Wu & Li, 2018; Zeithaml, 2000). Loyal customers are also more likely to pay higher prices and recommend the brand (Giovanis et al., 2015; Iglesias et al., 2020; Yim et al., 2008;

26 Zeithaml et al., 1996). According to Oliver (1999), three phases – namely cognitive-, affective- and cognitive loyalty – precede the final form of customer loyalty, in which customers take action (action loyalty).

2.5.1. Types of Loyalty

Customer loyalty can be distinguished into different types. Firstly, attitudinal loyalty builds on psychological commitment to a brand. Customers being attitudinal loyal to a brand are less likely to change their preference for the brand – despite negative information – since the perception is based on deeply held beliefs and emotions (Goncalves & Sampaio, 2012; Uncles et al., 2003). Secondly, behavioural loyalty is characterized by repeatedly acquiring products/services from the same brand (Lee et al., 2018). This type of loyalty is based on the assumption that customers try several products until they find one that satisfies their needs and wants and effectively repurchase this product in the future as long as it is available. Compared to attitudinal loyalty, the commitment to the brand is relatively low in the case of behavioural loyalty. However, behavioural loyalty can be based on attitudinal loyalty (Wu & Li, 2018). Lastly, loyalty to a product may depend on the circumstances of the customer. In this case, the individual’s budget, brand reputation or time pressure may influence the customer’s choice (Uncles et al. 2003).

Further, Dick and Basu (1994) established four categories of customer loyalty. Firstly, low or no loyalty is characterized by little commitment to the brand. Moreover, customers in this category indicate little intention to patronize and repurchase the brand’s products. Secondly, repeated purchases – e.g. habitual purchases – of the same brand but without attitudinal attachment is typical for spurious loyalty. The concept of latent loyalty suggests positive attitudes (e.g. positive emotions and beliefs) towards a brand. However, despite those convictions, situational influences – such as price promotions – might influence the customers’ decision to purchase a product from a competing firm. Lastly, true loyalty is characterized by favorable attitudes and commitment to a brand as well as repeated purchases of its products (Bowen & Chen McCain, 2015; Curran et al., 2010).

27 2.5.2. Influences on Customer Loyalty

2.5.2.1. Satisfaction

Customer satisfaction is considered to be one of the most influential antecedents to customer loyalty (Chen & Wang, 2016; Coelho & Henseler, 2012; Hoe & Mansori, 2018; Johnson & Gustafsson, 2000; Lowenstein, 1995; Yim et al., 2008). Johnson and Gustafsson (2000, p. 50) define satisfaction as “a customer’s overall evaluation of the purchase and consumption experience with a product, service, or provider.” Hence, a difference in prior expectation and performance of the product or service may induce dissatisfaction while met or exceeded expectations lead to satisfied customers (Chen & Wang, 2016; Oliver, 1999; Oliver et al., 1997). Jones et al. (2000) state that all previous transactions are included in the customer’s assessment of their satisfaction. The decision to pursue a relationship and stay loyal to a brand is influenced by previous experience (Curran et al., 2010). Normally, the correct delivery and appropriate quality of the actual product or service have a larger impact on the satisfaction and likelihood for repurchase than additional features (Jones et al., 2000; Lynch, 1995). However, other factors such as the availability of a service or product, competencies of the staff and the environment during the transaction influence the overall evaluation of customer satisfaction (Johnson & Gustafsson, 2000; Walsh et al., 2008). Moreover, besides the perceived quality, Hoe and Mansori (2018) and Zeithaml (1988) found that durability, serviceability and aesthetics of a product are positively correlated to customer satisfaction. Walsh et al. (2008) found that customer satisfaction in terms of staff members and available assortments positively impacts attitudinal as well as behavioural loyalty. Similarly, Goncalves and Sampaio (2012) found in their study that customer satisfaction is positively correlated for customers intentions to purchase a product again but no correlation was found for the actual repurchasing behaviour.

2.5.2.2. Customer Value

The customer’s perceived value of a product is often measured against the price (Hoe & Mansori, 2018). According to Wu and Li (2018), the higher the perceived value of a product the more likely customers are to patronize the brand. In their work, they distinguish utilitarian, hedonic and social values. Convenience, saving in cost, time reductions, as well as the overall functionality of a product, are considered utilitarian values. The emotional, cognitive and overall experience with a brand is subsumed under hedonic value. Products influencing social

28 perceptions – e.g. the reputation or status of customers – are regarded as high in social value. Wu and Li (2018) found that all three types of customer value have a significant influence on loyalty. However, they identified that hedonic value affects customer loyalty most and utilitarian value least. Similarly, Oliver et al. (1997) stated that providing mere utilitarian value to customers is not sufficient. Therefore, it is suggested to provide customers with hedonic value during the consumption in order to increase their perception of the product’s value (Oliver et al., 1997).

2.5.2.3. Customer Involvement and Participation

Another way to potentially increase retention and strengthen the relationship between business and customers is to involve them in the development or improvement of products (Donaldson & O'Toole, 2007). In the co-creation process, the customer actively influences the product outcome. Long-lasting and trusting relationships between businesses and customers may be developed by involving the latter. Furthermore, companies obtain information about customer values and potential trends (Iglesias et al., 2020). Ideally, customer participation increases the perceived value for the customer as well as his/her satisfaction with the product and brand. Chen and Wang (2016) and Iglesias et al. (2020) found that involving customers in the creation process leads to increased loyalty. Moreover, the researchers discovered a positive relationship between customer participation and the customer’s enjoyment as well as the trust in the brand (Chen & Wang, 2016; Iglesias et al., 2020). Similarly, Yim et al. (2008) found that giving feedback and experience adaptations in the received service creates a positive attitude towards the business. Another approach to enhance customer satisfaction and value for each customer individually is to offer specific adaptations to products. Customised products aim to target and fulfil customer demands better than mass-produced alternatives. In their study Coelho and Henseler (2012) found that customisation is positively correlated to the perceived quality, satisfaction and loyalty.

2.3.2.4. Switching Costs

According to Jones et al. (2000), any element that induces increased effort or expenses to customers in order for them to change to an alternative seller is considered switching costs. Theoretically, customers examine the potential benefits against the costs for changing the seller

29 and remain with a brand as long as no competitor offers a more attractive option (Giovanis et al., 2015). In order for a customer to switch, the alternative offer is required to exceed the incurred switching cost. Switching costs are usually higher for customized products compared to standardized alternatives (Coelho & Henseler, 2012). In the case of low switching barriers, dissatisfied customers are more likely to change to another alternative. Thus, if customers perceive switching barriers as high, they might stay with the current provider despite being discontent. Therefore, the creation of high barriers might increase the customer retention rate (Curran et al., 2010; Gummesson, 2002; Jones et al., 2000).

2.5.2.5. Other Influences

It has been found that trust is significantly positively related to customer loyalty. Reliability, social and environmental responsibility and integrity can affect customer trust in the brand. This suggests that the customer’s perception of a company’s ethical behaviour influences loyalty to the brand (Iglesias et al., 2020; Jones et al., 2000). Similarly, Giovanis et al. (2015) found that the customer’s perception of the quality and fairness of the provided service is positively correlated to loyalty. Customer trust can further be developed between customers and the salesperson providing the service. In that case, customers might build a relationship with the staff members and as a result remain loyal to the company (Yim et al., 2008). Moreover, customisation has been found to be positively linked to customer trust (Coelho & Henseler, 2012). Another moderating effect of customer loyalty is the duration of the relationship. It has been found that customers repurchase products more regularly and spend more money the longer the customer relationship exists, suggesting an increased loyalty (Goncalves & Sampaio, 2012). On the other hand, no impact of income and gender on customer satisfaction or loyalty has been found (Walsh et al., 2008).

2.5.3. Customer Retention

Since this study will focus particularly on customer retention, a brief outline will be given. Customer retention is defined as “techniques to maintain relationships with existing customers'' (Chaffey & Ellis-Chadwick, 2019, p. 509). Moreover, customer retention is one of five phases of the customer life cycle, which lead to the purchase of a product and – in the best scenario –

30 to a long-lasting relationship between the business and the customer. The five incremental stages of the customer life cycle are: “Reach, Acquisition, Conversion, Retention and Loyalty” (Ramírez-Durán et al., 2021, p. 2). According to Santouridis and Tsachtani (2015), in the retention phase relationships between the business and the customers are established as a result of satisfying customer expectations by acquiring valued products or services. As already outlined at the beginning of Chapter 2.5., retaining customers is beneficial for businesses since sales will be generated in the future and marketing expenses may be reduced (Lee et al., 2017). Santouridis and Tsachtani (2015) and Oliver (1999) state that gaining customers is commonly more expensive for businesses – especially in competitive markets – than to keep them. Zeithaml et al. (1996) stated that retaining customers may be more beneficial for businesses than lowering costs or increasing the company’s market share. Satisfied customers who have already bought products from the brand do not need to be informed in detail and persuaded of the benefits and value since they have the knowledge (Stone et al., 2000). Researchers generally agree that it is more profitable to retain customers than to acquire them (e.g. Iglesias et al., 2020; Oliver, 1999; Santouridis & Tsachtani, 2015; Zeithaml, 2000). However, customer acquisition may differ in expenses. Zeithaml (2000) suggests that acquisition is five times more expensive than retention whereas Iglesias et al. (2020) state that it can cost more than 20 times more.

One approach to retain customers is loyalty programs. Bowen and Chen McCain (2015) outline that those programs create a win-win situation since incentives are offered to customers to stay with the company and the business benefits from the repeated sales. Moreover, by implementing loyalty programs businesses may identify the preferred products and total revenue of individual customers (Donaldson & O'Toole, 2007). However, the potential success of a loyalty program depends on the appropriate implementation. According to Duffy (1998), a logical and simple unit and measure – such as points per purchase – has to be selected and a reliable electronic data processing system has to be established. Furthermore, DeWitt et al. (2008) and Zeithaml et al. (1996) describe that a well-established complaint management can enhance customer retention. Complaining customers maintain the relationship – since the majority decides to accept the situation or defect without complaining (Lowenstein, 1995; Schüller & Fuchs, 2013) – while offering feedback to the firm. Positive perception of the service might increase customers' trust in the provider as well as the likelihood for repurchases. Furthermore, customers receiving good complaint service are likely to

31 recommend the business (Stone et al., 2000). However, if complaints are not in an appropriate and satisfying manner, customers are likely to defect from the company.

2.6. Summary

Businesses have to decide which generic strategy to pursue in order to stay competitive as well as to position and differentiate their products and brand from their competitors. The decision whether to follow a cost leadership-, differentiation-, focus- or hybrid strategy has to be compatible with the overall business strategy and needs careful evaluation of the industry by assessing Porter’s five forces. The business’ decision which generic strategy to pursue often determines the application of the corresponding marketing mix. Product, price, place, and promotions are tools to target a customer segment specifically. Businesses aim to find the optimal marketing mix for their targeted customer segment in order to increase the satisfaction and value for customers and effectively enhance their loyalty to the brand.

32 CHAPTER THREE

METHODOLOGY

3.1 Research Philosophy

Research philosophy refers to the belief about how data about a phenomenon should be gathered and analyzed (Crossan, 2003; Holden & Lynch, 2004). Authors have classified research philosophy into four main types which are namely: pragmatic, realistic, positivist and interpretivist (Holden & Lynch, 2004; Mkansi & Acheampong, 2012; Saunders et al., 2015). Also, Mkansi and Acheampong (2012) noted that research philosophy is classified into three categories namely: epistemology, ontology and axiology which are most times applied to the qualitative/quantitative dichotomy. Epistemology refers to the validity, scope and methods through which a theory of knowledge is established (Mkansi & Acheampong, 2012). It further refers to distinguishing between established beliefs (based on facts and evidence) and mere opinion (Mkansi & Acheampong, 2012). It also refers to the study of knowledge, its nature, origin and scope. Ontology refers to sets of concepts and subject areas and categories that describe their properties and the similarities between them. Ontology also refers to the study of metaphysics while axiology refers to the study of valuable things and the nature of value (Mkansi & Acheampong, 2012). Hence, this research is categorized as epistemological research as it studies knowledge such as marketing mix, Porter’s generic strategies, Porter’s five forces, customer loyalty etc. It also studies the nature and scope by which these concepts are applied in the real world situation (with facts and evidence) using a case study design. The research is then classified as pragmatic. Pragmatic philosophy of pragmatism refers to the idea that a concept or ideology can only be proved to be true or reality if it has been proved to be workable or practical hence any idea that cannot be proved to be workable or viable should be rejected (Padilla-Díaz, 2015). This research, therefore, follows a pragmatic idea or proposition because it tries to investigate the practicability of concepts such as Porters’ generic strategies and marketing strategies.

33 3.2 Research approach

A research approach employs either inductive or deductive reasoning. Inductive reasoning starts with an observation and through data collection and analysis ends with a general theory explanation or formulation of theory while deductive reasoning starts with an idea or a general theory or hypothesis then through observations and experiments ends with a specific or particular conclusion (Armat et al., 2018; Azungah 2018; Young et al., 2020). Hence, the research employs inductive reasoning as it aims to give theoretical explanations on how companies react to business disruptions in terms of their marketing mix strategies using a case study of COVID-19 and its impact on businesses in Sweden.

3.3 Research Type

This research is taking on an exploratory type of research. Stebbins (2001) noted that exploratory research aims at understanding why a phenomenon or situation operates or is the way it is and to generate preliminary hypothetical explanations for it. Also, Cuthill (2002) argues that exploratory research aims at developing ideas that reveal the reasons for a potential cause/effect relationship and that this happens when the researcher is beginning to understand what they are observing while in the process of building a potential cause/effect relationship. Exploratory research also aims to formulate problems, to bring clarity to concepts and/or form hypotheses (Jaeger & Halliday, 1998). Hence, this research is exploratory research as it does not try to test or validate any hypothesis but rather tries to build potential hypotheses about how firms react in terms of their marketing mix strategies when a significant disruption to the normal human activities such as COVID-19 occurs. It aims to develop a potential cause and effect relationship between firms’ marketing behaviors and external disruptions to business activities.

This is attributable to the reality that exploratory research is focused on understanding the focus of the study or research objectives rather than providing convincing answers to the problem statement. Thus, a case-based/expert opinion or actual world possible outcome, that is commonly used with a qualitative method of analysis, is best suited for such investigation (Queirós et al., 2017).

34 3.4 Research design and method

Case study design with a qualitative method of analysis: The research is a qualitative cross case analysis with a case study design (Kohlbacher, 2006). A case study design is a research that is widely used to gain an in-depth understanding of complex issues using real-life context (Bennett, 2004). Also, case study design, though used in a wide variety of disciplines, is particularly used in social sciences (Baxter & Jack, 2008). Baxter and Jack (2008) further argued that case study design is usually used to test theoretical models by applying and using them in real-world scenarios (Tellis, 1997). Tetnowski (2015) described case study research as a useful tool that is used to answer complex real-life questions. Hence, this research is a case study design as it aims to apply, examine and assess theoretical business and marketing models such as Porters’ generic strategies and marketing mix respectively in a real-world situation. Yin (2003) noted that case study design is used in exploratory research, descriptive and explanatory research. There is a single case study design and there is a multiple case study design. A single case study design is mostly used in experimental research for subjects such as applied psychology, human behavior, health research or education whereby the researcher/subject serves as their own control rather than use an external organization, group or individual (Yin, 2009). Single-case designs are used when these designs individually have sensitive differences in their organism compared to multiple case study designs which are based on average or a representation of groups (Yin, 2009). Single case study designs are aimed at predicting behavior by affirming or confirming the consequent, verifying or proving that if there is no intervention the situation would have remained the same, and that a previously observed changes behavior can be reproduced (Gerring, 2016; Yin, 2009). Also, single case studies are also used in the study of a spatially bounded phenomenon such as a country, a political party, a revolution or a person observed at a single period of time or unlimited period of time (Gerring, 2004). On the other hand, a multiple case study design is a case study research where multiple instrumental bounded cases are studied to develop a much deeper understanding than a single case study design (Yin, 2006). Additionally, multiple case study research provides evidence from several sources making it easier to generalize while a single case study is often considered to be idiosyncratic (Gerring, 2004). Furthermore, multiple case study research design is often methodological similar to experimental research though it is normally used in a qualitative research method (Yin, 2009). There are holistic and embedded single and multiple case studies according to Yin (2004) as described in table one below:

35 Holistic Embedded Single case study A case with a unit of analysis multiple cases each with one unit of analysis Multiple case A case with multiple units of Multiple cases with multiple units of study analysis analysis Table 1: Case studies according to Yin (2004)

Therefore, based on the foregoing and for the purpose of this research, an exploratory holistic multiple case study design is adopted as it studies the impact of COVID-19 on companies’ marketing mix as a case study about marketing mix using multiple units of analysis (i.e. companies).

The reason for choosing to use a qualitative method of data collection and analysis is because of the insufficient availability of secondary empirical data concerning COVID-19 and its impact on businesses. There is little academic research on the impact of COVID-19 on business marketing mix strategies as it is a new problem which is still ongoing hence the best way to gain insight and provide explanations is by carrying out an original research which is usually done by collecting primary data through interviews, questionnaires and focused groups (Morse & Mitcham, 2002). Furthermore, quantitative research could still use primary data collection methods (Apuke, 2017; Park & Park, 2016) such as Likert scale questionnaires and direct quantitative data from companies such as the company’s financial records. However, limitations such as time constraint to gather this kind of data from multiple companies in order to run statistical analysis such as correlation analysis and regression partly informed the choice for qualitative method of analysis. Third, in order to achieve the aim of the research which is exploratory in nature, a case-based reasoning/expert opinion is required and more suitable (Allwood, 2012; Queirós et al., 2017). This is because an exploratory research is aimed at understanding the nature of the research problem or research question and not necessarily to provide conclusive solutions to the research question hence a case-based/expert opinion or real- world scenario which is mostly used with a qualitative method of analysis is most suitable for such research (Queirós et al., 2017). Primary data will be collected by means of in-depth interviews. These data will be analyzed using qualitative cross-case analysis. Cross case analysis improves researchers' abilities to comprehend how relationships could exist between discrete cases, demonstrate understanding from the original case, modify and generate new knowledge (Ragin, 1997), and construct, or theory building (Eckstein, 2002).

36 3.5 Data population

Data population refers to the entire group about which conclusions will be drawn (Etikan & Bala, 2017; Taherdoost, 2016). In research a population does not necessarily refer to people rather it refers to a group that contains elements which are being studied such as objects, organizations, events, countries, people, companies, species, organisms etc. (Barreiro & Albandoz, 2001; Taherdoost, 2016). The data population for this research are companies in the security and golf sectors in Sweden. These sectors have been well affected by the COVID-19 pandemic.

3.6 Data sampling method

Data sample refers to a specific group in the population from which data is collected (Barreiro & Albandoz, 2001; Etikan & Bala, 2017). Hence, a sample is a part of the population that has been selected which reflects and represents the entire population and from which conclusions and inference are drawn (Etikan & Bala, 2017; Taherdoost, 2016). There are eight types of data sampling methods which are divided into two categories namely probability and non- probability sampling methods (Gentles & Vilches, 2017). In probability sampling methods any member or part of the population have a chance of being selected in the study hence gives the research more credibility and objectivity as scholars argue that it represents the population objectively and without bias (Acharya et al., 2013; Delice, 2010; Phrasisombath, 2009). Probability sampling methods are mostly used in quantitative methods of analysis while non- probability sampling methods are mostly used in exploratory and qualitative research (Byrne, 2001; Gentles & Vilches, 2017; Marshall, 1996). There are four types of probability sampling methods namely: simple random sampling, systematic sampling, stratified sampling and cluster sampling. On the other hand, there are also four types of non-probability sampling method namely: convenience, voluntary response sampling, purposive sampling and snowball sampling (Taherdoost, 2016). Non-probability sampling are sampling methods where a selection of individuals or organizations are not randomly made but are rather made on other non-random criteria such as convenience, purposefulness or usefulness etc. Non-probability sampling enables the researcher to easily collect data and also not every member (such as individuals or organizations) has a chance of being included in the sample. The aim of non- probability sampling is usually not to test a hypothesis about the much broader population but

37 to gain understanding or insight of a small group, a situation or an under-researched group. These two categories of sampling methods are further explained below in table two:

Probability sampling methods Non-probability sampling methods Simple random sampling: in a simple random Convenience sampling: a convenience sample sampling every individual or organization in simply refers to the selection of members the population has an equal chance of being (organizations or individuals) of a population included in the sample (Taherdoost, 2016) who are easier to access. The argument for convenience sampling is that it is easier and inexpensive to gather data in this way. The criticism against convenience sampling is that there is no assurance that it represents the entire population hence difficult to make generalizations (Oppong, 2013). Systematic sampling: in systematic sampling Purposive or judgment sampling: Palinkas every member or part of the population is (2015) noted that purposeful sampling is identifiable or listed with a number which are widely used in research to identify and select not randomly generated but chosen at regular cases with strong relevance to the problem that intervals (Taherdoost, 2016) is being investigated. Also, it involves the researcher(s) using their judgment and expertise in selecting and sampling those members of the population that are most useful to the purpose of the research (Oppong, 2013; Taherdoost, 2016). Stratified sampling: this involves dividing the Voluntary sampling: similarly to convenience, population into subpopulations which are this type of sampling is easier and involves referred to as strata. These subgroups are based individuals or organizations voluntarily on similar characteristics which those in it responding to public online surveys. In this share in common. However, random or type sampling method a particular number of systematic sampling is used to select the final participants is predetermined from different sample from each strata (Taherdoost, 2016). characteristics that represents the entire population and once that is achieved the survey

38 closes. It is also referred to as quota sampling (Taherdoost, 2016; Yang, & Banamah, 2014). Cluster sampling: this also involves dividing Snowball sampling: snowballing is used most the population into subgroups each of which times to recruit participants from other has a reflective characteristic of the entire participants, especially when it is hard to population but final sampling is made by access the right people from the population for randomly selecting some subgroups instead of a sample. Hence, the number of the “right” some members of each subgroup (Queirós, people that the researcher have access to 2017). snowballs as they access the first right person who can potentially link them to other right people (Noy, 2008) Table 2: Summary of the categories of sample methods

Therefore, in order to achieve the aim of this research, convenience and purposeful sampling methods both of which are non-probability sampling methods are employed. Though as noted above, probability sampling methods give more credibility to the research as they represent the population in a more objective and unbiased manner (Acharya et al., 2013; Oppong, 2013; Phra Sisombath, 2009). However, they are not the most suitable for this research because they are suitable for quantitative research while this research employs a qualitative methodology (Allwood, 2012; Luborsky & Rubinstein, 1995; Taherdoost, 2016). The reason for choosing to use convenience and purposeful sampling methods is first because of time constraints. There is not enough time to sample participating organizations in this research entirely based on a purposeful sampling method. Hence, while certain companies in industries such as logistics, aviation, security, golf and e-commerce in Sweden have been chosen purposefully or based on judgment and based on the aim of the research for a data sample, the final sample of companies that are used for the research is limited to companies with easier accessibility to collect data.

Furthermore, apart from convenience, there are two criteria for choosing companies to sample based on judgment. First, is companies whose industry have been affected whether negatively or positively by COVID-19 and companies that are located in the study population. Hence, Epton Trading and 365id will be investigated as they are one of the major players in their respective industries which were well impacted by COVID-19 and only the marketing mix operations of their branches in the study population will be investigated. Also, in order to

39 further achieve purposeful sampling only practitioners at the managerial level with at least two years of experience as managers in the marketing departments will be interviewed.

3.7 Data collection

Primary data was collected with in-depth interviews. These interviews were conducted with representatives from the companies that responded. Prior to the interview, the researchers generated questions from the theoretical framework. These frameworks anchor questions from 1, Porter's generic strategies. 2, Marketing mix. 3, Customer loyalty & retention. Emails were sent to various companies in the logistics, aviation, security, golf and e-commerce sectors; in the end, the researchers were able to get responses from two companies in the golf and security sector respectively. An interest was shown in the topic hence an interview date was scheduled for April 2021.

Prior to the interviews, the interview questions were forwarded to the respondents so as to aid the interviewees in preparation of the interview and also to facilitate any question that needed clarification. The questions can be found in the appendix.

In the midst of the interview both interviewers introduced themselves and the purpose of the interview. Each interview was conducted within a 45 minutes time frame. The first interview was conducted with one of the researchers face-to-face with the interviewee whereby the other researcher joined the meeting via Zoom. Proper social distancing was conducted. The second interview was conducted only via Microsoft Teams. The representatives of both companies gave their permission for the researchers to record the interviews. These recordings facilitated easier transcription. One of the representatives emphasized the importance of confidentiality regarding some of the information obtained during the course of the interview. Assurance was given that the researchers will not divulge any confidential information. After each interview, both interviewees gave the option that they can be contacted if more questions arose.

On the other hand, secondary data is collected through an extensive literature review. Databases such as Business Premium, ABI/INFORM complete database, Elsevier-Science direct and Google Scholar were searched. Key search words such as “Marketing strategies” “Marketing mix”, “Porter’s five forces”, “Porter’s generic strategies'', “business model”, ''COVID-19”

40 AND “impact on business marketing strategies”. Justification for using the above mentioned databases are explained in table two below:

Database Justification Business Premium Business premium is the most comprehensive offering of ProQuest as it contains a combination of ABI/INFORM collection, accounting, tax and banking collection, business market research collection, JP Morgan research, Asian and European business collection, it has global coverage of economics and business, which includes a collection of thousands of full-text journals, abstracts, dissertations, trade journal publications, periodicals such as Wall Street Journal, Financial Times, Economist, working papers and Australian Financial Review. Furthermore, it has coverage of over 50 million US company records from Experian and almost a million profiles of manufacturing companies and it also holds in-depth reports of over 3,400 companies across all industries and regions of the world. It is hence the most suitable database for contemporary business and marketing related research especially considering the fact that COVID-19, its impact on companies and their reaction are very recent events (less than a year and half) hence sources such as Financial Times and Economist and other related source contains recent news affecting the economic and business world as well as specific companies. Elsevier Science direct Elsevier science direct though primarily covers science, medicine and other health related research is deemed suitable for this research as the research includes COVID-19 which is a health related issue. Google Scholar Google scholar is known for its reliability and it is a free online platform that researchers use to access both physical and digital scholarly articles from different sources such as academic publishers and universities. Therefore this was part of the reason it was chosen for this research. Table 3: Justification for using various databases

41 3.8 Data analysis

For the analytic process and interpretation of the data collected, cross-case analysis was applied to facilitate and give a comprehension of the collected data. Cross-case analysis aided by making comparisons based on the difference in the incidents, action and process taken by each unit (companies) in the answers to the questions in the interviews hence providing answers to questions arising from the literature review (Cruzes et al., 2014). Cruzes et al. (2014) explained cross-case analysis as a technique that aids the comparison of what a unit of a case has in common and the difference in the occurrences, activities and processes. This research adopted the foregoing explanation for the implementation of cross-case analysis in the analysis section of this study.

According to Miles and Huberman (1994), when a research pinpoint on outlining and analyzing the relationship between variables, that research is called a variable oriented analysis (Bruscia, 2005). Bruscia (2005) went further to outline the different options a researcher needs to focus on in order to achieve a good analysis. He pointed out Case-oriented and variable oriented analysis using cross-case analysis as an analytic tool. Bruscia (2005) further stated that a variable-oriented analysis using cross-case method, identifies the common variable amongst cases, therefore, using those identified variables in illustrating the phenomenon across all cases. Thus variable-oriented cross-case analysis was used for this research.

3.9 Research evaluation

The research will be evaluated by its level of reliability and validity as it is a qualitative cross- case analysis research. According to Noble and Smith (2015) research reliability evaluates the extent to which the research results can be reproduced when repeated in the same or similar conditions hence answering the question of what story the research is telling. Secondly, reliability evaluates the consistency and coherence of the research results across different sections of the research work and in comparison with other observers and/or researchers of the same research topic or problem or phenomenon (Mohajan, 2017). Third, reliable research may not necessarily be valid or correct but must always be reproducible (Mohajan, 2017). During the course of this research, reliability and validity were achieved.

42 CHAPTER FOUR

EMPIRICAL DATA

4.1. Interview 1 – Epton Trading

Company profile Epton Trading is a family-oriented company that was founded in 1983 by Åke Ericsson and Sven Tumba. The company offers sales, rental and maintenance of golf cars and as well as sales of electrical utility vehicles to the public sector. The idea of the company came about when Sven Tumba, who was a former golf player and Åke Ericsson noticed the boom of golf cars in the United States. They obtained the licence from Club Car in the United States for sole sales of its product in Sweden. For the past years, Epton Trading has been in business with the Swedish post office. According to Gunnar “Epton Trading has delivered almost 1000 cars to the Swedish post office” (G. Werner, personal communication, April 22, 2021). Not only are they in business with Swedish Post, but they are also suppliers of the Swedish railroad commission. For the past 38 years the leading electric car supplier in Sweden as well in the golf market as the public sector with utility electric vehicles.

Generic Strategy In terms of generic strategies, Epton Trading is applying a combination of strategies. According to Gunnar, the company put emphasis on keeping the cost down even though there has been a 36 percent rise in demand for their product. Although there was an increase in demand, the company employed only two new employees to curtail cost. Also Gunnar mentions that they also apply a focused strategy. The company focuses on the sales of its electric vehicles in the golf market sector and the public sector. and does not want to add more products to their portfolio.

COVID-19 According to Gunnar Werner, Epton Trading was positively impacted by COVID-19. The growth as of the first quarter of 2020 to the first quarter of 2021 is 36 percent. Due to the pandemic there was a surge in the interest in golfing in Sweden. According to Gunnar, the surge of interest came about when people realized when they played golf they didn’t have to

43 worry about social distancing. Hence this boosted the golf industry which led to the increase in demand for golf cars.

5 Forces – Legal restrictions In the Legal ramification, Epton Trading was not affected. Considering that Sweden did not impose any lockdown hence it did not affect the mobility of customers.

5 Forces – Suppliers The company noticed disruptions in its supply chain. It affected the delivery system of its product from the licensing company in the US. According to Gunnar, Club Car (US) had a backlog of orders however it was not possible for the company to increase its personnel. Due to this fact, the production rate was affected.

5 Forces – Customers/Buyers As stated by Gunnar, although Epton Trading’s supply chain was affected, customers are willing to wait for their orders. Gunnar noted that the customers have an understanding for the delay caused by COVID, that it hampered the production of its suppliers from the US. Furthermore, Gunnar pointed out that one of its competitors, Yamaha, stopped selling golf cars. Yamaha, which was one of its fiercest competitors, decided to focus on other business. It was a great opportunity for Epton Trading to monopolize the market.

Product Prior to the pandemic the company placed importance on the quality of its product and now the quality is as essential.

Price According to the interviewee, “they raised the price by 10%” (G. Werner, personal communication, April 22, 2021) in comparison to the pre-COVID. Prior to COVID, Epton Trading was more price-conscious however because of the increase in demand and lesser competitors (Yamaha focusing on other business activities) they concluded that its not essential.

44 Place In a reaction to higher demand caused by COVID, the company is in a discussion of having subsidiaries in several parts of Sweden.

Promotion According to Gunnar, a slight change in how they promote their product has been made. Before COVID-19, the promotion was based on selling. In reaction to higher demand, that is no longer as essential as before. Therefore, the promotion now consists more of making the brand stronger by communicating the attitudes that Epton Trading and Club Car represent.

Customer behaviour and retention When asked about the customer behaviour, he noted that it has been positive. As mentioned above he said that due to the rise in interest in golf the demand for their product is at an all- time high. He also noted that despite the delay in the delivery, the customers are willing to wait for the products. Regarding retention, Epton Trading performs servicing and maintenance on sold cars. Having considered that one major source of revenue to the company comes from renting out the cars to golf courses instead of selling them. Since buying golf cars is an expensive investment for the customers (golf course), this option is very popular. The customers, in their turn, rent out the cars to their customers, the players. For the golf courses, this is another source of revenue. Hence it's a win-win situation which leads to customer retention.

4.2. Interview 2 – 365id

Company profile 365id offers ID scanners and the necessary software to businesses such as car rentals and banks. Those scanners determine whether an ID document – regardless, where in the world it was issued – is real or fraudulent. Therefore, 365id is a company in the security sector. According to Anders Green – the Sales and Marketing Director – 365id has ten employees and about 700 customers in over 50 countries.

45 Generic Strategy 365id implements a hybrid strategy. Firstly, compared to the prices of their competitors, 365id offers their scanners for 1/8 to 1/10 of the competitors’ price. Secondly, Anders Green explained the reason that 365id was able to offer their solution at a significantly lower price than their competitors. Instead of having the verification software installed on each scanner, 365id put the whole verification mechanism into the cloud. Therefore, the company used a different approach compared to the competitors. In effect, the company was able to offer a different solution to a significantly lower price.

COVID-19 According to Anders Green, the industry is extremely affected by the COVID-19 pandemic. As a result of limited physical contacts, the whole industry changes from a physical to a more digital marketplace. Since fewer people go to bank offices and car rentals – compared to before the pandemic – the business noted a significant decrease in scans per day. Approximately 30.000 scans were made on a usual day before the pandemic. This number has more than halved. Now, 365id registers about 14.000 scans per day. At the worst time – in April and May 2020 – only about 5000 scans per day were made. However, since the company generates their revenue by a monthly fee, regardless of the number of scans, 365id was not as severely affected by the reduced usage as competitors who take a fee per scan. Nevertheless, the number of sold scanners reduced significantly during the pandemic (-80 percent).

5 Forces – Legal restrictions 365id is indirectly affected by imposed travel restrictions due to the COVID pandemic. Since their customers are car rentals and hotels, the company noticed a significant decrease in the number of scans.

5 Forces – Suppliers No problems related to disruptions in the supply chain were noticed by the company. However, the interviewee noted that they do not produce scanners at the moment since they have enough items in stock. Moreover, he also stated that the company got informed about possible delays for components.

46 5 Forces – Customers/Buyers Anders Green noted that “there has been both a cancellation of agreements but also a hesitance to sign up with [their] service” (A. Green, personal communication, April 22, 2021).

Product As a reaction to COVID-19, the company started developing a mobile application. Prior to the pandemic, the company focused on offering the scanners as a physical product. According to the interviewee, 365id had to develop and offer a digital solution as well, in order to stay competitive. He also said that without the pandemic, the company would not have developed the mobile version now and would possibly even be out of business in a few years.

Price According to Anders Green, the company “increased the price quite significantly” (A. Green, personal communication, April 22, 2021) compared to before the pandemic.

Place Before COVID-19, the company offered their products at conferences, exhibitions, and face- to-face meetings. In Addition to the physical presentation, they used social media platforms – such as LinkedIn and Facebook – to acquire new customers. During the COVID-19 pandemic, 365id uses online services – e.g. Microsoft Teams – to present their products to clients. Moreover, they produced videos and other digital material to inform their customers.

Promotion Adaptations to promotional activities were implemented. Anders Green stated that more promotions were conducted through Instagram and Facebook than before the pandemic. Furthermore, he explained that during the pandemic, the company started using the service of Salesloop. This tool generates invitations and messages to potential customers – that match certain criteria (e.g. car rental businesses) – on LinkedIn. Moreover, 365id started to work together with external companies during the pandemic to increase their promotional activities.

Customer behaviour and retention Regarding customer behaviour, Anders Green noted that customers more often want to have a mobile version of their solution than the physical product. Especially during the pandemic, the wish for an App increased. Although, he also mentioned that potential customers are

47 characterised by uncertainty, hesitance, unwillingness to take risks and a general tendency to wait. Furthermore, more cancellations of agreements were evident during the pandemic. However, the company noted that existing customers – the ones that already use their solutions – tend to have more scanners per customer than before the pandemic. Customer retention is an important objective for 365id. In order to achieve this, the company asks their most important customers for their assessment and feedback of the service. 365id proactively reaches out to their customers and asks about preferred features, appearance and how they can help during the application of the service. Moreover, Anders Green mentioned that the company has “been very flexible with the pricing and the billing for a lot of customers during the pandemic” (A. Green, personal communication, April 22, 2021). Meaning, that the charged monthly fee has been reduced for companies in problematic situations or free trial months were offered.

4.3 Analysis Generic Strategy As outlined in Chapter 2.2. of this Thesis, four types of generic strategies – cost leadership-, differentiation-, focus- and hybrid – exist. Gunnar Werner stated that Epton Trading intends to reduce costs and keep them low. For example, the company’s demand increased more than a third during the pandemic but only two new employees were hired. As Hyeock (2016) established, producing products cheaper than the competitors can lead to a competitive advantage. However, a low-cost strategy is rather simple to imitate by competitors and the competitive advantage may not be sustainable (Barney, 2001; Murray, 1988). In order to impede imitation, Epton Trading combined the low- cost strategy with the focus strategy. Porter (1980, 1985) stated that either cost leadership or differentiation builds the foundation of a focus strategy. In the case of Epton Trading, the focus strategy is likely to be based on the low-cost strategy. Furthermore, according to Gunnar, the company is satisfied with a small range of products and has – currently – no intention to broaden it. This is in line with Salavou (2015) who outlined that companies applying a focus strategy often focus on a rather narrow product portfolio. Similar to Epton Trading, 365id intends to keep the costs down and offers their product at a considerably lower price than their competitors. This supports Hyeock (2016) who argues that companies using this strategy put emphasis on low selling price. In order for 365id to achieve low costs and therefore be able to offer them cheaper than their competitors, the company

48 developed an innovative product. 365id installed the entire technology necessary for the validation of an ID document on the cloud rather than on each scanner individually. This concept was different to the ones of their competitors. As outlined by Islami et al. (2020) companies with a differentiation strategy offer products with unique and/or special features. Hence, 365id applied a combination of low cost- and differentiation strategies which are considered a hybrid strategy (González-Benito & Suárez-González, 2010; Hill, 1988; Salavou, 2015). According to Claver-Cortés et al. (2012) companies using this approach are more flexible to adapt to changing environments or customer behavior. In that sense, Anders Green stated that the company was able to increase the price during the pandemic almost without negative consequences.

COVID-19 As outlined by Cai and Luo (2020) and Fernandes (2020) several sectors – including the sports sector – are severely affected by the pandemic. Contrary to this literature, Epton Trading experienced an increased demand by Swedish citizens. According to Gunnar, golf can be practiced while keeping the required distance to other persons (Martinez et al., 2020; World Health Organization, 2020b) and is a way to stay physically active. When examining the security industry – in which 365id operates – it becomes clear that this industry was negatively affected by the pandemic as illustrated by Cai and Luo (2020) and Fernandes (2020). Anders Green stated that some of their clients had to close their business. This is in line with Cai and Lou (2020) who suggested that the pandemic will increase the number of bankruptcies considerably. As a result, 365id noticed a significant reduction of scans per day since the outbreak of the disease.

5 Forces As outlined by Ludvigsson (2020), Sweden did not impose a national lockdown during the COVID-19 pandemic. Therefore, both investigated companies stated that they were not (Epton Trading) or only indirectly affected (365id) by legal restrictions. In the latter case, the company noticed a significant reduction in scans since many clients depend on tourists (e.g. hotels and car rentals) and those had – due to travel restrictions – fewer customers, as outlined by the International Monetary Fund (2020). According to Jena et al. (2021), the disease had a negative impact on deliveries and supply chain management. The delivery of cars and spare parts from the US was affected, as stated by Gunnar. However, he also stated that the delays are massively influenced by the hindrance in

49 the Suez Canal in late March. Therefore, it remains unclear whether the company was affected by the COVID-19 pandemic – as outlined by Jena et al. (2021) – or by the naval accident. On the other hand, 365id did not experience any problems with the supply chain but got notified that they may expect delays for components should they intend to produce scanners. The Statista Research Department (2021) observed in 2020 a rather negative impact on the demand and sales of businesses located in Sweden. Epton Trading contradicts this observation since the demand of the company increased significantly (+36 percent) during the pandemic. 365id had more or less the same revenue during the pandemic than before but noticed a decline in customers. According to Cai and Luo (2020), the probability of insolvency increased during the pandemic. 365id noticed this as well since some of their customers – such as car rentals – cancelled their agreement due to the closure of their business.

Product Both investigated companies offer business products – as outlined by Armstrong et al. 2020 – that are necessary for running an organization effectively. 365id protects their clients (e.g. car rentals and banks) from being victims of ID fraud while Epton Trading provides the Swedish post office with electrical utility vehicles and makes business with the Swedish railroad commission. Additionally, Epton Trading offers specialty products to customers. As described by Perrault et al. (2009) customers of specialty products are rather price insensitive and willing to accept additional effort. In the case of Epton Trading, the customers are willing to wait several months until they receive their vehicle. Further, Gunner Werner stated that Epton Trading did not adjust, improve, or offer any new products during the pandemic. The company intends to focus on a rather small product portfolio and the main focus is to offer the best quality to their customers. Chaffey and Ellis-Chadwick (2019) and Kotler et al. (2020) state that product quality and appearance is an important factor of the core product. According to those authors, the brand is also a valuable asset for a business. Epton Trading is already a strong brand but also intends to strengthen it even more in future, as Gunnar Werner stated. Well-established brands may influence the customer’s perception as well as retention positively and enhance the differentiation to other competitors (Chaffey & Ellis-Chadwick, 2019; Kotler et al., 2020). Furthermore, as outlined by Coelho and Henseler (2012), adapting products to individual demands positively influences value perceptions, customer satisfaction and loyalty. Epton Trading also offers customized features to their

50 products e.g. seating color, additional lamps or refrigerator in the vehicle. According to Gunnar, Epton Trading sells more than the actual product, customers “buy an experience”. Sales and Marketing Director Anders Green stated that 365id was pressured to develop a mobile version of their solution due to a reduction in physical interaction and therefore a drastic increase of digital services during the pandemic. Moreover, Anders stated that 365id was – compared to their competitors – rather late in the development of a mobile application. In order to prevent losing customers to competitors, 365id asked their clients which criteria – e.g. features and appearance – are most important for them. As outlined by Iglesias et al. (2020), the company receives valuable information about possible upcoming trends and what customers value in a mobile application. Apart from that, customer participation in the development of a new product – such as a mobile ID validation software – enhances customers enjoyment, trust and positive attitudes towards 365id which in effect may increase the loyalty to the brand (Chen & Wang, 2016; Donaldson & O’Toole, 2007; Iglesias et al., 2020; Yim et al., 2008). To sum it up, both interviewed companies use customization and participation as tools to involve their customers in the process of either product development (365id) or the production of the final product, according to their wishes (Epton Trading). This involvement may enhance the loyalty to those brands significantly (Coelho & Henseler, 2012; Donaldson & O’Toole, 2007). Furthermore, both investigated companies offer support services – which can be classified as extended or augmented products (Chaffey & Ellis-Chadwick, 2019; Kotler et al., 2020) – to their customers. Epton Trading offers mainly maintenance services while 365id helps customers with the installation of the scanners. According to Armstrong et al. (2020), such services may benefit companies since they can positively influence the customer’s perception, satisfaction and may create long-lasting relationships.

Price Both companies raised their selling price considerably during the pandemic. However, they had differing motivations for doing this. Epton Trading increased its price because of more demand and less competition during the pandemic. According to Gunnar, the strongest competitor for golf cars and utility vehicles decided not to serve this segment anymore. Therefore, Epton Trading had the opportunity to raise its prices without fearing that customers might switch to another provider. This is in line with the assumption of an inelastic demand and little price sensitivity of the customers. As

51 evaluated by Runia et al. (2019) and Chaffey and Ellis-Chadwick (2019), in the case of inelastic demand, a company has the opportunity to increase the price while retaining the majority of its customers and demand. Therefore, businesses offering products with inelastic demand are able to increase their profit by raising their prices. In the case of Epton Trading, this pricing strategy is in line with the pricing objectives. As outlined by Perrault et al. (2009), a company’s pricing strategy may have one of the following three objectives: sales-, profitability- or status quo objectives. According to the interviewee, Epton Trading’s aim is to increase the profit in the near future. On the other hand, 365id increased their prices because they believed they offered their products too cheap compared to the prices of their competitors. Anders also stated that no complaints from customers about the price increase were noticed, which does not support Altay et al. (2021) who stated that customers have become more price-sensitive during the pandemic. 365id uses a monthly subscription model to generate rather constant revenue. It is also possible that the applied pricing model created high switching barriers for their customers. Giovanis et al. (2015) evaluated that customers remain loyal to a seller as long as they assess the offers of a competitor are not more attractive, cheaper, and more beneficial for them. Similarly, Curran et al. (2010), Gummesson (2002) and Jones et al. (2000) highlight that customer retention might be raised by establishing high switching barriers for clients. Therefore, it is possible that having long-term agreements with customers may lead to high switching barriers and effectively higher customer retention rate for 365id. Moreover, the demand for ID scanners might – similar to Epton Trading – be rather inelastic and price insensitive. Therefore, as Runia et al. (2019) and Chaffey and Ellis-Chadwick (2019) outlined, a significant increase in price for ID scanners might lead to a less proportional decrease in demand. In both companies, the demand has not decreased considerably as a reaction to an increase in price. This implies that the higher price is still within the price floor, outlined by Kotler et al. (2020) and Runia et al. (2019). According to those authors, customers are unwilling to purchase a product that exceeds a certain threshold, the so-called price ceiling.

Place The two researched companies use direct distribution. This is in line with Perrault et al. (2009) who state that this type of distribution is more commonly used for B2B selling. Moreover, due to the higher demand for golf cars and to react more quickly, Epton Trading is planning subsidiaries in other geographic areas. Since the Headquarters is in Vallentuna (close to

52 Stockholm), the first subsidiary will be located in Skåne. Furthermore, the company considers establishing subsidiaries in Mid-Sweden and North-Sweden. Therefore, Epton Trading intends to sell its products indirectly – through intermediaries – in the future. As already mentioned, and discussed by Perrault et al. (2009), the reason for subsidiaries in other geographic locations is to reach more customers and handle them more efficiently. Additionally, Epton Trading stated that the number of service suppliers (which are also intermediaries) in Sweden has to increase as well in order to guarantee maintenance services to their customers. On the other hand, as Ding and Li (2021) predicted, 365id has experienced a shift from a physical to a digital marketplace. The company used to offer their products at conferences, exhibitions, and personal meetings to present and distribute their products. This is in line with Ding and Li (2021) who elaborated that marketing activities during the COVID-19 pandemic will be – compared to before the outbreak – significantly more often executed on digital platforms. Due to social restrictions, 365id produces video material for presentations and holds online conferences via computer-assisted programs. As outlined by Chaffey and Ellis- Chadwick (2019) and Katsikeas et al. (2019) digital marketing has the benefits that it is less costly than traditional marketing, more flexible and more potential (foreign) clients can be reached and targeted. Anders Green expresses the same view, since the company was able to generate emails automatically, and therefore less time consumingly, to their target group across many European countries. To sum it up, both companies adjusted or intend to adapt their distribution channels. Although in the case of Epton Trading, it remains unclear whether those adaptations are a reaction to the COVID-19 pandemic or rather to the increased demand.

Promotion Promotional activities can be – as outlined by White et al. (2020) – rather quickly adjusted to the COVID-19 pandemic. As our interviews indicate, both companies adapted their promotions during the pandemic. In the case of Epton Trading, the promotion was only changed slightly in comparison to before the pandemic. Previously, the advertisement was intended to increase the sales volume of the company. During the pandemic, the advertisement is aimed to increase the strength of the brand by communicating the value, experience and attitude behind it. Therefore, the aspirated objective has changed. As outlined by Meffert et al. (2012), increasing brand awareness may enhance the customer’s positive perceptions and relationship to a brand.

53 365id changed their promotional activities significantly more during the pandemic than Epton Trading. Firstly – similar to Epton Trading – 365id aims to increase brand awareness and recognition, which might strengthen the customers’ relationship with the company (Meffert et al., 2012). Secondly, promotions on social media – such as Facebook and Instagram – have increased considerably. Contrary to Nicola et al. (2020) who hold the view that the spending on advertisements will be reduced during the pandemic, the Sales and Marketing Director mentioned that a significant amount of money was put into marketing on social media platforms. Since almost half of all consumers spend more time on social media during the pandemic (DiResta et al., 2020), expanding 365id’s promotional activities might be beneficial for the company. Anders Green also highlighted that the return on investment is much faster on digital promotion compared to traditional advertisements. And lastly, Anders Green stated that 365id is rebranding soon. For example, the company’s slogans, visual effects, and logos will be updated. This is in line with White et al. (2020) who suggest that promotional activities may be adapted quickly during the pandemic.

Summary of the marketing mix Epton Trading and 365id adapted their marketing mix as a reaction to the COVID-19 pandemic as outlined by Roggeveen et al. (2020). Moreover, the two interviewed companies illustrate that all four factors are coordinated and adapted simultaneously, as outlined by Perrault et al. (2009). According to Gummesson (2002) companies have to find an optimal mix of the 4P’s in order to gain competitive advantage. The authors cannot validate for certain whether two investigated companies found their perfect mix. However, when the companies were asked if they believe that the applied marketing tools are effective, both agreed.

Epton Trading 365id

Product The company did not develop new The company developed a mobile products during the pandemic or application as a reaction to social improve/adapt already existing restrictions during the pandemic. ones. However, it offers customers Furthermore, it involved key to customize their products. customers in the development of the new product.

54 Price The company increased the price The company increased the price significantly during the pandemic. significantly during the pandemic.

Place The company plans subsidiaries in The company’s distributing other geographical locations activities were transferred to during the pandemic. Moreover, digital platforms during the new intermediaries are acquired to pandemic. distribute the products.

Promotion The company adapted their The company adapted their promotional activities slightly promotional activities during the pandemic. considerably during the pandemic. Strengthening the brand has The company has increased their become the aim of promotional social media marketing. activities. Moreover, it aims to raise brand awareness and intends to rebrand soon.

Table 4: Summary of the applied marketing mix

Customer behaviour and retention Several authors – e.g. DeWitt et al. (2008) and Oliver (1999) – outline that loyal customers are beneficial for a company since they repeatedly buy their products and/or services. Both investigated companies support those authors since they profit from loyal customers. Epton Trading retains its customers by offering maintenance service for their vehicles and signing long-term rental agreements – especially with golf clubs. Hence, the customers might have high switching costs and barriers as described by Curran et al. (2010), Gummesson (2002) and Jones et al. (2000). Similarly, 365id also ties their customers to the company by offering monthly subscriptions of their service. Since customers repeatedly buy the products and/or services of the investigated brand, it is likely that they display behavioural loyalty as described by Lee et al. (2018). Moreover, the duration of the relationship between customer and company influences loyalty positively (Goncalves & Sampaio, 2012). Since both investigated companies offer long-term agreements and therefore bind their customers for a considerable duration, it might be beneficial to retain customers. Further, the customer’s perceived value of a product or service influences the loyalty to a brand according to Wu and Li (2018). In their work, the authors describe that – among other aspects – convenience, functionality and time saving are subsumed under utilitarian value. Epton Trading’s golf cars for example fulfill all those criteria since they are electric vehicles and

55 therefore drive smoothly, and they bring their customers from one place to another, which is especially valued by senior citizens. 365id also fulfills the utilitarian value for customers since the scanners are rather easy to handle, are smaller than the ones of their competitors, and validate ID documents. Further, Wu and Li (2018) outline that products/services may have a hedonic value – consisting for example of the emotional and overall experience – for customers. In that sense, Gunnar said that customers purchase an environmentally friendly experience when buying a golf car. Iglesias et al. (2020) and Jones et al. (2000) illustrate that – among other factors – environmental responsibility is positively related to customer trust in the brand. Epton Trading realized that customers are more aware of sustainable practices than a decade ago and produces and promotes environmentally friendly, electrical vehicles. This might increase customer trust in the brand and effectively loyalty to the company. Although 365id increased their selling price in general, Anders Green stated that the company was more flexible with their pricing for customers in problematic situations caused by the pandemic. According to Hoe and Mansori (2018), customers' value perception is often influenced by the price. Therefore, a reduced price might lead to a higher value perception which in effect may increase the loyalty to 365id (Wu & Li, 2018). Hence, a reduction in price might be an effective tool to retain customers – especially those that are severely affected by the pandemic.

56 CHAPTER FIVE

SUMMARY, RECOMMENDATIONS, IMPLICATIONS, LIMITATION & FUTURE RESEARCH AND CONCLUSION

5.1. Summary This research topic was chosen because of the impact the pandemic had on the economy but most importantly on businesses in various sectors. Additionally, the topic was chosen because there was a need to identify how Swedish companies adjusted their marketing mix to enable the retention of customers. This need was evident considering the lack of data documenting the adaptation of their marketing mix strategies to retain their competitive advantage due to the disruptive impact of the pandemic. Scholars empathized on marketing mix as a tool firm’s use to gain competitive advantage (Kwok et al. 2020). However other authors suggested that marketing mix is not the only factor to consider in determining a firm’s competitive advantage. They suggested a company's business strategy is also a determinant (Aulakh et al., 2000; Porter, 1985; Salavou, 2015). For the objective of the research to be achieved, a review of the literature was made which provided the authors with more theoretical understanding. Furthermore, interviews were conducted with two Swedish companies to cross-examine the strategic adaptations made in reaction to the COVID-19 disruptive impact. Following a critical cross-case method, the analysis revealed that the companies interviewed adopted similar generic strategies, adjusted their pricing and still retained their customers. Contrastingly, the adjustments made pertaining to product, place and promotion differed notably.

5.2. Recommendations

As previously stated in Chapter 3, this research is exploratory in nature. And as stated by Stebbins (2001), exploratory research is done to understand why a situation is the way it is and develop hypothetical explanations. Hence, this section will showcase recommendations generated in the course of this study.

The COVID-19 pandemic had a significant impact on the global economy but also on businesses specifically. As outlined in Chapter 4, two Swedish companies were interviewed to investigate how they dealt with the new situation in terms of their marketing mix. The

57 interviewers received valuable insights into already implemented and planned adjustments of the 4P’s and strategies to retain customers. As a result, the authors of this thesis were able to compare the statements of the interviewees and can develop suggestions for future testing and recommendations for businesses in crisis situations.

Regarding generic strategies, both companies stated that they implement a combination strategy. Moreover, both stated that they applied the low-cost strategy in conjunction with either a focus- or a differentiation strategy. Therefore, the first recommendation is:

Recommendation 1: During disruptive situations, a combination of two strategies is necessary to gain competitive advantage.

When the 4P’s were examined – although some similarities existed – generally significant differences between the companies were noticed. The authors of this thesis assume that the reasons are the different industries in which the companies operate as well as the offered goods. One company offers physical products while the other offers a service. As a result of the displayed differences in the marketing mix, the authors developed one suggestion for companies with physical commodities and one for businesses offering services. Thus, the hypotheses for the first P – product – are as follows:

Recommendation 2.1: During disruptive situations, companies offering physical objects should focus on high quality to gain competitive advantage. Recommendation 2.2: During disruptive situations, companies offering automated services should provide digital solutions to gain competitive advantage.

Furthermore, when the two interviews were analysed, the authors of this thesis found that both companies involved their customers. Epton Trading, on the one hand, offers customised products while 365id asked their customers to participate in the development of the new mobile application. This involvement can positively influence the loyalty to a company (Coelho & Henseler, 2012; Donaldson & O'Toole, 2007). Hence, recommendation 2.3. was generated: Recommendation 2.3: During disruptive situations, companies should offer customer involvement – such as customization or participation – to retain customers and remain competitive.

58 The second P – price – was approached similarly by the two investigated companies. Both interviewees stated that they increased their price considerably during the pandemic. Furthermore, none of the companies experienced negative consequences as a direct reaction to a higher price. Therefore, the following recommendations – considering the price factor – are developed:

Recommendation 3.1: During disruptive situations, companies should not lower the selling price in order to remain competitive. Recommendation 3.2: In the case of inelastic demand, the price may be raised – but remain below the price ceiling – in order to maintain competitiveness during disruptive situations.

Both companies differed in their adjustments to the place factor. The company selling physical products also intends to expand their physical selling locations over Sweden, while the company offering – mainly digital – services increased their shift from physical to digital platforms during the pandemic. Due to the differences in the companies’ activities concerning the place dimension, the authors developed the following two suggestions:

Recommendation 4.1: During disruptive situations, companies offering physical objects should increase their physical presence in other geographic locations to gain competitive advantage. Recommendation 4.2: During disruptive situations, companies offering automated services should sell their products on digital platforms to gain competitive advantage.

Major differences were outlined by the companies in regard to promotional activities during the COVID-19 pandemic. One company changed its promotions only slightly while the other implemented several adaptations. Therefore, the following two recommendations were developed by the authors:

Recommendation 5.1: During disruptive situations, companies offering physical objects do not need to change their promotional activities significantly to gain competitive advantage. Recommendation 5.2: During disruptive situations, companies offering automated services should increase their promotional activities significantly on digital platforms to gain competitive advantage.

59 The authors also examined how the companies retained their customers and noticed that both organizations had – before the pandemic – established high switching barriers. As a result of high switching barriers, customers are generally less likely to switch to a competitor. Hence, the following suggestion was developed:

Recommendation 6: During disruptive situations, companies should maintain high switching barriers in order to remain competitive.

Those recommendations open the way for further research with a bigger sample in order to draw valid and reliable conclusions. In the following section, the limitations and opportunities for further research will be outlined in detail.

5.3. Implications The findings of this study have beneficial implications both theoretically and practically. Academicians from both the business and marketing fields can gain immensely from the insights of the study. With the surge in how customer demands have changed and with insufficient data suggesting how businesses are to respond to the change caused by COVID- 19, this study was able to identify with empirical findings how companies adjusted/adapted their marketing mix in reaction to changes in a disruptive situation. With the recommendations generated from the findings it can aid academicians to either contribute to already theoretical frameworks or generate new theories.

Furthermore, these findings can aid new and current marketing managers on which suitable strategic business marketing models can be applicable to their various sectors.

5.4. Limitation & Future Research During the course of this research, some limitations were identified. Firstly, the focus of the research was majorly on the strategic marketing aspect of companies. Porter’s generic strategy, marketing strategy and marketing mix are significant aspects, however, there are other measures (e.g. the overall customer experience or loyalty programs) companies take to be able to achieve customer retention.

60 The second limitation identified is the research place. This research only focused on companies in Sweden. Thus, it would be of interest if such research is conducted between two or more countries so as to discover if it would yield the same or different result. A cross case analysis of two or three countries might lead to discovering strategic decisions which are conventional of a country or continent. For instance, a cross case analysis of how companies in the United Kingdom and the United States of America react to unforeseen disruptions in terms of their marketing mix to retain customers. Such research could shed light on the similarities and distinctness between the marketing managers of the countries. In addition, the research could focus on one industry. Furthermore, it would be of interest if another method of research is explored. For example, with a bigger sample, a quantitative analysis could be employed in order to draw reliable generalizations. Moreover, the answers of the interviewed individuals may be biased since they were asked how they experienced the pandemic and the impact on the companies. Therefore, the interviewees might unconsciously have provided the answers they thought were expected of them by the authors of this thesis.

In conclusion, this study attained its aims and objective. Additionally answered the research question which focused on how Swedish companies adjusted their marketing mix in order to retain their customers during the disruptive impact caused by COVID-19.

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72 APPENDIX

Interview Questions

General Questions ● Please give us a brief outline about your company. ● In your opinion, is your industry a little, very or not affected by the pandemic? Please elaborate your opinion.

Business Strategy ● What was the business strategy of your company in terms of Porter’s generic strategies before Covid-19? (low cost, differentiation, focused strategy and hybrid strategy) ● Please elaborate whether you are you affected terms of: → sales and profitability

→ legal restrictions

→ suppliers (e.g. disruptions in the supply chain)

→ customers/buyers

● What are the key areas of importance for your business post COVID-19?

Marketing Strategy ● What was the marketing strategy of your company before COVID-19? ● What are your marketing objectives? ● How did your organization implement marketing mix before Covid-19? ● Was this mix effective to reach the objectives? ● What is the current marketing strategy of your company? ● How is your organization adjusting their marketing mix in response to COVID-19? → new products, improvements or adaptations

→ price changes

→ place changes

→ promotion ● Are those adaptations effective to achieve the marketing objectives and retain customers? ● Is there any contingency marketing plan in place to avert the consequences of any similar future disruptions? ● Are you keeping the adaptations to the marketing mix or is there any new marketing strategy in place as a result of the “new normal” and the new way in which we are expected to live post COVID-19? ● What are the key areas of importance in your marketing agenda post COVID-19?

Customer Response

73 ● What is the impact of COVID-19 on the buying behavior of your customers? ● What is the impact of COVID-19 on your organization’s sales volume, revenue and profit? ● What is the impact of COVID19 on your organization’s number of transactions? ● What is the impact of COVID-19 on your organization’s customer retention rate? ● Have you noticed a change in the spending per customer? ● Have you noticed a change in the customer's value perception and/or satisfaction level? ● Have you noticed a change in complaints (amount, topic, …)? ● What is your company’s strategy to retain customers and maintain customer loyalty post COVID-19?

74 We are students from different countries with the intention of gaining more/new knowledge and different perspectives of business administration.

PO Box 823, SE-301 18 Halmstad Phone: +35 46 16 71 00 E-mail: [email protected] www.hh.se