As COVID-19 spreads around the world, companies may need to abandon traditional strategies in areas like pricing if they want to maintain public trust, WARC's Stephen Whiteside argues.
Marketing in the COVID-19 crisis
This article is part of a special WARC Snapshot focused on enabling brand marketers to re-strategise amid the unprecedented disruption caused by the novel coronavirus outbreak.
The global spread of COVID-19 is making a rapid, and damaging, impact on a swathe of categories – from out-of-home dining to consumer packaged goods and aviation.
But certain organizations are witnessing a spike in demand for specific products as a result of the burgeoning crisis. An example of this trend comes from 3M, a conglomerate that is active in a diverse range of segments, such as the industrial, consumer goods and healthcare verticals.
While the St Paul, Minnesota-based enterprise anticipates that its organic growth will be “roughly flat to down slightly” in Q1 2020, Mike Roman, the firm's CEO, reported at J.P. Morgan’s Industrials conference that “COVID-19-related demand” might add approximately one percentage point to this figure.
One of the main products fueling this process is respirators, which cover either half or all of the wearer’s face, and have traditionally been utilized by firefighters, industrial workers and military personnel to protect against harmful particles, gases and vapors – also known by 3M as “respiratory hazards”.
In a statement on its website, the company has asserted that it “expects demand for respirators to outpace supply for the foreseeable future”, even as it ramps up production at manufacturing units located in the US, Asia and Europe.
Various other 3M products that are relevant to COVID-19, Roman explained, span eye protection, hearing protection, “fall safety” equipment for people working at height, and “self-containing breathing apparatus”.
Under the classical laws of supply and demand, the relative scarcity of items such as respirators would dictate a concomitant increase in price – and, in turn, boost 3M’s revenues, pleasing shareholders and potentially enhancing its stock price.
The urgency and anxiety around COVID-19, however, means that pursuing business as usual, and the “rules” that go with it, is not always the best option. For brands interested in building long-term equity and retaining public trust, in particular, maintaining prices at a fixed level for items that are in demand due to COVID-19 is likely to be the most sensible – and, indeed, ethical – move. (Read Professor Richard Thaler's thoughts on surge pricing here.)
And that philosophy has been in evidence at 3M, as Roman told investors: “We don't disclose our product line pricing, but I would say this: We haven't raised prices in the middle of this. And so that's been an important part as we support our customers. We are not raising prices in face of coronavirus,” he said.
Following that approach, rather than exploiting a crisis for short-term revenue gains, would seem to be a prudent strategy for any brand that has a direct (or indirect) role in helping tackle COVID-19.