Direction November/December 2017 - 48

Fast Facts

THE CASE FOR LOWERING PRICES DURING NATURAL DISASTERS

NOVEMBER | DECEMBER 2017

By Erica Reed

Direction

48

In the aftermath of hurricanes Harvey
and Irma, Harvard Business Review
revived a longstanding economic
debate: Should businesses raise or
maintain prices when demand for
essential products such as water, gas
and bread increases in times of crisis?
That includes the demand for moving
services and storage solutions, as those
affected try to rebuild.
During natural disasters, economists
tend to advocate for raising prices in
order to equalize demand with supply,
rather than implement laws that restrict
price increases. The rationale is that
it avoids hoarding situations, and
products remain available for purchase
by those who value them most. The
potential for higher profits also motivates companies to obtain additional
supply to meet the demand. Clearly,
though, there is a disadvantage to
lower-income people in this scenario.

Conversely, many policymakers
are in favor of maintaining or raising
prices only slightly when disaster
strikes. It's very much an egalitarian,
first-come, first-served concept of
distributing goods. Potential disadvantages could include quick sellouts
and hoarding.
With the recent hurricanes, social
media has fueled a new question
about disaster pricing: Why not
lower prices instead?
Some companies have been dropping prices on essential goods and
services that are in high demand
post-disaster. For example, Airbnb
expanded its disaster response program
in Texas to offer free lodging for
people displaced by Hurricane Harvey.
JetBlue reduced prices for flights
leaving Florida and added seat capacity
to help those fleeing from Hurricane
Irma. Many companies have followed
their example.

While raising prices might be
economically correct, managers
are realizing that consumers view
price-gouging negatively. And if a
company is suspected to be profiting from a tragedy, that could hurt
business in the long term.
This switch in how companies
set prices during disasters is driven
partially by social media. If a company
is price-gouging, a Twitter user can
easily tweet it to a sea of followers,
who can then retweet it to all of their
followers, including media outlets. On
the other hand, a humanitarian effort
can be spread just as quickly, gaining
bonus points for reputation.
That leads to the discussion of a
company's pricing strategy during a
crisis. Helping customers in times of
need goes a long way in reinforcing
a brand and showing that a company
cares. The result could yield lifelong
customers. n



Table of Contents for the Digital Edition of Direction November/December 2017

FROM THE PRESIDENT
INDUSTRY NEWS
WHAT’S NEW AT AMSA
AMSA PARTNER PROFILES
Piloting Profits
Challenged by Change? We’ve Got This!
WASHINGTON WATCH
ADVERTISERS’ INDEX
FAST FACTS
Direction November/December 2017 - Cover1
Direction November/December 2017 - Cover2
Direction November/December 2017 - 1
Direction November/December 2017 - 2
Direction November/December 2017 - 3
Direction November/December 2017 - 4
Direction November/December 2017 - 5
Direction November/December 2017 - 6
Direction November/December 2017 - 7
Direction November/December 2017 - FROM THE PRESIDENT
Direction November/December 2017 - 9
Direction November/December 2017 - INDUSTRY NEWS
Direction November/December 2017 - 11
Direction November/December 2017 - 12
Direction November/December 2017 - 13
Direction November/December 2017 - AMSA PARTNER PROFILES
Direction November/December 2017 - 15
Direction November/December 2017 - 16
Direction November/December 2017 - 17
Direction November/December 2017 - 18
Direction November/December 2017 - 19
Direction November/December 2017 - 20
Direction November/December 2017 - 21
Direction November/December 2017 - 22
Direction November/December 2017 - 23
Direction November/December 2017 - 24
Direction November/December 2017 - 25
Direction November/December 2017 - 26
Direction November/December 2017 - 27
Direction November/December 2017 - Piloting Profits
Direction November/December 2017 - 29
Direction November/December 2017 - 30
Direction November/December 2017 - 31
Direction November/December 2017 - 32
Direction November/December 2017 - 33
Direction November/December 2017 - 34
Direction November/December 2017 - 35
Direction November/December 2017 - Challenged by Change? We’ve Got This!
Direction November/December 2017 - 37
Direction November/December 2017 - 38
Direction November/December 2017 - 39
Direction November/December 2017 - WASHINGTON WATCH
Direction November/December 2017 - 41
Direction November/December 2017 - 42
Direction November/December 2017 - 43
Direction November/December 2017 - 44
Direction November/December 2017 - 45
Direction November/December 2017 - ADVERTISERS’ INDEX
Direction November/December 2017 - 47
Direction November/December 2017 - FAST FACTS
Direction November/December 2017 - Cover3
Direction November/December 2017 - Cover4
https://www.nxtbook.com/ygsreprints/AMMOV/direction_julyaug2020
https://www.nxtbook.com/ygsreprints/AMMOV/direction_mayjun2020
https://www.nxtbook.com/ygsreprints/AMMOV/direction_marapr2020
https://www.nxtbook.com/ygsreprints/AMMOV/direction_janfeb2020
https://www.nxtbook.com/ygsreprints/AMMOV/direction_novdec2019
https://www.nxtbook.com/ygsreprints/AMMOV/direction_septoct2019
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue1_2019
https://www.nxtbook.com/ygsreprints/AMMOV/direction_julaug2019
https://www.nxtbook.com/ygsreprints/AMMOV/direction_mayjun2019
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue4_2018
https://www.nxtbook.com/ygsreprints/AMMOV/direction_marapr2019
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue3_2018
https://www.nxtbook.com/ygsreprints/AMMOV/direction_janfeb2019
https://www.nxtbook.com/ygsreprints/AMMOV/direction_novemberdecember2018
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue2_2018
https://www.nxtbook.com/ygsreprints/AMMOV/direction_septemberoctober2018
https://www.nxtbook.com/ygsreprints/AMMOV/direction_julyaugust2018
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue1_2018
https://www.nxtbook.com/ygsreprints/AMMOV/direction_mayjune2018
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue4_2017
https://www.nxtbook.com/ygsreprints/AMMOV/direction_marapr2018
https://www.nxtbook.com/ygsreprints/AMMOV/direction_janfeb2018
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue3_2017
https://www.nxtbook.com/ygsreprints/AMMOV/direction_novdec2017
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue2_2017
https://www.nxtbook.com/ygsreprints/AMMOV/direction_septoct2017
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue1_2017
https://www.nxtbook.com/ygsreprints/AMMOV/direction_julyaugust2017
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue4_2016
https://www.nxtbook.com/ygsreprints/AMMOV/direction_mayjune2017
https://www.nxtbook.com/ygsreprints/AMMOV/direction_marapr2017
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue3_2016
https://www.nxtbook.com/ygsreprints/AMMOV/direction_janfeb2017
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue2_2016
https://www.nxtbook.com/ygsreprints/AMMOV/G68068_direction_novdec2016
https://www.nxtbook.com/ygsreprints/AMMOV/direction
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue1_2016
https://www.nxtbook.com/ygsreprints/AMMOV/direction_julaug2016
https://www.nxtbook.com/ygsreprints/AMMOV/direction_mayjun2016
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue4_2015
https://www.nxtbook.com/ygsreprints/AMMOV/direction_marapr2016
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue3_2015
https://www.nxtbook.com/ygsreprints/AMMOV/direction_janfeb2016
https://www.nxtbook.com/ygsreprints/AMMOV/direction_novdec2015
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue2_2015
https://www.nxtbook.com/ygsreprints/AMMOV/ammov_sepoct2015
https://www.nxtbook.com/ygsreprints/AMMOV/it_issue1_2015
https://www.nxtbook.com/ygsreprints/AMMOV/g51838_ammov_julyaug2015
https://www.nxtbook.com/ygsreprints/AMMOV/ammov_it_issue4_2014
https://www.nxtbook.com/ygsreprints/AMMOV/g50117_ammov_mayjune2015
https://www.nxtbook.com/ygsreprints/AMMOV/g49142_ammov_marapr2015
https://www.nxtbook.com/ygsreprints/AMMOV/ammov_it_issue3_2014
https://www.nxtbook.com/ygsreprints/AMMOV/g47631_ammov_janfeb15
https://www.nxtbook.com/ygsreprints/AMMOV/amsa_sourcebook_2015
https://www.nxtbook.com/ygsreprints/AMMOV/ammov_it_issue2_2014
https://www.nxtbook.com/ygsreprints/AMMOV/g45738_ammov_novdec2014
https://www.nxtbook.com/ygsreprints/AMMOV/g44436_ammov_sepoct2014
https://www.nxtbook.com/ygsreprints/AMMOV/ammov_it_issue1_2014
https://www.nxtbook.com/ygsreprints/AMMOV/g42909ammov_julaug14
https://www.nxtbook.com/ygsreprints/AMMOV/g41053_ammov_mayjun2014
https://www.nxtbook.com/ygsreprints/AMMOV/AMMOV_IT_2013_V4
https://www.nxtbook.com/ygsreprints/AMMOV/g39757_ammov_marapr2014
https://www.nxtbook.com/ygsreprints/AMMOV/g39097_ammov_janfeb2014
https://www.nxtbook.com/ygsreprints/AMMOV/AMMOV_IT_2013_V3
https://www.nxtbook.com/ygsreprints/AMMOV/AMMOV_IT_2013_V2
https://www.nxtbook.com/ygsreprints/AMMOV/g38015_ammov_direction_novdec2013
https://www.nxtbook.com/ygsreprints/AMMOV/P36576_AMMOV_IT_2013
https://www.nxtbook.com/ygsreprints/AMMOV/g36367_ammov_direction_sepoct2013
https://www.nxtbook.com/ygsreprints/AMMOV/g35144_ammov_direction_julaug2013
https://www.nxtbook.com/ygsreprints/AMMOV/AMMOV_IT_2012V4_FP2
https://www.nxtbook.com/ygsreprints/AMMOV/g34598_ammov_direction_mayjun2013
https://www.nxtbook.com/ygsreprints/AMMOV/g33091_ammov_marapr2013
https://www.nxtbook.com/ygsreprints/AMMOV/g31497_ammov_janfeb2013
https://www.nxtbook.com/ygsreprints/AMMOV/g25957_ammov_direction_mayjun2012
https://www.nxtbookmedia.com