Companies Capitalizing Tragedies

Companies Capitalizing Tragedies

Introduction

Tragedies affect not only multinational companies but also affect small and medium-sized domestic companies. The act of capitalizing on misfortunes includes both the past and present tragedies (Duberstein). Many economists and business people have different views on capitalization. Some view it as contrary to the given ethics.

In contrast, others encourage the practice and even go a step ahead to advise people on ways of effectively profiting from a crisis. Also, when struck with a national or international crisis, the rule is that business must go on. However, a company should be sensitive when trying to capitalize on tragedies, and by doing so, they will be in a position to make a massive profit without being attacked by society.

Authors have written journals, articles, and books concerning businesses that have tried marketing and capitalizing on a tragedy and failed or viewed as insensitive (Ford). With current modernization, these companies relied on social media as their platform for marketing. Although social media marketing focuses on gathering as much attention as possible, that attention becomes a barrier to building a relationship.

Companies and businesses attempting to market on tragedies are just but an example of that barrier. Marketing columnists and other professionals in the business world have insisted and even come up with a slogan that if one has nothing important to say, be quiet. Despite their efforts in reinforcing this simple common sense lesson, repeating the mistakes is done quite often.

Objectives of the study

This study aims at giving enlightenment and knowledge on capitalizing of companies during a tragedy. The specific goal of the study is to

1. Know the different methods used for capitalization by companies
2. Dangers of capitalizing during a crisis
3. Ways of successfully capitalizing during a tragedy
4. How to approach a crisis and capitalize on it

Significance of the study

The research done in this study will assist companies and businesses to know the various methods used by their competitors in capitalizing in times of a disaster. From this study, firms will get enlightenment on what to do and what not to do during a crisis. Furthermore, this study will provide managerial staff and policymakers in companies with insight into managing the continuation of a business at a time of crisis. By using real examples of enterprises and companies trying to capitalize in times of a disaster, this study will serve as a future reference for companies in case of a tragedy.

Review of literature

Capitalizing during a tragedy is inevitable, and most business and companies get their breakthrough from disaster. As evidenced in the current coronavirus pandemic, many enterprises took advantage and increased their prices. In contrast, others provided aid and donations, and others acknowledged the crisis through social media. All of those are just some of the ways enterprises have applied to capitalize on the pandemic. Journals and articles written warn companies of capitalizing on tragedies as most of the time, the consequences are severe and not worth the intended benefits.

Some of the companies that tried to capitalize on tragedies but were insensitive in their marketing include AT&T. Intending to profit from the twelfth anniversary of the September 11 attacks, the company tweeted, “You can picture the scarred New York City skyline to remind yourself of the tragedy that struck the city years ago. Therefore, buy AT&T phones.” The tweet received a lot of backlash and negative comments. It was said to be idiotic and that it failed to provide any connection that was of importance between remembrance of the tragedy and selling of their product. Many questions arose as to the objective of the statement, was it that the company’s phones had great cameras or that AT&T will always remember the tragedy. It resulted in the immediate removal of the tweet.

In 2012 a picture was posted by Dubai’s Factory Fitness Center, the images were of Auschwitz, and the caption was kiss your calories goodbye. It didn’t come as a surprise when people became offended by the caption comparing the killing of millions to getting a workout. With the growing backlash, the owner of the firm escalated things to even worse when he defended the ad by comparing it to a calorie concentration camp. The firm did pull down the photo and sacked the person responsibly. The factory got a massive business boost due to the high demand they became concerned about their capacity to deliver. From the situation of the gym, it confirms that there is no such thing as bad publicity.

The Egyptian revolution in January 2011 has various factors that led to its taking place. Vodafone tried to capitalize on the crisis by posting an ad implying that it was they who made Mubarak step down. In other words, they credited themselves for Mubarak stepping down. Not only was the ad insulting, but it also glossed over the massive number of people tortured and killed in the revolution. When their plan of capitalization backfired, they were quick to deny permission for the publication.

McDonald’s in the year 2013 tried to capitalize on people suffering from depression, this it did by featuring a poster on Boston subway cars. The ad showed a young woman with her face in her hands, and the caption beside it was millions of people love the Big Mac. The company was quick to deny the posters, stating a foreign agency commissioned them without the proper approvals. However, their allegation was regarded as a false as the number in the poster went directly to McDonald’s call center. The effect on genuine depression patients was severe, as they felt people took their condition as a joke.

In the year 1938, on November 9, great havoc was caused by Nazi storm troopers as they rampaged Germany, destroying property, damaging businesses, and killing jews. The occurrence came to be known as Kristallnacht. Three centuries later, a spa in Germany saw it fit to capitalize on the tragedy by advertising the Kristall Sauna-Wellness Park hotel’s romantic evening as Kristall Nacht. The hotel in its defense stated it was just an accidental coincidence, and it had never advertised an evening like that again.

Hyundai tried to capitalize on the issue of suicide in the year 2013 in one of its adverts. The advert was a commercial of a man trying to kill himself by breathing in exhaust fumes. The irony, however, is that the attempt failed as the vehicle runs on hydrogen, meaning no harmful production emissions. Massive complaints followed the commercial, and one viewer was left in tears as his father committed suicide as per the ad. Hyundai, having failed in their attempt to capitalize on the suicide issue, apologized and stated that it had no intention of applying the ad.

Many marketers use the 9/11 tragedy to capitalize on their brands. An article outlined various campaigns that had misused the image of the twin towers. A NewZealand ad that had two cigarettes representing the towers with a caption “Terrorism-related deaths since 2001: 11,377, Tobacco-related deaths since 2001:30,000,000”. The ad suggested that if the architects of the towers were careful in their design, the airplanes would have harmlessly flown over.

Levi’s in the year 2011 launched a new direction for their campaign, it featured young people rioting and taking on the system. They aimed to relate to the ethos of the Arab Spring. Their mistake, however, was airing the campaign at a time when England was affected by rioting that destroyed cities. The ad received significant backlash as people termed it as insensitive. The company had no choice but to pull down the commercial even though it had undergone approval.

Another example in which a company failed in an attempt to capitalize on a tragedy by insensitive marketing was the NBC Bay Area. The company engaged in horrible self-promotion when it posted a photo of a victim from a bombing crisis visited by the first lady and captioned “LIKE’ this to wish him a continued speedy recovery.” Also, Kenneth Cole and his brand have been subject to the same. However, his is different, as by being insensitive, he gathered more tweeter followers, and the sales were off the roof. In one of his tweets in 2011, he stated that the riots in Egypt were just but excitement by people over his new spring collection. Later on, he apologized.

It is also important to note the advertisement of Pepsi and Kendall Jenner that went south. PepsiCo learned through a hard way of how trying to capitalize on a social movement was a completely terrible idea. The issue arising was that instead of trying to assist in the given crisis, all they wanted was to make a profit. Furthermore, the products on sale and the cause they were supporting had no connection at all. The author stated that although a little compassion goes a long way, so does a little greed. Companies should note that even if the process of raising funds to assist those in need created opportunities for a new business or increased profit, it might also backfire and damage sales.

The last incident recorded was when Ford posted a thank you to the responders who came in first in the Boston Marathon Bombing. It stated that “To the first responders of Boston: Thank you. You are true American heroes.” Even though it seemed harmless, free from malice, and not taking any advantage, it was attached to a picture, a sign of promoting its brand using a crisis.

Even with the slogan that no matter the circumstances business must go on, there are ways in which authors have outlined respectfully promoting business during a tragedy (Fredrickson,19). Companies should keep in mind that when a crisis strikes, the society and its people go through grief that can go on for years. Thus they should be aware of the same and approach the market with empathy, sensitivity to all, and upholding respect and authenticity during that period.

Marketing during a disaster, most of the time, seems out of place. However, businesses that support humanitarian relief efforts profit a lot in related societies. A company can thus capitalize during a crisis by smart marketing, and they can offer relief aid to the affected communities. It will affect an increase in preference for the services or products provided by the company. An example is whereby a grocery chain offers relief canned food to affected cities, or where a radio station takes part in campaigning for listeners to provide donations to those affected.

Companies and businesses altogether are increasingly noting that doing service to the community is not just antithetical to a great business. However, it is one of the major factors for growth. A recent study conducted by Cone Communications showed that 87% of consumers would buy a product just because of the simple gesture of the company supporting a cause they care about. The idea is that when a business gives back to society, customers will give it good business.

Capitalizing during a tragedy is most often a gamble, and companies should note that it may favor them or not. If it falls in their favor, they might experience huge profits than when there is no crisis. On the other hand, if it does not favor them, they might experience severe damages in sales and a lasting negative effect on the business. To avoid this, the authors established some useful tips business people should consider for their businesses to succeed during a crisis.

Some of the tips that the authors have provided for ways of effective marketing to ensure maximum capitalization in times of crisis include choosing a cause that is in connection with the company’s’ strategies. An example is whereby a technological company can donate free phones or the internet to the communities or societies affected by a tragedy. Another way is being authentic, and if a company or business generally does not care about a given cause, it is best if they do not assist at all. It is because employees and even clients will sooner or later find out that the help your providing is just because of good public relation. Thus it will affect the business in terms of sales and reputation negatively.  On the other hand, if a company does care about a given cause, it should devise a way to assist the society affected. By doing so trustworthy and, loyal customers will be made just because of doing good.

Companies and businesses should also be honest and not take advantage of people during a crisis. By taking advantage of people in a tragedy, customers and the community form negative opinions about the company. The negativity of the company or business will affect the performance in terms of sales and public relations(Morris,50). By businesses and companies rushing into hiking their prices during disasters, it has the effect of reduction of sales after the disaster due to the negativity branded on the company.

A smart way to capitalize on a given strategy is to sell at lower prices. Once people are back at their feet, they will prefer the company as it branded itself positively. In a situation where many houses burnt down, prices should not increase. Instead, rates should be standardized or even lowered the rates at a standard or lowered. When people are back on their feet, they will prefer the hotel from others who hiked prices at a time of need.

Companies should note that there isn’t a better time to brand themselves than during times of tragedy. Branding is of utmost importance as it is one of the methods of enhancing capitalization. By showing generosity to customers and the community at large, a company would have given a good picture of itself to society as a whole. Raising funds and asking customers in other areas not affected by the tragedy to donate is an act of generosity. People tend to prefer a company showing concern about their needs during tough times.

During tragedies, companies and businesses are encouraged to be creative and innovative. Most of the time, a little bit of creativity and innovation can save a company from undergoing losses and being subject to harsh marketing conditions. During the Great Recession, companies had no choice but to lay off their workforce to be at per with the reducing demand for the services. The same, however, was not experienced by Honeywell; this is because the management in the company became creative.

The leaders at Honeywell noted employees required a similar commitment to shareholders. So rather than issuing layoffs, they came up with a policy of rolling unpaid vacation. The company, as a result, continued to run normally, and employees kept their jobs, many employees became more loyal to the company and their colleagues. Employees demonstrated a sense of loyalty by volunteering to share their extra shifts with their co-workers who were adversely affected. It allowed the affected employees to earn a considerable amount of money to take care of their families showed a high level of loyalty. Honeywell, because of its creativity, was in a position to capitalize during the Great Recession.

Most often, companies think that once a disaster strikes, they will be ready to capitalize on it. The situation, however, is different, as capitalizing on a disaster requires years of planning. Insurance companies, as an example, use the threat of incoming danger to market their services (Okeson,7). A company should construct a corporate social responsibility CSR into its strategy to enable the raising of funds in case of a tragedy. In recent times the ongoing crisis of the Northern Triangle has seen an immigration crisis at the US border. The effect of this disaster includes agricultural losses, coffee rust, political upheavals, and many others. Companies should note that with non-profits like World Vision and CARE, they have an opportunity of doing good.

In the event in which customers are affected by a tragedy, companies need to take note and acknowledge it. It comes even when they are not assisting in any way. An acknowledgment can take the form of a blog, a social media post, a banner on the company’s website, or any other detailed statement. Companies must, however, acknowledge what their stakeholders are experiencing appropriately.

The idea is that the statement should align with all the features covered above. A business seeking attention at a time of tragedy should ensure it follows up with actions rather than trying to capitalize on the crisis.  MOZ became a victim of such when they tweeted that they are not going to post due to the ongoing Ferguson tragedy. Their tweet received a backlash. It is because its products had no link to the crisis, and they were not providing any assistance.

Companies can also capitalize on the crisis by adding value. They can achieve this by using social media after an occurrence of a tragedy to raise money, provide guidance and mentorship or give access to useful resources. The concept, however, works best when a company has a strong local presence, and people will readily run to their social media for similar information. By doing so, a company would have successfully branded itself and capitalize significantly on the disaster at hand.

The best way, as listed by authors for capitalizing during a crisis, is by marketing. Company brands are advised not to think about the present time but to think of how they want to be perceived when everything returns to normal (Shumaker 80). Many people and competitors are always at the forefront, waiting for insensitive comments. The last thing a company would want during a crisis is to sound opportunistic or taking advantage of the time of a disaster.

In the present coronavirus pandemic, many businesses took the opportunity to capitalize and applied methods to ensure it happened. Most companies took up marketing is a way of capitalization. Although marketing is considered the best approach during a crisis, it requires changes in the old planning. Marketing plans that seemed to make sense a few months before the virus may fail to be effective in the current times. Firms should forget past ideas and focus on creating new ones.

Most companies, however, are not keen when it comes to advertising, and as a consequence, they are unable to fix the smallest mistakes. Spirit Airlines learned the hard way when it forwarded promotional email messages stating, “Never a better time to fly.” They had just sent it a day before president trump declared a 30-day ban on travel from Europe. Many people viewed it as offensive and insensitive as the whole world is affected by the virus. In their defense, they argued that the message was drafted months ago and accidentally sent.

Scholars in business and management argue that the best strategy in a crisis is to pull out of any capitalizing method and do nothing (Quinn 68). They continue to insist on companies and enterprises not to capitalize during the crisis because of the declining economy. Furthermore, enterprises are encouraged to cut on cost and prioritize on the rising concerns on fulfillment capabilities and employee welfare.

Health companies and organizations play a huge role when it comes to capitalizing on every crisis. All disasters that take place require health assistance or medical intervention. Thus health organizations come in and provide the necessary medicine and vaccines. Even before the coronavirus attack, drug corporations showed a lack of interest in coming up with vaccines. The reason behind it was that they were expensive to produce and complicated to manufacture. Since vaccines do not offer corporations with huge profits like the high profile drugs, big pharmaceuticals thus order significant amounts of capital for them to produce certain drugs.

It is important to note that health corporations also tend to capitalize on tragedies by jumping in to work with public agencies to capitalize on money placed for the research. In the current pandemic of coronavirus, 700 million dollars was the amount set for research. Johnson & Johnson and Sanofi have seized the opportunity and joined public agencies intending to capitalize on the research money. Health companies are also capitalizing on the current pandemic by manufacturing sanitizers and face masks. The number of face masks and sanitizers produced during the past few months of the epidemic has exceeded the average amount by a considerable percentage.

The hacking industry is another field that has seen companies belonging to the field capitalizing on tragedies.  In the current times, a report made on observation of hacking organizations benefiting on the coronavirus pandemic. Furthermore, methods used by the attackers in capitalizing during the epidemic included pretending to be official government agencies. By pretending to be government agencies, people tend to trust and open up more, as a result of their want for official information, hackers make users download malware hence, handing over essential credentials sold for fraudulent causes. Another method in use is offering false maps showing areas affected by the pandemic. The map contains malware that steals a victim’s credentials and sells it to a given client.

A reported case of a hacking company that has formed a malicious app for tracking the virus, instead of tracking, the app launches an android lock-screen ransomware, referred to as CovidLock (Fredrickson, 43). Victims then pay a $100 fee in bitcoin to get access to their data. Hackers also recruit laid-off workers to be money mules. Due to the hardship of getting laid off or cancellations of gigs, many people find themselves working for hacking organizations. Their role only being assisting in bank transactions, the money stolen is first transferred to the mule, who then passes it to the hackers for small pay. Hacking companies also market their services to other cybercriminals. Their ads showed many services going for sale, from scam sites to sale of gaming accounts.

Food delivery companies, as per the current report on the coronavirus pandemic is one of the leading businesses capitalizing in the worldwide tragedy (Viki 110). As more people are in lockdown and others avoiding crowded places, food delivery companies are booming with business. Uber eats is an example of a food delivery company getting large business as people are in quarantine. Food companies that generally do not offer delivery during regular times have subscribed to delivery services such as Uber eats, or they have incorporated their food delivery services.

Business people have also taken such opportunities and joined platforms concerned with food delivery. The ambitious ones with plenty of resources have started their own food delivery companies ensuring maximum capitalization from the current pandemic. Fast food companies and restaurants have come up with marketing strategies through the use of social media. Some of the ways of marketing themselves are by reducing prices or offering free delivery. Uber eats, for example, in their plan for maximum capitalization of the pandemic have issued thirty free deliveries for each person using their services. Food companies, on the other hand, by the use of social media, use ads of foodstuff to lure their customers into placing orders.

The current pandemic has forced people to avoided crowded places. In contrast, those in countries under full lockdown have no option but to stay at home. With increased technological advancement and modernization, social media has had an enormous impact on people across the world. The improvement in smartphones and smart televisions has assisted in making quarantine bearable. Companies providing internet services have gone down the list as among the leading enterprises capitalizing fully on the pandemic.

Recent articles have shown the estimation of profit that internet providers have accrued over the past few months, and it is over the roof. It comes as a result of people seeking entertainment and interacting through social media. There is an overflow of internet providers, and consumers have a variety to choose from. The result is internet providers reducing their prices to stay on top of their competitors. Some internet providers with the objective of maximum capitalization are using social media platforms to advertise their services. In one of their methods of marketing, they have issued free installation of home internet and a free one free month of use.

Companies related to entertainment have seen an increase in profits. It comes about with the rise in the number of people watching movies, listening to songs, comedy, and all other factors falling under entertainment. Thus companies venturing in the entertainment industry are reported to be among the leading businesses capitalizing on the pandemic. Youtube, for example, has recorded an increase in viewership since the beginning of the epidemic as people stay indoors, avoiding crowded places.

E-commerce is another industry that is greatly capitalizing on the pandemic. Companies in this industry have registered an increase in profit due to the sales as more people are avoiding shopping in supermarkets and other retail stores. The likes of Amazon and Alibaba have experienced profit, which is above the roof. Also, with the lack of competition on e-commerce, leading companies have hiked delivery prices.

From the literature review, various questions arise. The first question is which industry is likely not to be affected by the occurrence of a tragedy? Also, is it advisable for a company or business to try to capitalize during a disaster? The study also raises the question of whether or not the tips on capitalizing during a pandemic are useful. On the ethical part of it, should health companies be capitalizing on disasters? Should people start a business capitalize on a tragedy?

Hypothesis

From the questions arising from the study, a hypothesis was able to be drawn from it.

Hypothesis 1: the food industry is unlikely to be affected in terms of losses during a disaster.

Hypothesis 2: depending on the type of industry, a company should try and capitalize on a tragedy.

Hypothesis 3: from the study, the tips on how to capitalize during a crisis are practical if they are followed correctly.

Hypothesis 4: it is unethical for health companies to try and benefit from a crisis.

Hypothesis 5: many businesses get their breakthrough during disasters; thus, people should consider starting their activities during this period.

Conceptual framework

References

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Viki, T. “Why Large Companies Continue To Struggle With Innovation.” Forbes. N.p., 4 Nov. 2018. Web. 9 Apr. 2020. https://www.forbes.com/sites/tendayiviki/2018/11/04/why-large-companies-continue-to-struggle-with-innovation/#43986dc967b4