Is the pandemic itself riskier than its opportunity cost?
While, with the lack of medical masks, the dropshipping market grew like a breakthrough, today with the news of “we started our production as usual” coming from China, the masks sold at $3.5 in the black market have entered into a big landing.
On the other hand, Europe and America now feel the danger at their nape, as Italy has to undergo strict control after China and South Korea. An official government document seen on Wednesday revealed the UK Government is preparing for the possible worst-case scenario that 80 per cent of Brits could be infected by the coronavirus. It means 50 million could catch the virus and with a mortality rate of one per cent 500,000 people could die.
Economic indicators are in a decline from the beginning of this week: The growing outbreak news creates confusion in investors, causing stocks to drop for two consecutive days. On Tuesday, the Dow Jones Industrial Average fell nearly 900 points, following Monday’s record sell-off. In the past two days, the virus has wiped out an estimated $1.7 trillion from the U.S. stock market. In the UK, the FTSE 100 fell almost 2% to a 12-month low of 7,018, while Japan’s Nikkei 225 index fell 3.3%.
One threat is a disease itself and the uncertainty it causes and the other is the fear of the disease or uninformed panic. As seen, health-related misinformation can spread as fast as viruses to undermine or disrupt the overall medical response efforts.
The panic of a pandemic, which primarily affected the tourism and travel sectors, now concerns all sectors closely.
How ready is the business world for an epidemic?
Estimates indicate that the 2014–2016 Ebola outbreak in West Africa cost $53 billion, and the 2015 MERS outbreak in South Korea cost $8.5 billion. According to the World Bank, only 39% of the economic losses are associated with effects on infected individuals, with the bulk of the costs resulting from healthy people’s change of behaviour as they seek to avoid infection.
In order to manage the impact of the coronavirus, Marsh recommended a four-step plan:
- Identify your business’ main vulnerabilities.
- Assess your preparedness.
- Make sure your plans will work.
- Make sure teams are kept in the loop.
Of course, it is not just about lowering risks. Creating a safe-side is not enough for a business to thrive.
Let’s look at the other side of the coin:
— EVERY CRISIS HIDES AN OPPORTUNITY. —
I remember, in 2001 a gross devaluation in currency ended up with a major economic crisis in Turkey. However, it was also a prosperous environment to grow for some very smart brands. As an example, I would like to remind the global brand, Dove. In the crisis, in which the currency depreciated greatly, the share of luxury consumption sharply declined. — I recall my desperate effort to change the pricetags wandering around all Tefal Shops in Istanbul. — One of the most affected sectors was, of course, cosmetics. Dove, trying to gain market share in the soap category until that day, redefined its target audience and claimed that it could meet the “moisturizing” need of Turkish women with the promise of “value for money” by positioning itself as “more than a soap”. Then by the bombardment of advertising sales rocketed. Its market share increased from 9.8 per cent to 15.7 per cent in one year!
Due to the panic of a pandemic, consumer behaviour definitely changes. We know that. But the consumer’s need remains the same. In other words, it is crucial to find out how to meet their needs and to change routes in this direction in an agile manner.
What can change with coronavirus panic? Let’s do some brainstorming.
For example, a family who has arranged Easter holiday to Italy can change their mind last minute and prefer Scotland to meet their holiday needs. Instead of publishing the recent ads on the London tube for an invitation to live in Scotland, the local authority can change the positioning to visit Scotland during Easter. Much more convincing!!! Or someone who wants to register for seminars or training would meet his demand with online education platforms, instead of a classroom environment.
At this point, looking for opportunities should also be a part of the brands’ mitigation plan.
I say, put a one-day war-room on your agendas for this potential crisis to thrive further.