When Whitney Houston died in 2012, were Sony Records right to immediately increase the prices of all her albums? In this Vlog Grant explains that the answer is a definite YES … and NO.
Within a few hours of Whitney Houston passing away, Sony Records put up the price of all her albums. They got ripped to shreds on the worldwide web of people who were outraged that within a few hours of her death, her albums had already jumped in price.
From a pure business perspective, Sony Records did nothing wrong, it was just good old fashion supply and demand. Unfortunately, when an artist just dies, the demand for their records goes up and so Sony put the prices up.
Surely it’s no different from an airline. We know it charges more to travel in August than in February.
Professor David Rock has a set of neurological characteristics that matter beyond just rationale, and one of them is fairness.
In business, when looking at things from a cold economic point of view, something might seem rational, when looking at it from the lens of fairness, it may just seem wrong. When looking at Sony Records’ decision to put up the price of Whitney Houston’s albums through the lens of fairness, it just seemed outrageous.
Companies make this mistake all the time. Let me give you an example. I travelled on business with a budget airline and they charged me £24 for a suitcase. And to be honest, on a business trip, travelling on my own, that didn’t seem unreasonable. But a few months later I went with the same airline, with my whole family. There were six of us and five suitcases. Suddenly to pay £120 in suitcase charges seemed extremely unfair.
Being perceived to treat your customers fairly and, therefore, have a good reputation and high levels of customer satisfaction are important.
So when putting together your business’s terms, conditions and policies, it isn’t enough to just use simple logic. You have to look at it through the lens of fairness and have empathy with your customers.
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There may be small changes to the spoken word in this transcript in order to facilitate the readability of the written English