You have built your marketing plan, started your execution, and are ready to launch. Your team is excited. Will you succeed? The answer to this question may depend on how much time you have spent anticipating and mitigating the potential risk in your marketing plans.
If you are a financial manager, you can diversify a portfolio or hedge currencies to limit your risk exposure. Does the same thing apply to marketing leadership? Can you protect yourself from market and marketing risk? Are there steps you can take to help ensure your months of planning and preparation do not go up in smoke?
The Need For Marketing Risk Management
If you have worked in marketing for a while, you know that different types of marketing risk are very real. The best developed new product, program, or plan can come apart for a variety of reasons. You likely implement a number of different marketing risk management initiatives already whether you think of them that way or not.
Marketing risk management is anticipating risk and then taking action to remove or reduce that risk in your marketing development and execution.
When Does Marketing Risk Occur?
- Marketing planning—Risk can enter your marketing plans as you begin to build them. Different initiatives and strategic choices carry different types and levels of marketing risk.
- Opportunity assessment—During new program and new product opportunity assessment, marketers evaluate and compare the market opportunity of different strategies and concepts. Marketers often focus on optimizing awareness, preference, purchase, market share, and ROI. Often the pursuit of sales and profit growth can lead companies to ignore or underestimate risk in selecting projects to pursue.
- Program/Product development—During the development process, the program or product concept that you approved may evolve for operational but not strategic reasons. Changes in execution that deviate from a strong concept may limit the impact and performance of your new product or program.
- Launch—Many marketing programs or new products have been launched only to face an internal budget cut or a change in external market factors.
- Company or product failure—A public relations issue or product problem could damage your reputation.
- Established products—In any given month, a competitor, retailer, or change in the economy can limit the attractiveness of your products. External risk is harder to predict and can have more severe consequences.
Some risk is easier to identify than others and manage than others. Marketing is subjective. There is risk in most marketing initiatives. Sometimes it takes higher risk to achieve higher reward. You cannot win some races without taking on risk. Sometimes you want risk to completely go away. Sometimes you want to manage marketing risk and not fully remove it.
To achieve reward more consistently, being able to identify, evaluate, and manage risk can make the difference between a successful company and one that goes out of business. Having active risk management tools and programs in place can help you move new products and programs to market quicker and with greater success.
What Forms Does Marketing Risk Take, And How Do You Protect Against Them?
Do you have marketing risk management programs already in place? Following are some examples of marketing risk and corresponding risk management:
Enterprise Risk Management
Marketing risk management should be part of your enterprise risk management efforts. This is a holistic approach to managing risk in an organization and typically includes assessment and mitigation of risk in areas such as:
- Strategic—Risk inherent in company strategic decisions and their outcomes.
- Operational—Risk inherent in internal operations, equipment, labor, and management.
- Financial—Examples are investments, currency exchange, interest rates.
- Pure risk—Examples are hurricanes, earthquake, war.
Marketing risk can occur in any of these categories. Risk in these categories does not often come at the same time but they are often interconnected in large initiatives. An operational or strategic failure introduces financial risk. Companies must manage their risk portfolio to manage multiple risks across multiple programs.
Ensuring that marketing strategies and initiatives are included as part of your company’s enterprise risk management dashboard and program can be one important step to help add visibility and tools for your marketing risk management efforts.
Putting Marketing Risk Management To Work
- Marketing planning—As you create your marketing plan, not only identify your objectives, strategies, and action plans but also identify potential roadblocks, hazards, or threats (risks) to your plans. If you identify potential risks during planning, you can make more informed choices and start risk management earlier.
- Opportunity assessment—During your opportunity assessment process, identify both potential risks and rewards. If you assess your options for both ROI potential and risk, it is possible that programs with lower ROI but also lower risk may be better choices. You may also select a high-risk opportunity due to high potential reward. Make sure you are considering both risk and ROI in your opportunity assessment.
- Program/Product development—Delivering a high potential product from concept to market can be more challenging when many people are involved in the development process. Committee decision making can slow, kill, or evolve a strategic project. A long or complicated development path may allow the team to stray from the original concept. Your ability to keep a new program or new product true to the approved concept during development can reduce risks following launch.
- Launch—There are many variables that introduce risk following a launch. An aligned leadership team that supports and protects key strategic initiatives from internal risk factors such as budget cuts, lack of sales support, or operational complications can improve results. Reducing the internal risk of new programs or products gives them a much better chance in market.
- Company or product failure—A solid, ongoing risk management team puts operational checkpoints in place to help prevent their company from having a significant market or public relations issue. Does your team have both quality management and crisis management programs in place? If not, it should.
- Established products—A good way to be prepared for market changes is to continually monitor the market and ensure that both the market team and the operations team are informed of any new potential market risks. Any new issues of concern can then trigger response planning with the needed team members.
What Can You Do Now?
- Commit to integrating risk management into your marketing planning and program or product management efforts.
- Identify who will lead your marketing risk management efforts. Everyone should play a part but having someone on your team who is specifically assigned to lead risk management can further protect you.
- Work with your organizations leadership team to integrate marketing into your enterprise risk management program.
- Set-up time this month to assess and identify potential risks in current and future programs.
- Based on this assessment, put together and implement marketing risk management or mitigation plans.
Marketing risk management is not a simple issue but regular and consistent efforts can make a big difference. As Ben Franklin once said, “An ounce of prevention is worth a pound of cure.”
This article was syndicated from Business 2 Community: What Could Go Wrong? Protect Yourself From Marketing Risk
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