How is marketing risk management accomplished?
Marketing risk management works to neutralize the potential for marketing risk by identifying, assessing, and addressing marketing risk before it happens. Marketing departments often focus their energy on the planning and execution phases for marketing activities, but they would be remiss to stop there. Successful marketing departments need to go a step further and engage in marketing risk management in order to ensure that the marketing activities aren’t impacted by events or circ*mstances that could have been planned for in advance.
Marketing risk management involves several steps that can help teams avoid some of these risks from the start or be ready to respond when they do arise.
- Assessment: Throughout the planning process, marketers should conduct a marketing risk assessment to identify potential risks that could impact activities and campaigns. These could be as simple as identifying the inclement weather trends that might impact production, from hurricane season in coastal areas or snowstorms in cold weather locations. Your team might also brainstorm issues that might arise with competitor pricing based on past data.
- Analysis: Analysis is the next step and involves considering how likely these events are to occur, how often they have happened in the past, and any data you have that will help you determine which risks are most likely to play out.
- Planning: Next, the marketing team will adjust marketing plans based on the identified risks and the marketing risk analysis that determined their likelihood. Alternative plans should be included where possible, so marketing teams know how to adjust their activities should one of the risks turn into reality. For instance, a marketing plan could include an alternative plan should a production or distribution system encounter inclement weather.
- Monitoring: Finally, the marketing team needs to continually monitor marketing activities for risk throughout the planning phases as well as execution. Continual assessment of marketing risk can help marketing teams stay ahead of potential problems and employ alternative plans when necessary.
While everyone on the team should be mindful of potential risks, it can be a smart strategy to designate a single team member to assess risk regularly throughout the planning process. Having alternate plans in place ahead of time can significantly improve marketing performance by enabling teams to pivot to a pre-planned alternative without missing a beat. This will help to cut down on any losses the company might have otherwise incurred.
