You have crafted a comprehensive marketing plan, marshaled your team, and you are ready to hit the ground running. But will your marketing efforts succeed? The answer depends on how prepared you are to identify and defeat the risks that you will encounter when executing your strategy.
Marketing risk represents the potential failures or losses that may arise from a marketing plan. To limit your risk exposure when trying to sell a product, you need to have a marketing risk management plan in place. An all-rounded risk mitigation system will help you anticipate, prepare, circumvent, or overcome any challenges you may come across.
Types of Marketing Risk
Today’s marketing environment is drastically changing. To stay ahead of the game, you need to deploy marketing techniques and strategies that take into consideration the current risks faced by modern businesses. Here are a few of them:
- Brand risk. Any company can lose its brand’s value. This can be caused by stiff competition or poor marketing. If you overestimate the strength of your brand, you may end up making use of the wrong marketing techniques. It might be already too late when you realize that you need to boost your efforts or spend more resources promoting your brand.
- Miscalculating your target market. Failure to conduct ample market research, collecting data from wrong places, and improper use of data can pose risks to your marketing plan. If you don’t understand your market, you may develop a strategy that targets the wrong people or paints the wrong picture of the product you are selling. To create a marketing message that appeals to your target audience, ensure you conduct extensive research beforehand.
- Changing trends. In today’s digital world, marketing trends change on a daily base. If your marketing strategies aren’t up to date, your business bottom line will be threatened. Always be on the lookout for the latest promotional messages in your niche, price shifts, automation technologies, and constantly check out what your competitors are doing.
- Promotional risk. How you promote your product heavily impacts the success of your marketing plan. If you use an approach that isn’t well-calculated, your efforts will fail. False, misleading, and exaggerated messages can also harm your marketing efforts. Apart from making sure your promotional techniques are compelling, powerful, and effective, ensure your advertising practices are ethical.
The Importance of a Marketing Risk Management Plan
Risk is the major cause of uncertainty when it comes to marketing. You may wonder whether your message will reach the intended target, whether potential customers will respond positively, or whether your brand will gain recognition. With a marketing risk management plan, you can curb these risks. Here’s why such a plan is important:
1. Identifying Risks
The most important role of a marketing risk management plan is that it enables the identification and definition of all the hurdles your marketing team might come across. By knowing what you are up against, you can make the right decisions to avoid the threat or minimize the negative effects. With this knowledge in mind, you will feel more confident when developing and implementing a marketing strategy.
2. Analyzing Risks
A risk management plan will provide you with significant insights on the risk you are set to encounter during the planning phase and after your marketing efforts are implemented. Analyzing each potential risk, allows you to tell how likely they are to occur, their magnitude, and how frequent they may occur. You can then tweak your marketing strategy to overcome any challenges that lay on the way. That’s why analyzing all risks before launching your marketing efforts will set you up for success.
3. Planning Risk Responses
Most threats are unique, and each challenge needs to be mitigated differently. With a risk management plan, you will be able to face any challenges in the best way possible by developing precautionary measures in advance. You can decide to address the risk at its root, remove its drivers, reduce its severity, or avoid it altogether. If you have assessed and realized that the marketing messages you wanted to use won’t generate leads, you can respond by adopting a more effective strategy.
4. Monitoring Risks
Keeping track of all threats means you are less likely to fall victim to them. You can predict when the threat will turn into a serious problem and put measures in place to counter it. In the modern marketing landscape, there are constant challenges to be faced. Your competitors may come up with better innovations, your customers’ preferences may change, or sales may start dipping. A risk management plan will help you monitor new and existing challenges and be ready to face most of them.
Risk management is a critical process that every company should integrate into its business operations. Implementing a risk management plan in your marketing strategy can help you foresee any challenges, get ready to face them, and avoid them altogether.
Written by Ken Lynch
Ken Lynch is an enterprise software startup veteran, who has always been fascinated about what drives workers to work and how to make work more engaging. Ken founded Reciprocity to pursue just that. He has propelled Reciprocity's success with this mission-based goal of engaging employees with the governance, risk, and compliance goals of their company in order to create more socially minded corporate citizens. Ken earned his BS in Computer Science and Electrical Engineering from MIT. Learn more at ReciprocityLabs.com.