Posted in Marketing and Strategy Terms, Total Reads: 723
In marketing, risk is any marketing related activity or event that has associated with itself variability in prices, leading to unpredictability of sales, a decisive parameter for a marketer. A marketer has to constantly be updated about the ambient information for formulating marketing strategies, designing implementation processes and targeting the right consumer market.
However, factors like rapidly changing consumer demand pattern, channel proliferation and demand for innovation can mould the consumer market in an altogether different manner. Even sudden and unexpected forces like natural calamity for agricultural products and government policies can also play havoc in the market. Thus the marketer’s activity has risks associated with these parameters, which he/she can mitigate with constant alertness to the changing environment. However, as time progresses and the environment becomes more and more complex, marketing risk management is getting more and more expensive. Thus risk management frameworks are developed to achieve this in accost effective manner.
A sample risk management framework
Setting executive business objectives
Ascertaining Key Performance Indicators (KPIs) that describe how much marketers conform to their business objectives
KPIs feed the Key Risk Indicators (KRIs) that tell what risks are imminent and the way out
KRIs feed the Key Control Indicators (KCIs) which are governance related controls to mitigate the risk