Magazine article Marketing

Economy Suffers If Caution Wins a Victory over Risk

Magazine article Marketing

Economy Suffers If Caution Wins a Victory over Risk

Article excerpt

There is a view that British industry would have emerged from the recession a year earlier if marketers had been more effective. Marketing could have created the demand that every manufacturer and service provider needed. But marketers have failed to persuade those who hold the purse-strings that the risk inherent in committing to marketing spend was an intelligent risk.

Instead, companies have clung to their profits by being risk adverse, even cutting expenditure where the reward represented no risk and a reasonable return. Consequently, they have failed to move on to a higher and more profitable plane. Efforts, instead, have been concentrated on attacking obstinate costs.

This victory for caution over risk -- for the accountants over the marketers -- makes businesses and the British economy smaller and certainly less exciting than they would otherwise be. It represents a real failure on the part of the marketer. Such caution leads, in the long run, to business shrinkage. What are the alternatives? No one wants risk.

The key is to put the correct management tools and management culture in place which will evaluate and minimise the risk and encourage action rather than stagnation.

Many organisations create complex risk-evaluation systems -- a check-list of criteria against which an investment is judged -- often called "resource allocation models". Some of these systems work well. The best work fast by speeding up decisions; the worst kill any project or investment which carries risk. Most marketing activity falls into the risky category during recession and the result is a reduced spend. …

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