Sales & Marketing Promo

Treatment

Once the target market has been identified together with the risks the treatment should form part of the Marketing and Sales Plan and seek to address the individual risks.

There are a huge range of appropriate treatments for the risks that have been identified and they will vary from product to product, from service to service, and from company to company. Make certain that the following at least are addressed by your Sales and Marketing Plan.

A.	Costs	D.	Quality
B.	Competitors	E.	Regulation
C.	Sales

From the Risk Map in Bite 4 you may have been able to identify several risks which had the possibility of being high impact.

Once identified and evaluated as important, the Sales and Marketing Plan needs a risk treatment.

Below is a table containing possible sales risks and the implications behind these when Demand is 70% of forecast in Year 1 and also at 150% of forecast.

Study the Implications and decide whether, from your experience, there are others to be considered.

The treatment is for you to decide, each company will have its own approach. When you are ready, consider the questions underneath the table.

Risk	Implications Behind 70 % of Demand	Implications Behind 150 % of Demand
Cost overrun by 50%.	Insufficient volume.	New suppliers required at short notice and they demand high prices.
Competitors’ reactions reduce projected sales margin by 10%.	You cannot expect to launch a new product and not spark a reaction, it is a risk that must be planned for.	You cannot expect to launch a new product and not spark a reaction, it is a risk that must be planned for .
30% of stock is returned unsold.	Poor sales will impact the amount of stock sold and therefore the amount returned.	High sales may mean some distributors overstocking. Stock returns cost money to administrate and the money that stock cost is doing nothing.
Regulation delays launch by six months.	This could add to the cost overrun and reduce the amount of sales in the first year.	Without that delay the sales would have been even larger.

Consider the following risk:

Due to a severe defect in your product, it requires a 100% recall. This happens at a time when demand is at 70% of forecast sales.

What are the implications and treatments behind this risk? Type in your response below, aiming for between 50 and 100 words and click the See Expert Answer button to compare your answer.

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Now look at the opposite scenario, where the company has the same risks but is experiencing a sales increase.

Consider the following risk:

Due to a severe defect in your product, it requires a 100% recall. This happens at a time when demand is at 150% of forecast sales.

What are the implications and treatments behind this risk? Type in your response below, aiming for between 50 and 100 words and click the See Expert Answer button to compare your answer.

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Having thought through the implications and treatments, you may be interested to see a risk map comparing the over and under demand scenarios.

The Risk Evaluator below will allow you to compare these over and under forecast scenarios.

Underneath each of the Impact, Probability and Control headings are a series of square boxes. These are the gauges by which you may assess the level of risk.

Click repeatedly on each gauge to determine the levels of risk that apply to your business. The lower the gauge is set (green), the less problematic a risk is likely to be for you or the better controls you have in place for it. The higher a gauge is set (red), the worse the risk is liable to be for you, or the less effective controls you have in place.

Note how as you click each gauge the corresponding risk appears on the risk map below it. A risk will only appear on the map once both its Impact AND Probability have been set. Setting a risk’s Control will further refine the risks position on the map.

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From the Risk Map you will see how these two very different scenarios relate to each other, and possibly in which you are most vulnerable. You need to be flexible enough to manage both. Test out what happens if your controls are changed or if you decide the probability or impact has changed for either of these scenarios.

You will see that all the issues are linked to both scenarios. The treatment for some of the risks can help both when sales are going well as profit can be maximised and when they are going poorly because costs can be contained.

Use the Risk Map to get an understanding amongst your colleagues of what the impacts of different events might be. None of these tools gives the whole picture. If others don’t agree with your assumptions get them to put theirs in and discuss the results – if you really think through the various implications you will learn, and that will help your decisions.

You have now reached the end of Session 1.