Risk is inevitable and will be present in any given situation, especially in a business environment, where there are several forms of risk that can be associated with any commercial decision. Proper risk management is required to analyze, manage and alleviate the consequences of the uncertainty the risk may have caused to the organization.
Risk management is a procedure which desegregates the identification of risk, risk analysation, recognition of strategies to administer and manage the associated risks and subsequently reduce the prevailing risk factors, using the given market intelligence and the managerial resources available. There are few important steps in the risk management process which are followed to substantially reduce the element of uncertainty and thus protect the business from any adverse affects the risk may have imposed on the business:
- Identification of the risk in the respective operation
- Analyzing and prioritizing the risk
- Planning and organizing the risks
- Following up and reporting the risk
- Controlling the risk
- Learning from the risk
How market intelligence is relevant in risk alleviation
In a business environment market intelligence is sometimes mistaken as something which is only associated with targeted customer research. However, market intelligence has a much broader application in practicality, and is efficiently used by companies for paving a focused path to achieve the desired goals of the company. It is important to maintain a strong correlation between using this market tool and the strategic decisions to gain a competitive edge. While market intelligence is acquired and used at every stage of risk management, it is the process of risk identification that makes the most extensive use of market intelligence.
Based on a firm’s current situation and dynamics, different types of organizations will use different types of market studies to identify the underlying threats. For example a startup company will have different kinds of problems they will need to look into and resolve, than an established business. On the other hand companies that want to expand their business will look at a different set of market studies to analyze their problems vis-à-vis a firm which is trying to protect their share and foothold in the market.
Let’s take the example of Cadbury Schweppes, who effectively used market intelligence to counter risks which could have potentially fatal to their business.
Cadbury Schweppes is the world’s fourth largest supplier of chocolate and confectionery products that markets and distributes its goods in over 200 countries. A market study showed that over 15% of the volume of sales chocolate for the last ten years was generated due to the launch of new products. From relevant market reports they concluded, a large number of their competitors had already launched new products that catered to the market demands. This posed a substantial threat to their business, translating into a significant market risk – the company feared that not only would their market share soon die, but it would also cause them to lose the already established loyalty with the customers. Further research showed that the customers wanted healthy ingredients such as cereal, wafer, biscuits, and peanuts to counter the effect of too much chocolate in the snack.
Thus keeping in mind the intelligence gathered, the product developers chalked out a new product called ‘Fuse’. This was a snack bar which constituted the healthy snacking ingredients with a hint of chocolate. Within a week of its launch, ‘Fuse’ bar was crowned as the most popular snack bar in UK, which also surpassed its most worthy competitors – the Mars bar and Kitkat.
Thus we see how market intelligence helped a leading company to map out data from relevant market research to make a more informed and up to date decision. Market research provides valuable insights that are indispensable for making managerial decisions as well as protecting the best interests of the business. Uncertain periods call for the best resources available to fight threats, and solid market intelligence is crucial to implement effective strategies and diminish risks.