Where is the Contingency Plan?- A Marketing responsibility

Where is the Contingency Plan?- A Marketing responsibility

CMC- InsightExec 06 Jan 09

The findings of the survey of the 2008 Global Strategic Reward survey by management consultancy Watson Wyatt, makes interesting and alarming reading. The consultancy spoke with 1,389 organizations in 37 countries about what, if any, contingency plans they had in place in the summer of 2008, to cope with the possibility of an economic downturn.
Despite the facts indicting that the current credit crisis has been developing for at least a year it is surprising that 32% of US businesses did not have any contingency plans to deal with an economic slowdown. One in five UK companies (21%) had made no contingency plans ahead of the current financial crisis for managing their workforce during an economic downturn. The percentage of European companies without a contingency plan was similar.
While the figures vary across Europe, the survey showed that of all the firms surveyed ,13% of German, 15% of Irish, 18% of Italian, 25% of Dutch , 26% of Swedish and 43% of Spanish firms had not made any contingency plans. By contrast all the French firms surveyed, had prepared contingency plans for an economic slowdown.
The whole purpose of business and marketing plans is to prepare for the expected and intended, but equally for the unexpected event or conditions whether good or bad. The question must be why, when the economic indicators have been there for all to see, have so many companies not prepared themselves and planned for the possibility of a rapid change in the economic climate?

For many business planners and marketers, the preparation of business and marketing plans is such a protracted affair, that the idea of preparing contingency plans hardly comes into it. Yet the “what if “question, is vital if plans are not to be thrown into disarray when events turn out differently from that which was expected. Marketers have the responsibility to deliver sustainable profitable revenue to their business. It is therefore incumbent upon them to identify potential problems in the market and the economy and to prepare accordingly. How should they do this? The various quality economic surveys are a prime source of information, as are Government reports, the Bank of England, and economic forecasts from the principle financial institutions and banks. Collectively these can provide good indicators of the economic climate and its future. In addition, statistical information regarding trends and activity in the relevant market sectors is important, as this sets out the forecast of the prevailing trading conditions in the immediate future.
If the preparation of a business or marketing plan is completed properly, the process will require an analysis of the strengths, weaknesses opportunities and threats( SWOT) that effect the business. Strengths and weaknesses are confined to that of the organization in relation to its overall performance in the market and against the competition. Opportunities and threats cover those external factors which affect the business e.g., Health and Safety, economics, legal aspects, as well as those that are seen directly effecting marketing such as competitor activity and market trends. Additionally, opportunities and threats relate to Political, Economic, Social and Technological factors that can effect the business Assessing the nature of these factors is generally carried out through a PEST Analysis. PEST (Political, Economic, Social and Technological) is used to describe the framework of analysis of the external macro-environment in which the firm operates and assess the potential risks to the business or marketing plans. Marketers should then have an understanding of the external risks to their plan, and consider the “What ifs”. What if the principle contract of this year’s revenue does not come in on time, or what if you fail to win the contract? What if the economic slow down reduces demand? How will the hole in the revenue plan be filled? What actions will have to be taken and by whom? When do you have to confirm contract success or failure in order to make good the revenue plan?
Business and marketing plans are essential working tools for effective management, to ensure that assets and resources are used effectively to achieve the objective and should not be seen as a tedious annual event. Used properly, the business and marketing plans should be in continuous use as a working management tool, being regularly reviewed and revised to meet changing conditions, so that resources can be moved effectively when the unexpected happens.
If all companies had drawn up their business and marketing plans properly earlier this year or even last year, then the possibility of the credit squeeze and recession should have been recognized, as all the signs were there, even if they were thought remote. Based on those possibilities marketers should have prepared contingency plans to deal with the situation. Over the next few months it will soon become apparent which marketers prepared and implemented effective contingency plans and which did not. If businesses have failed to make effective contingency plans to deal with the current economic and market situation, then marketers must take a major part of the responsibility, as theirs is the task of maximizing sustainable profitable revenue.