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Bradley Keefer, CRO, Keen Decision Systems
The current economic outlook is uncertain, with consumer confidence declining, egg prices climbing and new tariffs in place. Meanwhile, supply chain disruptions caused by understaffing and trade war implications pose broader risks to the global economy.
With so much turmoil, long-term marketing budgets pose a challenge for retailers. To remain prepared, many use scenario planning to navigate uncertainty and ensure their marketing plans stay agile and adaptable.
Scenario planning helps retailers mitigate economic risks while uncovering opportunities to stay ahead, even as competitors adjust their own strategies. It considers current and future forecasts, providing a blueprint for swift adaptation and sustained competitive advantage.
Every brand feels the effects of economic shifts differently, making it crucial to focus on the most relevant challenges. A Canadian-based company may prioritize the impact of tariffs, while a U.S. grocer might focus on pricing strategies to address rising egg prices.
Brands should also consider broader factors like shifting consumer behavior and how competitors respond to economic pressures to get a complete picture of the scenarios. By anticipating these shifts, businesses can better navigate uncertainty and stay competitive.
Once marketers fully understand the key factors affecting their business, they can map out possible scenarios featuring challenges and opportunities.
Retailers should consider short- and long-term possibilities as they adapt to an ever-changing landscape. Modeling over time helps reveal the lasting impact of current decisions, whether increasing spending to counter headwinds or cutting budgets due to internal pressures. Being mindful of these long-term effects ensures smarter strategic choices.
Once key scenarios are established, retailers should assess how each outcome could impact their strategy, identifying opportunities and challenges. For example, if inflation rises and consumer confidence declines, offering trade coupons can help differentiate a retailer from pricier competitors while providing customer savings.
Retailers can also evaluate how inflation might strain budgets, prompting a shift toward higher-performing channels like search or social media. Additionally, modeling tools allow them to test different profit margin assumptions, helping brands adjust budgets based on projected revenue.
The key to scenario planning is creating a clear roadmap that guides marketers on when to respond to a particular outcome. It should outline budget, channel allocation, campaign timing and expected ROI to ensure every investment delivers value.
Marketing mix modeling is a powerful tool for mapping the most effective path forward. For instance, if a global CPG company faces budget cuts due to a trade war, marketing mix modeling can help reassess spending and optimize allocation, minimizing impact without sacrificing marketing efforts.
These tools also assist in budget sizing. If a brand has specific revenue targets, modeling can determine how much additional investment is needed to overcome challenges and stay on track.
Being prepared doesn’t stop once the plan is set. Marketers must continuously monitor economic signals to know when to act and adjust strategies. Staying proactive means brands can get ahead of potential challenges and refine their approach over time.
For example, should supply chain issues resurface, a furniture company severely impacted by delays related to the COVID-19 pandemic would recognize early warning signs and respond accordingly. Ongoing testing is also essential, helping retailers fine-tune spending and channel allocation for the most effective results.
In this uncertain economy, planning just one week ahead can feel daunting. Scenario planning offers a proactive solution, and modeling tools provide real-time insights to help marketers make swift, informed decisions. As brands look ahead, scenario planning will be key to staying agile and competitive.
Sponsored by Keen Decision Systems
