Types of Marketing Risks

Investing time, money and resources in marketing is critical to the success of most companies. However, like other business investments, marketing has risks. These risks exist within each critical element of marketing, including customer and product research, design and development, promotion, sales and customer service.

Pricing

Pricing strategies fall under the marketing umbrella. Companies must generally pick a pricing strategy that correlates with their brand and position. Some companies use low price strategies, while others have higher prices that tie to value-based or high-end solutions. A low price provider risks developing a reputation for poor quality and instilling a strong price orientation in the market. High-end providers can flop if product or service quality doesn't measure up to the price point. Midrange or value-priced businesses must work especially hard to project a desirable mix of benefits and fair prices.

Target Market

A target market is the group of specific customers a company targets with products, services and promotional messaging. One marketing risk is targeting the wrong type of customer and missing out on a more profitable market segment. A company can alienate customers if it inaccurately defines the market and its needs. Another risk is going after customers that don't align best with the company's product or service strengths.

Research and Development

Research is used to identify what customers want and to develop products that align with desired features and benefits. Research costs money. Thus, investments that don't lead to useful data and results are wasteful. Additionally, companies need to use multiple types of research and multiple studies to ensure reliability in results. Investing in product developing or promotion based on singular sets of data may lead to additional waste and missed opportunities.

Promotion

Some of the most expensive marketing risks lie in the area of promotion. This is the use of paid advertising, unpaid public relations and selling to convey company and product benefits to targeted customers. Companies can err by developing messages that aren't making an impact. They may also err by selecting the wrong media to reach the audience with the desired impact. Messages that make no impact are wasteful. Additionally, companies sometimes inadvertently use messages that offend targeted customers or the general public. Such mistakes can severely damage the company brand.