Since risks are unavoidable and usually unpleasant, most businessmen and individuals, as much as possible, want to avoid or find a way of reducing the impact of their consequences.
This they can achieve by transferring the burden of the losses (where possible) to others. However, not all marketing risks are transferable. Risk management is an aspect of business activities.
It is a marketing function that increases its importance as business activities expand. Experts on risk management can be engaged in this respect. Some of the workable methods adopted in preventing risks include the following:
1) To prevent destruction by natural causes, watchmen can be employed to prevent theft and pilferages, a company can also install fire-fighting equipment to fight fire outbreaks.
2) The premises of a company can be fenced off to prevent entry by unwanted people or control the route of movement of people within the business area.
3) Detectives can be employed to monitor customers.
4) Credit collections must be planned and people with poor credit risks must be identified and handled appropriately.
5) Proper storage facilities can be constructed to prevent damage from weather changes and damage to stocks by rodents etc.
6) A firm must have a good market analysis, a sound plan, and a good sales forecast plus proper control methods to operate successfully. The company may engage an expert in risk management. This expert should be able to advise on the adequate amount to set aside each year for each class of risks.
7) Manufacturing to order- to reduce losses from low demands, management may encourage placing orders before production.
8) Subcontracting- the risk of loss can be spread if some part of the work can be given out to other contractors to perform. For example, if a person is given a contract to build a house, he may subcontract the electrical and plumbing works to other professional colleagues. This will spread the risks to many people.
10) Setting marketing boards- the setting up of marketing boards and production companies, in the 1950s and 1960s in Nigeria, were attempts by the federal government to ensure price stabilization for primary products. If such marketing boards can be reactivated and empowered, this will help to reduce some of the business risks in Nigeria.
In conclusion, any decision taken is subject to one form of risk or the other; this is particularly true in codeveloping countries where there are little or no data for business decisions. This unit has examined risks, marketing risks, and various forms of marketing risks. The unit also considered various methods of handling marketing risks.
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