If the past year has taught businesses and marketers anything, it’s the importance of having a plan in place for unexpected circumstances. But, how can we plan for the future when it’s at such a high degree of uncertainty? Scenario planning provides a solution by considering future changes to the business environment in order to be better prepared.
The process of scenario planning helps businesses and marketers navigate uncertain situations by preparing for these potential outcomes. With an accurate understanding of scenario planning and how to implement it, businesses can be better equipped to face ever-changing circumstances with ease.
The Importance of Scenario Planning
It’s important to understand that scenario planning is not necessarily designing a plan around a specific catastrophic event. For example, a disruption in the supply chain, a crash in the stock market, changes to oil prices, or even new business opportunities or unexpected growth can signal changes. Scenario planning instead embraces unpredictability and strives to improve the flexibility and adaptability of business practices, rather than trying to predict the future.
Scenario planning is important because it allows a business to understand in advance what the program will look like under a different set of circumstances. Studies have even shown that scenario planning increases decision quality and decreases the impact of biases. Based on the scenarios we are anticipating, we can adjust the current program in order to be compatible with the plausible scenarios. For instance, the way we are messaging our product or service may no longer feel relevant, so we might need to shift strategy.
It is also important for strategic management and stakeholders to be aligned on the plan so we can not only execute and pivot quickly against a new strategy but can also align on what success looks like in multiple scenarios. It is essential to ensure that your business and marketing strategies are set up for success regardless of any outside factors, and scenario planning helps you achieve just that.
When to Use Scenario Planning
Because change can and will happen, every well-prepared business no matter the size or industry should have a team who is able to plan for potential scenarios and then act to put them into action.
For example, do stores have a plan in place in the event that they sell through products faster than they can re-stock? What if the business is stagnant? Where do we pull funds from first? How should we invest our time and energy?
These are the types of questions you should ask yourself during scenario development. Marketing should always feel timely and relevant, so advertisers need to be prepared to make these kinds of adjustments to meet consumer needs.
Scenario Planning Process
To implement scenario planning and reap the benefits of being prepared and flexible, advertisers can follow these four simple steps.
Research is an essential first step to any kind of planning. There are many different aspects to research that can help leadership decide on the best strategy for potential scenarios. Some of those areas to look at include trend forecasts, consumer surveys, or historical moments similar to what we are planning for. For instance, when preparing for 2020 scenarios, we looked back at trends that arose during the 2008 recession. This can help you identify patterns that may re-emerge.
2. Determine Tactics & Goals
The next step is to determine the business’s driving forces and goals for the future. List out your most essential tactics and goals, and then rank them in order of importance and alignment with the business’s needs. Ask yourself, “What is needed to keep the business running in the short term and in the long term?” The goals that make the top of this list should be your priority.
Clearly defining top goals will help us understand the business’s key driving forces so that if a program is in need of scaling back, we will know immediately where we can start trimming. On the flip side, if we see the potential for growth and expansion, we will know exactly what prioritized tactics to implement.
3. Identify Steps
The next step is to determine what specific action would need to be taken for different scenarios. Having a plan in place will ensure that you can implement the new strategy as quickly as possible.
Remember to ask yourself these questions:
- Is your messaging still relevant?
- How will your budget levels change?
- Do you need to adjust your target audiences?
- Do you have the right media mix in place?
- Do new tactics need to be launched?
For example, with the increase of people at home consuming video content over the past year, we identified a huge opportunity for Connected TV campaigns. As we predicted thanks to thorough research, Connected TV advertising increased an astounding 25% in 2020. In-depth research on the front end of planning will help you identify these necessary next steps.
4. Outline a Plan
The last step in the scenario planning process is to develop a back-to-market strategy or a plan of action for when circumstances return to the new normal. It is critical for marketers to know what needs to be done in order to meet demands, as they will have likely changed as a result of the issue.
Stay patient when returning to the normal market — this may be a phased approach based on vertical or consumer trends.
Start Preparing a Scenario Plan Today
It is important for business owners and marketers alike to plan for future scenarios to maintain the health and adaptability of the program. The point of scenario planning is not to try to predict every potential outcome, but rather to have your business well-prepared for change. Regardless of business size or industry, it is crucial to think about how the business would operate under different circumstances and have a new strategy ready to execute.
Still unsure of how to start planning for your own potential scenarios?