Developing sound marketing plans is never easy, but it becomes a herculean task when a global pandemic turns the business world upside down. Scenario planning enables marketing leaders to manage marketing effectively in the face of unprecedented uncertainty.
The momentum for reopening the U.S. economy is steadily building, and it now appears the process is likely to begin within the next few weeks. On April 16th, President Trump released guidelines for restarting the economy. These guidelines lay out a set of conditions for reopening the economy, but leave most of the specific decisions (including timing) to state governors.
So far, three groups of governors - one involving six Northeastern states, one involving three West Coast states, and one involving seven Midwestern states - have announced they will work together to coordinate plans to restart the economy in their respective regions.
The reopening of the economy marks the beginning of the "recovery" phase of the coronavirus saga, and the task now facing marketing leaders is to develop a marketing plan for the balance of 2020. The challenge is, there is still a huge amount of uncertainty about how the restart of the economy will be managed and how quickly economic growth will recover. For example:
- When will the reopening process actually begin in the markets we serve?
- What conditions will be imposed on our business, and how will those conditions affect our operations, our ability to generate revenue, and our profit margins?
- How quickly will the demand for our products and services return to more "normal" levels?
So how can marketing leaders create appropriate marketing plans in the face of these uncertainties? One approach that has been used effectively for strategic planning is known formally as scenario planning. With scenario planning, business leaders construct a set of alternative strategies that are based on a range of possible future conditions.
Given the current level of uncertainty, scenario planning is the best tool marketing leaders can use to approach planning for the balance of 2020, but to use it effectively, marketing leaders must be able to construct a set of realistic scenarios. And that requires a clear understanding of the major factors that will shape future economic and business conditions.
In normal circumstances, the first step in a scenario planning process is to look at estimates of future macroeconomic conditions such as GDP growth, employment levels, and consumer spending. Then business leaders drill down to estimate the growth prospects for their industry and company.
In the circumstances we face today, however, the most important factors to consider when constructing scenarios are potential medical and scientific developments pertaining to the prevention and treatment of COVID-19 and the processes used by states to reopen the economy. More specifically, the pace of the economic recovery will be largely dictated by three factors:
- The availability of an effective vaccine for COVID-19
- The availability of effective medical treatments for COVID-19
- How restrictive the reopening "rules" adopted by states are, and when the reopening begins
Vaccine Availability - The availability of an effective vaccine for COVID-19 is the true "end game" for the coronavirus pandemic. Most health experts agree that we can't really call the pandemic over until we have an effective vaccine, and many economists say that we will not get a complete economic recovery until a vaccine is available. Unfortunately, most health experts also agree that the development of a COVID-19 vaccine will require 12 to 18 months. Therefore, all marketing scenarios for the balance of 2020 should reflect that no COVID-19 vaccine will be available.
Treatment Availability - The race is already on to identify and/or develop treatments that will reduce the severity of COVID-19 and save lives. Having an effective treatment is important economically because it will make people feel more comfortable about returning to work, shopping, and engaging in other economic activities. Many health experts believe that we may have an effective treatment by late summer, but there are no guarantees. Therefore, when planning for the balance of 2020, marketing leaders should use three treatment scenarios:
- At least one effective treatment for COVID-19 is widely available by September 1st.
- At least one effective treatment for COVID-19 is widely available by November 1st.
- No effective treatments for COVID-19 become available in 2020.
Reopening Rules - As I noted earlier, President Trump's reopening guidelines leave most of the decisions about reopening the economy to state governors. Therefore, there will actually be multiple "reopenings" that begin at different times and have different rules. It's fair to think that most governors will be cautious about when to begin the reopening and how quickly to relax the restrictions they currently have in place. For marketing planning purposes, the baseline scenario should be that the reopening process will begin in many states sometime in May and will be implemented gradually at least until an effective treatment for COVID-19 is available.
All of this suggests that the recovery of the overall economy is likely to be sluggish through most of the third quarter of 2020, but may pick up steam in the fourth quarter. With these scenarios as a backdrop, marketing leaders will then need to analyze the growth prospects under each scenario for their industry and their company.
The most successful marketers in 2020 will be those who are best prepared for a range of possible futures. Scenario planning can help you be ready to respond quickly when the shape of the future becomes more clear.
Image courtesy of Dan Moyle via Flickr CC.
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