How can we Evaluate Opportunities in an Uncontrollable Environment in Marketing?
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The question can be simplified into three steps:
1. Identify the company’s current situation and compare that to what you want to achieve for it.
2. Identify possible opportunities, and assess their value before undertaking any one of them.
3. Establish as many criteria as possible for each opportunity in order to rank them and decide which is most suitable (e.g., return on investment, risk mitigation).
1. Identify the company’s current situation and compare that to what you want to achieve for it.
In marketing, an uncontrollable environment is one where there are no fundamental constraints on a company’s resources (e.g., time, money, people).
As a result, every decision that a company makes is not only limited by the law of diminishing returns but also by the situation as it currently stands. In such an environment, we all try to create opportunity by flagging down situations from which we expect to gain the greatest value possible.
However, what we cannot predict or control is which opportunities will present themselves. This is in sharp contrast with the situation in a company that has inherent constraints on its resources i.e., a company under business constraints, where there are natural limitations to the amount of time, money, or people that it can squander.
In this case, the company can prioritize its opportunities and only pursue those that have a high likelihood of delivering a high return on investment (ROI) and low risk of failing.
2. Identify possible opportunities, and assess their value before undertaking any one of them.
It is very important to note that the question of how to evaluate opportunities in an uncontrollable environment is not the same as whether a company should pursue an opportunity that has an uncertain ROI and high risk of failure.
The decision to select opportunities with an uncertain ROI and high risk of failure is one for top management and outside the scope of this article. Rather, this article is about how to evaluate such opportunities once top management decides to pursue them.
Using the example of a marketing department, if the marketing department’s resources were unlimited and it had no budget to allocate, then the marketing department would have many more opportunities than is actually feasible for them to pursue.
However, the most important consideration in this situation would be whether the opportunity is still better than doing nothing.
Given that we cannot predict which opportunities will present themselves, it is essential that we make every effort to assess opportunity value as accurately as possible before deciding which one is most suitable.
The main problem with evaluating opportunities in an unpredictable environment is what to do when we do not have all the information available to us.
The selection of a suitable opportunity in such an environment is like choosing a color from a box of crayons. We can get close, but in the end it is impossible to know which one will come out the right color.
3. Establish as many criteria as possible for each opportunity in order to rank them and decide which is most suitable (e.g., return on investment, risk mitigation).
This is where decision analysis comes in. Decision analysis is a scientific process of identifying alternative opportunities, evaluating them in terms of their expected values, and selecting the opportunity that has the highest expected value.
Decision analysis provides companies with a method for measuring and communicating the probability of achieving a certain outcome, given the available information at hand. In other words, decision analysis gives us a way to assess how much we know about an opportunity and how to make decisions based on our level of confidence.
Let’s use an example. Imagine that a company wants to buy a new printer for its offices and is thinking about continuing to use the old one it already has or upgrading to a new model.
There are several factors that affect the company’s selection, including the cost of the printer, the quality of printing, and how quickly it can be delivered.
A decision analyst may be able to predict the best opportunity based on the analysis of a number of variables, including cost, quality, and delivery time.
A decision analyst can help a company perform an objective analysis of the information available, make decisions based on that analysis, and formulate a strategy for improving its performance.
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