Brand recognition is the ability of target customers to recognize the brand from its visual symbols such
as corporate colors, logo and products. This can decline due to competition or a redesign. For example a
competitor may adopt similar colors and product designs that cause recognition to decline.
Loyalty: Loss of loyal customers due to factors such as customer experience. One bad experience can
turn a customer away. Loyal customers can also be lost due to natural attrition as their needs and
preferences change.
Innovation: In innovation, making it right the first time just doesn't seem to happen sometimes. Ideas
get modified from time to time to fit certain requirements, and the risks that come with them have to
be mitigated. It's important to ensure that any temporary setback won't keep the concept from
becoming a product that adds value to both the customers and the business. Innovation leads
companies to implement certain changes that may revolutionize various processes and improve the way
businesses and customers handle specific activities. Organizations that like to innovate are able to
enhance or formulate their own solutions, designs, products, technologies, capabilities, and services
that add value to their employees or customers. As innovation involves going beyond traditional
boundaries, this complex process is made up of different phases that involve various experimentations.
Provided that these activities result in trial-and-error situations, innovation risk is different from other
types of risks as organizations regularly expect failures to determine what works and what doesn’t.
Following are some steps to mitigate/minimize risks:
- Evaluate risk levels in the early stage of product development
- Address the bigger risks first, then smaller risks second
- Take every risk as a chance to improve
Reputation: The brand image and reputation reflects the values and behaviour of a firm. Any gap
between how the brand wants to be perceived and how the company actual behaves is a risk.
With the growth in digital advertising, brand managers increasingly have less control over advertising
placement and context. In the traditional brand-building world, managers controlled media exposure by
targeting particular demographics and refining content to optimize brand messaging. BMW carefully
placed its Z3 in James Bond movies to emphasize synergistic associations and target audience
characteristics between the BMW and James Bond brands. Today’s digital world is different, and
placements result from programmatic algorithms driven by consumer histories rather than managerial
decisions. Such consumer-initiated ad targeting introduces vulnerabilities. For example, P&G found its
brands on extremist websites on YouTube, prompting a $140 million reduction in digital advertising
spending.