MARKETING MANAGEMENT DECISION-MAKING/ MARKETING RESEARCH

INTRODUCTION

Decision is a choice made out of alternatives, these alternatives relate to some objectives aimed to be achieved. No decision is involved when one has choice. In this unit, we are going to look at the process of carrying out decision- making and so on.

OBJECTIVES

At the end of this unit, you should be able to:

• identify the process of decision- making in an organization. 
• identify the categories of marketing research design 
• discuss the application of decision making to marketing research. · discuss marketing survey research decision 

 Decision Making Process

The process of carrying out an exhaustive consideration is decision-making. A decision making process requires possessing information and data about the elements that are involved and relevant, and how they interrelate. It is the process by which we apply appropriate methods and techniques of analysis in order to make good decisions.

Good decision is one that is based on logic, considers all available data, information and possible alternatives, and applies the quantitative and qualitative approaches. Good decision results occasionally in an unexpected or unfavourable outcome. Therefore, a bad decision is one that is not based on logic, does not use all available information, does not consider all alternatives, and does not apply appropriate quantitative and qualitative techniques.

The following elements may be found in any marketing decision situation:

•  Decision-maker: that is, who is responsible for, and will be committed to, the final choice 
• Value system: This reflects the fundamental preference structure of the marketing decision- maker and the terms of which the objectives to pursue have to be articulated, and evaluation criteria selected. 
• Objectives of the decision-maker, which can conflict, could change overtime.
• Alternative courses of action, which must be exhaustively identified and analysed. 
•  Environmental factors, which include cultural, economic, political, social, and technological factors, among others. 
•  Evaluation criteria, which are bases for comparing the options 
• Choice made which reflects the inner values and psychology of thedecision- maker. 
•  Intelligence activity phase, which is when a marketing decision-maker becomes aware of the needs to make a decision to do something.
• Marketing research activity phase, which is when the decision-maker makes the final choice. 

Render and Stair (1985) define decision theory as an analytic and systematic approach to studying decision- making. According to them, a good management decision is based on the following steps:

1.  Clearly define the problem at hand 
2. List possible alternatives 
3. Identify the possible outcomes 
4.  List the pay off or profit of each combination of alternatives and outcomes in a decision table. 
5. Select one of the decision theory models 
6. Apply the model and make the decision. 
7. Decision Objective is expressed as some variable to be optimized subject to a set of explicitly expressed constraints. 

Statistical decision theory or Bayesian decision theory model, for example, calls for:

1. Identifying major decision alternatives facing the firm (company).
2.  Distinguishing the events (state of nature) that might bring about a distinct outcome 
3. Estimating the probability of each state of nature. 
4.  Estimating the value of each outcome 
5.  Determining the expected value of each decision 
6. Choosing the decision with the highest expected value. 

There are three phases into which marketing management decision making process can be put, and these include:

1. Intelligence activity phase, which is the stage in which the marketing decision- maker becomes aware of the need for a decision. 
2. Research activity phase is the phase at which an articulation of what objective to pursue is carried out and the research for the options and their comparative evaluation carried out to show their relative merit. 

The types of decisions marketing managers make depend on how much knowledge, information, or data they have about the situation. Therefore, three kinds of decision-making environments have been identified, and they include:

1. Decision making under certainty: In this case, the marketing decision- maker knows with certainty the consequence of every alternative or decision choice. 
2.  Decision making under risk: Here, the marketing decision- maker knows the probability of occurrence of each outcome. Also, the decision- maker will attempt to maximise his/her value or expected well-being. Two types of criteria are employed: maximization of expected value and minimization of expected loss. 
3. Decision making under uncertainty: In this category, the marketing decision- maker does not even know the probabilities of the various outcomes. 

Types of criteria employed are maximax, maximin, equally likely, criteria of realism, and minimax, among others. 

1. Choice activity phase is the phase at which the decision- maker (marketing manager) considers the recommendations and makes the final choice. 

A marketing problem arises when there is some difficulty in achieving specific objectives. Major problems that may exist in marketing decision situation are:

• Lack of required skill for analysis 
• Lack of information 

Generally, a marketing decision-making process requires possession of data and information about the elements that are involved and how they interrelate.

• Lack of finance to conduct the research. The marketing researcher needs sufficient fund to conduct his research. 
• Lack of time to gather information and data and analyse the situation exhaustively. 
• Lack of facilities 

The marketing decision- maker needs some facilities such as computer to process and store the data.

SELF ASSESSMENT EXERCISE
List and Explain the elements in marketing decision situation.