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Chapter - 03 Marketing Decision Making and Case Analysis

This chapter discusses marketing decision making and case analysis. It covers the 6 steps of the decision making process: 1) define the problem 2) enumerate decision factors 3) consider relevant information 4) identify the best alternative 5) develop an implementation plan 6) evaluate the decision. It also discusses how to approach, formulate, and communicate a case analysis, including analyzing the industry, organization, available actions, and potential outcomes.

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KJ Vill
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180 views

Chapter - 03 Marketing Decision Making and Case Analysis

This chapter discusses marketing decision making and case analysis. It covers the 6 steps of the decision making process: 1) define the problem 2) enumerate decision factors 3) consider relevant information 4) identify the best alternative 5) develop an implementation plan 6) evaluate the decision. It also discusses how to approach, formulate, and communicate a case analysis, including analyzing the industry, organization, available actions, and potential outcomes.

Uploaded by

KJ Vill
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Chapter 3

Marketing Decision Making


and Case Analysis
In this chapter, you will
learn about…

1. Decision-Making Process
Define the Problem
Enumerate the Decision Factors
Consider Relevant Information
Identify the Best Alternative
Develop an Implementation Plan
Evaluate the decision and decision
process
3-2
In this chapter, you will
learn about…

2. Preparing and presenting a case


analysis
Approaching the case analysis
Formulating the case analysis
Communicating the case analysis

3-3
Decision Making

“Decision making is a rational and

systematic process. Its organization is a

definite sequence of steps, each of them

in turn rational and systematic.”

- Peter Drucker

3-4
Decision Making

Define the Problem

Enumerate Decision Factors

Consider Relevant Information

Identify the Best Alternative

Develop a Plan for Implementing


the Chosen Alternative
Evaluate the Decision and the
Decision Process 3-5
Define the Problem

A well-defined problem outlines the


framework within which a solution can
be derived. It includes:

Objectives of the decision maker


Recognition of constraints
Clear success measure or goal for
assessing progress toward solving the
problem
e.g., El Nacho Foods
3-6
Enumerate the
Decision Factors

Factors to be enumerated

Controllable Uncontrollable
Uncertainties in
Alternative
the Competitive
Courses of Action
Environment

e.g., Arrow Shirts


3-7
Consider Relevant
Information

“The truly successful managers and


leaders of the [twenty-first] century will…
be characterized not by how they can
access information, but how they can
access the most relevant information and
differentiate it from the exponentially
multiplying masses of non-relevant
information.”
3-8
Consider Relevant
Information

Characteristics of the industry and

competitive environment

Characteristics of the organization

Characteristics of the alternatives

under consideration

3-9
Consider Relevant
Information
Points to Remember

1. Resist the temptation to consider


everything in a case as a “fact”

2. Create relevant information, if


not available, by blending
together data given in the case

3-10
Identify the
Best Alternative

Decision analysis

Matches each alternative identified by


the manager with the uncertainties
existing in the environment and
assigns a quantitative value to the
outcome associated with each match.

3-11
Identify the Best Alternative
Sample Decision Tree

Company Competitive Financial


Action Response Outcome

Maintain price $150,000


Reduce price
Reduce price further $110,000

Maintain price $175,000


Maintain price
Reduce price further $90,000
Identify the Best
Alternative
Expected Monetary Value

The Expected Monetary Value (EMV) of a


decision alternative is:

Outcome of Uncertainty1 x P(Uncertainty1)

+ Outcome of Uncertainty2 x P(Uncertainty2)

+…

+ Outcome of Uncertaintyn x P(Uncertaintyn)


3-13
Identify the Best Alternative
Sample Payoff Table

Uncertainties
Competitors Competitors
maintain price reduce price
(Probability=0.9) (Probability=0.1)
Alternatives

Reduce Price $150,000 $110,000

Maintain Price $175,000 $90,000

Expected value of reducing price: (0.9) ($150000) + (0.1) ($110000) = $146,000


Expected value of maintaining price: (0.9) ($175000) + (0.1) ($90000) = $166,500
Identify the Best Alternative
Expected Value of Perfect Information

Uncertainties
Competitors Competitors
maintain price reduce price
(Probability=0.9) (Probability=0.1)
Alternatives

Reduce Price $150,000 $110,000

Maintain Price $175,000 $90,000

Expected value of certainty: (0.9)($175000) + (0.1)($110000) = $168,500

Expected value of perfect info: EMVcertainty– EMVbest alt.: $168500 - $166500 = $2,000
Familiarity with decision
analysis is important for
FOUR reasons:

1. It is a fundamental tool for considering


“what if” situations

2. It forces the case analyst to quantify


outcomes associated with specific actions

3. It is useful in a variety of settings –


product, communication, channel, or
pricing decisions

4. It can be used in determining the value of


“perfect” information
3-16
Develop a Plan for
Implementing the Chosen
Alternative

Resource allocation and timing

Strategy formulation

Strategy implementation

3-17
Evaluate the Decision

Was a decision made?

Was the decision appropriate, given the


situation identified in the case setting?

3-18
Evaluate the Decision
Process
1. Did I define the problem accurately?
2. Did I identify all pertinent alternatives
and uncertainties? Were my
assumptions realistic?
3. Did I consider all information relevant to
the decision?
4. Did I recommend the appropriate course
of action?
5. Did I consider how my recommendation
could be implemented?
3-19
Case Analysis
Approaching the Case

Become familiar with the issue(s) at


hand
Identify key “facts and assumptions”
Do not rush to a conclusion
Do not “work the numbers” until you
understand their meaning
Do not confuse supposition with fact

3-20
Case Analysis
Formulating the Analysis

Framework for Analysis

Nature of the industry, market,


and buying behavior

The organization

A plan of action

Potential outcomes

3-21
Formulating the Analysis
Nature of the Industry, Market,
and Buying Behavior

What is the nature of industry


structure, conduct, and performance?
Who are the competitors, and what are
their strengths and weaknesses?
How do consumers buy in this industry
or market?
Can the market be segmented? How?
Can the segments be quantified?
What are the requirements for success
in this industry?
3-22
Formulating the Analysis
The Organization

What are the organization’s mission,


objectives, and distinctive competency?
What is its offering to the market? How
can its past and present performance be
characterized? What is its potential?
What is the situation in which the
manager or organization finds itself?
What factors have contributed to the
present situation?
3-23
Formulating the Analysis
A Plan of Action

What actions are available to the


organization?
What are the costs and benefits of
actions in both qualitative and
quantitative terms?
Is there a disparity between what the
organization wants to do, should do,
can do, and must do?

3-24
Formulating the Analysis
Potential Outcomes

What will be the buyer, trade, and


competitive response to each course
of action?
How will each course of action satisfy
buyer, trade, and organization
requirements?
What is the potential profitability of
each course of action?
Will the action enhance or reduce the
organization’s ability to compete in
the future?
3-25
Case Analysis
Communicating the Analysis

Class discussion

Oral presentation

Written report

3-26
Communicating the
Analysis
The oral presentation should
have five major sections:
1. Title of presentation and presenters’
names
2. Presentation outline
3. Key problems and strategic issues
4. Analysis of company’s situation
5. Recommendations with supporting
arguments and reasoning for each
recommendation
3-27
Communicating the
Analysis
Written Report should have three
major sections:

1. Identification of the strategic


issues and problems
2. Analysis and evaluation
3. Recommendations

3-28

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