CHAPTER 3 Marketing Decision Making and Case Analysis 1 Describe each step in the decision-making process using the “DECIDE” method. Prepare and present an analysis of a written case. AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 2 DECISION-MAKING PROCESS “Decision making is a rational and systematic process and that its organization is a definite sequence of steps, each of them in turn rational and systematic.” — Peter Drucker Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 3 DECISION-MAKING PROCESS CHAPTER 3: MARKETING DECISION MAKING AND CASE ANALYSIS Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 DECISION-MAKING PROCESS: DECIDE Enumerate the decision factors Consider relevant information Define the problem Identify the best alternative Develop a plan for implementing the chosen alternative Evaluate the decision and the decision process Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 5 DECISION-MAKING PROCESS: DECIDE “A problem well defined is half solved.” — John Dewey Problem definition framework includes: Objectives Constraints Success Measures Step 1: Define the Problem Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 6 DECISION-MAKING PROCESS: DECIDE Two decision factors to be enumerated and related to each other: Controllable by the decision maker such as the marketing mix Alternative Courses of Action Uncertainties Uncontrollable factors that the manager cannot influence Step 2: Enumerate the Decision Factors Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 7 DECISION-MAKING PROCESS: DECIDE Relevant information consists of information that relates to the alternatives identified by the manager as being likely to affect future events. Includes characteristics of the following: Consumers Competitors Industry Organization (competitive strengths and position) Alternatives Step 3: Consider Relevant Information Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 8 DECISION-MAKING PROCESS: DECIDE Identifying relevant information is difficult: There is often too much info and viewpoints Determining what does and does not matter is a skill learned through experience Don’t consider everything as factual info Sometimes relevant info must be created A manager has performed a situation analysis when steps 1 through 3 are completed Step 3: Consider Relevant Information Slide 1-‹#› © 2013 Pearson Education, Inc. publishing as Prentice Hall 9 DECISION-MAKING PROCESS: DECIDE Uses a decision tree and a payoff table to show the relationship among alternatives, uncertainties, and potential outcomes Matches each alternative with the uncertainties in the environment Assigns a quantitative value to the outcome associated with each match Step 4: Identify the Best Alternative Decision analysis: Slide 1-‹#› © ...

1. CHAPTER 3
Marketing Decision Making and Case Analysis
1
Describe each step in the decision-making process using the
“DECIDE” method.
Prepare and present an analysis of a written case.
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
Slide 1-‹#›
© 2013 Pearson Education, Inc. publishing as Prentice Hall
2
DECISION-MAKING PROCESS
“Decision making is a rational and systematic process and that
its organization is a definite sequence of steps, each of them in
turn rational and systematic.”
— Peter Drucker
Slide 1-‹#›
© 2013 Pearson Education, Inc. publishing as Prentice Hall

2. 3
DECISION-MAKING PROCESS
CHAPTER 3: MARKETING DECISION MAKING AND CASE
ANALYSIS
Slide 1-‹#›
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4
DECISION-MAKING PROCESS: DECIDE
Enumerate the decision factors
Consider relevant information
Define the problem
Identify the best alternative
Develop a plan for implementing
the chosen alternative
Evaluate the decision and the decision process
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5
DECISION-MAKING PROCESS: DECIDE
“A problem well defined is half solved.”
— John Dewey
Problem definition framework includes:
Objectives
Constraints
Success
Measures

3. Step 1: Define the Problem
Slide 1-‹#›
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DECISION-MAKING PROCESS: DECIDE
Two decision factors to be enumerated and related to each
other:
Controllable by the decision maker such as the marketing mix
Alternative
Courses of Action
Uncertainties
Uncontrollable factors that the manager cannot influence
Step 2: Enumerate the Decision Factors
Slide 1-‹#›
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DECISION-MAKING PROCESS: DECIDE
Relevant information consists of information that relates to the
alternatives identified by the manager as being likely to affect
future events. Includes characteristics of the following:
Consumers
Competitors
Industry
Organization (competitive strengths and position)
Alternatives
Step 3: Consider Relevant Information

4. Slide 1-‹#›
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DECISION-MAKING PROCESS: DECIDE
Identifying relevant information is difficult:
There is often too much info and viewpoints
Determining what does and does not matter
is a skill learned through experience
Don’t consider everything as factual info
Sometimes relevant info must be created
A manager has performed a situation analysis when steps 1
through 3 are completed
Step 3: Consider Relevant Information
Slide 1-‹#›
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DECISION-MAKING PROCESS: DECIDE
Uses a decision tree and a payoff table to
show the relationship among alternatives, uncertainties, and
potential outcomes
Matches each alternative with the uncertainties in the
environment
Assigns a quantitative value to the outcome associated with
each match
Step 4: Identify the Best Alternative
Decision analysis:
Slide 1-‹#›

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DECISION-MAKING PROCESS: DECIDE
Example: El Nacho Foods
Uncertainties
about Competitors
Reduce price
Maintain price
Maintain lower price
Reduce price further
Alternative
Courses of Action
for Frozen Dinners
Step 4: Identify the Best Alternative
Slide 1-‹#›
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EXHIBIT 3.1: DECISION TREE FOR
EL NACHO FOODS
$175,000
$90,000
Company

6. Action
Competitive
Response
Financial
Outcome
$150,000
$110,000
Maintain price
Maintain
price
Reduce
price further
Maintain
price
Reduce
price further
Reduce price
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DECISION-MAKING PROCESS: DECIDE
Displays the alternatives, uncertainties, and outcomes facing a
firm
A payoff table:
Includes management’s determination of the probability of an

7. uncertainty’s occurrence
Step 4: Identify the Best Alternative
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EXHIBIT 3.2: PAYOFF TABLE FOR
EL NACHO FOODS
$110,000
$90,000
$150,000
$175,000
Competitors
Maintain Price
(Probability = 0.9)
Reduce price
Maintain price
Uncertainties
Alternatives
Competitors
Reduce Price
(Probability = 0.1)
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8. DECISION-MAKING PROCESS: DECIDE
A payoff table computes the “expected monetary value” (EMV)
for each alternative
The EMV is calculated as follows:
EMVPI = EMV of Perfect Information
EMV
Outcome of Uncertainty1
=
+
×
Probability (p)
of Uncertainty1
(
)
Outcome of
Uncertainty2
Probability (p)
of Uncertainty2
+
×
(
)
…
Step 4: Identify the Best Alternative
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EXHIBIT 3.3: DECISION ANALYSIS AND THE VALUE OF
INFORMATION
$110,000
$90,000

9. $150,000
$175,000
Competitors
Maintain Price
(Probability = 0.9)
A1: Reduce price
A2: Maintain price
Payoff Table Uncertainties
Alternatives
Competitors
Reduce Price
(Probability = 0.1)
EMV
Calculation
$166,500
$146,000
EMVA1 = (0.9 × $150,000) + (0.1 × $110,000) = $146,000
EMVA2 = (0.9 × $175,000) + (0.1 × $90,000) = $166,500
EMVCertainty = (0.9 × $175,000) + (0.1 × $110,000) =
$168,500
EMVPI = EMVCertainty – EMVBest alternative
EMVPI = $168,500 – $166,500 = $2,000
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Change P from 0.9 to 0.7 and then practice the previous several
slides in class
How does the EMVPI change and why?

10. Slide 1-‹#›
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DECISION-MAKING PROCESS: DECIDE
Is a fundamental tool for considering
“what if” situations
Decision analysis is important because it:
Forces the manager to quantify outcomes associated with
specific actions
Is useful in a variety of settings
Can be used in determining the value of
“perfect” information
Step 4: Identify the Best Alternative
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DECISION-MAKING PROCESS: DECIDE
Allocating marketing, financial, and manufacturing resources
An implementation plan involves:
The time needed to develop a marketing plan
Step 5: Develop a Plan for Implementing
the Chosen Alternative
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DECISION-MAKING PROCESS: DECIDE
Was a decision made?
With respect to the decision itself, ask:

11. Was the decision proper given the situation?
Step 6: Evaluate the Decision and the Decision Process
Insufficient information present?
Failure to consider and interpret relevant information?
Logical assumptions made regarding data gaps?
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DECISION-MAKING PROCESS: DECIDE
Was the problem defined adequately?
Ask 5 questions of the decision-making process:
Were all the pertinent alternatives and uncertainties identi fied?
Were the assumptions realistic?
Was all the relevant information considered?
Was an appropriate course of action recommended? Was the
logic consistent? Was any important piece of information
overlooked?
How can the recommendation be implemented?
Step 6: Evaluate the Decision and the Decision Process
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PREPARING AND PRESENTING
A CASE ANALYSIS
CHAPTER 3: MARKETING DECISION MAKING AND CASE
ANALYSIS
Slide 1-‹#›

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PREPARING AND PRESENTING
A CASE ANALYSIS
First reading. Become familiar with the situation of the
organization:
Identify insights into the problem
Obtain background information on the environment and
organization
Approaching the Case
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PREPARING AND PRESENTING
A CASE ANALYSIS
Second reading. Pay attention to key facts and assumptions:
Determine relevance and reliability of
the data
Obtain background information on
the environment and organization
Approaching the Case
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PREPARING AND PRESENTING

13. A CASE ANALYSIS
Do not rush to a conclusion
Avoid these pitfalls:
Do not confuse supposition with fact
Do not “work the numbers” until their meaning and derivation
are understood
Approaching the Case
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EXHIBIT 3.4a: MARKETING CASE ANALYSIS WORKSHEET
Nature of the Industry, Market, and Buyer Behavior
What is the nature of the industry structure, conduct, and
performance?
Who are the competitors, and what are their strengths and
weaknesses?
How do consumers buy (why, where, when, how) 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?
Formulating the Case Analysis
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EXHIBIT 3.4b: MARKETING CASE ANALYSIS WORKSHEET
The
Organization

14. Formulating the Case Analysis
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?
What are its financial, human, and material resources?
What is the “fit” between it and its environme nt based on the
SWOT?
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EXHIBIT 3.4c: MARKETING CASE ANALYSIS WORKSHEET
A Plan
of Action
What actions are available to the
firm based on the situation analysis?
What are the costs and benefits
of action in both qualitative and quantitative terms?
Is there a disparity between what the organization wants to do,
should do, can do, and must do?
Formulating the Case Analysis
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15. EXHIBIT 3.4d: MARKETING CASE ANALYSIS WORKSHEET
Potential
Outcomes
Formulating the Case Analysis
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?
What is the best course of action to pursue?
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If using teams:
Create a balanced team whose member’s skill sets complement
one another (writing, oral presentation, financial, etc.)
PREPARING AND PRESENTING
A CASE ANALYSIS
Be committed to the task and dependable
Formulating the Case Analysis
Avoid “groupthink”
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16. COMMUNICATING THE CASE ANALYSIS
Class Discussion
Case preparation requires 4-5 hours
Bring notes to class
Carefully listen to the viewpoints of other students during the
discussion of the case
Prepare a short summary of the case after discussing it in class
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COMMUNICATING THE CASE ANALYSIS
Oral Presentation
Visual aids do not replace the oral presentation
Do not read slides to the audience
Do not use too many graphics, colors,
and transitions
Rehearse the presentation
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COMMUNICATING THE CASE ANALYSIS
Presentation title and presenters’ names
Outline of the presentation
Key problems and strategic issues that management needs to
address
Analysis of the organization’s situation or problem
Recommendations and supporting reasoning
Oral Presentation

17. Slides should cover the following:
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COMMUNICATING THE CASE ANALYSIS
Written Report
Be carefully organized and grammatically correct
Has three major sections:
Strategic problem and issue identification
Analysis and evaluation
Recommendations
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Discussion Post 4 of 4 – Discuss and Apply Course-Related Key
Concepts and Knowledge (Note: Two Posts Required)
1A. Payoff Table and the Value of Information (30%):
Make sure to provide sufficient details and procedures so that it
can help you and your readers double check and follow easily.
The required and/or suggested readings listed below can help
you address this question.
Based on the above information,
(1) Compute the “expected monetary value” (EMV) for each
alternative.
(2) Compute the EMVcertainty.
(3) Compute the EMVPI (EMV of Perfect Information) and
explain what the implication based on your EMVPI result.

18. -------------------------------------------
Required Reading for 1A (Click the hyper link to see or
download a full PDF article. Please share with your professor if
you find better resources related to this assignment.):
Kerin13eCH03-Marketing Decision Making and Case Analysis
(Specifically, “Step 4: Identify the Best Alternative” from Page
11 to Page 18 in this attached PPT document.)
-------------------------------------------
1B-2: Specialist vs. Generalist Debate
In running a business and/or building your career, you’re likely
asked to choose one of two tracks: to become a specialist or to
pursue the path of a generalist. This assignment asks you to use
different perspective(s) and apply what you have learned to
address:
1) Under what conditions do you prefer being a specialist or
generalist (or some type in the middle or even a new type of
preference if any)? Please provide sufficient details to support
your arguments.
2) Please describe, predict, and justify how a preference
between being a generalist vs. specialist (or some type in the
middle or even a new type of preference if any) would or should
look like in the next five or ten years (e.g., ratio changes over
time). To be feasible, you can address this question by focusing
on a chosen scope (e.g., a narrowed and in-depth one vs. a
broad and big picture), perspective, domain, and time span (next
5 years vs. next 15 years).
These perspective(s) can come from a concept/theory (e.g.,
marketing concept, holistic marketing concept, value co-
creation literature, chaos theory, life history strategy, resource-
based theory/view, strategy as practice, politics, power,
individual vs. group identify), a paradigm (e.g., service
dominant logic, co-creation of value), or even a new perspective
you are proposing. Students are advised to think of other
possible perspectives and search for additional articles when
needed.

19. For this assignment option, you will perform a knowledge
consumption analysis of an organization that is highly important
to yourself: You, Inc. (i.e., yourself or your own career). For
the rest of your life, you will be CEO of You, Inc. Therefore,
learning and having a knowledge consumption analysis is
especially important
Specifically, this assignment asks you to use different
perspective(s) to address:
1) Ideally, how your knowledge consumption preferences could
have been changed, in order to achieve your goals or to
maximize your growth.
· Students are encouraged to demonstrate original/critical
thinking such as by finding a possible perspective, theory, or
solution that has not been mentioned in the published literature.
· At the end of your essay, a reference list with all the
information you cite in your essay.
· At least one table/flowchart/model/framework that summarizes
the key points of your essay. You can put this table at the end
of your essay but before the reference list.
Required Readings:
Please make sure to explicitly apply and cite at least four
concepts and/or relationships covered in this course (e.g.,
holistic marketing concept, branding, brand equality, customer
equality, point of parity, point of difference, perception map,
decision-making process, new-product development, data
analytics, social media, self-regulation, and doing the right
things vs. doing things right, etc.), as well as concepts and/or
relationships related to control and identity at individual and/or
group level.
Yang, Haiyang, Ziv Carmon, and Itamar Simonson. "Preference
for Practical Versus Theoretical Knowledge: Conceptualization
and Consumer Behavior Predictions." Review of Marketing

20. Research 17: 171-192.
Please choose one of the articles/perspectives below as your
third required reading for this option.
Chaos Theory: Please explicitly derive insights related to Chaos
Theory. Your professor has provided a link as an example here,
but please feel free to search and cite current literatures related
to Chaos Theory as needed. For your convenience, several
articles related to Chaos Theory and its applications are
provided in the suggested readings.
https://www.youtube.com/watch?v=aVvS_tWel54
Life History Theory/Strategy: Please explicitly derive insights
related to Life History Theory/Strategy. Your professor has
provided only one link here, but please feel free to search and
cite current literatures related to Life History Theory/Strategy
as needed. https://en.wikipedia.org/wiki/Life_history_theory
Campbell, D. T. (1965). “Variation and selective retention in
socio-cultural evolution”, In Social change in developing areas.
Eds. H.R. Barringer, G.I. Blanksten, and R. W. Mack. MA:
Schenkman, 19-49.