use of bayesian decision analysis to assess if conducting marketing research is worthwhile
DESCRIPTION
Use of Bayesian Decision Analysis to Assess if Conducting Marketing Research is Worthwhile. Reading (from Dillon, Madden, and Firtle (1990). Decision Tree. Payoff Table for Pricing Decision. Prior probabilities. Example #1. Optimal choice without additional research information. - PowerPoint PPT PresentationTRANSCRIPT
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Dr. Michael R. Hyman
Use of Bayesian Decision Analysis to Assess if Conducting Marketing Research
is Worthwhile
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Reading (from Dillon, Madden, and Firtle (1990)
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Decision Tree
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9Table contains alternatives, states of nature, and consequences
Example #1
Payoff Table for Pricing DecisionPrior probabilities
Optimal choice without additional research information
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Conditional Probability of Getting Each Test Market Result Given Each State of Nature
Read by Row (Zk) within Column (Sj)
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Revision of Prior Probabilities in Light of Possible Test Market Results
Notice difference in revised (post-research) distribution of demand probabilities
Sj = State of Nature; Zk = Level of Success in Test
Σ=1.0
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Optimal choice if test market result is Z1
Optimal choice if test market result is Z2
Optimal choice if test market result is Z3
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Example #2
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Solution to Example #2
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Revision of Prior Probabilities in Light of Research Information that Surveys Unlimited Might Provide
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Example #3—You Solve
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Study Questions