Chapter one

Chapter one

1. 1.1. THE LIMITS OF “RATIONALITY”

   • Rationality is used almost interchangeably with measurement and analytical methods.
   • 1.1.1. INHERENT RISK AND UNCERTAINTY DECISIONS
     • The very process of changing things makes the forecasts and model inaccurate
   • 1.1.2. THE VEIL OF RATIONALITY
     • Analytical rationality may get in the way of both seeing opportunities and allowing us to pursue that which is difficult
     • 1.1.2.1. Limits of What Can be Measured
       • It is only necessary to observe and classify a concept or a thing. Without this “data” it is not feasible to model or to analyze.
       • 1.1.2.2. Limits of Measuring
         • The very process of measurement influences that which is being measured.
         • 1.1.2.3. Externalities
           • there are other factors not controlled, which generate further uncertainties.
           • 1.1.2.4. Distortions in our Views
             • our worldview is distorted by our own “idols” and divided the sources into four types
               • 1.1.2.4.1. “Idols of the Tribe”
                 • 1.1.2.4.2. “Idols of the Cave”
                   • 1.1.2.4.3. “Idols of the Marketplace”
                     • 1.1.2.4.4. “Idols of the Theater”
   • 1.1.3. THE CAUSAL FOCUS
     • The models show correlation but not necessarily causation irrespective of how we design the marketing research.
       • 1.1.3.1. Main Effects
         • Most of the statistical analyses are based on linear or trade-off models.
         • 1.1.3.2. Central Measures
           • We live in a world of “information overload” and we need methods to simplify that statistical world.
   • 1.1.4. THE NEED FOR DISCIPLINE AND CREATIVITY
     • 1.1.4.1. Orthodoxy and Discipline
       • It is the discipline inherent to orthodox behavior and practices that is critical for success.
       • 1.1.4.2. The Unorthodoxy and Creativity
         • Unorthodox options and strategies are derived from creative thought.
         • 1.1.4.3. The Balance
           • relying solely on creative, unorthodox, methods will lead to chaos and also eventual business death.
   • 1.1.5. THE POWER OF BELIEF
     • Enthusiasm and belief are critical for any success. They are the drivers that make the difficult happen and that which is thought to be impossible, a reality
   • 1.1.6. THE HISTORICAL AND RATIONAL IMPERATIVE
     • the development of rational methods coincided with the development of modern business practices.

2. 1.2. INFORMATION AND KNOWLEDGE

   • Decisions can be and often are made without information or knowledge
   • 1.2.1. THE VALUE OF KNOWLEDGE
     • Some types of knowledge are directly applicable to problems while others have little effect.
     • 1.2.1.1. The “Triage” of Knowledge
       • (1) Some knowledge has major potential impact on the decisions that are being made.
       • (2) Knowledge that describes the context of important information has value to a lesser extent.
       • (3) Information that is “nice to know.”
       • 1.2.1.2. Timing
         • The decision making process usually starts with some event or piece of information that demands attention.
       • 1.2.1.3. The Presentation of Knowledge
         • How information and knowledge is presented to the users of that information and by whom greatly affects its value.
     • 1.2.2. PROCESS OF SEEKING KNOWLEDGE
       • Defining information and knowledge has always been the realm of the philosophers.
         • Need/Opportunity  Access  Data  Information  Knowledge  Action
       • 1.2.3. SOURCES OF INFORMATION
         • There are traditionally five areas of concern for business strategic decisions
         • 1.2.3.1. Internal Business Information -
           • These are the critical metrics of what the firm is doing.
           • 1.2.3.2. The Market Place
             • The value of the offering and the purchase process are usually the concerns. Both syndicated and custom Marketing Research studies
             • 1.2.3.3. Distribution Channels and Influencers
               • This constitutes the distribution channel and the influencers of the purchase decisions.
               • 1.2.3.4. Competitive Intelligence
                 • It is often critical to assess the likely behavior of these competitors to market actions or to estimate their likely initiatives.
                 • 1.2.3.5. External Effects
                   • 1.2.3.5.1. Economics
                     • 1.2.3.5.2. Technological
                       • 1.2.3.5.3. Governmental
                         • 1.2.3.5.4. Environmental
         • 1.2.4. QUANTITATIVE AND QUALITATIVE RESEARCH
           • In marketing research the distinction focuses on the ability of the research to estimate the characteristics of the population.
           • 1.2.5. SUBJECTIVE AND ANALYTICAL INFORMATION
             • Analytical approaches, on the other hand, focuses on collecting consistent data that can be analyzed using statistical techniques.
             • 1.2.6. UNCERTAIN INFORMATION
               • All knowledge is uncertain. Error or noise is introduced at every stage of the process of seeking information.
               • 1.2.6.1. Wrong Conceptual Models (World View)
                 • 1.2.6.2. Variation from Conceptual Models (Structural Problem)
                   • 1.2.6.3. Asking the Wrong Questions (Instrument Error)
                     • 1.2.6.4. Inability to Ask the Right Questions
                       • 1.2.6.5. Asking the Wrong Person (Sampling Error)
                         • 1.2.6.6. Misinterpretation of the Question (Accuracy) –
                           • 1.2.6.7. Unstable Results (Unreliability)
                             • 1.2.6.8. Instrument Bias (Wording)
                               • 1.2.6.9. Interviewer Bias (Heisenberg Uncertainty) –
                                 • 1.2.6.10. Non-predictability (Validity)
                                   • 1.2.6.11. Small Sample Size (Precision)
               • 1.2.7. CERTAINTY AND COSTS
                 • In order to test reliability and validity as well as experimental error, the information often needs to be obtained multiple times.
                 • 1.2.8. NEED FOR ACCURACY
                   • many decisions require only crude, or “order of magnitude” estimates to provide sufficient information for the decision
                   • 1.2.9. SMALL SAMPLE SIZE STUDIES
                     • These studies are small enough to allow subjective techniques such as personal interviews and open-ended questions to be used as well as sophisticated analytical techniques such as choice modeling and full profile conjoint.

3. 1.3. CONCEPTS, KNOWLEDGE, AND DECISIONS

   • The key to understanding the process of using information for decision making is in the idea of conceptual models. These models constitute the working “Paradigms”9 embedded in organizational and professional cultures.
   • 1.3.1. THE DOMINANCE OF CONCEPTUAL MODELS
     • It should be noted that the conceptual models are so basic to our thinking that they go unnoticed and rarely if ever challenged
     • 1.3.1.1. What is the problem?
       • The conceptual model of business and marketing provides the language in that is used to describe the business problem.
       • 1.3.1.2. What decision to make?
         • The decisions that are made are define by the same set of conceptual models.
         • 1.3.1.3. What should be measured?
           • The conceptual models also define what information is relevant to those problems and decisions.
     • 1.3.2. THE TRANSFORMATION OF DATA
       • That method of transformation is also incorporated into the conceptual models and paradigms.

4. 1.4. A BUSINESS ORIENTATION

   • It is a useful concept in that it focuses on what the organization does. Typically the business unit is selected to represent the organization for which the decision process is intended to help.
     • 1.4.1. THE “BUSINESS MODEL”
       • The business model defines the scope of operations and how it will function. It is the defining statement of the business. It should be noted that, in a venture there are probably multiple businesses
       • 1.4.1.1. Products that are sold
         • 1.4.1.2. Customers that buy the products
           • 1.4.1.3. Means to obtain the products
             • 1.4.1.4. Means of Making Money
       • 1.4.2. MISSION AND VISION
         • The mission and vision statements provide the direction for the business and scope for any planning process.
         • 1.4.2.1. Mission and Objectives
           • 1.4.2.2. Vision and Goals -
             • the vision describes where management “hopes” the business is going.
           • - The mission statement focuses on the present operations. It is basically a clarification of the objectives of the business.
         • 1.4.3. THE BUSINESS STRUCTURE
           • Unless one understands how the business is structured and who is responsible for what, it becomes difficult if not impossible to make decisions and get action.
           • 1.4.3.1. Organization
             • 1.4.3.2. The Supply and Value Chain
           • 1.4.4. THE SWOT ANALYSIS
             • he Strengths, Weaknesses, Opportunities, and Threat (SWOT) analyses captures the competitive state of the business. It is its competitive situation. Typically the SWOT analysis includes competitive intelligence, technological assessment, and regulatory and environmental evaluations.
             • 1.4.5. THE ALLOCATION OF RESOURCES
               • As such, the key component of any effective plan is the allocation of resources. That is where resources are going to be obtained, how they are going to be employed, and what are they expected to do, are the critical strategic issues.

5. 1.5. DECISIONS AND ACTIONS

   • The marketing “paradigm” provides the structure and language needed to describe the commercial situation
   • 1.5.1. THE FOUR P'S
     • 1.5.1.1. Product (Offering)
       • 1.5.1.2. Price (Customer Cost)
         • 1.5.1.3. Place (Distribution Channel)
           • 1.5.1.4. Promotion
     • 1.5.2. IMPERATIVES
       • 1.5.2.1. Survival
         • 1.5.2.2. Performance
           • 1.5.2.3. Growth
             • 1.5.2.4. Cost Control
               • 1.5.2.5. Leadership
                 • 1.5.2.6. Maintaining the Business Structure
                   • 1.5.2.7. Good for Our Stakeholders
                     • 1.5.2.8. Do No Harm
                       • 1.5.2.9. Good for Society
       • Success along these measures not only affects the business, but career prospects of the decision-makers and the prognosis for the health of the business.