Imagine you’re a business owner considering different marketing strategies to increase sales. You have narrowed your options to two marketing campaigns: a social media campaign (Campaign A) and a radio campaign (Campaign B). You have some data on each campaign’s potential impact and cost, and you want to make a data-driven decision on which marketing strategy to choose.
Here’s a step-by-step walkthrough on how to apply the decision analysis framework:
Step 1: Define the decision problem:
Choose between Campaign A (social media) and Campaign B (radio) to increase sales.
Step 2: Identify the criteria:
In this case, the two main criteria are:
- Expected increase in sales (in dollars)
- Cost of the campaign (in dollars)
Step 3: Assign weights to the criteria:
Weights represent the importance of each criterion to your decision. Let’s say you consider the increase in sales to be 70% important and the cost to be 30% important.
Step 4: Gather data:
You collect data on the expected increase in sales and the cost for each marketing campaign.
Step 5: Calculate the weighted score for each option:
Multiply the weights by the respective criteria values and then sum them up to get the total weighted score.
Here’s a comparison table to help visualize the process:
|Criteria||Weight||Campaign A||Campaign B||Weighted Score A||Weighted Score B|
|Increase in sales||0.7||$10,000||$8,000||0.7 * $10,000 = $7,000||0.7 * $8,000 = $5,600|
|Cost||0.3||$2,000||$1,500||0.3 * (-$2,000) = -$600||0.3 * (-$1,500) = -$450|
|Total||$7,000 – $600 = $6,400||$5,600 – $450 = $5,150|
Now, let’s analyze the results:
- The weighted score for Campaign A is $6,400.
- The weighted score for Campaign B is $5,150.
Based on the decision analysis framework with weight calculations, Campaign A (the social media campaign) is the better choice for your business, as it has a higher weighted score.
Remember that this is just one example of how to apply the decision analysis framework. You can adjust the criteria and weights to suit your specific decision-making needs.