Haircare Marketing Plan: Decision Analysis for Brand Introduction

This assignment focuses on decision analysis for a haircare company in Dubai considering the introduction of a new shampoo brand. The marketing manager needs to decide between a step-by-step or a concentrated introduction. The assignment constructs a payoff table based on low and high demand scenarios and then determines the optimal decision using various criteria, including Maximax, Maximin, Regret Criterion, Maximum Likelihood Criterion, and Expected Value Criterion. Each criterion leads to a different recommendation, highlighting the importance of understanding the underlying assumptions and goals of each approach in making strategic marketing decisions. Desklib provides this solved assignment and many other resources to aid students in their studies.

Running Head: DECISION ANALYSIS
Decision Analysis
Name of the Student
Name of the University
Student ID

1DECISION ANALYSIS
Answer 1
1. The payoff table for the two alternative courses of decisions is given as follows:
Low Demand High Demand
Step by Step Introduction $100,000 $500,000
Concentrated Introduction - $400,000 $2,000,000
2. Based on the Maximax Criterion, the optimal decision will be to introduce the new
brand of hair shampoo with a concentrated introduction as that can earn the
maximum profit according to this criterion.
Low Demand High Demand Maximum
Step by Step
Introduction
$100,000 $500,000 $500,000
Concentrated
Introduction
- $400,000 $2,000,000 $2,000,000
3. Based on the Maximin Criterion, the best of the worst payoffs are to be chosen. Thus,
the optimal decision will be to introduce the new brand of hair shampoo with a step
by step introduction as that can earn the maximum profit according to this criterion.
Low Demand High Demand Minimum
Step by Step
Introduction
$100,000 $500,000 $100,000
Concentrated
Introduction
- $400,000 $2,000,000 - $400,000

2DECISION ANALYSIS
4. Based on the Criterion of Regret, the option with the minimum of the maximum
regrets are chosen. Thus, the optimal decision will be to introduce the new brand of
hair shampoo with a concentrated introduction as that condition comes with the
minimum of the maximum regrets according to this criterion.
Low Demand High Demand Maximum
Regret
Step by Step
Introduction
$100,000 –
$100,000 = $0
$2,000,000 –
$500,000 =
$1,500,000
$1,500,000
Concentrated
Introduction
$100,000 +
$400,000 =
$500,000
$2,000,000 –
$2,000,000 = $0
$500,000
5. Based on the maximum likelihood criterion, the option with the minimum profit under
the most favourable market condition is chosen. In this case, the most favourable
market condition is a low demand market, with a probability of 0.7. Thus, the optimal
decision will be to introduce the new brand of hair shampoo with a step by step
introduction as that condition comes with the maximum profit according to this
criterion.
Low Demand High Demand Profit / Loss
in most
probable
market
condition
Step by Step $100,000 $500,000 $100,000

3DECISION ANALYSIS
Introduction
Concentrated
Introduction
- $400,000 $2,000,000 - $400,000
Probability 0.7 0.3
6. Based on the expected value criterion, the alternative with the maximum expected
profit is chosen. Thus, the optimal decision will be to introduce the new brand of hair
shampoo with a concentrated introduction as that condition comes with the maximum
expected profit according to this criterion.
Low Demand High Demand Expected
Profit
Step by Step
Introduction
$100,000 $500,000 ($100,000 *
0.7) + (-
$500,000 *
0.3) =
$220,000
Concentrated
Introduction
- $400,000 $2,000,000 (- $400,000 *
0.7) + (-
$2,000,000 *
0.3) =
$320,000
Probability 0.7 0.3