Create a decision tree reflecting your decisions on where and how much you spend on marketing your product. These decisions can start with the very beginning of making the product all the way to where to show your commercial.
The following description is an example of buying a computer but has similar paths to your marketing plan. The decision tree starts with a root node representing the initial decision of whether to buy a computer. The root node has two branches: yes or no. If the answer is yes, then there are two sub-decisions: what type of computer to buy (desktop or laptop) and what brand to buy (Apple or Dell). Each sub-decision has two branches as well. The leaf nodes represent the final outcomes of buying a computer with different combinations of type and brand. Each outcome has an associated cost and utility value that reflects the preferences and constraints of the decision-maker. For example, buying an Apple laptop costs $1500 and has a utility value of 80, while buying a Dell desktop costs $800 and has a utility value of 60.
The decision tree can be used to find the optimal choice that maximizes utility or minimizes cost. One way to do this is to use backward induction, which is a method that starts from the end nodes and works backward to find the best option at each node. For example, if we start from the end nodes and compare their utility values, we can see that buying an Apple laptop has the highest utility value of 80 among all outcomes. Therefore, buying an Apple laptop is the optimal choice if we want to maximize utility. Alternatively, if we start from the end nodes and compare their cost values, we can see that buying a Dell desktop has the lowest cost value of $800 among all outcomes. Therefore, buying a Dell desktop is the optimal choice if we want to minimize cost. (Example information gathered from various websites, 2023).
For this assignment, you will explore your marketing plan for your product development. You will need to provide a visual example of the decision tree. Clearly define each branch of the decision tree (minimum of 4 branches) that should result in a clear optimal decision regarding cost, value, and utility (noting that it is possible that one branch meets all criteria). You will need to conduct academic research to get information on pricing and marketing streams.
To complete the assignment, provide the following:
Decision Tree (1 page): Create a decision tree. Present the results you created regarding your decisions on where you plan to market your product and how. Remember to list the cost of each decision and the value associated with the decision (potential value is acceptable). Highlight the key points that clearly identify which decision is optimal, which is most cost-effective, and which provides the greatest value. Then, explain what branch in the decision tree represents to you, the business owner, and the customer. (The explanation can continue to page 2 if the chart takes up too much space on the page). (Additional note that landscape paper format might help fit the decision tree on 1 page).
Explanation (1 page): Review the existing academic journal article literature on decision tree theory and methods and summarize the main findings and arguments. Discuss the advantages and disadvantages of creating a decision tree. Explain how you constructed the decision tree using the various criteria, such as expected value, expected utility, information gained, or minimized cost.
References (1 page): List all the sources cited in the assignment using a consistent citation style, such as APA, MLA, or Harvard.
Some questions to consider when completing your assignment:
What are the main advantages and disadvantages of using decision trees for decision-making?
How can uncertainty be incorporated into decision trees using probabilities or ranges?
How can sensitivity analysis be performed on decision trees to test how changes in parameters affect the optimal choice?
How can decision trees be combined with other tools or methods such as SWOT analysis, cost-benefit analysis, or multi-criteria analysis?
What are some ethical or social issues related to using decision trees for decision-making?