The ability of a manager in an organization to make the right decision in different situations relies on him receiving the right information from the right staff. The team should give him information at an opportune moment. This is important especially if the company is facing an unstructured problem.
In such an environment, the manager gets little information about the problem while at the same time the availed information is ambiguous and as such not enough for use. Analyzing and predicting consumer behavior is a role that a manager has to do under such situations.
For instance, the organization would want to know how customers would behave in a situation where a product such as a pair of shoes is retailing at $ 499 and another at $ 510 with an incentive e.g. a tin of polish. In another scenario, a packet of chewing gum with four pieces sells at $ 6 and another with five pieces goes for $10. Predicting the outcome is very hard making it the most difficult situation that a manager can face.
In this type of circumstance, a manager has to be creative and as such anchoring and adjustment heuristic becomes the right tool for use. Consumer behavior might be one characteristic behavior that may not be known to the stakeholders. However, the same directly affects them. Putting the anchoring effect into perspective will help the manager in getting a short method used by consumers in arriving at decisions.
Decision making can be defined as making the right choice from a list of several alternatives. For example if I was a manager of a retail store I will choose the option that is bound to maximize profit while at the same time providing a feeling of satisfaction to the shop’s customers.
My choice would be based on my comprehension of the market dynamics, contemplation of the probable outcomes, and the preference I accord to each outcome. Decisions are taken to solve problems. On the other hand, problem solving can be defined as the attempt made in response to or an attempt to find an answer to a particular problem. Suppose as a manager I realize that a competitor is running a similar marketing strategy to the one employed in my organization, and I have two options either to change the strategy or continue with it.
Changing of the strategy would involve consuming a lot of resources. The best thing to do would be to evaluate the performance of the marketing strategy; if it is beneficial to the company it would be advisable to retain it rather than initiating a new strategy that would take time to be accepted by the customers hence offering an advantage to our competitors.
There are several approaches that managers use to make decision during periods of uncertainty and some of them include rational, behavioral, practical and personal approaches. The rational approach makes assumptions that as managers we follow predetermined processes in problem solving.
On the other hand, the behavioral approach recognizes the significance of the role discharged by human behavior in decision making processes. The assumption is made that manager operate under bounded rationality and perfect rationality as assumed by the rational approach. Regardless of the approach we use when making critical decisions during times of uncertainty, the main objective and goal is to make the most appropriate decision that would solve the problem at hand.