Decision Making – Executive summary
In this Decision Making Process Assignment report the researcher has provided a brief analysis of the decision making process and various alternative options available for accommodation to people. the decision making process is based on various factors associated with a human being demographic status’ his personal choice’ his life style and personality. The report is conducting an analysis of various personality traits and their impact on decision making process of an individual especially for a important decision like getting a residence for himself. This particular subject is covered under the consumer behavior which is an integral part of the marketing and related subjects. While making a decision about accommodation choices an individual usually have multiple choices in terms of number of rooms’ style of accommodation’ neighborhood and location. In this report we have developed 6 different types of choices and we will compare each option against its benefits and the type of individual who might prefer to live in it. We have also decided on 5 different evaluation criteria namely price’ relationship status’ distance from work place’ gender and safety of accommodation area in our decision making process. We will be developing a decision making matrix and take opinion of 3 different people including the researcher himself by taking their ratings of importance for each criterion to show the different decision making process of different individual.
Accommodation is one of the basic requirements of a human being. Food and shelter is also the primary level of needs in various psychological theories like hierarchical theory of needs etc. An accommodation is one of the most important decisions of an individual because an accommodation directly reflects the life style of a human being which impacts his work life’ personal life and quality of living directly. The satisfaction level of a human being is also achieved partially by the choice of accommodation (Daniel K, Amos T. 2000). An accommodation not only provides the basic shelter but it also gives the individual a sense of owner ship and pride. It defines his status in the social environment and provides a security blanket for himself and his family for years to come. In this report there will be a decision matrix analyzing 6 different alternatives of the accommodation choices within Australia. All accommodation choices are either rented of owned residential places. There are different patterns in an individual’s choice based on his personality traits and paying capacity which will be evaluated with alternatives of the homes. In second list five evaluation criteria are developed based on which opinion of 3 different individuals for different choices will be recorded and analyzed (Martinsons, Maris G., 2001). Further in the report an analysis of different personality traits and demographic facts will be done to find out the preferences or choices most probably made by an individual. By this report the researcher is attempting to gain insights on the decision making process of an individual which is based on different criteria of decision matrix formed. The analysis of a consumer’s most preferred choices and possible decision he will be making is a very important and strategic tool in the hand of a marketing professional. If a marketing professional is well aware of his target audience’s choice and preferences and understand their decision making process he can provide the customized solutions which will be addressing their requirements optimally thus gaining himself a sustainable advantage over his competitors (Damasio, AR. 1994).
A decision matrix is basically a grid of two different lists of criteria and alternatives which are systematically organized and each criteria has been given some weight based on the level of importance it occupies in an individual’s decision making process. The decision matrix process has been developed by Mr. Stuart Pugh and it is also known as Pugh Method of decision making. It is a decision making technique which is quantitative in nature and it does not rely on the subjectivity or biases of an individual but it provides the solid numerical weight to each alternative so that a decision is based as objectively as possible. Based on the pre decided criteria each alternative or choice is compared or graded and provided with a score. This score is then summed up to find out which alternative is attracting highest score thus giving us an idea about which alternative is most suitable in our criteria of selection making. The advantages associated with this type of decision making process is the enhanced sensitivity of the process which can change its alternatives even with a slight movement in criteria and also provide us the actual difference between the most preferred and second most preferred alternative. The other advantage is added objectivity in a decision making process which are conventionally based on a lot of subjective and pre formed notions (Triantaphyllou, E. 2000).
List of accomodation choices
The list of accommodation choices provided in this report for different locations in Australia is
- A 3 bedroom rented apartment in downtown Sydney ( rent approximately:- 5000 AUD per month)
- A single Owned accommodation studio apartment in suburban region of Melbourne (EMI:- 1500 AUD a month for 10 years)
- A shared 2 bedroom apartment within a multi story building which provides accommodation to university students in Victoria’ Queensland (rent:- 2000 AUD per month including boarding and lodging expenses).
- An 2 bedroom owned ground level home in a up and coming neighborhood in Perth ( EMI: 2000 AUD per month for 15 years)
- A pre owned and leased 1 bedroom house with wooden floorings in the suburban town of Biloxi. ( Lease rent:- 1500 AUD per month and lease agreement for 3 years)
- A 2 bedroom residential apartment in the downtown Melbourne with full ownership. ( EMI:- 4000 AUD per month for 20 years)
List of decision making criteria
For this report 5 different decision making criteria were selected and each criteria would be given weight in the decision making matrix based on their importance for the particular individual and his needs. The five criteria are
- Price of the residential place
- Own relationship status
- Distance of residence from the work place
- Safety level of the residential area
- Accessibility to public transportation
The three people who are chosen for the evaluation of decision making matrix have following characteristic
Individual A:- A single 28 year old female who is working as a young executive in a bank and just moved to the urban area. She is a very extrovert in nature and prefers to have an active social life and travelling. She is not planning to get married for another 4 years and she wants to lead a independent life but in a secure area till then. She has a salary of 6000 AUD per month and she has to send 1000 AUD per month back and home also do some savings for her future.
Individual B: – A 58 year old retired government official who has been living in government provided quarters till now. The person is suffering from anxiety and looking for a quite place where he can relax and lead a calm life. He has the purchase potential for high end property and used to of living in metropolitan area and would not prefer to change his life style. He is married with a dependent wife and all their children are living outside Australia because of their jobs.
Individual C:- A foreign single male 27 year old university student belonging to India who is joining the university of Queensland for post graduation studies. He is by nature a shy personality and prefers to live in solitude. He is on a scholarship of 3500 AUD per month for his sustenance and he does not have other means of earning as if now. He will need an accommodation for 2 years of study period and once he gets a job he is planning to move to other accommodation available (Douglas B.C.’ 2009).
Weightage for each criterion
As per the personal choice each criteria for selection is presented to the 3 individuals and it was asked them to rate each one of them on a scale of1 to5 where 1 being very important and 5 being least important.
The three individuals weighted their choices as follows:-
The next matrix will represent the ranks provided to each accommodation choice based on the criteria of selections by three individuals. The ranking scale here is again from1 to 5 where 5 is very suitable and 1 is least suitable for the individual.
Application of compensatory decision rule
A compensatory decision rule can be explained as a decision making formulae of a customer service where they evaluate different attributes or features of any product or services and then assign a mental weightage to each criteria and evaluate the whole product based on it. The final decision of customer is based on the overall score which he calculate in his mind most of the times however similar formula is also applied by large organizations in a written form which we know as tendering process of purchase making. Here in the decision matrix developed above for three different individuals with different personalities and earning status for their choice of accommodation. The difference in the actual choice of a person and the decision they finally make for purchase can be easily explained by the compensatory decision making formulae where one negative or less important attribute is compensated by other attribute of same product (Drake, R. A. 1993).
Most likely final choices of all individuals
Individual A:- She is a young working female with an extrovert nature and her original choice would be to live in a self owned down town home which more suits to her life style and choices but because of various decision making criteria and constraints on her part she most probably is likely to chose A pre owned and leased 1 bedroom house with wooden floorings in the suburban town of Biloxi. (Lease rent:- 1500 AUD per month and lease agreement for 3 years)
Individual B:– A retired government official who has sufficient disposable income and looking for a calm and relaxing environment. He might be able to purchase a 3 bedroom home for himself in downtown Sydney but looking at his choice of a relaxing environment he is most likely to make a choice of A 2 bedroom residential apartment in the downtown Melbourne with full ownership. ( EMI:- 4000 AUD per month for 20 years).
Individual C:– A 26 year old male university student who is shy in nature and living on a scholarship and occasion part time work. He might prefer to stay in a self owned single studio apartment where he can enjoy her solitude life style but looking at his financial constraint and preference towards closeness to college and university he most probably would make the decision in favor of A shared 2 bedroom apartment within a multi story building which provides accommodation to university students in Victoria’ Queensland (rent:- 2000 AUD per month including boarding and lodging expenses).
Accommodation is one of the basic requirements of life and each individual would prefer to stay in a place where he or she can enjoy the life the way they want to. The decision of choosing a accommodation is one of the major decisions of life and it takes a lot of thinking process before reaching a final conclusion. Many consumer behaviour studies have focused on the fact that the decisions which are big in nature are never taken in a whim but they are taken after due diligence and weighing each attributes against the criteria set by the customer. this particular concept is very helpful in forecasting the responses of a target audience and organizations takes consideration of this concept very highly while developing a particular product or service for a specific group of people (Theankbj;j o S. T.’ 1995).
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