DSS Effectiveness in Marketing Resource Allocation Decisions: Reality vs. Perception

Gary L. Lilien (glilien@psu.edu), Arvind Rangaswamy (arvindr@psu.edu), Gerrit H. Van Bruggen and Katrin Starke (wazblue@hotmail.com)
Additional contact information
Gary L. Lilien: The Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802
Arvind Rangaswamy: The Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802
Gerrit H. Van Bruggen: Rotterdam School of Management, Erasmus University Rotterdam, P.O. Box 1738, 3000 DR Rotterdam, The Netherlands
Katrin Starke: The Smeal College of Business, Pennsylvania State University, University Park, Pennsylvania 16802

Information Systems Research, 2004, vol. 15, issue 3, 216-235

Abstract: We study the process by which model-based decision support systems (DSSs) influence managerial decision making in the context of marketing budgeting and resource allocation. We focus on identifying whether and how DSSs influence the decision process (e.g., cognitive effort deployed, discussion quality, and decision alternatives considered) and, as a result, how these DSSs influence decision outcomes (e.g., profit and satisfaction both with the decision process and the outcome). We study two specific marketing resource allocation decisions in a laboratory context: sales effort allocation and customer targeting. We find that decision makers who use high-quality, model-based DSSs make objectively better decisions than do decision makers who only have access to a generic decision tool (Microsoft Excel). However, their subjective evaluations (perceptions) of both their decisions and the processes that lead to those decisions do not necessarily improve as a result of DSS use. And expert judges, serving as surrogates for top management, have a difficult time assessing the objective quality of those decisions.Our results suggest that what managers get from a high-quality DSS may be substantially better than what they see. To increase the inclination for managerial adoption and use of DSS, we must get users to “see” the benefits of using a DSS. Our results also suggest two ways to bridge the perception-reality gap: (1) improve the perceived value of the decision process by designing DSSs both to encourage discussion (e.g., by providing explanation and support for alternative recommendations) as well as to reduce the perceived complexity of the problem so that managers invest more cognitive effort in exploring additional options and (2) provide feedback on the likely market/business outcomes of various decision options.

Keywords: DSS; marketing models; decision quality; decision process; resource allocation (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (19)

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