The analytic hierarchy process as a decision support system for strategic marketing planning

Date of publication: June 15, 1990

Abstract:

While well-formalized, repetitive decision processes might adequately be represented by quantitative data and solved by algorithms the analysis of less formalized, ill-structured decision scenarios heavily relies upon qualitative data. For the latter, heuristic principles as applied by Decision Support Systems gain relevance. In general, strategic marketing decisions have to face a highly complex and dynamic environment. Therefore, a practicable decision tool is needed to assist the manager in structuring ill-defined, sporadically occurring marketing problems. The Analytic Hierarchy Process (AHP) as described by SAAIY (19800 serves this purpose well. It decomposes a complex problem, structures its components hierarchically and evaluates the different decision alternatives according to their contribution to superior decision criteria. Firstly, this paper discusses the relevance of Decision Support Systems for strategic marketing decisions. Thereafter, approach and technical procedure of the AHP is described by an example. Finally, the paper points out the practical relevance of the AHP. As a Decision Support System the AHP fulfills all the requirements of Decision Calculus as defined by Little (1970): It is simple, robust, controllable, flexible, complete and easy to communicate.

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