What makes decisions-makers tick

SHB PhD student examines the factors influencing the allocation of communication budgets

According to a study carried out by ZAW (the central association of the German advertising industry), advertising expenditure in 2009 amounted to around € 28.84 billion. Despite the significance of advertising to industry, few studies have so far been carried out into which communication instruments managers decide to spend their advertising budgets on, and how this decision-making process can be influenced. As a result, as part of his Project Competence PhD at Steinbeis University Berlin, Ralf Kiene decided to investigate the influence of a selection of parameters on the allocation of communication budgets – with a focus on the factors influencing decision-makers.

The dependent variable under investigation was the outcome of the allocation of the communication budget. Ralf Kiene restricted the decision to a selection between two media plans with different spends on promotional letters as a proportion of the overall communication budget.

The independent variables were chosen deliberately to identify key factors influencing decision-making. The level of influence was examined by looking at budget allocations. The independent variables were chosen by seeing whether the decisions to allocate communication budgets centered more on the cognitive processing of information or whether decision-makers leaned more towards intuitive factors based on judgment. In analyzing the attitude of decision-makers, two attitudinal tendencies were taken into account. Individuals with more explicit attitudes deliberately provide information. They control their utterances. This contrasts to implicit attitudes which individuals have no conscious access to, so they cannot actively influence how these are expressed. Apart from analyzing the influence of independent variables, the study also looked at the behavior of decision-makers when making decisions and their experience with the allocation of communication budgets. These counted as moderating variables.

To carry out his study, Ralf Kiene conducted online experimental research among decision- makers in marketing who already had experience allocating communication budgets. In total, 301 people took part in the test. Their average experience was around 13 years. On average, respondents had approximately seven years’ experience in allocating communication budgets. The data was put through the chi-square test. Apart from confirming statistical significance, the hypothesis was checked using empirical measurements relating to the strength of effects, so as to evaluate the practical significance of observed differences.

The key finding of the study: decision-making when allocating budgets is significantly influenced by the information used to support the decision as well as explicit attitudinal factors. Implicit attitudinal factors had no significant influence on decision-making. The relationship between information supporting a decision, explicit attitudinal factors and decision-making is also influenced by the behavior of deciders and their experience with the subject: 

  • The decisions of more deliberate deciders, who base their decisions more on methodical analysis, stem less from their explicit attitude and more from information used to support decisions. The decisions of more intuitive deciders, who tend to listen more to their feelings, stem less from the information used to support decisions and more from their explicit attitudes.
  • Decision-makers with strong experience in the area make decisions based on their explicit attitude, and less based on information. Deciders with less experience in the area draw more on information and less on explicit attitudinal factors.

When deriving statements relevant to business, a distinction was made between advertisers and businesses who provide services relevant to budget allocations. Looking at advertisers, the study indicates that the decision- making process for allocating communication budgets is influenced by the information used to support decisions and the (explicit) attitudes of deciders. It is not possible to make general statements about which of the two factors influencing decision- making is more likely to affect the degree to which communication goals are achieved. Given the increasing pressure managers responsible for communications come under in business to justify spends to colleagues, it is more important to advertisers to know which of the two factors influences the allocation of communication budgets, or which should do.

For companies involved in providing services as part of the process of allocating communication budgets, Ralf Kiene derived some routes to influence key decision-makers in a targeted manner. His recommendations for influencing advertisers making the decisions:

  • It is probably better to give decision-makers facts if they lean towards more deliberate decisions and they have less experience in selecting communication instruments. The message to these decisionmakers should be on a factual level, in- formative, and with convincing arguments. To appeal to decision-makers, focus more on descriptions, objective issues and proof that instruments work.
  • If decision-makers lean more towards intuitive decision-making and already have strong experience with communication tools, they should be influenced more with imagery. It is best to use a more emotional approach with these decision-makers and focus on creating a clear, positive image for the communication instrument. Ralf Kiene’s dissertation will be published shortly in Steinbeis Edition (in German: Allokation von Kommunikationsbudgets – eine empirische Analyse von Einflussfaktoren auf die Entscheidungsfindung im Rahmen der Allokation von Kommunikationsbudgets unter besonderer Berücksichtigung entscheidungsträgerbezogener Parameter“, ISBN 978-3-941417-56-4).

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