The Role of Experience in Information Use and Decision Making by Marketing Managers

Author(s): W. Steven Perkins and Ram C. Rao

Source: Journal of Marketing Research, Vol. 27, No. 1 (Feb., 1990), pp. 1-10
Published by: American Marketing Association
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 W. STEVENPERKINS
and RAMC. RAO*

Theauthorsreportthe resultsof a studyon the use of informationand decision

makingby practicingmarketingmanagers.Theyexaminethe effect of managerial
experienceand decisionprogrammability on managers'informationuse and deci-
sions. Theresultsindicatethat experienceis an importantdeterminantof managers'
behaviorfor relativelyunprogrammed decisions.Moreover,the effectsof experience
are manifestedin the evaluationand use of "soft" information,amountof infor-
mationused, and the decisionsthemselves.The authorsconcludethat in studying
the effects of experienceon managerialdecisions,one mustexaminethe steps lead-
ing to a decision;theyfindthat experienceaffectsthe priorstep in whichinformation
is acquired.To the extent experienceis a proxy for expertise, the articleaffords
insightsinto the key ingredientsin trainingand modelingexpert managers.

The Role of Experience in Information Use and

Decision Making by Marketing Managers

Understanding decision making by marketing man-
agers can provide insights that will help in building bet-
ter tools for managers to use and in improving marketing
decisions. Marketing models, for example, do not at-
tempt to tell managers what to do; rather, they create a
fruitful interaction between managers and models. Ef-
fective model building in this sense requires the manager
to understand and trust the model, and the modeler to
appreciate the manager's problem and take advantage of
the manager's knowledge derived from his or her ex-
perience (Little 1970; Little and Lodish 1981). In this
context, a relevant question is: What is the real interplay
between managers' experience and their decision mak-
ing? Clearly our ability to improve managerial decision
making ultimately depends not just on sophisticated
models, but also on our understandingof the managers'
*W. Steven Perkins is Assistant Professor of Marketing, College
of Business Administration, Pennsylvania State University. Ram C.
Rao is Professor of Marketing and Founders Professor, School of
Management, The University of Texas at Dallas.
The authors thank James C. Bartlett and Randall L. Schultz for their
suggestions in formulating the research, John Wiorkowski, Rick Stae-
lin, Pam Pickard, and Naufel Vilcassim for valuable discussions, and
Marci Armstrong, Dipankar Chakravarti, Rohit Deshpande, Don Leh-
mann, Harish Sujan, and Mita Sujan for comments on a previous draft.
Any remaining errors are the authors'.
1
decision process itself. In particular, by studying prac-
ticing managers, we can understand better the elements
that affect real-world decision making. The research we
report comprises a formal study of marketing managers
in a single large company. Specifically, our interest cen-
ters on the interaction of managerial experience and de-
cision programmability as it obtains among practicing
managers.
The few descriptive studies of marketing decision
making (Hulbert 1981) have addressed two issues: (1)
the use of managerial judgments to parameterize deci-
sion models and (2) the use of marketing research by
managers. The first issue relates to the use of managers'
judgments to build decision calculus models that may be
difficult to parameterize by other methods (Little 1970).
Fudge and Lodish (1977) illustrate the usefulness of this
approach. Chakravarti,Mitchell, and Staelin (1979), in
an important experimental investigation, found the ap-
plicability of this approach to be limited mainly to stable
markets. (See also Larr6ch6 and Moinpour 1983; Mc-
Intyre 1982).
Deshpande and Zaltman (1982, 1984) studied mar-
keting managers' use of marketing research information.
They found that managers tended to use more informa-
tion if it was deemed technically adequate, if it con-
firmed priorexpectations, and when the managersworked
closely with the researchers.Lee, Acito, and Day (1987),
in an experimental study of MBA students, found greater
use of marketing research information when the infor-
Journal of Marketing Research
Vol. XXVII (February 1990), 1-10

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2 JOURNAL
mation confirmed prior beliefs, regardless of technical
quality of the research.
The results of previous research highlight the need for
more descriptive studies of marketing decision making.
They also have some limitations. One has been the ab-
sence of an experimental setting that enables subjects to
engage in "meaningful tasks." For example, the use of
MBA studentsreduces our confidence in inferences about
practicing managers. Also, subjects perform experimen-
tal tasks that differ, often substantially, from the prac-
tical decisions they may be accustomed to facing. A more
valid approach would be to study real-world managers
making decisions similar to those in their natural envi-
ronment.
Another area not fully addressed by previous research
is the interaction effect of managers' characteristics and
decision characteristicson decision making (Payne 1982).
In fact, it is this interactionthat defines the "space"within
which decisions are made (Newell and Simon 1972). An
example in marketing is the idea that effective selling is
contingent upon both the salesperson's resources and the
environmental characteristics (Weitz 1981; Weitz, Su-
jan, and Sujan 1986). Finally, in studying decision mak-
ing, it would be useful to examine not just the decision,
but the steps leading up to it. Hogarth (1980) outlines
the steps as structuringthe decision problem, acquiring
information, processing it, and then making a decision.
Our study spans the information acquisition and pro-
cessing steps as well as the decision itself.
Our research is aimed at understandingmanagerial de-
cision making by explicitly studying the role of experi-
ence when a task characteristic-programmability-is
varied. Programmability of a decision is the extent to
which the decision can be made by using relatively rou-
tine procedures instead of more general problem-solving
techniques. Subjects for our research are practicing man-
agers who engage in experimental tasks closely resem-
bling their on-the-job decisions. We obtain insights into
how experience and programmabilityof decisions affect
(1) managers' use of information to arrive at decisions
and (2) managers' decisions themselves. Briefly stated,
our overall finding is that more experienced managers
regarded more kinds of information as useful and made
more conservative decisions, especially in a relatively
unprogrammedsituation. The results are consistent with
our hypotheses and prior theory.
We next state the research issues and objectives, then
outline the study method. After reporting the data anal-
ysis and our results, we discuss our conclusions, our
study's limitations, and the implications for managerial
practice and future research.
RESEARCHISSUES AND OBJECTIVES
What is the rationale for choosing experience as the
characteristic of managers and programmability as the
task characteristic in studying marketing decisions? One
reason is that previous research in marketing decision
making has not explicitly considered these factors. In
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OF MARKETING FEBRUARY
RESEARCH, 1990
this section we elaborate on why these factors are im-
portant to examine.
Experience
Our premise is that with experience managers acquire
expertise in making decisions. Studies comparing ex-
perts and novices suggest that experts have more highly
developed cognitive structures-the organization of in-
formation in memory and the repertoireof rules for using
that information-which allow for effective problem
structuring and successful problem solution (Chi, Fel-
tovich, and Glaser 1981). Effective salespersons, for ex-
ample, have been found to know more customer traits
(i.e., have more facts in memory) and to know more
selling strategies (i.e., more rules; Sujan, Sujan, and
Bettman 1988). According to Harmon and King (1985),
experts use these facts and heuristics to solve problems
effectively. In fact, experienced subjects are likely to
search for more information, simultaneously restricting
themselves to relevant and importantinformation(Chiesi,
Spillich, and Voss 1979). When managers are provided
information, as opposed to acquiring it, they will differ
in their valuation of the information. Specifically, more
experienced managers can be expected to place more
weight on relevant (functional) cues and less on irrele-
vant (peripheral) cues (Brucks 1985). Thus, experience
determines the amount of information sought and its val-
uation.
Differences in information valuation lead to differ-
ences in decisions. Moreover, experienced managers may
also understand the uncertainties and consequences of
their decisions better than their inexperienced counter-
parts (Beach 1975; Nisbett et al. 1983). In other words,
experience affects managerialdecisions, and more so when
it influences information valuation. Though the role of
expertise and experience in consumer behavior has been
studied extensively (Alba and Hutchinson 1987), it has
not received attention from researchers studying mar-
keting managers' decision making.
Programmability
A useful classification of decisions is one based on the
concept of programmability, proposed by Simon (1960).
In his framework, programmed decisions are character-
ized as being routine and structuredwith a well-defined
starting point, a clear goal, and standardized rules for
reaching the goal. They are repetitive enough to permit
the establishment of definite procedures to process them.
According to Simon, methods for making programmed
decisions include habit, standard operating procedures,
and a common set of expectations established by the or-
ganization. In contrast, nonprogrammeddecisions are ill-
structuredand have few guidelines. They are novel, not
being amenable to processing by a prespecified method
and often requiring the decision maker to rely on general
problem-solving abilities. When making unprogrammed
decisions, managers must exercise judgment and ".
this judgment depends, in some undefined way, upon
 IN INFORMATION
ROLEOF EXPERIENCE USE
experience, insight, and intuition . . ." (Simon 1960,
p. 11). We expect, then, that the effects of experience
will be greater in a relatively less programmed decision.
Simon's distinction between programmed and unpro-
grammed decisions has provided a basis for studying
managerial decisions in such areas as information sys-
tems (Gorry and Scott Morton 1971) and auditing (Ab-
dolmohammadiand Wright 1987). The same concept has
been applied by artificial intelligence researchers in clas-
sifying problem types (Steffik et al. 1982). In marketing,
there is no absolute measure of programmability of de-
cisions. Gorry and Scott Morton (1971) believe that short-
term sales forecasting, for example, could be thought to
be more programmed than the novel decisions in new
product planning. Examples of unstructured marketing
decisions include generating advertising appeals and rec-
ommending a negotiation strategy, both of which in-
volve incomplete information and a reliance on judg-
mental heuristics (Rangaswamy et al. 1987). Many
important decisions are in a middle ground of semi-
structured decisions-for example, the setting of mar-
keting budgets (Keen and Scott Morton 1978). The ex-
tent of programmabilityof different marketing decisions
could be distinguished on the basis of how standardized
the decision process is-less standardized for less pro-
grammed-and whether logical and broad information
is needed for the decision as opposed to narrow and
arithmetic-the latter being more suitable for pro-
grammed decisions. Hence, we expect the effect of ex-
perience on decisions to be greater in cases in which
managerial judgment plays a greater role. In the next
section, we return to the question of how we operation-
alized programmability in our study.
On the basis of the foregoing discussion, we expect
to find the following interaction of experience and pro-
grammability:
-Experience effects will obtainin the decisionsand in the
use andweightingof relevantinformationpriorto making
the decisions.
-These experienceeffects will be greaterfor the less pro-
grammablethanfor the more programmable decisions.
Thus, we expect experience effects across decisions; we
also expect experience effects in different steps of de-
cision making.
THE STUDY
To investigate our research questions, we conducted
a study with brand managers in a major Fortune 500
corporation. The corporation serves a national consumer
packaged goods market in which advertising, promo-
tions, and new products are important strategic vari-
ables. The study examined two of its marketing deci-
sions, scheduling consumer promotions and introducing
new products, which represent, respectively, more pro-
grammed and less programmed decisions. Simon, who
coined the term "programmability,"emphasizes that de-
cisions form a continuum with "programmed"and "un-
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3
programmed" serving as labels for the extreme cases.
The two marketing decisions in our study do not rep-
resent these extremes. Rather, they differ on critical pro-
grammabilitycharacteristics,including repetitiveness and
standardizationof processing method.
Programmability
The consumer promotion decision, for this corpora-
tion, represents a routine task with a fairly standardized
set of well-defined information inputs. Though some
managers may not have repeated experience with such
decisions, the firm has developed standard operating
procedures for making common ones. Having learned
these problem-solving procedures through corporate and
personal knowledge, managers can reasonably be ex-
pected to agree on what information to use and how to
use it. As the consumer promotion decision involves rel-
atively well-understood information and well-defined
procedures, we consider it a good exemplar for a pro-
grammed decision in our study. In a recent audit, prod-
uct managersrated promotionexecution as a routine, less
desirable management task (Quelch, Farris, and Olver
1987). The decision's programmed nature presumably
limits the need for individual managerialjudgment. Con-
sequently, we expect individual experience to be a less
significant factor in this decision.
New product introduction, in comparison, involves a
more novel decision for which there are fewer formal,
well-developed guidelines. Though the firm has intro-
duced several new products, each carries a different nu-
ance and in that sense is unique. The decision task has
less inherent structure. Moreover, individual managers
experience fewer repetitions of this decision. It is rea-
sonable to expect that managers often must provide their
own structure in this instance. Therefore this decision
serves as an unprogrammedone in our study. We expect
greater individual differences in this decision, with ex-
perience being an important explanatory factor.
Subjects
Fifteen managers from a single division of the com-
pany participated. The managers work with different
brands, but the firm follows the same marketing process
with all the brands. The brands are distributed through
the same channels, promoted and priced in similar ways,
advertised in the same media, and even produced in the
same plants. The marketing experience of most of the
managersconsisted of what they had acquiredat this firm.
They were about 30 years of age and held MBA degrees
from major universities. The brand management struc-
ture in the firm consists of three staff levels-senior,
associate, and assistant manager-and managers spend
about two years at each level as they move up in the
firm. Five subjects at each level participatedin the study.
Experience
We operationalize experience by the months of brand
management experience of a manager (referred to here-
4 JOURNAL
after simply as "experience"), which correlates highly
with alternative measures used. The correlation between
experience and staff level is .82 (p < .01) with seniors,
associates, and assistants having median experience of
46, 26, and 4 months, respectively. We also obtained
from the managers their self-reported ability on and fre-
quency of participationin each of the two marketing de-
cisions. The correlation of experience with the number
of promotion decisions is .78 (p < .01) and with the
number of new product introductions is .52 (p < .05).
Experience does not correlate with the measures of self-
reportedability for promotiondecisions, r = .07 (p n.s.),
but it does for the new product decision, r = .75 (p <
.01). Hence, though managers made more promotion de-
cisions as their tenure increased, their knowledge, as
measured by their self-reported ability, did not increase.
In contrast, experienced managers had encountered more
new product decisions and perceived an increase in their
ability to make those decisions.
Procedure
Each manager participated in an individual two-hour
session conducted in private at the corporation. There
was no communicationamong the subjects about the study
during its conduct. The flow of questions was controlled
by following a script. Most of the tasks required a verbal
response, with responses kept to a minimum. Sessions
were recorded and managers were encouraged to think
aloud, explaining why they used certain information and
how they made decisions.
Subjects were assigned randomly to perform either the
promotion tasks or the new product tasks first. Before
beginning either task they read a one-page statement
containing background information related to the deci-
sions. For promotion decisions it read, in part, ".
During the annual planning process a consumer pro-
motion was scheduled for the future. The time has come
to be more specific about the promotion. . . . You must
review the current situation and decide if it would be
appropriateto have a consumer promotion for your brand
or to wait until later. . . ." It also included information
on the purpose, type, duration, and depth of promotion.
In effect, these aspects were held constant; the manager
decided only on the scheduling of the promotion. The
statement for the new product decisions said that the
product had been in test market for six months and also
indicated the product's purpose and the introductory
budget. Specifically, it read, ". . . The time has come
to decide if the product should be discontinued or rolled
out nationally. You must review the currentsituation and
decide if it would be appropriateto stop marketing the
new product or go ahead with it. .. " centered on studying the number of pieces chosen and
Stimuli
Stimuli and tasks were constructed during the prestudy
phase with the aid of several other managers in the cor-
poration. Discussions with them spanned the decisions
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OF MARKETING FEBRUARY
RESEARCH, 1990
managers make and the information they use. The stim-
uli were tailored to be as realistic as possible, including
the same kinds of information managers normally would
have available and even specific terminology they em-
ployed. Thus the need for extensive instructions was
eliminated, as the managers were making simulated ver-
sions of the decisions required in their job.
The prestudy identified 14 kinds of marketing infor-
mation important for the decisions (Table 1). Seven are
related primarily to promotion decisions and the other
seven to new product decisions. When managers made
decisions, they had available only the seven pieces of
information relevant to each decision. For each type of
decision, eight scenarios were developed by dichotomiz-
ing the seven pieces of information into high and low
values according to an orthogonal fractional factorial de-
sign (Cochran and Cox 1957, plan 6A.7, p. 280). These
values are listed in Table 1. To check the reasonableness
of the information combinations generated by the de-
sign, managers assessed the likelihood of encountering
each scenario in practice. The mean likelihood was .7
and .6 for promotion and new product decisions, re-
spectively, indicating that the scenarios represented re-
alistic situations. These likelihood values did not differ
significantly across decisions.
Tasks
Managers performed three tasks for each type of de-
cision: rating the usefulness of all 14 pieces of infor-
mation, choosing some or all of seven pieces of infor-
mation on each of eight trials for each decision type, and
making decisions on the eight trials of each type. For
convenience, we call them information rating, infor-
mation choice, and decision-making tasks. In the rating
task, managers assessed the usefulness of information
for a decision on an 11-point scale ranging from 0 (not
at all useful) to 10 (extremely useful). These data were
used to examine differences in ratings by experience and
to check on the validity of our choice of what infor-
mation to provide for each decision type.
The choice task consisted of selecting information,prior
to each decision trial, from seven pieces randomly or-
dered for each scenario. The pieces were presented on
seven cards, each indicatingthe kind of information(e.g.,
Nielsen data). By turning over the card, the manager
would learn whether that variable was better or worse
than "expected" (as shown in Table 1). The managers
were to choose in order of perceived usefulness. They
were encouraged to choose only as many pieces as they
needed to make a good decision because information in
the real world would be costly. Our interest in this task
the consistency between the order of choice and the use-
fulness ratings. Our rationale is that experienced man-
agers have well-developed frameworks for decision
making, which would influence the numberof pieces (i.e.,
amount) of information sought. Consistency between
ROLEOF EXPERIENCE
IN INFORMATION
USE 5

Table 1
INFORMATION
AVAILABLE
FORDECISIONS

Values
Information type +1 -1
Consumer promotion
1. Weekly sales report
Actual and targeted sales by product and region Above target Below target
2. Trade promotion
Brand sales promotion to stores Promotion on Promotion off
3. Ad schedule
Ad pulse or flighting schedule Flighting on Flighting off
4. Competitor's promotion
Major competitor sales promotion to stores Promotion on Promotion off
5. Responsiveness to consumer promotions
Past impact of this type of promotion Strong response Weak response
6. Consumer promotion budget
Budget available for consumer promotion Above expected Below expected
7. Season of sales year
Seasonal pattern of sales through 13 annual periods Higher than average Lower than average
New product introduction
1. Nielsen store audit data
Bimonthly sales data based on store inventories Sales above average Sales below average
2. Diary panel data
Detailed record of product use by panel families Use above average Use below average
3. Headquarters support
Strength of corporate support for new product Above average Below average
4. Peer opinion
Subjective input from your fellow product managers Positive, do it Negative, don't do it
5. Competitor's new product introduction
Major competitor has launched new product similar to yours Yes No
6. Consumer research
Burke research on consumer attitudes from focus groups Positive results Negative results
7. Merchandiser word of mouth
Subjective feedback from key route personnel Positive feedback Negative feedback

stated ratings and behavior (i.e., actual selection) was
expected to be more likely with better developed struc-
tures.
Finally, the managers stated the probability of action
given the information. For promotions they indicated the
probability of carrying out the promotion and for new
products they gave the probability that they would in-
troduce the new product. They stated their decision first
on the basis of the information they selected. They were
then given all the information and again asked to state
their decision. In our analysis we use the second prob-
ability statement to preserve the orthogonality of the in-
dependent variables. As a check, the first and second
statements correlated .95 for promotions and .94 for new
products. Managers made one practice decision before
beginning their eight trials.
ANALYSIS
AND RESULTS
Information Rating
The first issue to address is whether or not managers
valued the information differently by decision type. Our
study was designed on the assumption that, of the 14
pieces of information, seven would be more relevant for
promotion decisions and the other seven more relevant
for new product decisions. To test this assumption we
performed a fully saturated repeated-measures analysis
of variance over managers' ratings of all 14 pieces of
information and both decision tasks. Let R denote the
usefulness rating of information, I a 14-level information
factor, D a (2-level) decision factor, and S a 15-level
subject factor. Then the ANOVA model is
(1) R= + I + D + S + (Ix D) + (I x S)
+ (D xS) + (Ix D x S).
In model 1 we examine the interaction I x D and find
that ratings differ by decision type: F(13,182) = 9.84
(p < .01). Table 2 gives the results of univariate tests
of differences of mean ratings of each piece of infor-
mation for the two decisions. Twelve of 14 pieces of
information are valued differently in the expected way
with six being statistically significant. One piece of in-
formation has the wrong sign and is significant. These
findings generally confirm that our information manip-
ulation is valid for the two decisions.
The next question is what, if any, effect experience
has on these ratings. We find both quantitativeand qual-

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6 OF MARKETING
JOURNAL FEBRUARY
RESEARCH, 1990

Table2
MEANUSEFULNESS
MANAGERS' RATINGS FORINFORMATION
(standarddeviationsin parentheses)

Marketing decision
Probability rating differs
Information Promotion New product (t-test)
Consumer promotion
1. Weekly sales report 4.9 8.3 .01
(2.5) (2.9)
2. Trade promotion 9.3 6.6 .01
(.9) (2.5)
3. Ad schedule 8.1 6.9 .10
(1.7) (2.4)
4. Competitor's promotion 6.3 6.0 .71
(2.8) (2.6)
5. Promotion responsiveness 9.5 5.8 .01
(1.1) (2.7)
6. Consumer promotion budget 9.7 6.7 .01
(.5) (2.6)
7. Season of sales year 8.3 6.3 .03
(1.7) (2.9)
New product introduction
1. Nielsen data 4.6 8.3 .01
(2.2) (1.8)
2. Diary panel data 5.1 8.6 .01
(3.3) (1.7)
3. Headquarters support 6.8 8.1 .13
(2.3) (2.4)
4. Peer opinion 5.7 4.4 .13
(2.0) (2.4)
5. Competitor new product 6.7 8.4 .06
(3.0) (1.4)
6. Consumer research 6.7 9.2 .01
(2.5) (1.7)
7. Merchandiser word of mouth 6.1 7.1 .83
(3.1) (2.4)

itative differences in the effect of experience. First, we
performed an analysis of variance over ratings of all 14
pieces of information, and both tasks, treating experi-
ence as a covariate replacing the subject factor in equa-
tion 1. Across all ratings and both decisions, experience
is significant, F(1,364) = 5.75 (p < .05). The inter-
action of experience and information also is significant,
F(13,364) = 1.74 (p < .05), as is the three-way in-
teraction of experience with information and decision,
F(13,364) = 1.71 (p < .10). Hence, experience is seen
to affect the perceived usefulness of information and this
effect varies by decision programmability. Moreover, by
examiningthe qualitativedifferencesacross decision types,
we see that the more experienced managers rated several
of the "promotioninformation"pieces as useful even when
making new product decisions. Ratings of five of these
information pieces are correlated positively with expe-
rience, suggesting that experiencedmanagersvalue a wide
variety of information for new product decisions.
A second analysis confirms that differences across
managers are greater in the case of new product deci-
sions than in the case of promotions. Convergence among
managers was examined by computing the average
Spearman correlation between the information ratings of
all pairs of managers (Hays 1988). This correlation av-
erages .40 for promotion decisions but is significantly
lower, .21, for new products: t(208) = 4.88 (p < .01).
Information Choice
To understandmore fully the managers' use of infor-
mation, we examined their actual choice of information
when faced with the decision task. Recall that managers
chose to look at some or all of the seven pieces of in-
formation before stating their decision. Given this rank
ordering of information, we examined three issues: the
consistencybetween statedratingsand rankorderof choice
of a piece of information in each task, the convergence
among managers on the rank ordering, and the average
number of information pieces chosen before making a
decision.
Consistency for each individual was determined by
correlating the ratings and rank ordering of information
averaged across trials. As a lower rank order would im-
ply a greater usefulness, this correlation should be neg-
ative. For the promotion decisions the correlation aver-
ages -.55 (n = 7 per subject) across all managers. In
the same analysis for the new product decisions, the cor-
relation averages -.59 (n = 7 per subject) across all

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 IN INFORMATION
ROLEOF EXPERIENCE USE
managers. These correlations do not vary significantly
by experience for either decision.1
Convergence among managers was determined by
computing the average Spearman correlation between all
pairs of managers' rank orderings. This correlation av-
erages .46 for promotion decisions; for new product de-
cisions it is marginally lower, .38. Managers thus gen-
erally agreed more on how valuable the informationpieces
were for promotion decisions. This confirms the findings
based on ratings.
Finally, for the number of pieces of information cho-
sen, we find that managers selected 5.1 pieces on av-
erage for promotion decisions and 5.5 pieces for new
product decisions. In a paired t-test these means differ,
t(14) = 1.53 (p < .10). We find no differences by ex-
perience in the number of information pieces chosen.2
Marketing Decisions
Recall that in our study a decision is the probability
of acting given information. The two decisions are the
probability of a consumer promotion given information
and the probability of new product introduction given
information. Each manager provides his or her proba-
bility for each of eight trials on each of the two deci-
sions. The trials represent a fractional replication of the
factorial design of a high and low value on each of seven
pieces of information. We are interested in two aspects
of these decisions: the weight placed on each informa-
tion piece in making a decision and the effect of expe-
rience on these weights. We estimated the weights using
a dummy variable regression model, as is often done in
the analysis of profiles from fractional factorial designs
in conjoint analysis (Green and Srinivasan 1978). We
introduced a second set of coefficients in the regression
model to capturethe experienceeffect (Green and DeSarbo
1979; Holbrook 1981). We estimated separate models
for the promotion and new product decisions.
Let Yj represent the decision on trial i, i = 1, ..., 8,
by individual j, j = 1, ..., 15, for the promotion deci-
sions. Denote Xik to be the code of information k, k =
1, ..., 7, on trial i. Recall that information takes on one
of two values,
- 1-1 if informationis below "expected"
Xk if informationis above "expected."
'To explicate this issue further, we looked at individuals in the ex-
tremes of staff levels by collecting the five assistant managers in one
group and the five senior managers in another group. The correlation
between rating and rank order for promotion decisions did not differ
across the groups. In contrast, for the new product decisions, the cor-
relations turned out to be -.39 for the assistants and -.80 for the
seniors. Thus, senior managers appear to be more consistent in their
ratings and choice of information for the less programmed decision.
2Again, we examined the average number of information pieces
chosen by managers at the extremes of staff levels. We found that for
the promotion decisions senior managers chose fewer pieces than as-
sistants, but for the new product decisions they chose more than the
assistants.
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7
Let Ej denote the months of brand management experi-
ence of individualj. We develop only the promotionmodel
in detail, as the new product model is identical. A linear
model of the promotion decisions, then, is
(2) Y,= ao + yE E Pk,Eki + kXikE, + Zi
k k
where 4iiis the errorterm.3 The parametershave the fol-
lowing interpretation:a0 can be thought of as the prob-
ability of promotion by a manager with no experience
when all the information is as expected, y measures the
incremental probability of promotion per month of ex-
perience, 3k(-3k) measures the effect of being above
(below) expected on information k, and 5k measures the
interaction of experience and information.
Consumer Promotion Decisions
Table 3 reports the results of estimating equation 2 for
the promotion decisions by ordinary least squares.4 We
find that all the experience-related variables are insig-
nificant. In particular, ^ and 8k, for all k, are not sig-
nificantly different from zero, indicating that experience
does not affect the promotion decisions across managers.
When all the variables are as expected (i.e., neither be-
low nor above expected), the probability of promotion
is given by ^o = 44.25%. Of the information variables,
promotion response is the most heavily weighted: if the
responsiveness of the brand to promotion is strong, the
probability of promotion increases by (s = 19.39%.
Similarly, with an above-expected promotion budget, the
probability of promotion increases by 36 = 9.73%. If
trade promotion is on, the probability of promotion in-
creases by 32 = 6.87%. Of the remaining information
variables, weekly report has a marginally significant (p
< .10) negative coefficient, S1,indicating that if the lat-
est weekly report shows actual sales to be above target,
the probability of a promotion decreases. No coefficients
have implausible signs. The regression has an R2 of .55,
indicating good overall explanatory power of the model.5
3The error C, is likely to be correlated across trials i, suggesting a
repeated-measures analysis of variance. Unfortunately, given our
fractional factorial design, such an analysis can only speak to the ex-
perience x trial interaction and not the experience x information in-
teraction of interest here. For completeness, we performed a repeated-
measures ANCOVA for the two decisions. It revealed that neither
experience by itself nor the interaction experience x trial was signif-
icant for the promotion decisions, but both were significant for the
new product decisions.
4To account for the correlation across trials, one might estimate the
model using seemingly unrelated regressions (Zellner 1962). This ap-
proach does not help in our particular case, however, as the X matrix
is identical across trials (Theil 1971, p. 309-310).
'Qualitatively, on the basis of sign (for the nonsignificant param-
eters), we find that experienced managers promote less often (j < 0),
are not influenced as positively by trade promotion and promotion
budget (82, 6 < 0), weight promotion response higher (8, > 0), and
are more likely to promote when advertising flighting is on (83 > 0)
or if seasonal sales are higher (87 > 0).
8 JOURNAL
OF MARKETING FEBRUARY
RESEARCH, 1990

Table 3 are as expected, as j < 0. In particular, for a manager

OF PROMOTION
ESTIMATES DECISIONSMODEL with five years (60 months) of experience, this proba-
in
(t-values parentheses) bility decreases by 10%. Headquarters support is more
valued by experienced managers (83 > 0), whereas mer-
Parameter estimates chandiser word-of-mouth support is not valued as much
No experience Experience
(8s < 0). Hence, experiencedmanagersdiffer more on
Variable interaction interaction the valuation of the subjective information-headquar-
ters support and merchandiser word of mouth. All man-
Intercept do = 44.25a = -.05
(15.74) (-.53) agers weight the "hard"data heavily-Nielsen store au-
Weekly report = -5.09 b, = .00 dit data (p, = 9.49), diary panel data (32 = 11.11), and
(-1.81) (.02) consumer research (36 = 11.41). These coefficients are
Trade promotion = 6.87b
P2 2= -*.09 all highly significant. All managers view a competitor's
(2.45) (-1.02) new product as a reason for not introducing a new prod-
Ad schedule P3 = -1.22 83 = .14
(-.43) (1.57) uct (P3 = -6.02). Of the "soft" information, only peer
Competitorpromotion 4 = -1.49 84 = .00 opinion does not have a significant weight, though it is
(-.53) (.02) positively viewed (P4 > 0). Inexperienced managers
Promotion response = 19.39' 8, = .03
P5
(6.90) (.38) weight merchandiserword of mouth positively (37 > 0),
Promotion budget 6 = 9.73a 6 = -.10
but for experienced managers it is insignificant. Head-
(3.46) (-1.15) quarters support is viewed positively (33 > 0), but is
Season 7 = -.47 7 = .10 insignificant for inexperienced managers. The model has
(-.17) (1.14) an R2 of .58, indicating good explanatory power.6
Adjusted R2 = .55, F(15,104) = 10.72 We see that more information is valued by managers
ap < .01, two-tailtest. for the new product decisions than for the promotion de-
bp < .05, two-tail test.
cisions, experienced managers differ significantly from
inexperienced ones in the new product decisions but not
in the promotion decisions, and these differences are in
New Product Decisions the use of "soft" information.
Table 4 gives the results for the new product decisions
from estimating a model similar to equation 2. For the DISCUSSION AND CONCLUSIONS
experience-related variables, we find that three coeffi- Our study largely confirms our hypotheses that man-
cients are significant. Experiencedmanagersare less likely agerial experience and decision programmabilityinteract
to introduce new products when all information variables in managerialdecision making. Specifically, we find that:
-the effects of experienceare morepronouncedin the less
programmed (new product)decisionthanin the morepro-
Table4 grammed(promotion)decision,
ESTIMATES
OF NEW PRODUCT DECISIONS
MODEL -the effect of experienceis manifestednot only in the de-
cisions themselves,but also in what informationis used
in
(t-values parentheses) to make the decisions, and
-the moreexperiencedmanagersdifferfromtheirless ex-
Parameter estimates periencedcolleagueson the new productdecisionin sev-
No experience Experience
eral importantways: they ratedmoreinformationas use-
Variable interaction interaction ful, weightedthe "soft" informationdifferentlyin their
do = 47.93' j = -. 17 decisions, and made more conservativedecisionson av-
Intercept
(18.92) (-2.18) erage.
Nielsen data = 949 ~ = .02 As Simon (1960) noted almost 30 years ago, pro-
(3.74) (.22)
Diarypaneldata 2 = 11.1a 2 = -.08 grammed and unprogrammeddecisions require different
(4.38) (-.97) decision-making techniques. Routine, repetitive deci-
Headquarters support P3 = 4.05 83 = .18b
sions yield to habit or specialized procedures. However,
(1.60) (2.36)
Peer opinion P4 = 1.89 = .01
84
many importantmarketing decisions are closer to the un-
(.74) (.10) programmed end of the spectrum, requiring managerial
Competitor's new P5 = -6.02b 5 = -.01
product (-2.38) (-.12)
Consumer research 36
= 11.41' -.08
8•=
(4.50) (-1.04) 6Qualitatively,on the basis of sign (for the nonsignificantparam-
Merchandiser word of 37 = 11.82' 87 = -.17b
eters),we find thatexperiencedmanagersvaluemoretheirpeeropin-
mouth (4.66) (-2.12) ion (84 > 0) and Nielsen store audit data (8, > 0), weight less the
Adjusted R2 = .58, F(15,104) = 12.07 informationfromdiarypaneldata(82 < 0) andconsumerresearch(86
ap < .01, two-tailtest. < 0), andaremorenegativelyaffectedby a competitor'snew product
bp < .05, two-tail test. (86 < 0).

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 IN INFORMATION
ROLEOF EXPERIENCE USE
judgment and general problem-solving abilities. Thus,
improvements in marketing management can be effected
through a better understanding of managerial decision
making. In particular, unprogrammed decision making
can be improved by training managers and modeling
managers. In terms of training, knowledge differences
due to experience can be exploited to accelerate and di-
rect novices' learning (Weitz, Sujan, and Sujan 1986).
For instance, the fact that senior managers valued more
sources of information as well as "soft" information for
new product introductions should be codified and passed
on to novices. In contrast to traditional training, part of
what managers learn through experience is tacit knowl-
edge, not explicitly expressed or taught, but often a ma-
jor building block of practical, real-world intelligence
(Wagner and Sternberg 1985). For example, the fact that
senior managers paid close attention to internal corporate
information and discounted the word-of-mouth infor-
mation received from sales personnel may have to be
learned by on-the-job training or learning by doing (An-
zai and Simon 1979).
In terms of modeling managers, our findings suggest
that the input of managerial knowledge will have the
greatest impact on models of decision making in less
programmed domains. Because experienced managers
differ from novices on unprogrammed decisions, cap-
turing their knowledge could have a significant effect on
decision making. Expert systems, of course, attempt to
do just that. Examples of such unprogrammeddecisions
in marketing include new product design, launch, and
positioning (Rangaswamy et al. 1987). However, trans-
ferring experts' knowledge from human to machine has
been much more time consuming and difficult than ex-
pected by early advocates of expert systems (Hayes-Roth,
Waterman, and Lenat 1983). Research such as ours may
speed their development by explicating differences be-
tween more and less experienced decision makers.
Future research should address some of the opera-
tional limitations of our study. First, the measurement
of marketing experience could be improved upon to cap-
ture marketing "expertise," rather than merely length of
experience. For example, comparing the decisions with
an objective criterion for an optimal, or even a good,
decision would provide a measure of decision quality as
well as increase the generalizability of the results. Next,
the operationalization of decision programmabilitycould
involve developing experimental tasks that manipulate
the level of programmability. Third, other specific hy-
potheses about the effect of experience on the use of
information and decision making may be in order. For
example, our decision-making task does not consider the
configural or nonlinear use of information, which may
increase with experience (Slovic 1969). Finally, one
strengthof our study, the use of practicingmanagersfrom
a single corporation, is also a drawback: it limits the
sample size. Some of the specific results may not be
generalizable outside the corporation we studied; how-
ever, the conclusions related to programmabilityand ex-
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9
perience have been shown in several domains ranging
from physics (Larkin 1983) to auditing (Ettenson 1984).
At a more substantive level, we believe future re-
search should extend our idea of examining not just the
decision, but the steps leading up to it (e.g., Soelberg
1967). We stepped back to look at information choice
and weighting. As an extension, subjects could be asked
to interpret raw data as opposed to being told that the
information is better or worse than expected. Another
possible extension might be to step fartherback, to study
the way managers structure their problem and how that
influences their actions toward raw data, informationand,
finally, decisions.
The formal study of decision making by practicing
managers has enormous potential because surprisingly
little is known. Extant work indicates that both research
(Deshpande and Zaltman 1983) and models (Little 1970,
1986) are often underutilized by managers. The question
is: How, then, do they make decisions? For now, on the
basis of our findings, we can say that for unprogrammed
decisions, experienced managers differ from novices in
both their use of information and in the decisions they
make.
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