An example of the costs of not following intuition is the Pepsi Challenge, which is Coca-Cola's biggest
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The market research was flawed. First, participants were not told that by choosing the new Coke they would lose the classic Coke they loved. This seems intuitive in retrospect, but it was not tested. Second, preferences for sweeter tastes diminish after the first test. In the testing, participants in the research based their rating of the Coke flavor on just a sip and not an entire glass. This also should have been intuitive, since consumers typically drink more than one sip. Finally, the symbolic value of Coke's image to consumers was not taken into account. Coke is a strong brand, and this should have been considered. What the executives learned was that intuition may be more valuable even when it conflicts with research. Changing an existing product may not be the right decision-even if a company spends billions on market research and advertising.
In retrospect, the intuitive nature of the Coke blunder appears obvious. Which decision traps and how would framing have influenced the decision to introduce the new Coke? Explain in detail.
Provide another example of a business mistake that illustrates the lack of attention to intuition. Provide details.
What can be done to prevent bias and lack of attention to intuition from preventing decision-making failures?
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Related Book For
Intermediate accounting
ISBN: 978-0077647094
7th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
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