How Much Should You Spend on a Marketing Pretest? A Short-Cut Approach

Pretesting of proposed marketing actions is a common type of marketing research activity. A key question is whether the information collected in the pretest is worth the cost. Described is a quick and easy way of deciding whether or not to buy additional information in the case of a two-action, two-state-of-nature decision problem. The approach is applicable to the pretest of any proposed marketing action. Its simplicity makes possible the widespread use in marketing of decision theory.