Decision theory involving a fundamental statistical approach to pattern recognition, classification, and conditional probabilities.

Bayesian decision theory is well-suited to marketing problems where a decision is required but where there is considerable uncertainty or limited information on which to base a decision. The theory involves the application of probabilities to each of the decision-related elements, where probabilities are typically established as a result of opinion rather than established by fact. The aim of the approach is to arrive at an understanding of an optimal outcome for a decision-making process. Marketers involved in strategic decision making where there is a high degree of uncertainty or limited information may draw upon Bayesian decision theory-based research to increase the robustness of the strategic decision-making process used as well as to obtain clearer insights into optimal outcomes. At the very least, the approach can be valuable to understand better the relationship between various outcomes and marketing actions involving varying degrees of risk.