Chapter Seven Copyright © 2006 John Wiley & Sons, Inc. Primary Data Collection: Experimentation.

Chapter Seven

Copyright © 2006John Wiley & Sons, Inc.

Primary Data

Collection: Experiment

ation

John Wiley & Son, Inc 2

1. To understand the nature of experiments.2. To gain insight into requirements for proving

causation.3. To learn about the experimental setting.4. To examine experimental validity.5. To learn the limitations of experimentation in

marketing research.6. To compare types of experimental designs.7. To gain insight into test marketing.

Learning Objectives


An Experiment:The researcher changes an explanatory, independent, or experimental variable to observe changes in the dependent variable.

To understand the nature of experiments.What is an

Experiment?

Dependent variable

Experimental variable

total salesprice

advertising market share


Demonstrating Causation

To gain insight into requirements for proving causation

• Causal Research: – The only types of research that has the potential

to demonstrate that a change in one variable causes some predictable change in another variable

• To Demonstrate Causation:– Concomitant Variation (Correlation– Appropriate Time Order Of Occurrence– Elimination Of Other Possible Causal Factors



• Scientific Definition—Causation and Causality1. X is only one of a number of determining conditions

that caused the observed change in Y.2. X can be a cause of Y if the presence of X makes the

occurrence of Y more probable or likely3. One can never definitively prove that X is a cause of Y

but only infer that a relationship exists4. Causal relationships are always inferred and never

demonstrated conclusively beyond a shadow of a doubt.




• Concomitant Variation: – A predictable statistical relationship between two

variables—A caused a particular change in B• Appropriate Time Order of Occurrence:

– A change in an independent variable must occur before a change in the dependent variable

• Elimination of Other Possible Causal Factors – The change in B was not caused by some factor other

than A



To learn about experimental setting

• Laboratory experiments: – Conducted in a controlled setting.– Advantages of laboratory experiments:

• Ability to control all variables• Greater internal validity

– Disadvantages of laboratory experiments:• External validity• Not transferable to the actual marketplace

The Experimental Setting



• Field experiments:– Tests conducted outside the laboratory– Advantages

• Creates realism of the environment– Disadvantages

• Internal validity• No control over spurious factors

– Action of competitors - societal trends– Weather - political climate– economy

The Experimental Setting


• Validity– Degree to which an experiment actually measures

what it is trying to measure• Internal and External Validity

– Internal Validity: • The extent to which competing explanations can be

ruled out.– External Validity:

• The extent to which causal relationships can be generalized to outside persons, settings, and times

Experimental Validity

To examine experimental validity


• Experimental Treatment– Factors whose effects are to be measured and

compared• Experimental Notation:

– X indicates exposure– O for observation– O1 X O2 for time periods– X1 O1 for simultaneous exposure and measurement X2 O2

Experimental Notation

To understand the nature of experiments


To examine experimental validityExtraneous Variables

• Extraneous Variables: Threats to Experimental Validity– History– Maturation– Instrument Variation– Selection Bias

• Randomization or matching

– Mortality– Testing Effect– Regression to the Mean


To examine experimental validity

• Confounding Variables—extraneous causal factors because they confound the treatment condition

• Four Basic Approaches to Control Extraneous Factors

– Randomization– Physical Control– Design Control– Statistical Control

Extraneous Variables


To learn about experimental settingExperimental Design,

Treatment, and Effects• Experimental Design

– Ex Post Facto Research—non-experimental designs

• Factors of the Experimental Design: – Researcher has control of variables and

manipulates them.• Treatment• Subjects• Dependent variable• Plan for dealing with extraneous causal factors



• Treatment Variable– Independent variable that is manipulated

• Experimental Groups– Control Group– Test Group

• --Experimental Effects– The effect of the treatment variable on the

dependent variable

Experimental Design,

Treatment, and Effects


To learn the limitations of experimentation in marketing research

Limitations of Experimental

Research• The High Cost of Experiments

• Time• Money

• Security Issues• exposing to the actual marketplace • competitors

• Implementation Problems• cooperation• contamination• lack of control group


To compare experimental designsSelected Experimental

Designs• Three Pre-experimental Designs

– Offer little or no control over extraneous factors

• One-Shot Case Study– X O1

– Basic weakness• No pretest observations• No control group of test units• Lacks internal validity


• One-Group Pretest-Posttest Design– O1 X O2

– Pre- and postmeasurements but no control group– Threats

• History• Maturation• Only one pretest observation

Selected Experimental

Designs

To compare experimental designs


• Static-Group Comparison DesignExperimental Group: X O1

Control Group O2

– Pre-experimental with a control group– Threats

• Absence of pretests• Not assigned to the groups randomly


Designs



• True Experimental Designs– Before and After with Control Group Design

• Experimental Group (R) O1 X O2

• Control Group (R) O3 O4

– Threats• Mortality• History


Designs



– Solomon Four-Group Design• Second experimental group no pretest• Second control group only posttest measurement• Experimental Group 1: (R) O1 X O2

• Control Group 1: (R) O3 O4

• Experimental Group 2: (R) X O5

• Control Group 2: (R) O6


Designs



– After-Only with Control Group• Involves random assignment of test units to

experimental and control groups, no premeasurement of the dependent variable.

• Experimental Group: (R) X O1

• Control Group: (R) O2


Designs



• Quasi-Experiments– Developed to deal with external validity– Researcher lacks complete over the scheduling of

treatment or must assign treatment in a nonrandom manner.

• Interrupted Time-Series Designs– The treatment interrupts repeated measurements.– Cannot control history– O1 O2 O3 O4 X O5 O6 O7 O8


Designs



• Multiple Time-Series Designs– An interrupted time-series design with a control

group– Experimental Group

O1 O2 O3 X O4 O5 O6

– Control Group:O1 O2 O3 O4 O5 O6


Designs



To gain insight into test marketingTest Markets

• Test Markets Defined– Any research that involves:

• Testing a new product or change in an existing marketing strategy.• The use of experimental or quasi - experimental procedures

• Test Market Usage and Objectives– Estimate of market share– Effect on sales of similar products– Characteristics of consumers– Behavior of competitors

• Simulated Test Markets


To gain insight into test marketing

• Direct Costs of Test Marketing

• Costs include: – Commercials– Advertising– Media– Research– POP– Coupons– Sampling– trade allowances

• Indirect Costs of Test Marketing

• Costs include: – Management time– Diversion of sales activity– Negative impact of test

market failure– Negative trade reactions to

products– Cost of letting competitors

know what the firm is doing

Test Markets


To gain insight into test marketing

• Decision To Conduct Test Marketing• Benefits

– Good estimate of product’s sales potential– Identify weaknesses of the product and the proposed

marketing strategy• Factors to Consider

– Weight the cost and risk of failure– Likelihood and sped product can be copied– Damage an unsuccessful new product would inflict

Test Markets


• Steps in a Test Market Study1. Define the Objective2. Select a Basic Approach

1. Simulated test market2. Standard, or traditional, test market3. Controlled test market

3. Develop Detailed Procedures for the Test

Test Markets To gain insight into test marketing


4. Select Markets for the Test1. Minimum of 2 test sites2. Geographically dispersed3. Demographically

representative of US4. Run at least 6 months5. Media 50% of current

levels6. Variety of media outlets7. TV spill-over less 15%8. TV spill-in less 15%9. Dominant newspaper10. Market should be at least

0.2% of US no more 2%

5. Execute the Plan6. Analyze the Test Results

1. Purchase data2. Awareness data3. Competitive response4. Source of sales



• Simulated Test Market (STMs)– Not actual test markets—rely instead on laboratory

• Steps in the STM1. Intercept consumer at shopping malls2. Screen3. Expose to the new product concept or prototype4. Give subject opportunity to buy new product5. After time interval interview those who made a

purchase determine their assessment of it6. Use the trial and repeat purchase for input into a

mathematical model



• Four Reasons for the Popularity of STMS1. Competitors less likely to know about test2. STMs can be completed quickly3. STMs are much cheaper than standard test4. STMs can be very accurate

– Other Types of Test Marketing– Rolling rollout– Lead country strategy



SUMMARY

– What is an Experiment– Demonstrating

Causation– The Experimental

Setting– Experimental Validity– Experimental Notation

– Extraneous Variables– Experimental Design,

Treatment and Effects– Limitations of

Experimental Research– Selected Experimental

Design– Test Markets


The End

Copyright © 2006 John Wiley & Son, Inc

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Chapter Seven Copyright © 2006 John Wiley & Sons, Inc. Primary Data Collection: Experimentation.

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