COM 5405 LT2 - experimentation v

8/7/2019 COM 5405 LT2 - experimentation v

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Experimentation and Consumer Research

Fei Shen

COM 5405 Consumer Behavioral

Insight



Experiment

WHAT comes to your

mind?



These?



1. Let·s take a look at two experiments

y Stanely Milgram Experiment -1963

y Obedience Experiment at Yale University

y Learner,Teacher, Experimenter

y Word pairs learning: cat ² redy Increasing in 15-volt increments

for each wrong answer

y Learner ² actor/confederate



Milg ram Experiment Result

y All of the poll respondents believed that only a very small

fraction of teachers (the range was from zero to 3 out of 100,

with an average of 1.2) would be prepared to inflict the

maximum voltage.

y In Milgram's first set of experiments, 65 percent (26 of 40)

of experiment participants administered the experiment's

final massive 450-volt shock, though many were very

uncomfortable doing so.

y When authority is not present, less than 3 percent of the

participants administered the massive volt shock.



Not only for basic research

y Wide business application as well

y Almquist andWyner (2001). Boost your marketing ROI with

experimental design.Harvard Business Review.

y

Guess work -> accurate campaign and marketingy Maximize ROI (return on investment)



The economist subscription study

y DanAriely ² Duke Univ.

y Trying to subscribe the Economist online

y Curiosity arose



Pricing experiment

Product Price

Web subscription $ 59

Print subscription $ 125

Print & web subscription $ 125

Product PriceWeb subscription $ 59

Print & web subscription $ 125

FirstDay

SecondDay



Pricing experiment

Condition 1

Product Price Subscriber distribution

Web subscription $ 59 68%

Print & web subscription $ 125 32%

Condition 2

Product Price Subscriber distribution

Web subscription $ 59 16%

Print subscription $ 125 0%

Print & web subscription $ 125 84%

Let·s suppose 100 people subscribe everyday.Then adopting the second pricing strategy

will help you make $3,432 more everyday.





2. The essence of experimentation

y To manipulate some stimuli, applying them to your

research participants

y To establish causal relations:

y Cause and effect covary (suppose we have it)y Cause proceeds effects (absolutely so in an experiment)

y Exclude alternative explanation (that·s the main task)

y Make sure the whole process won·t be ćontaminated by

other factorsµ, meaning that the effect is really ćausedµby your stimuli.



X Y X Y

Z

X Y

Correlation

Spurious

correlation

(e.g., ice-

creamconsumption

and drowning)

Causality



ovariation � Causation



Graphic explanation

Water with water Water with milk



Key terms def ined

y anipulation: assigning different stimuli to research

participants

y Control: a researcher tries systematically to rule out

variables that are possible ¶causes· of the effects he/she isstudying other than the variables that he/she has

hypothesized to be the ¶cause·. (Kerlinger, 1974)



Key terms def ined

y Manipulated variable: when researchers control

participants· exposure to a variable, that variable is called

manipulated (controlled) variable ² always the independent

variables.

y Ways of manipulation:

y Presence vs. absence (Watch advertisement vs. watch nothing)

y gradation on a scale (Watch 10 advertisements, watch 9, 8,

7«.1,0 advertisements)



Experimental Desig ns

y A category of designs focused on the testing of cause-effect

hypotheses through the direct manipulation of one variable (the

independent variable) and random assignment of people to levels

of that manipulation prior to the measurement of another variable

(the dependent variable).



Single g roup post-test only desig n

XX OO

Intervention Time Observation

The design has little scientific merit. There is no way of comparing

measurement to any relevant baseline, so it is impossible to know

what, if anything, affected the measurements.



Single g roup pre-test post-test desig n

OO11 XX OO22

This design is better, but it has problems. Threats to

validity include testing, history.



Post-test only nonequivalent control

g roup desig n

XX OO11

==============OO22

This design still has problems

Testing and history are no longer a threat.

The major threat to internal validity is selection.



Extraneous influences/Noises

y Sensitization:The effects of one measurement on a

subsequent measurement.

y Testing effect is a sub-category.

y H

istory: changes in the external environment that impingeover the course of an experiment

y Selection effect

y Attrition



RANDOMASSIGNMENTRANDOMASSIGNMENT

True Experimental

Research Desig ns

The distinguishing feature of a

true experimental design:

RANDOMASSIGNMENTRANDOMASSIGNMENT



Random Assig nment

y Random assignment to experiment is like random sampling

to survey research

y Random assignment

y

Recruiting research participantsy Randomly assignment them into multiple groups, depending on

how many treatment/control groups you have

y Ways of random assignment: simple random sampling, by

birthday,



Simple random sampling

y Number all your participants: 1 2 3 4 5 6 7 8 9 10

y Generate random numbers within the range from 1-10

y Half being assigned to groupA, the other half being assigned

to group B

y The consequences of R.A.

y Ruling out initial differences.

y Guarantee that people in different groups are about the same inevery aspects that are related to the study



Post-test only control g roup desig n

RR XX OO11

==============RR OO22



Pre-test Post-test control g roup desig n

RR OO11 XX OO22

==================RR OO

33 OO

44



To really learn, quit studying and take a

test

y http://www.nytimes.com/pages/science/index.html

y New YorkTimes, Jan 21, 2011

y



Desig n with multiple f actors

y AdvertisementA vs. B

y PricingA vs. B

y Factorial design:An experiment using factorial design allows

one to examine simultaneously the effects of multipleindependent variables and their degree of interaction.

Ad A Ad B

PricingA Group 1 Group 2

Pricing B Group 3 Group 4



Can random assig nment take care of

all the errors?

y Random assignment allows us to rule out pre-existing differences

between people as the explanation for differences between

groups

yBut just as important is minimizing other differences betweenthe levels of the manipulation other than the intended

manipulation

3. External Validity



Internal Validity

y The extent to which competing explanations for

experimental results can be avoided

y Variation in the dependent variable was caused by exposure

to the treatment conditions and not by other causal factors



External Validity

y Population Validity (Representativeness)

Are the participants in the study representative of a broader population

of interest?y Ecological Validity (Realness)

Is the experimental context representative of the ´real-worldµ context

of interest?

External validity pertains to the ´generalizabilityµ of the research

findings. In the case of laboratory-based experimentation, concern is on

generalizability to the ´real worldµ of interest

Twobroad dimensions of external validity



Population Validity

y Study how health information campaign influence the elderly

making decision about medical product

y You need to make sure you are studying the right people

y

Young people might be influenced by a campaign, but thisdoesn·t lead to a conclusion about the elderly



Ecolog ical Validity

y You want to study which advertisements people likemost

y You invite students to a lab, showing them differentversions of advertisements

y Even if you find difference, you cannot make a solidconclusion. Because people usually do not watchadvertisements with high attention in real life.

y Failed to fulfill mundane reality and experimental reality.



The Asch Paradig m

A B C



Evaluating Ecolog ical Validity

y Mundane RealismThe similarity of the experimental stimuliand/or situation to ´real worldµstimuli/situations of interest.

y Experimental RealismThe degree to which the stimuli orsituations in the study are impactful,

interesting, and involving, to theparticipants.And therefore theparticipants might forget they are in anexperiment.



The classic case: Pepsi vs. Coke

y Misuse of experiment: Low ecological validity

y ´When we put the new formula in a Coke can and compared

it side by side with the old formula Coke, the new product

was chosen by consumers 61% to 39%.µ

y "We failed to tell the tasters graphically enough that their

preference for the new would mean that they would never be

able to taste the original Coke again," explained Ira Herbert,

vice president for worldwide marketing.



Did you notice this?

y Viewpoints from your textbook:

y Why experiment is not conducted often?

y High cost ² the costs of testing three alternative advertisingcampaigns in three different geographic areas

y Security issues ² exposing a marketing plan to competitorsy Implementation ² no one wants to run the risk

y Viewpoint from the HBR article

y Ńow, however, marketers have easier access, at relatively lowcost, to experimental design techniques long applied in otherfields«µ (paragraph 2, sentence 1)

y WHY?



Lab experiment and f ield experiment

y Lab ² experiment conducted in a controlled setting

y Focus on individual consumers, and then make inference and

prediction about collective consumer

y Higher internal validity

y Lower external validity

y Field ² experiment conducted outside the lab in an actual

market environment

y Focus on collective consumer

y Lower internal validity

y Higher external validity



Alternative approach ² low cost

y Simulated test market (STM)

y No actual testing in the market place

y Expose a sample of individuals, representative of the target

group, to various stimuli and ask them to make purchase

choices between them.

y The results are used to input to mathematical models and make

estimations.



Data Extrapolation for f actorial

desig n ² low cost



Pause for a while

THINK about your own experiment



Our little g ame f rom last week y I want to know whether ánchor effectµ is true or not

y In other words, whether exposure to your own phone number willinfluence the max amount you are willing to pay for a product

y Now, activity time, let·s first discuss in groups, answer the followingquestionsy

1. what is the manipulation in the experiment?y 2. is there any control group in the experiment?y 3. what is the dependent variable?y 4. what kind of design this experiment use?y 5. is there any history effect?y 6. do you think the manipulation is random?y 7. comment on the quality of this experiment in terms of its external

validity including ecological validity and population validity, and internalvalidity.

y 8.How would you improve the experiment?



A f irst look at some results

y Data cleaning ² deleted extreme cases (3 cases) who will pay

more than 10,000 for a product

y 81 cases (afternoon class + evening class) ² to enhance

statistical power



Rational consumer?



Who? - Just for f un ² NO scientif ic

base



Rational consumer? ² percentag e of

willing to pay at the price of your cell

phone number



Anchoring Eff ect? ² averag e amount of

money willing to pay by diff erent g roups

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COM 5405 LT2 - experimentation v

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