Lecture Marketing research - Chapter 7: Primary data collection: Experimentation

CHAPTER Seven

Learning Objectives

Primary Data
Collection:
Experimentation

Copyright © 2004
John Wiley & Sons,Inc


Learning Objectives

Learning Objectives
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.


Learning Objectives

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

Learning Objectives

What is an Experiment?

To understand the nature of experiments.

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

Dependent
variable

marketing mix

total sales

advertising

market share


Learning Objectives

Demonstrating Causation

To understand the nature of experiments.

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


Learning Objectives

Demonstrating Causation

To understand the nature of experiments.

Scientific Definition—Causation and Causality
1. 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 likely
3. One can never definitively prove that X is a cause of Y
but only infer that a relationship exists
4. Causal relationships are always inferred and never
demonstrated conclusively beyond a shadow of a doubt.


Learning Objectives

Demonstrating Causation

To understand the nature of experiments.

Concomitant Variation:
A predictable statistical relationship between two
variables
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


Learning Objectives

The Experimental Setting:
Laboratory or Field

To learn about the 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
Field experiments:

Tests conducted outside the laboratory


Learning Objectives

Experimental Validity

To examine experimental validity.

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 Notation:
X indicates exposure
O for observation
O1 X

O2 for time periods


Learning Objectives

Experimental Validity

To examine experimental validity.

Extraneous Variables: Threats to Experimental Validity
• History
• Maturation
• Instrument Variation
• Selection Bias
• Mortality
• Testing Effect
• Regression to the Mean


Learning Objectives

Controlling Extraneous
Variables

To learn about the experimental
setting

Confounding Variables—extraneous causal factors because
they confound the treatment condition
Four Basic Approaches to Control Extraneous Factors
1. Randomization
2. Physical Control
3. Design Control
4. Statistical Control


Learning Objectives

Experimental Design,

Treatment, and Effects

To learn about experimental setting

Experimental Design
Ex Post Facto Research—nonexperimental designs
Factors of the Experimental Design:
Researcher has control of variables and manipulates
them.
1. Treatment
2. Subjects
3. Dependent variable
4. Plan for extraneous causal factors


Learning Objectives

Experimental Design,
Treatment, and Effects

To learn about experimental setting.

Treatment Variable
-Independent variable that is manipulated
Experimental Groups
1. Control Group—the group in which the independent
variable is not changed during the course of the
experiment
2. Test Group—the group that is exposed to manipulation
(change) of the independent variable

Experimental Effects
The effect of the treatment variable on the dependent
variable


Limitations of Experimental
Research

Learning Objectives
To learn the limitations of
experimentation in marketing
research.

The High Cost of Experiments
• Time
• Money
Security Issues
• exposing to the actual marketplace
• competitors
Implementation Problems
• cooperation
• contamination
• lack of control group


Learning Objectives

Selected Experimental
Designs

To compare experimental designs.

Three Pre-experimental Designs
• One-Shot Case Study—pre-experimental design with no
pretest observations, no control groups, and an
aftermeasurement only
• No pretest observations
• No control group of test units
•Lacks internal validity
• One-Group Pretest-Posttest Design—pre- and
postmeasurements but no control
• Static-Group Comparison Design—pre-experinmental


Learning Objectives

Selected Experimental
Designs

To compare experimental designs.

Three Pre-experimental Designs (cont’d)
• One-Group Pretest-Posttest Design—pre- and
postmeasurements but no control group
• History
• Maturation
• Only one pretest observation
• Static-Group Comparison Design—pre-experinmental
• Absence of pretests
• Not assigned to the groups randomly

Learning Objectives

Selected Experimental
Designs

To compare experimental designs.

True Experimental Designs
• Before and After with Control Group Design
• Mortality
• History
• Solomon Four-Group Design
•Second experimental group no pretest
•Second control group only posttest measurement
• After-Only with Control Group


Learning Objectives

Selected Experimental
Designs

To compare experimental 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
Multiple Time-Series Designs
• An interrupted time-series design with a control group.


Learning Objectives

Test Markets

To gain insight into test marketing.

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


Learning Objectives

Test Markets

Direct Costs of Test Marketing
Costs include:
• Commercials
• Advertising
• Media
• Research
• POP
• Coupons
• Sampling
• trade allowances

To gain insight into test marketing.


Learning Objectives

Test Markets

To gain insight into test marketing.

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


Learning Objectives

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


Learning Objectives

Test Markets

To gain insight into test marketing.

Steps in a Test Market Study
1. Define the Objective
2. Select a Basic Approach
3. Develop Detailed Procedures for the Test
4. Select Markets for the Test
5. Execute the Plan
6. Analyze the Test Results

Learning Objectives

Test Markets

To gain insight into test marketing.

Simulated Test Markets (STM)
• uses laboratory approaches and mathematical
models to simulate test market results
Other Types of Test Marketing
• A rolling rollout
• Lead country strategy


Learning Objectives

SUMMARY

• What is an Experiment?
• Demonstrating Causation
• The Experimental Setting: Laboratory or Field
• Experimental Validity
• Experimentation: Summary Of Basic Issues
• Test Markets