Learning Objectives 1 Copyright © 2002 South-Western/Thomson Learning Primary Data Collection: Experimentation CHAPTER eight

Learning Objectives 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.

Learning Objectives 3 6. To compare types of experimental designs. 7. To gain insight into test marketing.

Learning Objectives 4 An Experiment: The researcher changes an explanatory, independent, or experimental variable to observe changes in the dependent variable. Examples: To understand the nature of experiments. What is an Experiment? Dependent variable Experimental variable total sales marketing mix advertisingmarket share

Learning Objectives 5 An Experiment: To show causation, the experimenter must show: - Concomitant variation (correlation) - Appropriate time order of occurrence - Elimination of other causal factors To understand the nature of experiments. What is an Experiment?

Learning Objectives 6 Concomitant Variation: A predictable statistical relationship (or correlation) between two variables Relationships can be positive (e.g., increased ads leads to increased sales) or inverse (e.g., increased price leads to decreased sales) Correlation does not prove causation Demonstrating Causation To understand the nature of experiments.

Learning Objectives 7 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 Demonstrating Causation To understand the nature of experiments.

Learning Objectives 8 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 The Experimental Setting: Laboratory or Field To learn about the experimental setting.

Learning Objectives 9 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. To examine experimental validity. Experimental Validity

Learning Objectives 10 Extraneous Variables: Threats to Experimental Validity History (some other variable or event intervenes) Maturation (of subjects) Instrument Variation Selection Bias Mortality (loss of test units during experiment) Testing Effect (experiment produces own effects) Regression to the Mean To examine experimental validity. Experimental Validity

Learning Objectives 11 Controlling Extraneous Variables Randomization – randomly assign subjects to treatment conditions Physical Control – Hold the level of extraneous variables constant Design Control – Use the experiment’s design Statistical Control – statistically adjust dependent variable To examine experimental validity. Experimental Validity

Learning Objectives 12 Experimental Design and Treatment Experimental Design: Researcher has control of variables and manipulates them. Includes factors: 1. Treatment (independent variable) that is manipulated 2. Subjects that participate 3. Dependent variable that is measured 4. Plan for extraneous causal factors To examine experimental validity. Experimentation: Summary Of Basic Issues

Learning Objectives 13 Experimental Design and Treatment Experimental Design: Additional factors: 1. Control Group (independent variable unchanged) 2. Test Group (exposed to change of independent variable) To examine experimental validity. Experimentation: Summary Of Basic Issues

Learning Objectives 14 Experimental Effects The effect of the treatment variable on the dependent variable. E.g., change in price (treatment variable) leads to change in sales (dependent variable) To learn the limitations of experimentation in marketing research. Experimentation: Summary Of Basic Issues

Learning Objectives 15 Why Experiments Are Not Used More Often High Cost Security Issues exposing to the actual marketplace competitors Implementation Problems cooperation contamination differences: test market/population lack of control group To learn the limitations of experimentation in marketing research. Experimentation: Summary Of Basic Issues

Learning Objectives 16 Experimental Notation: X indicates exposure of person(s) to the treatment (e.g., ad, package design) O for observation O 1 X O 2 for time periods (this example shows preliminary measurement first, then exposure, and then the next measurement) To examine experimental validity. Experimental Validity

Learning Objectives 17 Selected Experimental Design Examples Pre-experimental Design – Little or no control over extraneous factors The One-Shot Case Study - Basic Design: X O 1 - No pre-test observations - No control group of test units - After-measurement only - Lacks internal validity (and probably also external validity) To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 18 Selected Experimental Design Examples Pre-experimental Design The One-Group Pretest-Posttest Design - Basic Design: O 1 XO 2 - Pre- and postmeasurements - No control group - History and maturation can threaten internal validity - Only one pretest observation To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 19 Selected Experimental Design Examples Pre-experimental Design The Static-Group Comparison Design - Basic Design: Experimental Group:XO 1 Control Group:O 2 - No premeasurements taken - Subjects not randomly assigned - Many possible reasons for post test differences To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 20 Selected Experimental Design Examples True Experimental Designs – Use an experimental group and a control group to which test units are randomly assigned Three Examples: Before and After with Control Group The Solomon Four-Group Design The After-Only with Control Group To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 21 Selected Experimental Design Examples True Experimental Design: Before and After with Control Group - Basic Design: Experimental Group: (R) O 1 XO 2 Control Group: (R) O 3 O 4 (R) = random assignments of test units to treatments - Random assignment of subjects to both experimental and control groups - Pre and post-measurements of both groups - Mortality and History can be problems To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 22 Selected Experimental Design Examples True Experimental Design: The Solomon Four-Group Design - Basic Design: Experimental Group 1: (R) O 1 XO 2 Control Group 1: (R) O 3 O 4 Experimental Group 2:(R) XO 5 Control Group 2:(R) O 6 - Controls for all extraneous variable threats To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 23 Selected Experimental Design Examples True Experimental Design: After-Only with Control Group - Basic Design: Experimental Group:(R) XO 1 Control Group: (R) O 2 - No premeasurement of the dependent variable - Mortality and History can be problems To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 24 Quasi-Experiments - Developed to deal with external validity - Researcher lacks complete over the scheduling of treatment or must assign treatment in a nonrandom manner. To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 25 Quasi-Experiment Example: Interrupted Time-Series Designs The treatment interrupts repeated measurements. Basic Design: O 1 O 2 O 3 O 4 XO 5 O 6 O 7 O 8 Weakness: - Can’t control history - Evaluation apprehension due to repeated measurements To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 26 Quasi-Experiment Example: Multiple Time-Series Designs An interrupted time-series design with a control group. Basic Design: Experimental Group: O 1 O 2 O 3 X O 4 O 5 O 6 Control Group: O 1 O 2 O 3 O 4 O 5 O 6 To compare experimental designs. Experimentation: Summary Of Basic Issues

Learning Objectives 27 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 To gain insight into test marketing. Test Markets

Learning Objectives 28 Test Market Usage and Objectives Estimate of market share Effect on sales of similar products (Cannibalization Rate) Characteristics of consumers Behavior of competitors To gain insight into test marketing. Test Markets

Learning Objectives 29 Costs of Test Marketing Direct costs include: commercials, advertising, research, coupons, sampling Indirect costs include: management time, sales cycles, possible negative trade reactions, informing competitors Deciding Whether to Conduct a Test Market To obtain a good estimate of the sales potential under realistic conditions To identify weaknesses of the product To gain insight into test marketing. Test Markets

Learning Objectives 30 Steps in a Test Market Study Define the Objective Select a Basic Approach (simulated, standard, or controlled) Develop Detailed Procedures for the Test Select Markets for the Test Execute the Plan Analyze the Test Results To gain insight into test marketing. Test Markets

Learning Objectives 31 Simulated Test Markets (STM) uses survey data and mathematical models to simulate test market results also called pretest market Other Types of Test Marketing A rolling rollout Lead country strategy Line extensions To gain insight into test marketing. Test Markets

Learning Objectives 32 What is an Experiment? Demonstrating Causation The Experimental Setting: Laboratory or Field Experimental Validity Experimentation: Summary Of Basic Issues Test Markets SUMMARY

Learning Objectives 33 The End Copyright © 2002 South-Western/Thomson Learning