Learning Objectives Copyright © 2004 John Wiley & Sons,Inc Primary Data Collection: Experimentation CHAPTER Seven

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 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 sales marketing mix advertisingmarket share

Learning Objectives 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 Demonstrating Causation To understand the nature of experiments.

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

Learning Objectives 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 Demonstrating Causation To understand the nature of experiments.

Learning Objectives 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 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 O 1 X O 2 for time periods To examine experimental validity. Experimental Validity

Learning Objectives Extraneous Variables: Threats to Experimental Validity History Maturation Instrument Variation Selection Bias Mortality Testing Effect Regression to the Mean To examine experimental validity. Experimental Validity

Learning Objectives 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 To learn about the experimental setting Controlling Extraneous Variables

Learning Objectives 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 To learn about experimental setting Experimental Design, Treatment, and Effects

Learning Objectives 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 To learn about experimental setting. Experimental Design, Treatment, and Effects

Learning Objectives The High Cost of Experiments Time Money Security Issues exposing to the actual marketplace competitors Implementation Problems cooperation contamination lack of control group To learn the limitations of experimentation in marketing research. Limitations of Experimental Research

Learning Objectives 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 To compare experimental designs. Selected Experimental Designs

Learning Objectives 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 To compare experimental designs. Selected Experimental Designs

Learning Objectives 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 To compare experimental designs. Selected Experimental Designs

Learning Objectives 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. To compare experimental designs. Selected Experimental Designs

Learning Objectives 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 To gain insight into test marketing. Test Markets

Learning Objectives Direct Costs of Test Marketing Costs include: Commercials Advertising Media Research POP Coupons Sampling trade allowances To gain insight into test marketing. Test Markets

Learning Objectives 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 To gain insight into test marketing. Test Markets

Learning Objectives 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 To gain insight into test marketing. Test Markets

Learning Objectives 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 To gain insight into test marketing. Test Markets

Learning Objectives 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 To gain insight into test marketing. Test Markets

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

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