1. Copyright © 2008 by Nelson, a division of Thomson Canada Limited Chapter 10 Part 2 Designing Research Studies EXPERIMENTAL RESEARCH AND TEST MARKETING

2. LEARNING OBJECTIVES 1.To define experimentation and discuss the requirements for making a true experiment 2.To understand the terminology of experimentation 3.To compare and contrast the two basic types of experimental error 4.To discuss how to control extraneous variables in experimental situations 5.To distinguish between internal and external validity 6.To outline the various quasiexperimental designs and alternative, better experimental designs What you will learn in this chapter Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–1

3. LEARNING OBJECTIVES (cont’d) 7.To discuss the useful functions that test marketing performs for marketing management 8.To understand what factors to consider in selecting a test market What you will learn in this chapter Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–2

4. ExperimentExperiment  A research method in which conditions are controlled so that one or more independent variables can be manipulated to test a hypothesis about a dependent variable  Experimentation allows evaluation of causal relationships among variables while all other variables are eliminated or controlled The Nature of Experiments Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–3

5. Manipulation of the Independent VariableManipulation of the Independent Variable  Independent variable  In an experimental design, the variable that can be manipulated, changed, or altered independently of any other variable  Experimental treatments  Alternative manipulations of the independent variable being investigated Basic Issues in Experimental Design Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–4

6. Manipulation of the Independent Variable (cont’d)Manipulation of the Independent Variable (cont’d)  Experimental and control groups  Experimental group: The group of subjects exposed to the experimental treatment  Control group: The group of subjects exposed to the control condition in an experiment—that is, not exposed to the experimental treatment  Several experimental treatment levels  More than one independent variable  It is possible to assess the effects of more than one independent variable by using more complex experimental designs Basic Issues in Experimental Design (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–5

7. Selection and Measurement of the Dependent VariableSelection and Measurement of the Dependent Variable  Dependent variable  The criterion or standard by which the results of an experiment are judged; a variable expected to be dependent on the experimenter’s manipulation of the independent variable Basic Issues in Experimental Design (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–6

8. Selection and Assignment of Test UnitsSelection and Assignment of Test Units  Test units  Subjects or entities whose responses to experimental treatments are observed or measured  Sample selection and random sampling errors  Random sampling error: An error that occurs because of chance; statistical fluctuations in which repetitions of the basic experiment sometimes favour one experimental condition and sometimes the other  Randomization  A procedure in which the assignment of subjects and treatments to groups is based on chance Basic Issues in Experimental Design (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–7

9. Selection and Assignment of Test Units (cont’d)Selection and Assignment of Test Units (cont’d)  Matching  A procedure for the assignment of subjects to groups that ensures each group of respondents is matched on the basis of pertinent characteristics  Repeated measures  Experimental technique in which the same subjects are exposed to all experimental treatments to eliminate any problems due to subject differences Basic Issues in Experimental Design (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–8

10. Control Over Extraneous VariablesControl Over Extraneous Variables  Constant experimental error  An error that occurs in the same experimental condition every time the basic experiment is repeated  Demand characteristics  Experimental design procedures or situational aspects of an experiment that provide unintentional hints about the experimenter’s hypothesis to subjects  Guinea pig effect  Hawthorne effect  Blinding effect  Double-blind design  Constancy of conditions Basic Issues in Experimental Design (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–9

11.  Debriefing  The process of providing subjects with all pertinent facts about the nature and purpose of an experiment after its completion  Privacy  Confidentiality  Deception  Accuracy Ethical Issues in Experimentation Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–10

12. Basic versus Factorial Experimental DesignsBasic versus Factorial Experimental Designs  In basic experimental designs a single independent variable is manipulated to observe its effect on a single dependent variable  Factorial experimental designs allow for an investigation of the interaction of two or more independent variables Fundamental Questions in Experimentation Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–11

13. Fundamental Questions in Experimentation (cont’d) Field and Laboratory ExperimentsField and Laboratory Experiments  Laboratory experiment  An experiment conducted in a laboratory or other artificial setting to obtain almost complete control over the research setting  Field experiment  An experiment conducted in a natural setting, where complete control of extraneous variables is not possible  Controlled store test  A hybrid between a laboratory experiment and a test market; test products are sold in a small number of selected stores to actual customers Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–12

14. Internal ValidityInternal Validity  Validity determined by whether an experimental treatment was the sole cause of changes in a dependent variable or whether the experimental manipulation did what it was supposed to do Issues of Experimental Validity Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–13

15. Internal Validity (cont’d)Internal Validity (cont’d)  History  History effect  Cohort effect  Maturation  Testing  Testing effect  Instrumental effect  Selection  Mortality (or sample attrition) Issues of Experimental Validity (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–14

16. External ValidityExternal Validity  The ability of an experiment to generalize beyond the experiment data to other subjects or groups in the population under study Issues of Experimental Validity (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–15

17. Trade-Offs Between Internal and External ValidityTrade-Offs Between Internal and External Validity  Often it is necessary to trade off internal validity for external validity because a laboratory experiment provides more control  Laboratory experiments with many controlled factors are high in internal validity, while field experiments have less internal validity but greater external validity Issues of Experimental Validity (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–16

18. Basic experimental designBasic experimental design  An experimental design in which a single independent variable is manipulated to measure its effect on another single dependent variable Symbolism for Diagramming Experimental DesignsSymbolism for Diagramming Experimental Designs  X = exposure of a group to an experimental treatment  O = observation or measurement of the dependent variable  R = random assignment of test units Classification of Experimental Designs Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–17

19. Quasi-Experimental DesignQuasi-Experimental Design  A research design that cannot be classified as a true experiment because it lacks adequate control of extraneous variables Classification of Experimental Designs (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–18

20. Three Examples of Quasi-Experimental DesignsThree Examples of Quasi-Experimental Designs  One-shot design  An after-only design in which a single measure is recorded after the treatment is administered  One-group pre-test–post-test design  A quasi-experimental design in which the subjects in the experimental group are measured before and after the treatment is administered, but there is no control group Classification of Experimental Designs (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–19

21. Three Examples of Quasi-Experimental Designs (cont’d)Three Examples of Quasi-Experimental Designs (cont’d)  Static group design  An after-only design in which subjects in the experimental group are measured after being exposed to the experimental treatment and the control group is measured without having been exposed to the experimental treatment; no premeasure is taken Classification of Experimental Designs (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–20

22. Three Better Experimental DesignsThree Better Experimental Designs  Pre-test–post-test control group design  A true experimental design in which the experimental group is tested before and after exposure to the treatment and the control group is tested at the same two times without being exposed to the experimental treatment. Random assignment of subjects and treatment occurs  Post-test–Only Control Group Design  An after-only design in which the experimental group is tested after exposure to the treatment and the control group is tested at the same time without having been exposed to the treatment; no pre-measure is taken. Random assignment of subjects and treatment occurs Classification of Experimental Designs (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–21

23. Three Better Experimental Designs (cont’d)Three Better Experimental Designs (cont’d)  Solomon Four-Group Design  A true experimental design that combines the pre-test–post- test with control group design and the post-test–only with control group design, thereby providing a means for controlling the interactive testing effect and other sources of extraneous variation Classification of Experimental Designs (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–22

24. Test MarketingTest Marketing  A scientific testing and controlled experimental procedure that provides an opportunity to measure sales or profit potential for a new product or to test a new marketing plan under realistic marketing conditions The Nature of Test Marketing Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–23

25. Functions of Test MarketingFunctions of Test Marketing  Offers the opportunity to estimate the outcomes of alternative courses of action  Allows management to identify and correct any weaknesses before committing the company to a national sales launch Test Marketing: A Lengthy and Costly ProcedureTest Marketing: A Lengthy and Costly Procedure  Test marketing is an expensive research procedure  The value of the information must be compared with the costs of the research The Nature of Test Marketing (cont’d) Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–24

26. Factors to Consider in Test Market SelectionFactors to Consider in Test Market Selection  Population size  Demographic composition and lifestyle considerations  Competitive situation  Media coverage and efficiency  Media isolation  Self-contained trading area  Overused test markets  Loss of secrecy Selecting Test Markets: A Sampling Problem Copyright © 2008 by Nelson, a division of Thomson Canada Limited 10–25