Marketing Research Essentials

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Chapter Seven
Primary Data Collection Experimentation
Chapter Seven
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Chapter Seven Objectives
Chapter Seven
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What is an Experiment?

• An Experiment
• A research approach in which one variable is
  manipulated and the effect on another variable
  is observed.
• Key Variables
• Independent variables you control directly such
  as price, packaging, distribution, product
  features, etc.
• Dependent variables you do not directly control
  such as sales or customer satisfaction -
  (might control them by manipulating the
  independent variable)
• Treatment the independent variable manipulated
  during and experiment to measure its effect on
  the dependent variable
• Extraneous Factors you do not control but have
  to live with such as the weather.

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Demonstrating Causation
Causal Research
Research designed to determine whether a change
in one variable likely caused an observed change
in another.

• A causal relationships must demonstrate three
  things
• Concomitant Variation
• Appropriate Time Order of Occurrence
• Elimination of Other Possible Causal Factors.

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Demonstrating Causation Must Meet Three Criteria
1 . Concomitant Variation

• A statistical relationship between variables

2. Appropriate Time Order of Occurrence

• Change in an independent variable occurred
  before an observed change in the dependent
  variable

3. Elimination of Other Possible Causal Factors

• No other independent variables are causing the
  change
• If you eliminate the impossible, whatever
  remains, however improbable, must be the truth.
  Sherlock Holmes

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Experimental Setting
Laboratory

• Experiments conducted in a controlled setting.

Field

• Tests conducted outside the laboratory in an
  actual environment, such as a marketplace.

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Experimental Validity
Internal Validity
The extent to which competing explanations for
the experimental results observed can be
ruled-out.
External Validity
The extent to which causal relationships measured
in an experiment can be generalized to outside
persons, settings, and times.
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Experimental Notation

• X Independent Variable
• Indicates the exposure of an individual or a
  group to an experimental treatment. This variable
  is something the researcher can change and
  manipulate. It is hoped that the change in the
  independent variable will cause a change in the
  dependent variable.
• O Dependent Variable
• Indicates a variable the researcher cannot
  change directly. It is hoped that changing the
  independent variable will cause changes in the
  dependent variable. Thus the dependent variable
  is dependent on what the researcher does with
  the independent variable.

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Extraneous Variables

• History
• Intervention, between the beginning and end of
  an experiment, of outside variables that might
  change the dependent variable.
• Maturation
• Changes in subjects occurring during the
  experiment that are not related to the
  experiment but which might affect subjects
  response to the treatment factor.
• Instrument Variation
• Changes in measurement instruments (e.g.,
  interviews or observers) that might affect
  measurements.
• Selections Bias
• Systematic differences between the test group
  and the control group due to a biased selection
  process.

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Extraneous Variables

• Mortality
• Loss of test units or subjects during the course
  of an experiment, which might result in a
  nonrepresentativeness.
• Testing Effect
• An effect that is a by-product of the research
  process itself.
• Regression to the Mean
• Tendency of subjects with extreme behavior to
  move toward the average for that behavior during
  the course of the experiment.

Things like the weather, government regulations,
competitors actions
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Controlling Extraneous Variables
Randomization
The random assignment of subjects to treatment
conditions to ensure equal representation of
subject characteristics. Holding constant the
value or level of extraneous variables throughout
the course of an experiment. Use of
experimental design to control extraneous causal
factors. Adjusting for the effects of
extraneous variables by statistically adjusting
the value or the dependant variable for each
treatment condition.
Physical Control
Design Control
Statistical Control
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Experimental Design, Treatment, and Effects
Experimental Design
A test in which the researcher has control over
and manipulates one or more independent variables.
Treatment Variable
The independent variable that is manipulated in
an experiment.
Experimental Effect
The effect of the treatment variable on the
dependent variable.
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Experimental Design, Treatment, and Effects

• High Cost
• Is the research affordable?
• Will the research be beneficial help solve
  problems?
• Has a cost benefit analysis been done?
• Security Issues
• Particularly critical with field experiments.
• The competition might be tipped-off.
• Are the data and findings secure?
• Process Contamination
• People who unwittingly get caught into the
  survey.
• Outside factors unnaturally affecting the
  experiment.
• Participants who intentionally try to skew the
  results.

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Selected Experimental Designs

• Pre-Experimental Design
• Designs that offer little or no control over
  extraneous factors.

Three Key Design Types
One-Shot Case Study One-Group Pretest-Posttest Sta
tic-Group Comparison
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Selected Experimental Designs
O The Measurement of the Dependent Variable X
The Manipulation/Change of Independent Variable E
Experimental Effect - Change in Dependent
Variable due to Change in the Independent Variable
Given
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Selected Experimental Designs
O The Measurement of the Dependent Variable X
The Manipulation/Change of Independent Variable E
Experimental Effect - Change in Dependent
Variable due to Change in the Independent Variable
Given
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Selected Experimental Designs
O The Measurement of the Dependent Variable X
The Manipulation/Change of Independent Variable E
Experimental Effect - Change in Dependent
Variable due to Change in the Independent Variable
Given
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True Experimental Designs

• True Experimental Design
• Research using an experimental group and a
  control group, to which test units are randomly
  assigned.

Three Key Design Types
Before and After With Control Group Solomon Four
Group Design After Only With Control Group
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Selected Experimental Designs
O The Measurement of the Dependent Variable X
The Manipulation/Change of Independent Variable E
Experimental Effect - Change in Dependent
Variable due to Change in the Independent Variable
Given
Chapter Seven
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Selected Experimental Designs
O The Measurement of the Dependent Variable X
The Manipulation/Change of Independent Variable E
Experimental Effect - Change in Dependent
Variable due to Change in the Independent Variable
Given
Chapter Seven
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Selected Experimental Designs
O The Measurement of the Dependent Variable X
The Manipulation/Change of Independent Variable E
Experimental Effect - Change in Dependent
Variable due to Change in the Independent Variable
Given
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Quasi-Experiments
Quasi-Experiments

• Studies in which the researcher lacks complete
  control over the scheduling of treatments or must
  assign respondents to treatments in a nonrandom
  manner.

Interrupted Time-Series Multiple Time-Series
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Quasi-Experiments
Interrupted Time-Series

• Research in which repeated measurement of an
  effect interrupts previous data patterns.

Multiple Time-Series

• Interrupted time-series design with a control
  group.

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Test Markets
Test Market

• Testing of new product/service, or some element
  of the marketing mix, using an experimental or
  quasi experimental design.
• Advertising expenses
• Point-of-purchase materials
• Coupons and sampling
• Travel and set-up expenses
• Need for customized research
• Possible diversion of sales from your other
  products
• Potentially bad press / public reaction if
  experiment fails
• Letting competitors know what your company is
  doing
• Falsely thinking the sample results are always
  representative of the population.

Cost Issue
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Six Steps in a Test Market Study

• 1. Define the Objective
• What do you hope to learn?
• What are the characteristics of the
  people/products of interest?
• 2. Select a Basic Approach
• Simulated, controlled, or standard test?
• 3. Develop Detailed Test Procedures
• How will you execute the study?
• Who will be involved?
• How long will it take and how much can you spend?

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Six Steps in a Test Market Study

• 4. Select the Test Market
• Market should not be over tested
• Should have little media spillover
• Demographics should be similar to your target
  population
• Market should be large enough to provide useful
  results
• Distribution and other patterns should be
  similar to the nation.
• 5. Execute The Plan
• How long should the test run?
• Who should execute it?
• 6. Analyze the results
• Use qualitative and quantitative techniques when
  possible.

Chapter Seven