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Exploring
Marketing Research
William G. Zikmund
Chapter 12:
Test Marketing
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Controlled experimentationControlled experimentation
Not just tryingNot just trying
somethingsomething
outout
But scientificBut scientific
testingtesting
Test Marketing
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Test Marketing
An experimental procedure that provides an
opportunity to test a new product or a new
marketing plan under realistic market
conditions to measure sales or profit
potential.
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ESTIMATEESTIMATE
OUTCOMESOUTCOMES
IDENTIFY ANDIDENTIFY ANDCORRECTCORRECT
WEAKNESSESWEAKNESSES
IN PLANSIN PLANS
Functons of
Test Marketing
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A Lengthy and Costly Procedure
$$$$$$$$$$
Loss ofLoss of
SecrecySecrecy
When notWhen notto Test?to Test?
How LongHow Long
Should aShould a
Test Last?Test Last?
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Popular Test Markets
Pittsfield,
Massachusetts
Charlotte, NorthCarolina
Columbus, Ohio
Little Rock, Arkansas Evansville, Indiana
Cedar Rapids, Iowa
Eau Claire,Wisconsin
Wichita, Kansas
Tulsa, Oklahoma Omaha, Nebraska
Grand Junction.
Colorado
Wichita Falls, Texas
Odessa-Midland, Texas
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Selecting a Test Market
Population size
Demographic composition
Lifestyle considerations
Competitive situation
Media Self-contained trading area
Overused markets - secrecy
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Control Method of Test
Marketing Small city
Low chance of being detected
Distribution is forced (guaranteed)
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The Advantages of Using the
Control Method of Test Marketing Reduced costs
Shorter time period needed for reading test
market results
Increased secrecy from competitors
No distraction of company salespeople from
regular product lines
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Some Problems Estimating Sales
Volume Over-attention
Unrealistic store conditions
Reading competitive environment
incorrectly
Incorrect volume forecasts Adjusted data
Penetration and repeat purchase rate
Time lapse
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High Tech Test Markets
ElectricElectric
TestTestMarketsMarkets
SimulatedSimulated
TestTest
MarketsMarkets Virtual-realityVirtual-realitySimulatedSimulated
Test MarketsTest Markets
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Advanced Experimental Designs are
More Complex
Completely randomized
Randomized block design
Latin square
Factorial
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Completely Randomized Design
An experimental design that uses a random
process to assign subjects (test units) and
treatments to investigate the effects of onlyone independent variable.
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Completely Randomized Designs
Average minutesshopper spendsin store
Control:no music
Experimentaltreatment:slow music
Experimentaltreatment:fast music
16 18 12
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Independent Variable A
Group A Group B Group C
Level 1 Level 2 Level 3
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Completely Randomized DesignWith a pretest posttest
Group A R O1 X1 O2
Group A R O3 X2 O4
Group A R O5 X3 O6
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With a posttest
Group A R X1 O1
Group B R X2 O2
Group C R X3 O3
Completely Randomized Design
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Randomized Block Design
An extension of the completely randomized
design in which a single extraneous variablethat might affect test units response to the
treatment has been identified and the effects
of this variable are isolated by blocking outits effects.
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Independent Variables
Control:no music
Experimentaltreatment
slow music
Experimentaltreatment:fast music
Mornings andafternoons
Evening hours
Block
ingvariable
Randomized Block Design
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Factorial Design
An experiment that investigates the
interaction of two or more variables on asingle dependent variable.
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Independent Variable 1
No Music
cart signs
Slow Music Fast MusicNo Music
Grocerycart signs
Inde
pe
ndent
Variable2
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Price Red Gold
$25 Cell 1 Cell 4$30 Cell 2 Cell 5
$35 Cell 3 Cell 6
Package Design
Factorial Design -- Roller Skates
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Effects
Main effect
The influence of a
single independentvariable on a
dependent variable.
Interaction effect
The influence on a
dependent variable bycombinations of two
or more independent
variables.
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Men
Women
Ad A Ad B
65
65
70 60
Main Effectsof Gender
Main Effects of Ad
>
>
2 x 2 Factorial Design
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100
90
80
70
60
50
40
30
20
10
Ad A Ad B
Women
Men
Be
lieva
bil
ity
Interaction Between Gender and
Advertising Copy
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Level 1 Level 2
Level 1
Level 2
Group A
Group DGroup C
Group B
INDE
PEND
ENT
VARIABLE
2
Independent Variable 1Independent Variable 1
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Group A R O1 X11 O2
Group B R O3 X21 O4
Group C R O5 X12 O6
Group D R O7 X22 O8
2 x 2 Factorial with a Pretest
Posttest
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Group A R X11 O1
Group B R X21 O2
Group C R X12 O3
Group D R X22 O4
2 x 2 Factorial Design with a
Posttest Measure
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A Test Market Experiment
on Pricing
Sales in Units (thousands)
Regular Price$.99
1301188784
X1=104.75
X=119.58
Reduced Price$.89
145143120131
X2=134.75
Cents-Off CouponRegular Price
1531299699
X1=119.25
Test Market A, B, or CTest Market D, E, or FTest Market G, H, or ITest Market J, K, or L
MeanGrand Mean
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Latin Square Design
A balanced, two-way classification scheme
that attempts to control or block out the
effect of two or more extraneous factors byrestricting randomization with respect to the
row and column effects.
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1 2 3
1 A B C2 B C A3 C A B
Order of Usage
SU
BJ
ECT