Exploring
Marketing Research
William G. Zikmund
Chapter 12:
Test Marketing
TEST MARKETING
Not just trying
something
out
But scientific
testing
Controlled experimentation
Copyright © 2000 by Harcourt, Inc. All rights reserved.
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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FUNCTONS OF
TEST MARKETING
ESTIMATE
OUTCOMES
IDENTIFY AND
CORRECT
WEAKNESSES
IN PLANS
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A Lengthy and Costly Procedure
When not
to Test?
$$$$$
Loss of
Secrecy
How Long
Should a
Test Last?
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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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Advantages of using the Control
Method of Test Marketing
1.Reduced costs
2.Shorter time period needed for reading test
market results
3.Increased secrecy from competitors
4.No distraction of company salespeople from
regular product lines
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Some Problems Estimating Sales
Volume
• Overattention
• 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
Electric
Test
Markets
Simulated
Test
Markets
Virtual-reality
Simulated
Test 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 only
one independent variable.
Copyright © 2000 by Harcourt, Inc. All rights reserved.
Completely Randomized Designs
Control:
no music
Average minutes
shopper spends
in store
16
Experimental
treatment:
slow music
18
Experimental
treatment:
fast music
12
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Independent Variable A
Level 1
Group A
Level 2
Level 3
Group B
Group C
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Completely Randomized Design
With a pretest posttest
Group A
R
O1
X1
O2
Group A
R
O3
X2
O4
Group A
R
O5
X3
O6
Copyright © 2000 by Harcourt, Inc. All rights reserved.
Completely Randomized Design
With a posttest
Group A
R
X1
O1
Group B
R
X2
O2
Group C
R
X3
O3
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Randomized Block Design
• An extension of the completely randomized
design in which a single extraneous variable
that might affect test units’ response to the
treatment has been identified and the effects
of this variable are isolated by blocking out
its effects.
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Randomized Block Design
Independent Variables
Blocking variable
Control:
no music
Experimental
treatment
slow music
Experimental
treatment:
fast music
Mornings and
afternoons
Evening hours
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Factorial Design
• An experiment that investigates the
interaction of two or more variables on a
single dependent variable.
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Independent Variable 1
Independent Variable 2
No Music
Slow Music
Fast Music
No Music
cart signs
Grocery
cart signs
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Factorial Design -- Roller Skates
Package Design
Price
Red
Gold
$25
$30
$35
Cell 1
Cell 2
Cell 3
Cell 4
Cell 5
Cell 6
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Effects
• Main effect
• The influence of a
single independent
variable on a
dependent variable.
• Interaction effect
• The influence on a
dependent variable by
combinations of two
or more independent
variables.
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2 x 2 Factorial Design
Ad A
Ad B
Men
65
Main Effects
> of Gender
Women
65
70
60
Main Effects of Ad
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100
90
Interaction Between Gender and
Advertising Copy
80
70
60
50
40
30
20
10
Ad A
Ad B
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INDEPENDENT
VARIABLE 2
Independent Variable 1
Level 1
Level 2
Level 1
Group A
Group B
Level 2
Group C
Group D
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2 x 2 Factorial with a Pretest Posttest
Group A
R
O1
X11
O2
Group B
R
O3
X21
O4
Group C
R
O5
X12
O6
Group D
R
O7
X22
O8
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2 x 2 Factorial Design with a Posttest Measure
Group A
R
X11
O1
Group B
R
X21
O2
Group C
R
X12
O3
Group D
R
X22
O4
Copyright © 2000 by Harcourt, Inc. All rights reserved.
A Test Market Experiment
on Pricing
Sales in Units (thousands)
Regular Price
$.99
Test Market A, B, or C
Test Market D, E, or F
Test Market G, H, or I
Test Market J, K, or L
Mean
Grand Mean
Reduced Price
$.89
Cents-Off Coupon
Regular Price
130
118
87
84
145
143
120
131
153
129
96
99
X1=104.75
X=119.58
X2=134.75
X1=119.25
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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 by
restricting randomization with respect to the
row and column effects.
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Order of Usage
SUBJECT
1
1
2
3
2
3
A B C
B C A
C A B
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