Elements of Causal Designs Experiments Elements of Causal Designs

Causal Research Research design in which the major emphasis is on determining cause-and-effect relationships. Most causal research is conducted as experiments—defined as manipulating an independent variable to see how it affects a dependent variable while also controlling the effects of additional extraneous variables

Showing a Causal Relationship Concomitant variation--evidence of the extent to which X and Y occur together or vary together. Time order of occurrence of variables--evidence that shows X occurs before Y. Elimination of other possible causal factors—evidence that allows the elimination of factors other than X as the cause of Y.

Concomitant Variation: Evidence of the extent to which X and Y occur together or vary together. “Every time “X” occurs, “Y” follows Following exposure to the ad, a significantly different, positive change in attitude toward the brand occurs. Increases in “X are followed by an increase in Y.”

Temporal Precedence If “X” is said to be a cause of “Y,” “X” must occur before “Y.” Treatment comes before the measured result. A pre-test, to determine a current state, precedes treatment, followed by a post-test.

Controlling for “Other Factors” Random selection of subjects Random assignment of subjects to treatments Use of untreated condition, “control group” Conditions which exclude or control for alternative explanations.

Experimental or Causal Designs The most powerful, most easily argued means of identifying a cause and effect relationship. Important when identifying the appropriate marketing action within a marketing strategy. Effect of a specific ad on buyer motivations Effect of various prices on buyer intentions Effect of different products on category sales

Cigarettes and Health “Second-hand smoke kills 50,000 people per year in the U.S.” “Women who smoked during pregnancy had babies with a 10-15% lower birth weight. “People who smoke 3 or more packs per day are 50% more likely to develop a respiratory illness. “8th graders instructed to smoke 3 packs of cigarettes per day for six consecutive years had an 80% higher incidence of lung-cancer than a control group.”

Experiments in Marketing Research Some research questions cannot be addressed with classical experimental designs, i.e., smoking causing cancer. Causal design provides the clearest approach to marketing action. Ethical questions are possible within marketing causal designs, but the instances of incidence is low with advertising and pricing research.

Elements of an Experiment Independent Variable(s): Specific advertisement Dependent Variable(s): Attitude (liking) ad/brand Extraneous Variables: Age of respondent Experimental Group: Views the ad Control Group: Views alternative ad, or no ad Pretest: Attitude to brand prior to commercial Posttest: Attitude to brand following commercial

Experiment includes pretest and posttest. EXPERIMENTAL DESIGNS TRUE EXPERIMENTAL DESIGN Before-After with Control Group Experimental Group (R) O1 X O2 Control Group (R) O3 O4 Where E = (O2 - O1) - (O4 - O3) Experiment includes pretest and posttest.

Assignment to Groups Treatment group X Treatment O1 Pretest O2 Posttest Control group

EXPERIMENTAL DESIGNS TRUE EXPERIMENTAL DESIGNS After-Only with Control Group Experimental Group (R) X O1 Control Group (R) O2 Where E = (O 2 - O1) Without random assignment, you could not be sure the effect was attributable to the treatment.

EXPERIMENTAL DESIGNS QUASI-EXPERIMENTAL DESIGNS After-Only Design X O1 Where X = O1 One Group, Before-After Design O1 X O2 Where X = O2 - O1 Without control group, you cannot be certain the treatment created a difference (after-only) or that extraneous conditions weren’t the “cause (before-after)”

Campbell’s V8 Research Symptom and Problem Definition Declining sales, low product recall Research Problems and Designs: Exploratory: Depth interviews, brand associations Causal research: Advertising experiments Descriptive: Theme selection, content analysis Marketing Action New advertising campaign

Unusual Aspects of the V8 Case Exploratory, qualitative techniques led to advertising testing, skipping a stage of descriptive (conclusive) research. Content analysis was used to evaluate an advertisement the company just created. Illustrates how a rush to address symptoms (time and budget constraints) creates errors in marketing research.

VALIDITY OF EXPERIMENTS Internal Validity The extent to which the change in the dependent variable is actually due to the independent variable. or Evidence demonstrating that the variation in the dependent variable was the result of exposure to the treatment, or experimental, variable.

VALIDITY OF EXPERIMENTS External Validity The extent to which the relationship observed between the independent and dependent variables during the experiment is generalizable to the “real world”. The extent, to what populations and settings, to which the observed experimental effect can be generalized.

TYPE OF EXPERIMENTS “Laboratory” Experiments Setting: Controlled, “laboratory” setting Internal validity: Highest certainty of treatment effect External validity: Field Experiments Setting: Realistic, market setting Internal validity: External validity: Highest certainty that results can be replicated in the market.

MARKET TEST Ultimate Field Experiment A controlled experiment done in a limited but carefully selected sector of the marketplace; its aim is to predict the sales or profit consequences, either in absolute or relative terms, of one or more proposed marketing actions .

TEST MARKETING TYPES OF TEST MARKETS Standard Test Market: One or two cities, same wholesalers, retailers. Controlled Test Market: Rack jobber controls on shelf inventories.

In standard test markets, cities form the treatment groups Treatment cities receives the new product, control cities do not. Treatment cities receive price reductions, coupons, special advertising, control cities do not. Includes realistic competitive setting using existing distribution system.

Household “Panels” & Longitudinal Designs “Panel” is group of respondent that agree to repeated participate in a research design. “True” panel is one where individual respondents are tracked for change, part of longitudinal designs. Also used in experimental designs, when a “treatment” can varied among panel members, and differences can be monitored.

TEST MARKETING TYPES OF TEST MARKETS Standard Test Market: One or two cities, same wholesalers, retailers. Controlled Test Market: Rack jobber controls on shelf inventories. Electronic Test Market: Panel of households agree to be monitored Simulated Test Market (STMs): Laboratory studies

CRITICAL PROBLEMS OF TEST MARKETING COST: Standard test markets require major promotional budget to shorten the time needed to measure repurchase TIME: It may take 10 or 11 months to be completely sure with results CONTROL: Competitors may monitor results or other unintended competitor behavior may ruin the results.

Criteria for Selection of a Test Market City Representativeness: Large, sufficiently diverse Degree of Isolation: Media and distribution isolation Ability to Control Distribution and Promotion:

Increasing of risks with Test Markets Simulated Test Market Promising Not Promising Abort Controlled Test Market Promising Not Promising Abort Standard Test Market Not Promising Abort Promising National Rollout