• 1. Exploring Marketing Research William G. Zikmund Chapter 12: Test Marketing
  • 2. TEST MARKETING Controlled experimentationNot just trying something outBut scientific testing
  • 3. Test MarketingAn 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.
  • 4. FUNCTONS OF TEST MARKETINGESTIMATE OUTCOMESIDENTIFY AND CORRECT WEAKNESSES IN PLANS
  • 5. A Lengthy and Costly Procedure$$$$$Loss of SecrecyWhen not to Test?How Long Should a Test Last?
  • 6. Selecting a Test MarketPopulation Size Demographic Composition Lifestyle Considerations Competitive Situation Media Self-contained Trading Area Overused Markets - Secrecy
  • 7. Control Method of Test MarketingSmall City Low Chance of Being Detected Distribution is Forced (Guaranteed)
  • 8. Advantages of using the Control Method of Test Marketing1. 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 * Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 9. Some Problems Estimating Sales VolumeOverattention Unrealistic Store Conditions Reading Competitive Environment Incorrectly Incorrect Volume Forecasts Adjusted Data Penetration and Repeat Purchase Rate Time Lapse* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 10. High Tech Test MarketsElectric Test MarketsSimulated Test MarketsVirtual-reality Simulated Test Markets
  • 11. Advanced Experimental Designs are More ComplexCompletely Randomized Randomized Block Design Latin Square Factorial
  • 12. Completely Randomized DesignAn 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.
  • 13. Completely Randomized DesignsAverage minutes shopper spends in storeControl: no musicExperimental treatment: slow musicExperimental treatment: fast music16 18 12* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 14. Independent Variable AGroup AGroup BGroup CLevel 1Level 2Level 3* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 15. Completely Randomized DesignWith a pretest posttestGroup 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.
  • 16. With a posttestGroup A R X1 O1 Group B R X2 O2 Group C R X3 O3* Copyright © 2000 by Harcourt, Inc. All rights reserved. Completely Randomized Design
  • 17. Randomized Block DesignAn 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.* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 18. Randomized Block DesignIndependent VariablesControl: no musicExperimental treatment slow musicExperimental treatment: fast musicMornings and afternoons Evening hoursBlocking variable* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 19. Factorial DesignAn experiment that investigates the interaction of two or more variables on a single dependent variable.* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 20. Independent Variable 1No Music cart signsSlow MusicFast MusicNo MusicGrocery cart signsIndependent Variable 2* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 21. Price Red Gold $25 Cell 1 Cell 4 $30 Cell 2 Cell 5 $35 Cell 3 Cell 6Factorial Design -- Roller SkatesPackage Design
  • 22. EffectsMain 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.* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 23. 2 x 2 Factorial Design Men WomenAd A Ad B65 6570 60Main Effects of GenderMain Effects of Ad>>* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 24. 100 90 80 70 60 50 40 30 20 10Ad A Ad BWomenMenBelievabilityInteraction Between Gender and Advertising Copy
  • 25. Level 1 Level 2Level 1 Level 2Group AGroup DGroup CGroup BINDEPENDENT VARIABLE 2Independent Variable 1* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 26. Group A R O1 X11 O2 Group B R O3 X21 O4 Group C R O5 X12 O6 Group D R O7 X22 O82 x 2 Factorial with a Pretest Posttest* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 27. 2 x 2 Factorial Design with a Posttest MeasureGroup 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.
  • 28. A Test Market Experiment on PricingSales in Units (thousands)Regular Price $.99 130 118 87 84 X1=104.75 X=119.58Reduced Price $.89 145 143 120 131 X2=134.75 Cents-Off Coupon Regular Price 153 129 96 99 X1=119.25 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* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 29. 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.* Copyright © 2000 by Harcourt, Inc. All rights reserved.
  • 30. 1 2 3 1 A B C 2 B C A 3 C A B Order of UsageSUBJECT* Copyright © 2000 by Harcourt, Inc. All rights reserved.