Experirnentinq with Price Sensitivity Marketing Research Help

Canon wants to determine consumers’ price sensitivity for its new advanced digital camera and hires you as a consultant.

1, Visit  and identify the price ranges of the digital cameras by Canon and other brands.
2. Search the Inter.. using a search engine as well as your library’s online databases to obtain information on consumers’ price sensitivity for digital cameras.
3. To determine consumers’ price sensitivity for Canon’s new advanced digital camera, design an appropriate experiment. Would you recommend a true experimental design? If yes, which one?
4. As the marketing manager for Canon Cameras, how would you use information on consumers’ price sensitivity for digital cameras to formulate pricing strategies that would increase your market share?

Laboratory Versus Field Experiments

Experiments may be conducted in laboratory or field environments. A laboratory environment is an artificial one, which the researcher constructs with the desired conditions specific to the experiment. The term field environment is synonymous with actual market conditions. The Rite Aid example in the “Overview” section presented a field experiment. Our experiment to measure the effectiveness of a test commercial could be conducted in a laboratory environment by showing the test commercial embedded in a TV program to respondents in a test theater. The same experiment could also be conducted in a field environment by running the test commercial on actual TV stations. The differences between ~ two environments are summarized in Table 7.7

As compared to field experiments, laboratory experiments suffer from some disadvantages. The artificiality of the environment may cause reactive error, in that the respondents react to the situation itself, rather than to the independent variable.23 Also, the environment may cause demand artifacts, a phenomenon in which the respondents attempt to guess the purpose of the experiment and respond accordingly. For example, while viewing the test commercial, the respondents may recall presentment questions about the brand and guess that the commercial is trying to change their attitudes toward the brand.24 Finally, laboratory experiments are likely to have lower external validity than field experiments. Because a laboratory experiment is

Laboratory Versus Field Experiments

Laboratory Versus Field Experiments

owner external validity. One must be aware of the aspects of the laboratory experiment that differ from the situation to which generalizations are to be made. External validity will be reduced only if these aspects interface with the independent variables explicitly manipulated in the experiment, as is often the case in applied marketing research. However, another consideration is that laboratory experiments allow for more complex designs than field experiments. Hence. the researcher can control for more factors or variables in the laboratory setting, increasing external validity

The Internet can also be a useful vehicle for conducting causal research. Different experimental treatments can be displayed at different Web sites. Respondents can then be recruited to visit these sites and respond to a questionnaire that obtains information on the dependent and extraneous variables. Thus. the Internet can provide a mechanism for controlled experimentation. although in a laboratory type of environment. Let us continue with the example of testing advertising effectiveness considered in this chapter. Different advertisements or commercials can be posted at different Web sites. Matched or randomly selected respondents can be recruited to visit these sites. with each group visiting only one site. If any pretreatment measures have to be obtained. the respondents answer a questionnaire posted on the site. Then they are exposed to a particular advertisement or a commercial at that site. After viewing the advertisement or commercial. the respondents answer additional questions, providing posttreatment measures. Control groups can also be implemented in a similar way. Thus. all types of experimental designs that we have considered can be implemented in this manner.

We do not wish to undermine the importance of descriptive research designs in marketing research. As we mentioned in descriptive research constitutes the most popular research design in marketing research, and we do not want to imply that it should never be used
to examine causal relationships. Indeed. some authors have suggested procedures for drawing causal inferences from descriptive (non experimental) data P Rather. our intent is to alert the reader to the limitations of descriptive research for examining causal relationships. Likewise. we also want to make the reader aware of the limitations of experirnentation

Project Activities

The book illustrates the use of various experimental designs in determining the effectiveness of a test commercial for a department store such as Sears.

Limitations of Experimentation

Experimentation is becoming increasingly important in marketing research, but there arc limitations of time, cost, and administration of an experiment.

Time

Experiments can be time-consuming, particularly if the researcher is interested in measuring the long-term effects of the treatment, such as the effectiveness of an advertising campaign. Experiments should last long enough so that the post treatment measurements include most or all the effects of the independent variables

Application Test Marketing

Test marketing, also called market testing, is an application of a controlled experiment, done in limited but carefully selected parts of the marketplace called test markets. It involves a replication of a planned national marketing program in the test markets. Often, the marketing mix variables (independent variables) arc varied in test marketing, and the sales (dependent variable) are monitored so that an appropriate national marketing strategy can be identified. The two major objectives of test marketing arc (1) to determine market acceptance of the product, and (2) to test alternative levels of marketing mix variables. Test marketing is being practiced by both consumer-product and industrial-product companies. Test-marketing procedures may be classified as standard test markets, controlled and mini market tests, simulated test marketing, electronic test marketing, virtual test marketing, and Web-enabled test marketing.

Standard Test Market

The duration of the test depends on the repurchase cycle for the product the probability of competitive response, cost considerations, the initial consumer response, and company philosophy. The test should last long enough for repurchase activity to be observed. This indicates the long-term impact of the product. If competitive reaction to the test anticipated. the duration should be short. The cost of the test is also an important factor. The longer a.test, the more it costs. and at some point the value of additional information is our weighed by Its costs. Recent evidence suggests that tests of new brands should run for at least 10 months. An empirical analysis found that the final test market share was reached in 10 months 85 percent of the time and in 12 months 95 percent of the time.30 Test marketing
can be very  risk

Posted on November 30, 2015 in Causal Research Design Experimentation

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