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CHAPTER 6
LEARNING OBJECTIVES
1. Explain the concept of causality as defined in marketing research and distinguish between
the ordinary meaning and the scientific meaning of causality.
2. Discuss the conditions for causality, and whether a causal relationship can be
demonstrated conclusively.
3. Define and differentiate the two types of validity: internal validity and external validity.
4. Describe and evaluate experimental designs and the differences among pre-experimental,
true experimental, and statistical designs.
5. Compare and contrast the use of laboratory versus field experimentation and
experimental versus non-experimental designs in marketing research.
6. Understand why the internal and external validity of field experiments conducted
overseas is generally lower than in the United States.
7. Describe how social media facilitate causal research.
8. Describe the ethical issues involved in conducting causal research and the role of
debriefing in addressing some of these issues.
CHAPTER OUTLINE
TEACHING SUGGESTIONS
Learning Objective 1
Learning Objective 2
1. Concomitant variation: is the extent to which a cause, X, and an effect, Y, occur together
or vary together in the way predicted by the hypothesis under consideration. Evidence
pertaining to concomitant variation can be obtained in a qualitative or quantitative manner.
Thus, we may hypothesize that increasing product price will lead to an increase in profits.
2. Time order of occurrence of variables: the causing event must occur either before or
simultaneously with the effect; it cannot occur afterwards. Thus, our profits cannot increase
until after we increase the price.
3. Absence of other possible causal factors: means that we can infer causality if all other
factors affecting the subject are absent, i.e., these factors are held constant. Thus, other
factors like store penetration, expanded consumer spending, or decreased costs must be held
constant.
Learning Objective 3
Learning Objective 4
Figure 6.5 can be used here to organize your discussion on experimental designs.
Examples of a Factorial design can be constructed for demonstration purposes. See Table
6.1
Learning Objective 5
Mention that descriptive studies are sometimes used to infer causality, but this may not
be appropriate. In descriptive studies, prior equivalence of the groups with respect to both the
independent and dependent variables is difficult to establish, as is time order of occurrence of the
variables. Finally, it offers little control in eliminating other extraneous factors.
Learning Objective 6
Learning Objective 7
Learning Objective 8
Internet Emphasis
* Indicate that the Internet and computers are helpful in the analysis of
experimental design data.
iRESEARCH
iResearch: FTC:
To ensure the smooth operation of our free market system, the Federal Trade Commission (FTC)
enforces federal consumer protection laws that prevent fraud, deception and unfair business practices.
The Commission also enforces federal antitrust laws that prohibit anticompetitive mergers and other
business practices that restrict competition and harm consumers. Whether combating telemarketing
fraud, Internet scams or price-fixing schemes, the FTC’s primary mission is to protect consumers.
- Information overflow; difficult for customers to differentiate noise and useful information
- Information flow cannot be controlled or traced. This can lead to misrepresentation of
information, fraud etc.
- Dumping of products especially from foreign countries (web based selling of drugs by Canadian
and Indian companies)
- Increased possibility of collusion between companies
2. Time Order - increased information lags or concurs with increased information use.
3. Absence of other possible causes
The popularity ratings for channels can be used to assess the attributes that audiences look for in
Network News Channels.
Based on experimentation, causality can be assigned to factors that make the news more attractive.
Improve the attributes preferred by audience.
Convey the change in form and content to audience through appropriate PR and Advertising channels.
iResearch: Canon
1. Students should be encouraged to visit www.bestbuys.com and identify the relevant
information.
2. Students should be encouraged to search the Internet and identify the relevant
information on consumers’ price sensitivity for digital cameras.
3. A factorial design is appropriate. The price of digital cameras could be varied and
consumers’ willingness to buy measured. It would be important to control for income
and digital camera usage.
4. It is likely that the market is segmented with respect to price sensitivity. Different prices
can be charged to the different segments with some differentiation in the cameras offered.
1. A, B & E
2. A lot of secondary data about apparel industry is available from online as well as traditional
third party databases. This can be used initially to gather information about the success of
private labels and in-house brands. The focus groups are helpful in gaining further
understanding of the conclusions drawn from the analysis of secondary data, understanding
consumer priorities, perceptions and preferences. The specific causal design that is
recommended is a factorial design. The factor, brand name can be varied at three levels:
Levi’s, Gap, and Arizona. Respondents can be randomly assigned to one of these brands and
asked to express preference for the brand rate its power. Current usage of these brands
should be controlled.
3. The causal design, as specified, will provide a direct relative measure of the power of the
three brands when the mean levels are compared.
1. B and C
2. Comparing the prices, it appears to be one of the reasons why Levi’s is losing the battle for
market share. It would be a good idea to launch a cheaper line of jeans to appeal to the cost
conscious market segment. To reach the new target segment, the company would want to
increase advertising spend in targeted marketing efforts. The new line of jeans should be
distributed through different channels than that of the existing high priced segment. This will
ensure the necessary reach.
REVIEW QUESTIONS
6-1. There are three requirements or conditions that must be satisfied before a causal
relationship can be inferred. The three conditions are:
1. Concomitant variation of the two variables
2. Time order of occurrence of variables
6-2. The difference between internal and external validity is that internal validity is concerned
with the question of whether the observed effects on the dependent variable have been
caused by variables other than the treatment, and control of extraneous variables is
necessary for establishing internal validity. External validity, on the other hand, is
concerned with whether the cause-effect relationship can be generalized. More often
than not a tradeoff is required between internal and external validity. While internal
validity can be increased in an artificial environment, this reduces the generalizability of
the results and consequently, the external validity.
6-3. The main method for controlling extraneous sources of variation is randomization. This
involves randomly assigning test-units to experimental groups by using random numbers.
Treatment levels are also randomly assigned. Such random assignment usually results in
an equal representation of extraneous variables in each treatment condition.
6-4. The distinguishing feature of the true experimental design, as compared to the pre-
experimental design, is randomization. In true experimental designs, the researcher can
randomly assign test units to experimental groups and also randomly assign treatments to
experimental groups.
6-5. The steps involved in implementing the posttest-only control group design are:
1. Select a sample of respondents at random.
2. Randomly assign the respondents to two groups (i.e. experimental group and control
group).
3. Respondents in the experimental group would then be exposed to a treatment.
4. Post-treatment measurements are obtained from both groups using a measuring
instrument like a questionnaire.
6-6. The advantages statistical designs have over basic designs are:
a. In the case of basic designs, the effects of only one independent variable or treatment
can be measured, while in case of a statistical design, the effects of more than one
independent variable can be measured.
b. In the case of statistical designs, specific extraneous variables can be statistically
controlled.
c. Economical designs can be formulated when each test unit is measured more than
once.
6-8. Descriptive research should not be used for establishing causal relationships for the
following reasons:
(a) It is difficult to establish the prior equivalence of the groups with respect to both the
independent and dependent variables in descriptive research.
(b) It is difficult to establish time order of occurrence.
(c) It provides little control in eliminating other possible causes.
6-9. Test marketing is an application of a controlled experiment done in a limited but carefully
selected part of the marketplace called test markets. It involves a replication of a planned
national marketing program for a product in the test markets. The three types of test
markets are:
1. Standard test market: The product is sold through regular distribution channels and,
typically, the company's own salesforce is responsible for distributing the product. It
involves a one-shot case study.
2. Controlled test market: The entire test marketing program is conducted by an
outside research company, which also handles distribution and field sales operations
in the test market.
3. Simulated test market: These are also called laboratory tests and yield mathematical
estimates of market share based on initial reaction of consumers to the new product.
6-10. In virtual worlds, one can use Second Life (www.secondlife.com) as a tool to conduct
standard marketing research projects at a lower cost. Incentives in the form of Linden
dollars can be given to gain residents’ cooperation and improve response rates. The
researcher can also give nonmonetary incentives such as free virtual products and
services like clothing or scripts that add certain features to avatars. However, opinions,
tastes, and preferences in virtual worlds may not be the same as in a real setting.
Therefore, each new idea generated within virtual worlds needs to be subject to a
thorough reality test before actually being implemented.
All of the experimental designs that we have discussed in this chapter can also be
implemented within the context of the real social world. As compared to the field,
experimentation in social media offers the advantages of ease of implementation and
lower cost. The internal validity may be satisfactory in most cases as extraneous variables
can generally be controlled. However, external validity will not be as high as that of field
experiments.
6-12. If the respondents had been selected by convenience, a static group design would result.
6-13. a. This is an example of the one-shot case study. The internal validity is threatened
by history, maturation, selection, and mortality.
b. This is an example of the posttest-only control group design. Internal validity is
not hampered by extraneous variables.
6-14. Many answers are possible for each design. One solution is provided as an example.
a. Measuring the attitude towards a new advertisement or new product
b. Evaluating the effectiveness of a change in a product attribute or the effectiveness
of a new marketing program when time and cost are not major considerations
c. Evaluating the attitude toward a new advertisement or product when time and cost
are not significant factors, forcing researchers to reduce sample size, quickly
determine results, and/or keep costs down
d. A new advertising program is being initiated which must be evaluated to
determine its effectiveness. The goal is to determine which of the three
commercials is most effective in generating sales.
INTERNET EXERCISES
6-15. Computer controlled experiments are becoming increasingly popular in marketing
research. They ensure that proper technique is followed when conducting an experiment.
As such, the validity of the results is improved.
6-16. Several of the designs can be implemented. A two factor design, where factor one
denotes the value of coupon (none, low, medium, and high), and factor two denotes
product use (none, low, medium, and high), seems to be very appropriate. Students
should select a specific product and also define the levels (low, medium, and high) for
each factor.
6-17. The existing and the three new packages can be displayed, one at each specific location
on the Internet. Respondents can be recruited and randomly assigned to each package
location (URL), asked to view the package and answer several attitudinal and behavioral
6-18. The previous (existing) and the new version of EXCEL can be made available, one at
each specific location on the Internet. Respondents can be recruited and randomly
assigned to each EXCEL version, and then asked to do a specific task using that version.
Then they answer several questions relating to ease of use, performance, features, and
overall preference. The most favorable version can then be identified.
6-19. Respondents would be randomly recruited and randomly assigned to one of two Internet
locations (URLs). The experimental group of respondents would first see the print ad for
Toyota Camry and then respond to a battery of attitudinal and behavioral intent questions.
The control group respondents would not see the print ad but respond to the same battery
of attitudinal and behavioral intent questions. The effectiveness of the print ad can be
determined by comparing the responses of the two groups.
ROLE PLAYING
Q1. You are a marketing research manager for the Coca-Cola Company. The company would
like to determine whether it should increase, decrease, or maintain the current level of
advertising dollars spent on the Coca-Cola brand. Design a field experiment to address
this issue.
A1. One of several designs can be used for this field experiment. A pretest-posttest control
group design is outlined below:
(a) Select three sets of test markets with similar demographic profiles, competitive
environments and sales volume of Coke Classic.
(b) Randomly increase ad budgets in one set of markets, decrease them in a second set and
maintain them in the third set of markets.
(c) Track sales volumes for three months in each set of markets.
(d) Analyze the sales results to determine differences in performance.
Q2. What potential difficulties do you see in conducting the experiment just described? What
assistance would you require from the Coca-Cola management to overcome these
difficulties?
A2. Potential difficulties include access to sales data, selecting three similar markets to test,
changing competitive dynamics and objections from bottlers in the test market where ad
expenditures will decrease.
Management can assist by ensuring corporate compliance for gathering data, allocating
the necessary funds, pacifying affected bottlers.
FIELD WORK
A1. The purpose of this exercise is to have the student actually design and conduct a simple
experiment in order to apply the material discussed in the chapter. They should also gain
an appreciation for the rigor of statistical testing and the assumptions a researcher must
make when conducting an experiment. Because quantitative analysis has not been
covered in the text so far, it should be interesting to see what measures students devise to
measure the advertising effectiveness. Whatever measure they choose, it should be
justifiable and valid in this setting.
GROUP DISCUSSIONS
Q1. “Since one cannot prove a causal relationship by conducting an experiment,
experimentation is unscientific for examining cause-and-effect relationships.” Discuss
this statement in a small group.
A1. Issues which can be discussed include the role of inference in drawing conclusions, the
difficulty of isolating all possible sources of variation in social science experimentation,
the historic value of experimentation in deriving theories and inferring relationships, and
the nature or definition of science, (i.e., is science only limited to proofs which account
for all sources of variation?).
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