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What are Experimental Techniques?

Osmand Vitez
Osmand Vitez

In regards to marketing, experimental techniques are measurements that help economists and companies make determinations on consumer behavior. Prior to fully releasing a product or entering a new market, economists and companies look to measure variables or factors that will affect how consumers purchase goods and services. Purchase laboratories, test markets, and choice modeling are a few common types of experimental techniques in marketing. Large organizations and publicly held companies will often engage in these techniques, as a small change in products offered can result in large changes to profits.

Purchase laboratories are closely controlled situations where a group of consumers is placed into a store and allowed to purchase goods. Marketers use these types of experimental techniques to determine how customers shop, where they look on store shelves, and what types of packaging are most appealing, as well as how a particular company's product fares compared to the competitor products next to it on the shelves. Purchase laboratories allow companies and markets to change the layout of the store and re-conduct the test to determine the effect of the changes.

Businesswoman talking on a mobile phone
Businesswoman talking on a mobile phone

Test markets are larger and more uncontrolled types of purchase laboratories. Experimental techniques in these markets allow a company to roll out new products in a limited number of cities, towns, or locales. Companies, marketers, and economists can review product sales, consumer comments, and other information to determine the reception of new products. This technique is often viewed as better than purchase laboratories because the company can reach more consumers. Additionally, the company can select cities or locales with specific demographics, such as income, age, race, sex, or other demographics. Companies can also test products at different price points or techniques in each individual market, gathering more information from different factors at one time.

Choice modeling focuses more on the economic side of experimental techniques. This method helps a company determine the benefits and costs of new products and how they impact the market. For example, companies will rarely be able to release a product that does not draw competitors into the market. If no barriers to entry exist in the market, then companies will not have exclusive market power to direct consumer behavior. Companies that release a new type of widget may not be able to draw customers in because the widget is priced too high. Economists help companies to decide if the high price will drive consumers to purchase substitute products. This ultimately helps companies avoid disastrous losses from increasing fixed costs for new products that will ultimately fail in the open market.

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