Market Analysts and Promotional Specialists, Incorporated (M.A.P.S) was hired by the Dixie Brewing Company to research their marketing methods after sales fell. It was decided that shelf positioning was a major factor for influencing sales and therefore a marketing plan was constructed to test this. Internal or External Validity? There are two specific kinds of validity that are relevant to experimentation, internal and external validity. Internal validity refers to the extent to which the effect observed was a result of the experimental variable and no other factors (Churchill and Iacobucci, 2002). External validity refers to whether the cause and effect relationships found in the experiment can be generalized (Malhotra, 1999).
The marketing research design made by M.A.P.S for Dixie Brewing Company can be classified as a One-Group Pretest-Posttest Design. In this design, a pretreatment measure was taken where the original shelf positioning was observed. The convenience store was exposed to the treatment where the alternative layout was introduced. A post treatment measure was taken. The design may be symbolized as:
O1 X O2 The treatment effect can be shown by O2-O1 (Mc Daniel and Gates, 2002). The experiment was conducted in an actual market environment, the selected convenience store. Although the price and number of bottles were the same throughout the treatment, some extraneous variables, which were threats to the internal validity to this design were not taken into account. One of the main extraneous factors is history where outside variables affect the dependent variable during the course of the experiment (McDaniel and Gates, 2002). This could include the action of other competitors, such as, promotions and increased advertising, and changing weather conditions, for instance, an increase in temperature could result in an increase in sales as people may drink more.
Another extraneous factor is maturation, which involves external changes unrelated to the experiment, which affects subjects’ response (McDaniel and Gates, 2002). In this case financial situation of the customer at the time of experimentation could be a factor. For example, if they have just received their salary they may have a more disposable income. As a field experiment, and taking into consideration extraneous variables the experiment seems to have a higher degree of external validity.
Was the convenience store a good venue for the experiment? Having discussed external validity in the previous section this provides a basis to judge the advantages and disadvantages of using the convenience store in this experiment. As it is conducted in an actual environment the design has certain feasibilities. Since the convenience store is comparatively small it easy to observe and control the whole procedure. Therefore the costs should be relatively low and results easy to collect.
On the other hand some shortcomings need to be considered. The chosen suburban area may not realistically take into account the characteristics of differing locations in the real world, for example the consumer structure may differ between suburban and metropolitan areas. The differences between convenience stores and supermarkets must also be considered. People do convenience purchases in convenience stores and regular purchases in supermarkets, therefore it can be concluded that peoples purchase behaviour varies between the two. Supermarkets will provide a wider variety of brands of beer to customers. That is to say, Dixie may face must stronger competition in supermarkets.
How effective was the marketing design? Having discussed the advantages and disadvantages of the experiments, the graph in appendix 1.0 illustrates and compares the sales of the seven brands of beer following the introduction of the M.A.P.S plan. Overall Dixie indicates the highest sales along with Bud and Miller respectively, the lowest sales being Dixie Light and Coors Light. The hypothesis of the experiment was that the location of brands on a display would affect sales.
However, the graph clearly shows that there must be external factors affecting the results because in general it caused the sales to decrease or remain constant. On average Miller, Bud and Dixie Light decreased by 1.7%, while Coors and Coors Light remained constant. There were two exceptions to this trend, Dixie and Miller Lite, where sales increased. However, Dixie sales increased by five times more than that of Miller Lite, resulting in Dixie being the overall best seller. Before taking into consideration the effect of the location of the beers, external influencing factors other than shelf positioning must be considered. Such factors could include: previous advertising; price advantage; packaging design and taste, all of which would have an impact on the consumer and therefore affect the hierarchy of sales of Dixie down to Dixie Light.