Causal marketing research studies apply to the experimental phase.
They help to identify the cause of what we are predicting and the effect it exerts. For instance, a question that can be addressed by means of a causal study reads: Did the price cut cause the increase in sales? Experimentation and measurement provide the only reliable basis to validate management assumptions and to establish causal relationships.
Two classes of causal experiments
There are two broad classes of experiments:
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- Natural experiments, which do not require any intervention by the investigator. For instance, observing the reactions of pedestrians walking past a billboard.
- Controlled experiments, in which investigators manipulate the variables of interest. For instance, one half of website visitors see the Home page and the other half see a modified version, aka A/B test or Split-run test.
In recent times, as a result of increased awareness among modern decision-makers and the availability of software tools, there is a relevant increase of both observational studies and experimentation tests. Experiments can be further split into:
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- Lab experiments, which are experiments conducted in environments created by the investigator
- Field experiments, which are experiments conducted in real-life environments
Most lab tests run unseen in the rooms of private companies and in some cases give birth to very popular and profitable inventions, like Swiffer, synthetic soap, PostIt notes, lab grown food, and more on the way.
Online tests are a form of field study that has grown steadily in the last few years. The number of A/B tests, for instance, has increased dramatically and there is reason to believe that the trend will continue because more decision-makers seem to realize that measuring customer reactions to changes is a more accurate decision-parameter than experience and intuition alone.
It must be said, however, that conducting flawless experiments isn’t always easy. Laboratory experiments in a controlled environment are easier to handle than field experiments, where unexpected influences can result from external factors that could threaten the internal validity of the study.
Internal validity is the extent to which we can say that the measured effect was caused by our treatment. For this reason, researchers conducting causal studies need a thorough understanding of the phenomenon under investigation.
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Causal experiments improve decisions
It is hard to find an area of business management where running experiments would not help to improve decisions. Production, logistics, HR, R&D, hotlines, counter queues, order processing, and more are all potential targets of systematic testing to improve important decisions. Among all, however, marketing is perhaps the area of an enterprise where experimenting is most useful.
Every lever of the marketing-mix is open for improvement through experiments:
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- Product: a lot of lab and field experiments are conducted to improve technical performance and design of products
- Communication: message memorization and calls-to-action are frequent targets of field studies
- Price: often tested in terms of effect on purchasing behavior
- Distribution: often tested in terms of effect on buying behavior
Among all industries, drug-makers rely on some of the most advanced experimental structures covering both lab tests and field experiments, aka clinical trials. Marketing researchers can learn a lot from how the pharma industry plans, sets up, and conducts lab experiments and clinical trials.