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CRAVENS*
The potential value of applying experimental design the types of marketing research situations where the de-
techniques to marketing research problems has been in- sign is potentially useful.
creasingly recognized in recent years. Several classical
experimental designs have been described and applied FRACTIONAL FACTORIAL DESIGNS
to marketing problems [2, 3, 7, 9, 11, 14]. 1 Yet, appar-
Advantages of Factorial and Fractional Factorial
ently little attention in marketing has been given to the
Designs
very important general class of experimental designs
called fractional factorials. Use of these designs allows Factorial experimental designs have proven to be val-
the researcher to investigate a large number of variables uable research tools in numerous fields. These designs
(factors) with a small number of experimental runs. They are experimental programs in which a fixed number of
have proven to be extremely useful in industrial research levels are selected for each of k controlled factors and
and development applications. Because of their impor- experiments are run for all combinations of levels of all
tance, almost all of the experimental design literature the factors. Thus, there may be n 1 levels of Factor 1, n2
published in the last ten years has been in the area of levels of Factor 2, and so forth. The complete factorial
fractional factorial designs. design would then consist of n1 x n 2 • • • x n1c (or nk if
These designs offer the marketing researcher a po- each factor has n levels) experimental runs. 2 The main
tentially useful methodology for examining cause and advantages of factorial designs are as follows:
effect relationships. While study of marketing processes 1. They are efficient in that a maximum amount of in-
typically involves consideration of several interrelated formation is obtained with a minimum number of
variables, the cost and time span associated with running experimental runs. (The information obtained from
nk experimental runs from a factorial experiment
complete factorial experiments are frequently prohibi-
can equal the information provided by k X n• ex-
tive. A fractional factorial design yields much of the
perimental runs that would result if each of the
same information provided by the full factorial, al- variables was studied individually using nk runs.)
though certain information must be sacrificed to obtain 2. They provide information on interactions• among
the cost advantages inherent in the design. Moreover, the k variables that is not available when one vari-
the fractional designs offer the researcher more flexi- able at a time and other experimental designs are
bility than certain of the other classical designs such as used.
the Latin square. 1
Classical experimental designs include the randomized
Our objective is to outline the essential aspects of the block, the Latin square, Greco-Latin squares, balanced incom-
fractional factorial design, to illustrate use of the design plete block, and factorial designs.
in the study of a marketing problem, and to identify 2
An experimental run refers to one phase of an experiment.
(It is sometimes referred to as the application of a treatment
* Charles W. Holland is Supervisor of Statistical Analysis, combination.) The complete experiment consists of obtaining
Union Carbide Nuclear Company; and David W. Cravens is numerical observations for a series of experimental runs.
Professor of Marketing, The University of Tennessee. •An interaction is said to exist between two factors if the
effect of one factor varies from level to level of the other factor.
270
3. They are more likely to lead to an optimum set A = Yi[(sum of y's where A is at high level)
of conditions as compared to the commonly em- - (sum of y's where A is at low level)].
ployed method of changing one variable at a
time. Estimates of all main effects and interactions for the
4. They show which factors are most important (that three factor case can be calculated using Table 1. This
is, which factors have the most effect on the re- table is obtained by first indicating "+" and " - " signs
sponse). under the Factor A, B, and C columns corresponding to
The primary disadvantage of factorial experiments is the level that the factor is to be held for each experimen-
that, with many factors at many levels each, the num- tal run. The "+" signs indicate that the factor is to be
ber of experimental runs required and, hence, the time at its high level and the " - " signs indicate that it is to be
and expense grow rapidly. By utilizing fractional fac- at its low level. The signs in the different interaction col-
torial designs, a much smaller number of experimental umns are obtained by taking the product of the signs in
runs is needed. The price paid for reducing the number the corresponding factor columns. For example, the sign
of experimental runs is that all main effects 4 and inter- in the ith row of the ABC column is obtained by taking
action effects cannot be separately estimated. Usually the the product of the signs in the ith row of columns A, B,
fractional factorial designs are constructed so that es- and C. Each effect can be obtained from the table by
timates of the important effects (the main effects and multiplying each of the y's by the corresponding sign in
possibly the two-factor interaction effects for certain fac- the effect column, taking the sum and dividing by four
tor combinations) are said to be confounded5 with higher (the number of changes in level). For example, the main
order interaction effects that are assumed to be negligi- effect of Factor A is:
ble.
A = Yi( - Yi + Y2 - Ya + Y1 - Ya + Yu - Y; + Ys).
Fractional Factorial Development Table 1 illustrates how fractional factorial designs are
Whenever a fraction of a full factorial experiment is obtained. Suppose that we are interested in investigating
used, the design is termed a fractional factorial. (See the effects of four factors each at two levels. Further sup-
[10, Chapter 15] for an introduction to fractional fac- pose that our resources limit us to eight experimental
torials.) Thus, Latin square or incomplete block designs, runs, thus precluding the use of a full factorial experi-
for example, are really special cases of fractional fac- ment which would involve 2 4 = 16 experimental runs.
torial designs. Various fractions of the full factorial can If certain interactions can be assumed to be negligible,
be used depending upon the resources available and then we can estimate the main effects of all four factors
the degree of confounding acceptable to the researcher. as well as the two-factor interactions between three of
Before discussing how fractional factorials are ob- them. Thus, "clean" estimates can be made of the main
tained, it is necessary to present certain factorial experi- effects and certain two-factor interactions.
mental design terminology. In factorial experimentation To obtain the levels of a fourth factor, say D, to be
where each factor is investigated at two levels, small let- run with the levels of A, B, and C indicated in the table,
ters are used to denote treatment combinations and capi- we confound Factor D with one of the interactions. Any
tal letters are used to denote factors and effects. The one of the interactions could be used for this purpose;
symbol (I) is used to represent the treatment combina- however, higher order interactions are usually of less in-
tion where all factors are at their low levels. If a factor is terest than the lower order ones. Hence the highest order
at its high level, a small letter representing the factor ap- interaction is usually confounded with the added factor.
pears in the treatment combination symbol. If it is at its
low level, it does not appear. For example, if three fac- Table 1
tors A, B, and Care included in a factorial experiment, TREATMENT COMBINATIONS AND EFFECTS
the treatment combination symbol ab indicates that A
and B are at their high level and C is at its low level. Factor
Two-factor Three-
The main effect of a factor is the average change in Treat- interaction factor
ment inter- Re-
response caused by changing levels of the factor. Hence, combi- action sponse
the main effect of Factor A in the three factor case is: nation A B c AB AC BC ABC
=D
A = Yi[(a - (J)) +(ab - b) + (ac - c) + (abc - be)]
(1) + + + y,
or in terms of the responses (see Table I) the main effect a + + + Y2
of: b + + + Ya
ab + + + Y•
'A main effect of a factor is the average change in response c + + + y,
caused by a change in level of the factor. ac + + + Ys
" Two effects are confounded when the linear combination of be + + + Y1
observations used to estimate the first effect is identical to that abc + + + + + + + Ys
used to estimate the second effect.
272 JOURNAL OF MARKETING RESEARCH, AUGUST 1973
In this case, we confound Factor D with the ABC inter- The Latin square designs have probably been used
action. We write D =ABC which indicates that the lev- more often than any other type of experimental design
els of Factor D will be determined by the signs in the in marketing. It appears that these designs are used in
ABC interaction column of Table 1. Hence, the experi- many instances where some other form of fractional fac-
mental conditions under which the experiment is to be torial would be more appropriate. The Latin square de-
conducted are given in Table 2 where the Factor D col- signs require that there be exactly three factors included
umn is exactly the same as the ABC interaction column in the experiment and the number of levels must be the
of Table 1. same for each of these three factors. It seems that there
We can then construct what is called a defining rela- are very few experimental situations in marketing (or
tion that enables us to determine which effects are con- any other area) where both of these conditions exist. In
founded (usually referred to as the confounding scheme). the application of statistical methods, the appropriate
Rules for determining which effects are confounded are design should be chosen to fit the problem rather than
given in the Appendix. The use of the defining relation adapting the problem to fit the design.
for this situation shows that in addition to ABC = D the The assumption made when using the Latin square is
following pairs of effects are confounded: ABD = C, that no interactions exist. It appears that this assump-
ACD = B, BCD = A, AB = CD, AC = BD, and tion is rarely met in marketing situations. In any event,
AD = BC. Note that all main effects are confounded care should be taken when interpreting the analysis of
only with three-factor interactions. This means that if the the data from the Latin square or any other fractional
three-factor interactions are assumed to be negligible, factorial design. The defining relation should be con-
this design will enable us to estimate the main effects of structed and the confounding relationships determined
all four factors with only eight observations. In addition, and studied before naively assuming that no interactions
if certain of the two-factor interactions are assumed to exist.
be negligible, we can also estimate some two-factor inter-
action effects. ILLUSTRATIVE EXAMPLE
Latin Square Designs As an illustration of the use of fractional factorial de-
By definition, a Latin square experimental design has signs, we have selected a screening experiment. Suppose
three factors arranged so that each level of each factor a candy company is interested in test marketing a new
is combined only once with each level of the other two candy bar. The objective is to determine which of the
factors. For example, a 3 x 3 Latin square is given be- following factors are important to the sales of the candy
low: bar: (1) television advertising; (2) billboard advertising;
Factor 2 (3) newspaper advertising; (4) candy wrapper design;
(5) display design; (6) free sample introduction pro-
I II III
1 A B c gram; or (7) size of candy bar. A full factorial experi-
Factor 1 2 B c A ment using only two levels of each factor would involve
3 c A B 128 experimental runs. Typically the cost associated with
The levels of Factor 3 are represented by the A, B, and running an experiment this large would be prohibitive.
C symbols in the table. Consequently, it is decided that a screening experiment
Latin square experimental designs are a very restricted will be run in an effort to identify the more important
subset of the fractional factorial designs. A Latin square factors. After these more important factors are identi-
design with n 2 observations is a 1/ n fraction of a n3 fac- fied, smaller experiments can be conducted to obtain
torial design. more precise estimates of the factor effects and the asso-
ciated interaction effect. The factor levels for the screen-
Table 2 ing experiment are chosen as shown in Table 3.
Suppose that it is decided to test the sales of the new
EXPERIMENTAL CONDITIONS candy bar in cities ranging in size from 100,000 to
150,000 inhabitants. Further, suppose that 20 such cities
Factor
Observation are available where the firm's established candies are al-
A B c D ready being marketed and where the sales are reasonably
consistent from city to city. Eight of these 20 cities are
Yi chosen at random and then randomly assigned the treat-
Y2 + + ment combinations indicated in Table 4. The Factors D,
Ya + + E, F, and G are confounded with the four interactions.
Y•
y,
+ + The y column of this table shows the observed sales in
+ +
Y• + + thousands of dollars for a six-week period after the ex-
Y1 + + periment was started.
Ys + + + + To obtain the main effect of A (that is confounded
FRACTIONAL FACTORIAL EXPERIMENT AL DESIGNS 273
Effect of A = - (8.7 + 9.74 + 14.7 + 16.1) = 5..4 tions of the new products. In addition, by compar-
ing the results from a particular new product with
results from other new products, likely failures
The sum of squares due to Factor A is calculated by the could be detected and eliminated from further
following: consideration.
2. In sequential experimentation where, having per-
Sum of squares due to A
= [(number of changes in level) x (effect of A)]2 / Table 4
total number of observations = [4(5.4)]2/8.
TREATMENT COMBINATIONS AND
Results of similar calculations for all factors are shown EXPERIMENTAL RESULTS•
in Table 5. Assuming the interactions are negligible, the
obvious interpretation of the data is that Factors C and Factor
A have the most important effects on the response. That City
D= E= F= G=
is, newspaper advertising has the largest effect on sales, A B c AB AC BC ABC
and television advertising has the next largest effect. Fur-
ther experimentation could be conducted to determine 1 + + + 8.7
which of these two variables is most important and to 2 + + + 15 .1
study the possible interaction between them. Alterna-
3 + + + 9.7
tively, narrowing down the factors to these two may be
4 + + + 11.3
5 + + + 14.7
sufficient. The decision maker would need to assess the 6 + + + 22.3
costs of additional benefits to be gained from further 7 + + + 16.1
experimentation. 8 + + + + + + + 22.1
• This table indicates the levels for each of the seven factors
ADDITIONAL CONSIDERATIONS to be used in each city. For example, in City 1 there is to be no
television, billboard, or newspaper advertising. (Factors A, B,
Types of Applications and Care at their low levels.) The flashy candy wrapper design,
special aisle display, and free sample booths are to be used
Fractional factorial designs are useful in a number of (Factors D, E, and Fare at their high levels). Finally, only the
different situations [4, 12]: 1 oz. candy bar is to be sold (Factor G is at its low level).
b Observed sales in lOOO's of dollars for a 6-week period
I. They are applicable in screening situations where after the experiment was started.
274 JOURNAL OF MARKETING RESEARCH, AUGUST 1973
3. Multiplying both sides of the defining relation fining relation and each effect may be confounded with
by each effect yields: several other effects. Also, rules for obtaining the de-
A (1) = A= A (ABCD) = A 2 BCD =BCD fining relations when the factors have more than two
B (1) = B = B (ABCD) = A B 2 CD = ACD
levels are considerably more complicated than for the
C (1) = C = C (ABCD) = AB C 2 D = ABD two level case. Fortunately, defining relations and con-
D (I) = D = D (ABCD) = A BC D 2 = ABC
founding schemes have been derived for designs cover-
AB(l) = AB= AB(ABCD) = A 2 B 2 CD =AB ing most research situations. The National Bureau of
AC (1) = AC= AC (ABCD) = A2 B C 2 D = AC Standards [13] has made available a complete collection
AD(l) = AD= AD(ABCD) = A 2 BCD2 =AD of such designs for situations where each factor is at two
BC (1) = BC= BC (ABCD) = A B 2 C 2 D =BC levels. Cochran and Cox [5, pp. 276-92] discuss situa-
BD(l) = BD = BD (ABCD) = A B 2 C D 2 = BD tions involving factors at two, three, and four levels each.
CD (1) = CD = CD (ABCD) = A B C2 D2 = CD In a recent article, Addelman [1] discusses some of the
ABC (1) =ABC= ABC (ABCD) = A2 B2 C 2 D = D more specific situations not covered by the other two
ABD (1) = ABD = ABD (ABCD) = A2 B2 C D 2 = C references.
BCD (1) = BCD = BCD (ABCD) = A B 2 C 2 D2 = A. REFERENC ES
Hence we have the following pairs of effects confounded: 1. Addelman, Sidney. "Recent Developments in the Design of
Factorial Experiments," Journal of the American Statistical
A =BCD, B = ACD, C = ABD, D =ABC, Association, 67 (March 1972), 103-11.
AB= CD,AC = BD,AD =BC. 2. Banks, Seymour. Experimentation in Marketing. New York:
McGraw-Hill, 1965.
The confounding scheme will usually be much more 3. Barclay, William D. "Factorial Design in a Pricing Experi-
complex than for this example. If there is more than one ment," Journal of Marketing Research, 6 (November 1969),
427-9.
primary confounding relationship (that is, if more than 4. Box, G. E. P. and J. S. Hunter. "The 2•-P Fractional Fac-
one new factor is added), there will be more than one de- torial Designs," Technometrics, 3 (August 1961), Part I,
311-51 and (November 1961), Part II, 449-58.
Figure 2 5. Cochran, William G. and Gertrude M. Cox. Experimental
Designs, second edition. New York: John Wiley & Sons,
NO INTERACTION BETWEEN NEWSPAPER ADVERTISING 1966.
AND CANDY WRAPPER DESIGN 6. Cox, David R. Planning of Experiments. New York: John
Wiley & Sons, 1965.
SALES 7. Cox, Keith K. and Ben M. Enis. Experimentation for
Marketing Decisions. Scranton, Penn.: International Text-
book Company, 1969.
8. Davies, Owen L., ed. The Design and Analysis of Industrial
Experiments. London: Oliver and Boyd, 1960.
flashy 9. Green, Paul E. and Donald S. Tull. Research for Market-
wrapper design ing Decisions, second edition. Englewood Cliffs, N.J.:
Prentice-Hall, 1970, Chapter 14.
10. Hicks, Charles R. Fundamental Concepts in the Design of
conservative
Experiments. New York: Holt, Rinehart and Winston, 1964.
wrapper design
11. Hoofnagle, William S. "Experimental Designs in Measuring
the Effectiveness of Promotion," Journal of Marketing Re-
search, 2 (May 1965), 154.
12. Hunter, J. Stuart. Fractional Factorial Designs. Pittsburgh:
Westinghouse Learning Press, 1968.
13. United States Department of Commerce, National Bureau
of Standards. Fractional Factorial Experiment Designs for
Factors at Two Levels. Applied Mathematics Series 48
no advertising advertising April 15, 1957. '
14. Venkatesan, M. and Robert J. Holloway. An Introduction
to Marketing Experimentation. New York: The Free Press
NEWSPAPER ADVERTISIN G 1971. '