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Unit 6: Research Design

6.7.3 Factorial Design Notes

Factorial design permits the researcher to test two or more variables at the same time. Factorial
design helps to determine the effect of each of the variables and measure the interacting effect of
many variables.

Example: A departmental store wants to study the impact of price reduction for a product.
Given that, there is also promotion (POP) being carried out in the stores (a) near the entrance
(b) at usual place, at the same time. Now assume that there are two price levels namely regular
price A1 and reduced price A . Let there be three types of POP namely B , B and B . There are
2 1 2 3
3 × 2 = 6 combinations possible. The combinations possible are B A , B A , B A , B A , B A , B3A2.
1 1 1 2 2 1 2 2 3 1
Which of these combinations is best suited is what the researcher is interested in. Suppose there
are 60 departmental stores of the chain divided into groups of 10 stores each. Now, randomly
assign the above combination to each of these 10 stores as follows:

Combinations Sales
B1A1 S1
B1A2 S2
B2A1 S3
B2A2 S4
B3A1 S5
B3A2 S6

S to S represents the sales resulting from each variable. The data gathered will provide details
1 6
on product sales on account of two independent variables:
The two questions that will be answered are:

1. Is the reduced preice more effective than regular price?
2. Is the display at the entrance more effective than the display at the usual location? Also,
the research will tell us about the interaction effect of the two variables.

Outcome of this experiment on sales is as follows:
1. Price reduction with display at the entrance.
2. Price reduction with display at the usual place.
3. No display and regular price applicable.

4. Display at the entrance with regular price applicable.
6.7.4 Latin Square Design

The researcher chooses three shelf arrangements in three stores. He would like to observe the
sales generated in each of these stores at different periods. The researcher must make sure that
one type of shelf arrangement is used in each store only once.

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