Question 3.67

3.67 Effects of price promotions.

A researcher is studying the effect of price promotions on consumers’ expectations. She makes up a history of the store price of a hypothetical brand of laundry detergent for the past year. Students in a marketing course view the price history on a computer. Some students see a steady price, while others see regular promotions that temporarily cut the price. Then the students are asked what price they would expect to pay for the detergent.

  1. Is this study an experiment? Explain your answer.
  2. What are the explanatory and response variables?

3.67

(a) Experiment, the subjects are assigned a treatment. (b) The explanatory variable is the price history shown (with and without promotions); the response is the price they would expect to pay.