What is Experimental Marketing? - Definition & Examples

Instructor: Lucinda Stanley

Lucinda has taught business and information technology and has a PhD in Education.

This lesson will explain how experimentation is being used in marketing, and how marketing evolved to this point. We'll also take a look at an example of how experimental marketing can be used.

Scientific Inquiry

When you think of the word 'experiment,' do you automatically picture a scientist in a lab coat pouring a variety of viscous liquids from one beaker to another? That's probably what most people think about. However, an experiment is any process used to learn about something by testing what you think might happen, which is called the hypothesis, and comparing it to what actually does happen. That means you need to collect data to support your hypothesis, which sounds reasonable, right? So, how can experiments be related to marketing? We know that marketing is all about promoting goods or services so that potential customers are aware of their existence in the hopes that they will exchange their hard-earned money to buy those products or services. Just like a scientist, a marketing manager wants to learn what marketing strategies work best in a variety of markets. To conduct this inquiry, marketing managers use experimental marketing. Let's see how it developed.

Evolution of Marketing

Gone are the days when producers didn't worry about marketing because the supply of a product was less than the demand (think pre-industrial revolution). Back then, if your family farm produced 6 dozen eggs, you knew you would be able to sell them because you were the only supplier in town. Also, gone are the days when producers marketed their products to everyone and anyone because supply was greater than demand. Why market a new line of diapers in a retirement community? Mass marketing became pricey, and marketing dollars were wasted promoting products to people who would never buy the products. Marketing today focuses on the actual customer, the one who is likely to have a need for the product and will buy it. This is called targeted marketing.

That's all well and good, but how do marketing managers know what forms of marketing activity are most likely to result in sales? They could guess, and maybe be right, but a better way to find the right fit between the target market and a marketing strategy is to experiment. Experimental marketing consists of research based on a hypothesis of what kinds of marketing activities will appeal to potential customers, then collecting and analyzing the resulting data to see if the marketing activity was successful. With so much marketing being done digitally now (think social media, email, and web pages), it's easier than ever to develop marketing campaigns based on real-world experience and driven by actual data, not by what the marketers think will appeal to their customers. This is a real advantage in today's competitive marketplace!

Data-Driven Marketing Strategies

In the end, experimental marketing is the process of testing a variety of marketing strategies to see which ones work the best with the targeted customers and which ones generate new leads for building new customer markets. Savvy marketing managers know that even small increases can multiply over time to something more significant. They also know that experimental marketing activities have to be managed well to maintain consistency in the message and the vision of the company, while taking advantage of innovative ideas for targeting customers.

At the very least, experimental marketing should have a specific objective, meaning the experiment should test for only one thing at a time; that way the data is more focused and returns more meaningful data that can be interpreted and acted on. A marketing manager looking to try an experimental strategy should concentrate on one of the following:

  • Acquisition: Identifying new customers.
  • Activation: Having potential customers take action.
  • Retention: Encouraging existing customers to continue to purchase.
  • Referral: Encouraging existing customers to provide leads for new customers.
  • Revenue: Increasing sales.

What would that look like in a real-world situation?

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