Effects of Price and Advertising in Test-Market Experiments

Abstract

The effects of price and advertising expenditures on new-product sales are examined across four test-market experiments. All experiments involved two levels of advertising expenditure tested across cities and two or three price levels tested across stores within city. Mean sales results over a 24–week period are reported for each treatment combination. Analysis of variance results are interpreted as supporting a negative price main effect, a positive advertising main effect, a negative price-advertising interaction, and significant but variable time effects. Assessments of these results in terms of design adequacy and their implications for alternative theoretical explanations are offered.