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    39 views13 pages

    Experimentation in Business

    Uploaded by

    kalyanr27

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    © All Rights Reserved
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    of 13

    BEWORKS:

    EXPERIMENTATION IN
    BUSINESS
    GROUP 4

    JIitesh Singh (PGP/27/443)


    Jobin P Raj (PGP/27/444)
    Kalyan Roy (PGP/27/447)
    Hari Chandana Kaipa (PGP/27/446)
    Tanaya Killedar (PGP/27/449)
    Kartik Bhardwaj (PGP/27/448)
    CONTENT
    01 INTRODUCTION

    02 THE ROLE OF TESTING IN BUSINESS

    03 BEWORKS

    04 OVERVIEW OF THE COSMETICS INDUSTRY

    05 THE CLIENT’S CHALLENGE

    06 DESIGNING THE TEST

    07 RECOMMENDATIONS
    Introduction
    In 2016, Ada Le, an associate at BEworks
    Inc., had a meeting with their latest
    client, a luxury cosmetic company.

    Meeting Outcome: Tasked with understanding


    customer behavior to tailor communications.

    Client Objective: Design key messages aimed at


    driving sales growth

    Methodology: BEworks proposed using empirical


    data obtained through experiments to assess the
    effectiveness of various messages.
    The Role of Testing in Business
    In the world of business, data-driven decisions are critical to success. However, relying
    solely on historical data can lead to inaccuracies and misinterpretations.

    01 02 03 04

    IMPORTANCE OF BUSINESS SCIENTIFIC UNDERSTANDING


    ACCURATE DATA DECISIONS EXPERIMENTS IMPACT
    Testing allows
    Historical data Testing plays a pivotal Experiments are
    businesses to better
    comparisons may role in gathering primary designed to measure
    understand the true
    overlook extraneous data and providing the potential outcome
    impact of proposed
    variables, leading to evidence to support of test conditions, such
    changes and make
    misleading conclusions business decisions as product variations
    informed decisions
    BEworks
    Founded in 2010: Pioneering management consulting firm specializing in applying
    behavioral economics to real-world challenges.

    Founding Team:
    Dan Ariely: Renowned professor and author of "Predictably Irrational."
    Nina Mazar: Behavioral scientist and marketing professor.
    Kelly Peters: Experienced strategy and innovation executive.

    Mission: Apply scientific thinking to marketing and operational challenges with an emphasis on
    empirical testing and data-driven decisions.

    Client Sectors: Worked across various sectors, including energy, financial services, consumer-
    packaged goods, insurance, and government.
    BE Method
    1. Discovery: Scientific perspective study, setting objectives, and specifying measurable
    targets.
    2. Behavioral Diagnostics: Understanding client challenges through a behavioral lens,
    leveraging academic and managerial research.
    3. Ideation: Identifying and prioritizing behavioral economics strategies, often using BEworks'
    "Expert Think Tank."
    4. Build and Experiment: Designing and launching experiments to test solutions empirically.
    5. Choice Architecture: Delivering the "Choice Architecture Playbook" with final
    recommendations based on experimental data, supporting large-scale market rollout.
    COSMETICS INDUSTRY OVERVIEW
    The cosmetics industry encompasses a wide array of products, from
    makeup to luxury skincare lines such as Estée Lauder and L'Oreal Paris. It
    caters to diverse price ranges and qualities, reflecting consumer sentiments
    and economic shifts.

    Effect of Consumer Sentiments


    Discretionary Nature Consumer Confidence Index

    Cosmetic purchases often The industry's performance is


    fluctuate with the state of closely tied to the fluctuations
    the economy, reflecting in the Consumer Confidence
    consumer priorities and Index, directly impacting
    financial constraints. purchasing decisions.
    Market Dynamics & Future Trends

    Barriers to Entry Competitive Segments Social Trends

    The advent of technology From low-end to high-end Significant shifts


    and e-commerce has manufacturers, the industry towards organic and all-
    significantly lowered the is characterized by a wide natural beauty products
    barriers to entry, allowing spectrum of competition have revolutionized
    smaller players to thrive in based on price and quality consumer preferences
    niche markets. offerings. and demand.
    The Client’s Challenge
    HOW TO IMPROVE PRODUCT
    MESSAGING?
    WHY

    Convey the value proposition


    Drive sales
    Increase brand recall
    Boost brand loyalty

    1. BEworks generated 17 taglines through discussion with client


    2. Bolstered by behavioural economics, literature, managerial expertise
    3. Divided into SIX themes

    QUALITY CUSTOM FIT SCIENCE TIME HORIZON WHOLE UNIT CONTROL MSG.
    DESIGNING THE TEST
    Optimizing Tagline Testing for BEWork's Success
    BEworks aims to provide data-driven recommendations
    through reliable experimentation.
    Randomization is crucial to ensure comparability
    between groups.
    Le is deliberating among three alternatives: laboratory
    experiment, field test without randomization, or online
    survey.

    ONLINE SURVEY
    LABORATORY
    EXPERIMENT
    FIELD TEST WITHOUT
    RANDOMIZATION
    STRATEGIES
    LAB EXPERIMENT FIELD TESTING W/O ONLINE SURVEY
    RANDOMIZATION

    Conducted in a Conducted in natural Cost-efficient, time-


    controlled environment. settings. efficient, and easy to
    Subjects randomly Randomization deploy.
    assigned to conditions. challenging in real-world Allows for random
    Minimizes impact of environment. assignment.
    external variables. Statistical corrections More sophisticated
    Limited social factors may compensate for approaches possible.
    influence. limitations. Responses may not fully
    Control conditions: Provides strong represent actual
    status quo treatment. predictors of actual behavior.
    Potential drawback: lack outcomes. Predictive data, not fully
    of real-world relevance. Consideration: feasibility indicative of real-world
    and potential errors. outcomes
    RECOMMENDATIONS
    Given the context of the client's challenge and
    the considerations provided, online surveys
    appear to be the most appropriate method of
    testing for BEworks's client.

    Why?
    1. BEworks is on a tight timeline, and online
    surveys would provide time and cost
    efficiency compared to other options.
    2. Flexible platforms like Qualtrics would allow
    BEworks to tailor the experiment to the
    client's needs and preferences.
    3. Given that this project could significantly
    impact the client’s position in the competitive
    industry, the accuracy of the test results is
    crucial. The random assignments in online
    surveys help draw valid conclusions about the
    effectiveness of each message.
    THANK YOU

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