April 26, 2009

Retail Testing: Matched Markets

You are a retail executive. Those folks in the online division talk all of the time about how they test different issues in real time. You don't have that type of flexibility.

Or do you?

Matched market testing has been around since, oh, I don't know, 1,200 BC? You take markets that have similar demographics, psychographics, lifestyle attributes, and customer spending levels at your brand, and you match them up for testing purposes.

Examples (there are infinite combinations):
  • Seattle and Portland
  • Los Angeles and San Diego
  • San Francisco and San Jose
  • Oakland and Sacramento
  • Phoenix and Denver
  • Minneapolis and Chicago
  • Detroit and Cleveland
  • Pittsburgh and Cincinnati
  • Philadelphia and Baltimore
  • Boston and Washington, DC.
  • Richmond and Raleigh
  • Atlanta and Miami
  • Tampa and Charlotte
  • Jacksonville and Orlando
  • New Orleans and Birmingham
  • Memphis and St. Louis
  • Nashville and Louisville
  • Omaha and Kansas City
  • Houston and Dallas
  • Salt Lake City and Boise
Once you match similar markets, you randomly assign one market to the test group, one to the holdout group. Then execute your test --- take 20% off orders over $75 in one set of markets, don't do so in the other set. Or test different price points --- you name it.

Matched markets. Give it a shot!

3 comments:

  1. Whenever I see a big retail change make a significant change to their stores I wonder if they do this sort of testing.

    For example, Safeway recently upgraded their stores to look more like Whole Foods -- lots of wood paneling, big open spaces with organic produce, etc.

    Did they just do that all-at-once, or did they match markets?

    Whenever I'd walk inside I always hoped they did the latter.

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  2. Most large retailers are doing this style of testing ... they just don't talk about it publicly.

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  3. Trend of matched market testing is been from many years; it’s been beneficial to catch the trend of the market. This testing is still applied in modern times to see user’s reaction and it’s not the one factor which would affect the business, but there are many factors that should calculated while applying this testing.

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