Broadly speaking, an experiment occurs when some action leads to some results. In a way, we can say that if prices are reduced, we can study its effect by observing whether sales go up. It is a simple experiment where sales will be observed before the price reduction and after the price reduction. It is before-and-after comparison on account of manipulation of price. In a simple experiment, the design remains confined to a single participant or group of participants and is single-group pre-test vs. post-test design.

Some thought must be given to interpretation of results in simple experiments. Suppose we reduce the price of text-books by 10% and the sales of the books go down by 20 per cent. What does it mean? Is it necessary to raise the price? Maybe, the professors have suggested the use of guide-books and help-books. Maybe, someone else has reduced the price by 15 per cent. What if we conduct the experiments after examinations?

This is where simple experiment’s results are vulnerable to effects of many factors other than manipulation. We can observe the change in results, i.e. the change in sales of a dependent variable. But we cannot attribute these changes to manipulation alone. Non-manipulated activities also may affect the results. An experiment is useful only so far as it can control the effects of other events which may affect the dependent variable, so as to make changes attributable to manipulation alone. One way out to isolate non-manipulated variables in experiments is to do lab research. For instance, we can control price of a competing book-store in a lab experiment. But lab experiments do not reflect reality. Besides, they are also not free from many extraneous factors.

The other way is to set up comparison group in the experiment to control the effects of non-manipulated variables. A bookstore can measure the effect of reduced prices on sales, by reducing prices in one group of markets and keeping them constant in another group. The group where prices are lowered is called the experimental group and the group where they are kept constant is called the control group. If the groups chosen are to begin with on par, the effect of manipulation can be measured by comparing the groups. An extraneous factor affects both the groups and cancels out its effect.