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Positioning

ME Basics 1

Product Positioning Using
Perceptual & Preference Maps

Differentiation: Creation of differences on one or two key
dimensions between a focal product and its
main competitors.

Positioning: Strategies that firms develop and implement
to ensure that the created differences occupy
a distinct position in the minds of customers.

Mapping: Techniques (using customer-data) that
enable managers to develop differentiation
and positioning strategies by visualizing the
competitive structure of their markets as
perceived by their customers.

ME Basics 2

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ME Basics 4 2 2 . problem solution or needs u G Positioning against another product u 7 up (Uncola) G Positioning through service uniqueness u Singapore airlines ME Basics 3 To Position Products G Marketing managers must understand the dimensions along which target rs (competitive structure of their markets): u How do our customers (current/potential) view our brand? u Which brands do these customers perceive to be our closest competitors? u What product and company attributes seem to be most responsible for these perceived differences? G The perceptual mapping methods provide formal mechanisms to depict the competitive structure of markets in a manner that facilitates differentiation and positioning decisions. Generic Positioning Strategies: G Positioning on specific product features u Sport u Roomy G Positioning on benefit.

G Characteristics of the map: (1) The pairwise distances between product alternatives directly products. how close or far apart the products are in the minds of customers. that is. Vectors are usually used to geometrically denote attributes of the perceptual maps. ME Basics 5 Example: Perceptual Map of Beer Market Popular with Men Ν Ν Heavy Budweiser Full Bodied Heavy ΕΕ Old Milwaukee Meister Brau Special Heineken Miller Occasions Blue Collar Coors Dining Out Premium Good Value Budget Premium Michelob Miller Lite Pale Color On a Old Coors Light Budget Milwaukee Light Light Popular with Women Light Less Filling ME Basics 6 3 3 . A Perceptual Map G A perceptual map is a spatial representation in which competing alternatives and attributes are plotted in a Euclidean space. (2) A vector on the map (shown by a line segment with an arrow) indicates both magnitude and direction in the Euclidean space. (3) The axes of the map are a special set of vectors suggesting the underlying dimensions that best characterize how customers differentiate between alternatives.

This may help in identifying new G Select the set of competitors to compete against. ME Basics 7 Potential Uses of Mapping Techniques G Understand the market structure of product categories as perceived by customers. such maps help managers to think strategically about product positioning. ME Basics 8 4 4 . G Developing a name for a new product.Perceptual Maps Facilitate Decision Making G By summarizing a large amount of information. G Evaluate a new product concept in the context of existing brands in the market. G Identify weak competitors. u Manager can focus on positioning decisions on the underlying dimensions instead of thinking on several attributes.

4. Mapping Methods in Marketing Joint Space Maps Perceptual Maps Preference Maps (includes both perception & preference) Similarity -based methods (particularly useful for Ideal-point model External analysis image-oriented products) (unfolding model) using PREFMAP-3 program Attribute-based methods Vector model (particularly useful for using modified perceptual functional products used in mapping methods using the course MDPREF MDPREF program program) Positioning 8 Attribute-based methods 4-steps: 1. Interpret the output of the perceptual mapping method used. 3. The method used in the software accompanying this book is called MDPREF. Identify the set of competing alternatives (products) and the attributes on which those product will be evaluated. It relies on a factor-analytic approach derivation of perceptual maps. 2. Select a perceptual mapping method. Obtain perceptions data and organize it into a matrix representing customer perceptions of each alternative on each of the pre-specified attributes. ME Basics 10 5 5 .

.... Long battery life (A4) Poor value ..... Step 3: (Select a perceptual mapping method) G Submit data to a suitable perceptual mapping technique (e...) Ratings of each brand on each of the attributes (A1....... Reliable .......g...... G C2. Toshiba_new..................... Compaq.. (e... through video presentation). IBM............. Unreliable (A1) Common ................... MDPREF or Factor Analysis)..................... Dell) G Ensure that consumers are familiar with the laptops (e. A3.........g.. A15 Dell 320N 6 3 7 2 2 C1 TI Travel mate 4 3 4 1 5 Toshiba concept 3 6 2 7 7 Dell 320N C2 TI Travel mate Toshiba concept G Compute average ratings of each brand on each attribute.. Distinctive (A2) Light .. Heavy (A3) Short battery life . ME Basics 12 6 6 . G Identify key attributes (e..... Perceptual Maps Using Attribute Ratings Example: Evaluation of New Laptop Concept with Longer Battery Life Step 1: (Identify the set of competing alternatives and the attributes) G Select a set of laptop computers of interest to the target group (including the new concept).............) A1 A2 A3 A4 ............. through focus groups). Good value (A15) ME Basics 11 Perceptual Maps Using Attribute Ratings Step 2: (Obtain perceptions data and organize it into a matrix) G Have consumers evaluate the laptops..g................... A2. NEC............ Toshiba.g.

brands) u Let X be a matrix with m rows (alternatives) and n columns (attributes). orthogonal. ME Basics 14 7 7 . r<n. with the data in the matrix consisting of the average ratings of each alternative on each attribute by a sample of customers. Let Xs represent a standardized matrix (the effect of the measurement scale is removed) u The model decomposes the matrix Xs (mxn) into two matrices: Xs=Zs*FT v (1) the factor score matrix. usually r=2 or 3 and v (2) the factor loading matrix. Factor Analysis Factor Analysis is a technique for finding underlying dimensions and interrelationships among variables (here. G Variance (the dispersion of values around a mean) is a measure of the information content of an attribute. which retain as much information contained in original data matrix is possible. The larger the variance. F (nxr) ME Basics 13 Information Content of an Attribute G We seek for r factors (typically r=2 or 3). attributes) based on a data matrix consisting of the values of the attributes for a number of different alternatives (here. G The factors retained should recover more than 60 to 70 percent of the variance of the original data. the higher the information content. Zs (mxr) where r is the number of factors (dimensions) of the perceptual map.

xkj zk 1 z kr . The longer this line.. ME Basics 16 8 8 . . ... m m Standardized Standardized Factor Original Data Score Matrix Zs The correlation Matrix Xs between attribute j Reduced Data... r<n and factor i x kj ~ zk1 f1j+zk2 f2j z kr f rj .. Factor Loading . A Pictorial Depiction of Attribute-Based Perceptual Mapping G Alternatives Factors Attributes Factors Attributes 11 22 33 F1 F2 Fj r 11 22 33 G 11 f 1j 11 G 22 F1 f 2j 22 .. Alternatives . Matrix FT . the greater is the importance of that attribute. (zk1. ∼∼ Fr f rj == .zk2 z kr )= location of brand k in f ij (this gives the angle the rD space of factors (cosin) between the 2 2 Variance explained by factor i = fi1 in vectors) (this gives the length of the Proportion of variance explained for attribute j= f1j2 rj 2 attribute vector) ME Basics 15 Step 4 (Interpret the output) G The arrow indicates the direction in which that attribute is increasing (The attribute is decreasing in the direction opposite to the arrow). . G The length of the line from the origin to the arrow is an indicator of the variance of that attribute explained by the 2D map.. 33 G 33 F2 .

draw an imaginary perpendicular line from the location of the alternative onto that attribute. ME Basics 17 Perceptual Map of Laptop Market (This slide shows only the brands) Toshiba IBM Sanyo Compaq TI AST Exec Dell NEC Samsung ME Basics 18 9 9 . G Attributes that are both relatively important and close to the horizontal (vertical) axis help interpret the meaning of the axis. G To position an alternative on each attribute. (These are shown by dashed lines on the map).

(This slide shows only the attributes) Low battery life Keyboard Expandability Distinct Unsuccessful Elegant Avant-Garde Heavy Fast operation Reliable Good design Difficult to use Poor setup Value Graphics Screen quality ME Basics 19 (This slide shows both products & attributes) Low battery life Keyboard Expandability Toshiba Distinct Unsuccessful New Concept Elegant Avant-Garde Heavy Fast operation Reliable IBM Sanyo Compaq TI Good design AST Exec Difficult to use Dell NEC Poor setup Value Samsung Graphics Screen quality ME Basics 20 10 10 .

Joint-Space Maps Objective: Introduce customer preferences into perceptual maps in Two Preference Models Ideal-Point Preference Model Vector Preference Model Increasing Preference Preference Preference Decreasing Preference Ideal Point Attribute Attribute (e.g. quality. (d IB = 2d IA) ME Basics 22 11 11 .g... service speed) ME Basics 21 Incorporating Preference Maps: Ideal-Point Map as an additional alternative evaluated by customers. u Distance of a brand from the ideal-brand on the map is a measure of preference for the brand Ideal Point (I) d IA d IB A B A is preferred twice as much as B. sweetness) (e.

C v Helps identify which attributes B influence consumer preferences v Helps identify which brands are most preferred in the aggregate (b) A is preferred to B and B is preferred to C. Preference vector indicates the d AC direction in which preference is d AB increasing in the map. (d AC = 2d AB) ME Basics 23 Preference Map Using MDPREF Vector Model Low battery life Keyboard Expandability Toshiba Distinct Unsuccessful New Concept Elegant Avant-Garde Heavy Fast operation Reliable IBM Sanyo Compaq TI Good design AST Exec Difficult to use Dell NEC Poor setup Value Samsung Graphics Screen quality Preference ME Basics 24 12 12 . Incorporating Preference Maps: Vector Map A simple vector method: additional variable (attribute) in the ratings data A Preference u attribute Vector simultaneously with other attributes on which the products are rated. C is preferred half as much as B. With reference to A.

ME Basics 25 Positioning Analysis Software ME Basics 26 13 13 . Mapping Preferences PREFMAP3 is a mapping model based on the assumption that respondents who have common perceptions of a set of alternatives may have widely differing preferences for these alternatives. This approach is called external unfolding. u PREFMAP3 starts with a perceptual map giving the locations of the product alternatives (developed external to the PREFMAP3 model). u In the second step it introduces for each respondent either an ideal brand or a preference vector into the map.

quiet and roomy . G20 not roomy enough -Attractiveness to S3 (American dreamers): G20 but rates BMW. Saa b.It is perceived as attractive.In the overall segment customers prefer the BMW or Saab on Infiniti G20 ME Basics 27 . Toyota and Honda similarly CHALLENGE: by restyling G20 Infiniti may increase its attractiveness this would position G20 southwesterly that would rsult in a 6..Hi-prestige matter to S1 (singles): BMW. high prestige. Saab more then G20 -Roomy to S2 (married people): Audi.G20 is closer to BMW and Saab than to Toyota .67% market share under first choice rule ME Basics 28 14 14 . successful.

Exercise #5: Positioning the Infiniti G20 Question 1 Describe the two (or. three) dimensions underlying the perceptual maps that you generated. S2 and S3) shown on these maps? To which segment(s) would you market the Infiniti G20? How would you reposition the Infiniti G20 to best suit the chosen segment(s)? Briefly describe the marketing program you would use to target the chosen segment(s)? ME Basics 29 15 15 . how do people in the market perceive the Infiniti G20 compared with its competitors? Question 2 Which attributes are most important in influencing preference for these cars in the three segments (S1. Based on these maps. if applicable.