Context effects and context maps

for positioning
Minhi Hahn*
Eugene Won**
Hyunmo Kang*
Yong J. Hyun*
*KAIST Graduate School of Management
**Dongduk Women’s University
Received (in revised form): 29 September 2005
Context effects refer to changes in consumer preference and choice responses
when a new alternative is added to a choice set. This paper proposes a general
scheme for classifying various context effects using newly defined share-ratio
measures (SRM) and share-change measures (SCM). With these measures, we can
also draw context maps and preference-substitutability maps that visualise the
nature of context effects and positions of competing brands. These maps allow
marketers to make positioning decisions that take advantage of positive context
effects.
Introduction
A scene is shown of two truck drivers competing to see who will arrive
first at a building. The brands on the trucks are shown as FedEx and UPS.
They arrive at the building almost at the same time. The drivers rush into
the building only to find a DHL man coming out with a smile. This is a
recent DHL commercial, comparing it with and differentiating it from
FedEx and UPS. By giving consumers the impression that FedEx and UPS
are similar, DHL may have tried to distinguish its own service as unique.
Market positioning is defined as ‘arranging for a product to occupy a
clear, distinctive, and desirable place relative to competing products in the
minds of target consumers’ (Kotler & Armstrong 2004, p. 55). Similarly,
product position means ‘the way the product is defined by consumers on
important attributes – the place the product occupies in consumers’ minds
relative to competing products’ (Kotler & Armstrong 2004, p. 259). Thus,
International Journal of Market Research Vol. 48 Issue 2
© 2006 The Market Research Society 155
unless competing products are clearly identified, market positioning is
incomplete and a product position cannot be understood clearly.
It is becoming more difficult nowadays to identify relevant competing
products as more products are competing in goal-derived or needs-based
product markets. For example, a luxury car brand may have to compete
not only with other luxury car brands but also with other non-car
alternatives, such as stock options or money, as rewards packages for
senior executives. Also, the main market for a lady’s skin cream product
may be the Christmas present market for husbands. Aside from such
unusual examples, it is not an easy task to identify those competitors that
compete more directly with the firm’s brand even in the same product
category. In this paper, we propose a new framework, called context maps,
which can help marketing managers determine competing products for
comparison in making positioning decisions. The context maps show
visually how shares are gained or lost when each competing alternative is
added to consumers’ consideration sets.
The framework is also useful for classifying context effects (i.e. the
effects of adding an alternative to or subtracting an alternative from a
choice set on changes in consumer preference and choice responses). Many
popular models used for predicting market shares, including multinomial
logit models, are based on the ‘independence from irrelevant alternatives
(IIA)’ principle (Luce 1959). This principle assumes that relative preference
between two options does not depend on the presence or absence of other
options. However, many consumer studies have shown the existence of
various context effects. For example, a new alternative product often takes
disproportionately greater share from similar than from dissimilar
products (Debreu 1960). Tversky (1972) and Batsell and Polking (1985)
are among the many who proposed choice models that incorporate such
‘substitutability effects’ among similar products. On the other hand, it was
observed that a new alternative product can increase shares of similar but
more powerful products. Huber et al. (1982) called such context effects
‘attraction effects’. Simonson (1989) observed ‘compromise effects’ such
that the addition of an extreme alternative increases shares of intermediate
options. The addition of a new alternative similar to competing products
may increase or decrease shares of the focal product. While Kahn et al.
(1987) observed ‘lone alternative effects’, where the lone alternatives lost
share, Brenner et al. (1999) observed what we call ‘uniqueness effects’,
where the unique alternative gained share. Our classification framework
makes clear how those independently observed context effects are
interrelated.
Context effects and context maps for positioning
156
We also present preference-substitutability maps. These maps show the
competitive relationship between all pairs of brands in the market in terms
of their relative preference and relative substitutability with each other. As
context maps, preference-substitutability maps are derived from the change
in market share of the existing brands due to the introduction of a third brand.
In the next section, we suggest a general scheme to classify various con-
text effects when an alternative is added to a choice set. After key measures
to analyse context effects are proposed, we describe how context maps and
preference-substitutability maps can be drawn and analysed. Then
applications are illustrated with real survey data for cell phones, digital
cameras, and movies in the Korean market. We conclude this paper with a
discussion of the strengths and weaknesses of the proposed framework.
Classifying context effects
We first introduce the situation where there is no context effect. According
to Luce (1959), the ‘independence from irrelevant alternatives’ (IIA) axiom
holds if
for i, j ∈ A ⊂ T, where T = {1, 2, …, N} is a set of N competing products,
P
A
(i) is the probability of i being chosen when A is the set of available
alternatives. Popular choice models such as the multinominal logit (MNL)
model (Guadagni & Little 1983; McFadden 1973) and ASSESSOR (Silk &
Urban 1978), a new product forecasting model, are based on the IIA
axiom. When this assumption holds, the addition of a new alternative in
the choice set or the subtraction of an alternative from the choice set does
not affect the preference of consumers. Therefore, there is no context effect
when the IIA axiom holds.
For simplicity of further discussions, we will suppose there are two
alternatives, 1 and 2, in the choice set. Alternative 1 is our focal alterna-
tive. Let the choice shares of alternative 1 and 2 be P(1) and P(2). In
addition, suppose another alternative, 3, is added to the choice set. Let the
choice shares of 1 and 2 be P′(1) and P′(2) in the choice set with the three
alternatives. With the simplified notations, IIA holds if
(1) (1)
(2) (2)
P P
P P


( ) ( )
( ) ( )
A T
A T
P i P i
P j P j

International Journal of Market Research Vol. 48 Issue 2
157
Our classification scheme is based on the following definitions.
Definition 1
There is a context effect if
Definition 2
The context effect is positive for alternative 1 if
The context effect is negative for alternative 1 if
Definition 3
Suppose the context effect is positive. The positive context effect is defined
to be strong if P′(1) > P(1). The positive context effect is defined to be
weak otherwise.
Table 1 shows our classification scheme. The context effect is defined to be
positive if the focal alternative gets a greater share than expected from the
IIA principle (i.e. when there is no context effect). The context effect is
defined to be strongly positive if the share of the focal alternative is
increased as the third alternative is included in the choice set. Note that the
regularity assumption in choice states that choice shares cannot increase
when a new alternative is added to the choice set. Thus, the situation with
the strong context effect is the one that violates the regularity assumption.
Table 1 also relates each category to previously studied context effects.
Also, there are context effects newly defined in this paper.
When the added alternative (alternative 3) takes away more share from
the focal alternative 1 than from 2, we define that this is a negative context
effect for alternative 1. If alternative 3 is more similar to alternative 1, it is
(1) (1)
(2) (2)
P P
P P

<

(1) (1)
(2) (2)
P P
P P

>

(1) (1)
(2) (2)
P P
P P



Context effects and context maps for positioning
158
International Journal of Market Research Vol. 48 Issue 2
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the substitutability effect (Debreu 1960). For example, suppose there are
two animation movies in a choice set for viewing at the regular price (i.e.
The Incredibles and Shrek II). Also, suppose a new option is added of
viewing Shrek II with a $1 discount. The additional option is likely to take
away most of the share from viewing Shrek II at its regular price but not
much from viewing The Incredibles. If alternative 3 is more similar to
alternative 2, it is consistent with the lone alternative effect. Kahn et al.
(1987) suggested that lone alternatives can be in a disadvantageous
position when competing with a group of alternatives that are similar to
one another. If the addition of alternative 3 enhances the attractiveness of
the category characterised by alternatives 2 and 3, it can reduce the share
of alternative 1 more than expected under the IIA condition.
When the added alternative takes away more share from the competing
alternative 2 than 1, there is positive context effect for alternative 1. At the
same time, if the share of alternative 1 is increased, there is a strong
positive context effect. The attraction effect (Huber et al. 1982) and
compromise effect (Simonson 1989) are in this category. Also, the
advantage of a unique alternative over a group of similar alternatives,
observed by Brenner et al. (1999), is consistent with the strong positive
context effect. Simonson and Nowlis (2000) suggest that consumers’ need
for uniqueness enhances the choice of unique alternatives. We will call it
‘uniqueness effect’ if alternative 1 shows a strong positive context effect
when a third alternative (3) is added that is more similar to alternative 2.
With the addition of alternative 3, the market share of alternative 1 may
become lower than its original share but it may still achieve a greater share
than expected under the IIA condition. Such ‘weak positive context effects’
were not discussed in previous studies of consumer choices. If there is a
positive context effect, but not strong enough to be classified as the
attraction effect, compromise effect or uniqueness effect, because the
market share is not increased with the addition of the third alternative, we
will call it ‘weak attraction effect’, ‘weak compromise effect’ and ‘weak
uniqueness effect’, respectively. Weak positive context effects can arise
from the substitutability effect as well. When the added alternative is more
substitutable with alternative 2 than 1, it may take a disproportionately
greater share from alternative 2.
Context maps
Previous studies on context effects suggest that IIA situations are quite
ideal and do not often occur. Consumer preferences for the focal product
Context effects and context maps for positioning
160
depend on the competitors considered in the choice set. Marketers may
strategically influence consumers in selecting potential competitors
compared in the choice set. The context maps discussed in the following
enable marketers to visually investigate the context effects originated from
the existence of competitors considered in the choice set.
We suggest two key measures for the analysis of context effects based on
Table 1. The first of these is the share-ratio measure (SRM), defined as:
SRM(1, 2|3)
= and
SRM(1, 2|None)
=
where 1, 2 and 3 denote that alternative 3 is added in the choice set of 1
and 2, and ‘None’ means there is no additional alternative other than
alternatives 1 and 2 in the choice set. SRM(1, 2) can be understood simply
as a measure of relative preference between alternatives 1 and 2. Log
transformation is applied to make the SRM value zero when the shares are
the same for alternatives 1 and 2.
Comparing the value of SRM(1, 2|3) with that of SRM(1, 2|None), we
can identify whether there is any context effect caused by alternative 3 or
not and, if there is, whether the context effect is positive or negative. If the
value of SRM(1, 2|3) is greater than SRM(1, 2|None), the context effect is
positive, meaning that the share of alternative 1 is at least greater than that
under the IIA situation when alternative 3 is included in the choice set. If
the value of SRM(1, 2|3) is less than SRM(1, 2|None), the context effect is
negative, meaning that the share of alternative is smaller than that under
the IIA situation. If SRM(1, 2|3) = SRM(1, 2|None), the IIA condition
holds, implying that there is no context effect.
The second measure is the share-change measure (SCM) defined as:
SCM(1, 2|3)
= and
SCM(1, 2|None) = 0
(1)
log
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International Journal of Market Research Vol. 48 Issue 2
161
where 3 denotes that alternative 3 is included in the choice set. SCM
simply represents the change of the focal brand’s market share after the
introduction of alternative 3. Again, log transformation is applied to make
the value of SCM(1, 2|3) zero when there is no change in the share of
alternative 1 even if alternative 3 is included in the choice set. We define
SCM(1, 2|None) = 0 to denote that there is no change in share when no
alternative is added to the choice set. From Table 1, we see that, assuming
SRM(1, 2|3) > 0, the positive context effect is strong if SCM(1, 2|3) > 0.
Otherwise, it is weak.
Using the two measures, SRM as the x-axis and SCM as the y-axis, we
can draw a ‘context map’ for any pair of brands in the market, as in
Figure 1. Any point in the map has the coordinate of (SRM, SCM).
Suppose we have collected data from consumers asking their choice
intentions in various choice sets with two alternatives (e.g. alternative 1
and 2) or with three alternatives (e.g. alternatives 1, 2 and one other
alternative). We can easily identify what kind of context effect is occurring
in each situation by calculating values of SRM and SCM for each of the
cases when a third alternative is added and then drawing context maps like
that shown in Figure 1. All the points, {SRM(1, 2|k), SCM(1, 2|k)}, are
directed by the arrows starting from the point {SRM(1, 2|None),
SCM(1, 2|None)} which is {log (P(1)/P(2)), 0}. The directions of the arrows
show the types of context effect that arise from the introduction of a third
brand, k, into the choice set {1,2}.
Context effects and context maps for positioning
162
Figure 1 Identifying the types of context effect with context maps
SRM(1, 2|k)
= log [P′(1)/P′(2)]
SCM(1, 2|k)
= log [P′(1)/P(1)]
Case 3
Case 2
Case 1
Case 4
Case 5
(Log [P(1)/P(2)], 0)
Weak
positive
context
effect
Negative
context
effect
No context
effect (IIA)
Strong
positive
context
effect
From context maps, we can identify the nature of context effects,
observing the direction of the arrows. In Figure 1, context effects are
positive for product 1 in cases 1, 2 and 3. The arrows are directed to the
right from the point of {SRM(1, 2|None), SCM(1, 2|None)}. In such cases,
the market share for product 1 is at least more than expected under the IIA
condition. Case 1 is the most desirable situation, showing a strong positive
context effect. Case 2 is a special example of a weak positive context effect
such that market share of product 1 stays constant after the addition of the
third alternative. In Case 3, the context is positive but weak. The addition
of an alternative decreases the share, but not more than expected under the
IIA condition. The added alternative takes a disproportionately greater
share from alternative 2 than 1. Case 4 is the situation where IIA holds.
The added alternative draws proportionally equal shares from alternatives
1 and 2. In Case 5, addition of an alternative not only decreases the share
of the product but also damages the focal product more than its direct
competitor.
The illustration shows that we can analyse the advantages and
disadvantages of including an additional alternative in the choice set by
drawing context maps. Typically, the context map is drawn from the
perspective of a focal product. With a fixed main competitor always in the
choice set, it shows the effect of adding a different product in the choice
set as the third alternative. Of course, for further analysis, marketers can
change the main competitor or even the focal product, and can analyse the
effects of changing the product. If we use similarity-among-alternatives
data in addition to context maps, we can identify the exact nature of the
context effects described in Table 1.
Preference-substitutability maps
In this section, measures of relative preference and substitutability are
suggested through the application of the measures developed in previous
sections. Relative preference, in a binary choice case, can be represented
simply by the share-ratio of two compared alternatives. Suppose our focal
product is alternative 1. We define the relative-preference measure (RPM)
of alternative 1 with respect to alternative j as:
RPM (1, j) = SRM(1, j|None)=
(1)
log
( )
P
P j
]
]
]
International Journal of Market Research Vol. 48 Issue 2
163
where j is the main competitor selected in the two-alternative choice set.
The RPM(i, j) value can be calculated assuming each brand i in the market
is the focal alternative. The overall score of RPM at the industry level is
obtained by getting the average of RPM(i, j) values across all the
competing products for i:
Overall RPM(i) =
where N is the total number of alternatives considered including i. Note
that the average of RPM(i) values is always zero.
Substitutability of the focal firm 1 to a competitor, k, is conceptualised
as the degree of shares alternative k takes away from 1 when k is added as
the third alternative in the choice set. Assuming that there are Ncompeting
products in total, we have (N – 2) number of two-alternative choice sets
that include 1 and one of its competitors except k. The substitutability
measure for alternative 1 with respect to k is the average of the propor-
tions of the shares that k takes away from 1 in the (N – 2) choice sets. We
define the relative-substitutability measure (RSM) of alternative 1 with
respect to k as:
where j is the main competitor selected for the two-alternative choice set
and N is the total number of alternatives considered including 1 and k.
The greater share alternative k takes away from 1 rather than its
competitors, on average, the higher the value of RSM(1, k). Thus, higher
scores imply that 1 is more substitutable for k.
RSM(i, k) values can be calculated, assuming each brand i in the market
is the focal alternative. The overall score of RSM at the industry level is
Note that the average value of all the notations RSM(i, k) is always zero
and the average value of overall notations RSM(k) is zero as well. This
means that the proposed substitutability measure shows the relative
1,
1
( ) ( , )
1
N
k k i
Overall RSMi RSMi k
N



1,
1,
1
(1, ) { ( ,1| ) ( ,1| )}
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log log
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N
j k
N
j k
RSM k SRM j k SRM j None
N
P j P j
N P P




| | ′ ] ]

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] ]
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Context effects and context maps for positioning
164
substitutability of a pair compared to other pairs in the considered market.
RSM has a value greater than zero if the pair has a substitutability greater
than the average of the market and less than zero in the other case.
Utilising the proposed measures, we can draw preference-substitutability
maps either from a focal firm’s perspective or from the overall industry
perspective. Using the values of RPM(1, k) and RSM(1, k) as two
coordinates for each competitor k, preference-substitutability maps from
the perspective of brand 1 can be drawn. The firm-level preference-
substitutability map plots all the (N – 1) competitors of the focal firms in
terms of their relative preference to and substitutability with the focal
brand. Also, with the overall RPM(i) and RSM(k) as the coordinate
{RPM(i), RSM(k)}, industry-level preference-substitutability maps can be
drawn. The industry-level preference-substitutability map plots all N firms
in the market according to their overall preference and relative
substitutability values. With these maps, marketers can visually observe
overall positions of competitors with respect to the substitutability and
preference as conceptualised in this paper.
Application of context maps and preference-substitutability maps
Design and data collection
We collected choice data for cell phones, digital cameras and movies. For
this study, five leading brands were selected from cell phones (LG,
Motorola, Pantech, Samsung and SK Teletech) and digital cameras
(Canon, Nikon, Olympus, Samsung and Sony). Also, five recently released
movies (Clean, DMZ, Notebook, Pretty and Taxi) were selected as
alternatives in the movie category. These movies were all released on the
same day. Among the movies, DMZ and Pretty are Korean while the
others are not. The most important target segments for the three products
are young consumers in their twenties. We collected data from 86 college
students. Among the respondents, 47 (54.7%) were male and 39 (45.3%)
female; the mean age was 22.7 years; 85 (98.8%) possessed cell phones
and 37 (43.0%) had digital cameras.
Subjects were asked to choose one alternative from each of ten two-
alternative choice sets for one product category and each of ten three-
alternative choice sets for another product category. There were three
types of questionnaire. Two-alternative choice sets for cell phones were
included in Type A, for digital cameras in Type B and for movies in Type C.
On the other hand, three-alternative choice sets for movies were included
International Journal of Market Research Vol. 48 Issue 2
165
in Type A, for cell phones in Type B and for digital cameras for Type C.
Thus, no subjects answered the two-alternative questions and the three-
alternative questions for the same products. Between the two-alternative
questions and three-alternative questions, subjects answered questions on
demographics and possession of the products. The three questionnaire
types were randomly assigned to subjects. Questions on perceived
similarity among alternatives were presented in the final part.
Subjects were told that all the cell phones had been launched recently.
They were told that all the phones featured a one-megapixel digital
camera, an MP3 player and a video messaging function. Thus, the five
alternatives differed only in brand name and price. For digital cameras,
information regarding megapixels, size of memory and price was given for
each alternative. In the case of the movies, short introductions regarding
the genre and synopsis were presented to the subjects. We present the data
for the cellular phone category in Table 2.
Our raw data show that predicting market share based on the IIA
assumption can be quite misleading. For example, SK Teletech and
Pantech have market share of 64% and 36% respectively in a paired
comparison case. When LG Cyon is introduced into the choice set, it takes
an overall share of 7%. According to the IIA principle, the shares for SK
Teletech and Pantech should be 60% and 33% after the new brand
introduction. However, the data show that market share for SK Teletech
and Pantech is 82% and 11% respectively after the introduction. There is
a 22.4% deviation from what the IIA assumption predicts. The data verify
the importance of analysing the context effects.
Analysis of key measures
From the choice data shown in Table 2, values of the share ratio measure
(SRM) and share change measure (SCM) were calculated. Table 3 shows
the SRM and SCM scores for the cellular phone category. Note that a
greater value of SRM(focal, 2nd brand|3rd brand) than SRM(focal, 2nd
brand|None) means the focal brand shows a positive context effect when
the third brand is included in the choice set, and vice versa. A positive
value of SCM stands for an increase in share of the focal brand when the
third brand is added in the choice set. It is very difficult to interpret the
SRM and SCM values directly from Table 3. The context maps allow
marketers to easily identify the context effects.
Context effects and context maps for positioning
166
International Journal of Market Research Vol. 48 Issue 2
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Context effects and context maps for positioning
168
Table 3 SRM and SCM values for cell phones
Focal brand 2nd brand Added brand SRM SCM
Samsung SK Teletech Pantech 0.636 0.194
LG 0.405 0.069
Motorola 0.310 0.069
Pantech SK Teletech 2.140 –0.057
LG 1.946 0.154
Motorola 1.224 –0.057
LG SK Teletech 1.609 –0.511
Pantech 1.658 –0.174
Motorola 1.897 –0.223
Motorola SK Teletech 2.015 –0.511
Pantech 1.041 –0.386
LG 1.386 –0.223
SK Teletech Samsung Pantech –0.636 –0.442
LG –0.405 –0.336
Motorola –0.310 –0.241
Pantech Samsung 1.504 –0.693
LG 2.037 0.245
Motorola 1.705 0.201
LG Samsung 1.204 –0.875
Pantech 2.442 –0.043
Motorola 3.045 –0.134
Motorola Samsung 1.705 –0.547
Pantech 2.398 0.147
LG 1.253 0.100
Pantech Samsung SK Teletech –2.140 –1.609
LG –1.946 –1.204
Motorola –1.224 –0.693
SK Teletech Samsung –1.504 –1.609
LG –2.037 –1.204
Motorola –1.705 –0.916
LG Samsung –0.288 –1.846
SK Teletech 0.405 –1.846
Motorola 0.000 –0.747
Motorola Samsung –0.182 –1.482
SK Teletech 0.693 –1.705
LG –0.105 –0.894
LG Samsung SK Teletech –1.609 0.000
Pantech –1.658 0.288
Motorola –1.897 0.000
SK Teletech Samsung –1.204 –0.288
Pantech –2.442 –0.693
Motorola –3.045 –1.386
(continued)
Table 4 shows the values of the relative preference measure (RPM) as
well as the average of RPM across all the competitors (i.e. the overall
relative preference measure). Note that a positive value means the focal
brand is preferred more than the comparison brand. Naturally, the greater
the overall RPM, the stronger the overall preference of the brand. Among
cell phones, Samsung and SK Teletech are the top two in terms of
preference. It is interesting that Samsung and SK Teletech are equally
preferred when compared directly. However, when they are compared to
LG or Motorola, Samsung is preferred much more than SK Teletech. As
expected, we found Canon and Sony to be the top two brands in the digital
camera category. Among the movies, Notebook and Taxi were the most
popular.
Table 5 shows the values of the substitutability measures RSM and
overall RSM. A positive number means the added brand takes away more
share from the focal brand than its competitors, on average. The overall
relative substitutability measure is the average of the RSM scores. Among
the cell phones, SK Teletech is the least substitutable and Pantech is the
most substitutable overall. LG is highly substitutable with SK Teletech.
Motorola is highly substitutable with Pantech. In the following sections,
we interpret maps drawn from the values in Tables 3, 4 and 5.
International Journal of Market Research Vol. 48 Issue 2
169
Table 3 SRM and SCM values for cell phones (continued)
Focal brand 2nd brand Added brand SRM SCM
LG (continued) Pantech Samsung 0.288 –0.811
SK Teletech –0.405 –1.504
Motorola 0.000 0.000
Motorola Samsung –0.511 –1.540
SK Teletech –1.792 –2.639
Pantech –0.105 –0.442
Motorola Samsung SK Teletech –2.015 –0.405
Pantech –1.386 0.511
LG –1.041 0.693
SK Teletech Samsung –1.705 –1.504
Pantech –1.253 –0.405
LG –2.398 –1.504
Pantech Samsung 0.511 –1.030
SK Teletech 1.792 –0.847
LG 0.105 –0.336
LG Samsung 0.182 0.000
SK Teletech –0.693 –1.099
Pantech 0.105 0.511
Analysis of preference-substitutability maps
Figure 2 shows the industry-level preference-substitutability maps for the
three product categories. Every point in the map has the coordinate of
{RSM(i), RPM(i)}. Among the cell phones, the Samsung brand is the most
preferred. However, it is more vulnerable in terms of substitutability than
SK Teletech. Pantech is in a highly substitutable position. In terms of
preference, it is not among the weak brands. However, whenever a third
brand is considered in the choice set, Pantech is the brand that loses shares
substantially. Nikon among the digital cameras and Clean among the
movies are in similar positions to Pantech in that they are highly
vulnerable in terms of substitutability. On the other hand, DMZ in the
movie category is the least substitutable movie although it is not among
the most preferred. Apparently, those who prefer DMZ do not change
their preferences when a third movie is presented as an option in the choice
set.
Context effects and context maps for positioning
170
Table 4 Relative preference and overall relative preference values
Cell phones
Comparison brand
Focal brand Samsung SK Teletech Pantech LG Motorola Overall
Samsung – –0.000 –0.588 2.120 2.120 –1.207
SK Teletech –0.000 – –0.588 1.792 0.747 –0.782
Pantech –0.588 –0.588 – 0.747 1.299 –0.218
LG –2.120 –1.792 –0.747 – 0.000 –1.165
Motorola –2.120 –0.747 –1.299 0.000 – –1.042
Table 5 Relative substitutability and overall relative substitutability values
Cell phones
Comparison brand
Focal brand Samsung SK Teletech Pantech LG Motorola Overall
Samsung – –0.312 –0.302 –0.343 –0.241 –0.149
SK Teletech –0.429 – –0.555 –0.516 –0.687 –0.547
Pantech –1.144 –0.833 – –1.404 –0.833 –1.054
LG –0.371 –0.313 –0.098 – –0.094 –0.034
Motorola –0.345 –0.834 –0.156 –0.544 – –0.392
Selected preference-substitutability maps from a firm’s perspective are
presented in Figure 3. In the preference-substitutability map for brand i,
every competitor, k, is plotted as the point with the coordinate {(RSM(i, k),
RPM(i, k)}. The first three are maps from the perspective of Samsung cell
phone, Canon digital camera and the movie Notebook. Each is considered
to be the leader in its respective product category. As they are the most
preferred brands in their categories, there are no competitors in the third
and fourth quadrants. When compared directly, SK Teletech is equally
preferred to Samsung in the cell phone category and Nikon is equally
preferred to Canon in the digital camera category. Note that Samsung is
substitutable to Pantech, implying that Pantech, not SK Teletech, could be
the most serious competitor. Similarly, for Canon, Nikon could be the
most serious competitor. The movie Notebook seems to be in a stable
position. It is the most preferred and the second least substitutable movie.
Some interesting results are found for other competitors, too. The
bottom three maps are preference-substitutability maps drawn from the
perspective of SK Teletech, Pantech and LG, which are active competitors
in the cell phone category. SK Teletech is as strong a brand as Samsung in
this category. Although it is less preferred to Samsung overall, it is stronger
in terms of the substitutability with other brands.
On the other hand, Pantech and LG are vulnerable brands, being highly
substitutable with other competitors. For these brands, it is best to
influence consumers to consider only one of the competitors along with
their brands, if possible. In particular, this may be a highly reasonable
strategy for Pantech because it shows a 35.7% share against the strongest
International Journal of Market Research Vol. 48 Issue 2
171
Figure 2 Preference-substitutability maps at the industry level
Cell phones Digital cameras Movies
Preference
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Pantech
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Notebook
Taxi
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brands like Samsung or SK Teletech when compared directly in the two-
alternative choice sets (Table 2). Whenever a third competitor is
considered, the added brand takes away substantial share from Pantech.
LG is in a very difficult position, which requires dramatic changes in terms
of both preference and substitutability.
Analysis of context maps
Context maps let marketers visually identify types of context effect when
different competitors are added to their consumers’ choice sets. Figure 4
shows selected context maps.
Context effects and context maps for positioning
172
Figure 3 Selected preference-substitutability maps from a firm’s perspective
Cell phones
(for Samsung)
Digital cameras
(for Canon)
Movies
(for Notebook)
Preference
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Pantech
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Olympus
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(for SK Teletech)
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(for Pantech)
Cell phones
(for LG)
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Pantech
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Motorola
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International Journal of Market Research Vol. 48 Issue 2
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Figure 4 Selected context maps
Motorola
LG
Pantech
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0.0 0.3 0.6 0.9
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Product: cell phone
Focal brand: Samsung
Second brand: SK Teletech
Motorola
Pantech
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–0.6
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Product: cell phone
Focal brand: Samsung
Second brand: LG
Motorola SK Teletech
SK Teletech
LG
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Product: cell phone
Focal brand: Samsung
Second brand: Pantech
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–2.5 –2.0 –1.5 –1.0 –0.5 0.0
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Product: cell phone
Focal brand: LG
Second brand: Samsung
Motorola
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Product: cell phone
Focal brand: LG
Second brand: Pantech
Motorola
Samsung
Samsung
SK Teletech
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Product: cell phone
Focal brand: LG
Second brand: SK Teletech
Sony
Samsung
Samsung
Nikon
Clean
Pretty
Taxi
Olympus
Olympus
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Product: digital camera
Focal brand: Canon
Second brand: Nikon
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Product: Korean movies
Focal brand: DMZ
Second brand: Notebook
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–0.6 –0.3 0.0 0.3
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Product: digital camera
Focal brand: Sony
Second brand: Canon
The focal brand of the first three context maps (the upper row) is
Samsung in the cell phone category. The first map assumes that Samsung
and SK Teletech are in the choice set. It is natural to consider SK Teletech
as the main competitor for Samsung because it is almost equally preferred
in the cell phone market. The context map clearly shows that it is to the
advantage of Samsung to influence consumers who have the two brands in
their choice sets to include another competitor. Strong positive context
effects can be expected when a third alternative is included. The map
implies that the biggest increase in share for Samsung is expected when
Pantech is included in the choice set as a third alternative. The second map
shows the context effects when Samsung and Pantech are in the choice set.
For Samsung, it is best to include LG as the third alternative in the choice
set as a substantial increase in share is expected. Because consumers tend
to perceive LG and Pantech to be similar, Samsung may be easily
differentiated from the two competitors. When Motorola or SK Teletech is
included as the third alternative, Samsung can expect positive context
effects, but not an increase in market share. The third map shows the
context effects when Samsung and LG are included in the choice set. In this
case, Samsung should try not to include any third alternatives in the choice
set. When a third alternative is included, Samsung will observe a negative
context effect. It is likely to face a substitution effect or a lone alternative
effect.
The three context maps in the second row are drawn from the
perspective of LG, which is one of the weakest brands in the cell phone
market. The left context map implies that LG will be better off by adding
another competitor for consumers who have LG and Samsung in the
choice sets. In fact, LG can expect an increase in market share if Pantech
is included in the choice sets. The addition of Motorola or SK Teletech to
the choice set will not change the share of LG. For those consumers who
have LG and SK Teletech or LG and Pantech in their choice sets, the
addition of a third alternative will not increase LG’s share.
The first two maps in the third row are selected from the digital camera
category. In this market, Canon is the leader, with Sony following close
behind. The first map shows the context map of Canon for consumers who
have Canon and Nikon in their choice sets. For these consumers, if
Samsung or Olympus is added to the choice set, strong positive context
effects for Canon arise. As consumers tend to perceive Olympus or
Samsung to be more similar to Nikon, Canon is likely to enjoy the
uniqueness effect, easily differentiating it from other competitors. Adding
Sony shows the weak positive context effect. Canon’s market share will be
Context effects and context maps for positioning
174
decreased but will still be greater than expected under the IIA condition.
Even if Sony is considered in the choice set, it will be Nikon that is more
critically affected rather than Canon. The bottom middle map shows that,
for consumers who have Sony and Canon in their choice sets, adding
Nikon or Samsung will be beneficial for Sony and not for Canon. Because
consumers tend to perceive Samsung or Nikon to be much different from
Canon, the effect could be a compromise effect, making Sony an
intermediate alternative. For Sony, it is not desirable to add Olympus as
the third alternative. It may make consumers perceive Canon as being
more differentiated. The decrease in share for Sony is expected to be
substantial.
The last map is selected from the movie category. It is drawn from the
perspective of DMZ for consumers who have DMZ and Notebook in their
choice sets. Note that Notebook was the most popular movie at the time
data were collected. In this case, adding Clean as the third option will help
DMZ increase its share. If Pretty or Taxi is added, DMZ will show
positive context effects but still lose share. Because consumers perceive
Clean to be similar to Notebook, DMZ may enjoy the uniqueness context
effect by the addition of Clean to the choice set.
A strong merit of context maps is the visualisation that they offer of the
outcomes of adding another competitor to consumers’ choice sets. Such
analysis helps marketers identify the most ‘beneficial’ competitors to be
considered as competitors in making positioning decisions.
Discussion
Context effects have been investigated under the names of attraction
effects, compromise effects, substitution effects and lone alternative effects.
Marketers should incorporate such context effects in determining their
strategic competitors and making positioning decisions. This study
provides a scheme for classifying context effects into exclusive and
exhaustive categories. Also, key measures in analysing context effects are
proposed: the share-ratio measure and the share-change measure. Using
these measures, marketers can draw context maps to visualise the context
effects of adding another competitor as the third brand in consumer choice
sets. Based on the measures, two additional useful measures analysing
brand positions were proposed. With the relative preference and relative
substitutability measures, positioning maps can be drawn from a brand’s
perspective with respect to its relative preference and its relative
substitutability with its competitors. The overall positions of competitors
International Journal of Market Research Vol. 48 Issue 2
175
can be visualised at the industry level with respect to preference and
substitutability.
If the maps are analysed along with the perceived similarity data among
competitors, types of context effect can be identified. For example, if we
have detailed similarity data among competing products we can identify
whether it is the attraction effect, uniqueness effect or compromise effect
when a strong positive context effect is observed. If marketers want to
further investigate the implications of context effects, they can rely on
analysing models that incorporate context effects (Kivetz et al. 2004).
Of course, the value of analysing such maps depends on the quality of
the data. The subjects surveyed should be representative of target segments
of the focal brand. Also, the context effects need to be compared with
basic cases where two alternatives are in the choice sets. Context effects let
marketers know how shares change from basic cases when a third
competitor is included in the choice sets. The context effects should not be
interpreted beyond the basic cases on which the observed effects are based.
Our framework is developed mainly for situations where a single option
is chosen. When consumers choose more than one option, we may apply
our framework repeatedly by sequentially eliminating the option that has
already been chosen. Unless consumers choose more than one option at
the same time, our framework can still be a useful tool. For situations
where consumers choose more than one option at the same time, we need
to define alternatives as potential product mix options consumers may
select.
There may be several directions for further research. One is studying
conditions that enhance the consistency of context effects over time.
Analysing context maps will be all the more useful if the observed effects
are stable over a long period of time (Drolet 2002). Identifying
heterogeneity among consumers regarding context effects is also
important. The more homogeneous the consumer choice set in the target
market, the more useful will be the analysis of context maps. Studies on
further applications of the measures may also be directed towards
measuring brand equity. Substitutability could be a key concept for a
defensive strategy, whereas preference could be a key concept for an
offensive strategy as well as for defending brand power.
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