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.

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 Generic Positioning Strategies:

G Positioning on specific product features

u Sport

u Roomy

G Positioning on benefit, problem solution or needs

u

G Positioning against another product

u 7 up (Uncola)
G Positioning through service uniqueness

u Singapore airlines

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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.

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 A Perceptual Map

G A perceptual map is a spatial representation in which

competing alternatives and attributes are plotted in a
Euclidean space.
G Characteristics of the map:
(1) The pairwise distances between product alternatives directly

products, that is, how close or far apart the products are in the
minds of customers.
(2) A vector on the map (shown by a line segment with an arrow)
indicates both magnitude and direction in the Euclidean
space. Vectors are usually used to geometrically denote
attributes of the perceptual maps.
(3) The axes of the map are a special set of vectors suggesting
the underlying dimensions that best characterize how
customers differentiate between alternatives.

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Example: Perceptual Map of Beer Market

Popular with Men

Heavy Budweiser
Full Bodied Heavy
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

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Perceptual Maps Facilitate Decision Making

G By summarizing a large amount of information,

such maps help managers to think strategically
about product positioning.
u Manager can focus on positioning decisions on the
underlying dimensions instead of thinking on several
attributes.

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Potential Uses of Mapping

Techniques

G Understand the market structure of product categories as

perceived by customers. This may help in identifying new

G Select the set of competitors to compete against.

G Identify weak competitors.

G Evaluate a new product concept in the context of existing

brands in the market.

G Developing a name for a new product.

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 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. Identify the set of competing alternatives (products) and the
attributes on which those product will be evaluated.
2. Obtain perceptions data and organize it into a matrix
representing customer perceptions of each alternative on
each of the pre-specified attributes.
3. Select a perceptual mapping method. The method used in the
software accompanying this book is called MDPREF. It
relies on a factor-analytic approach derivation of perceptual
maps.
4. Interpret the output of the perceptual mapping method used.

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 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). (e.g. IBM, Toshiba, Toshiba_new, Compaq, NEC, Dell)
G Ensure that consumers are familiar with the laptops (e.g., through video
presentation).

G Identify key attributes (e.g., through focus groups).

Reliable .............................. Unreliable (A1)
Common .............................. Distinctive (A2)
Light .............................. Heavy (A3)
Short battery life .............................. Long battery life (A4)

Poor value .............................. Good value (A15)

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Perceptual Maps
Using Attribute Ratings
Step 2: (Obtain perceptions data and organize it into a matrix)

G Have consumers evaluate the laptops.

G C2,...)
Ratings of each brand on each of the attributes (A1, A2, A3,....)
A1 A2 A3 A4 ............... 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.
Step 3: (Select a perceptual mapping method)
G Submit data to a suitable perceptual mapping technique (e.g., MDPREF
or Factor Analysis).
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 Factor Analysis

Factor Analysis is a technique for finding underlying dimensions and

interrelationships among variables (here, attributes) based on a data matrix
consisting of the values of the attributes for a number of different
alternatives (here, brands)
u Let X be a matrix with m rows (alternatives) and n columns (attributes), 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, Zs (mxr)
where r is the number of factors (dimensions) of the perceptual map;
r<n, usually r=2 or 3
and
v (2) the factor loading matrix, F (nxr)

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Information Content of an Attribute

G We seek for r factors (typically r=2 or 3), orthogonal,

which retain as much information contained in original data
matrix is possible.
G Variance (the dispersion of values around a mean) is a
measure of the information content of an attribute. The
larger the variance, the higher the information content.
G The factors retained should recover more than 60 to 70
percent of the variance of the original data.

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 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
.
33
G 33 F2
.
..
Alternatives ..
Fr
f rj
== ..
xkj zk 1 z kr
.. Factor Loading
.. Matrix FT
..
..
..
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 ; (zk1,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. The
longer this line, the greater is the
importance of that attribute.

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 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,

draw an imaginary perpendicular line from
the location of the alternative onto that
attribute. (These are shown by dashed
lines on the map).

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Perceptual Map of Laptop Market

(This slide shows only the brands)

Toshiba

IBM Sanyo
Compaq
TI
AST Exec
Dell
NEC

Samsung

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 (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

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(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

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 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., sweetness) (e.g., quality,
service speed)
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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.

(d IB = 2d IA)
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 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.
Preference vector indicates the d AC
direction in which preference is d AB
increasing in the map. 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.
With reference to A, C is preferred half as
much as B.
(d AC = 2d AB)
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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

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 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.
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.
This approach is called external unfolding.

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Positioning Analysis Software

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- G20 is closer to BMW and Saab than to Toyota
- It is perceived as attractive, successful, high prestige, quiet and roomy
- In the overall segment customers prefer the BMW or Saab on Infiniti G20
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- Hi-prestige matter to S1 (singles): BMW, Saab more then G20

-Roomy to S2 (married people): Audi, G20 not roomy enough
-Attractiveness to S3 (American dreamers): G20 but rates BMW, Saa b, Toyota and Honda similarly
CHALLENGE: by restyling G20 Infiniti may increase its attractiveness this would position G20 southwesterly

that would rsult in a 6.67% market share under first choice rule

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 Exercise #5: Positioning the Infiniti G20
Question 1
Describe the two (or, if applicable, three) dimensions underlying the perceptual maps that you
generated. Based on these maps, 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, 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)?

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