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Product Positioning Using Perceptual & Preference Maps

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Product Positioning Using Perceptual & Preference Maps 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 1 1 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 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. ME Basics 4 2 2 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. ME Basics 5 Example: Perceptual Map of Beer Market Popular with Men Heavy Budweiser N Heavy Full Bodied EE Old Milwaukee Meister Brau Special Heineken Miller Occasions Blue Collar Coors Good Value Dining Out Premium 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 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. ME Basics 7 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. ME Basics 8 4 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. 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. ME Basics 10 5 5 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) 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 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). ME Basics 12 6 6 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) T u The model decomposes the matrix Xs (mxn) into two matrices: Xs=Zs*F 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) ME Basics 13 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. ME Basics 14 7 7 A Pictorial Depiction of Attribute-Based Perceptual Mapping G Alternatives Factors Attributes Factors Attributes F F F 11 22 33 1 2 j r 11 22 33 G 11 f 11 1j G 22 F f 22 1 2j . G 33 33 F . 2 .. .. Alternatives ~~ frj x z z Fr .. kj == .. k 1 kr Factor Loading T .. .. Matrix F .. .. m m Standardized Standardized Factor Score Matrix Z Original Data s The correlation between attribute j Matrix Xs Reduced Data; r<n and factor i location of brand k in xkj ~ zk1f1j+zk2f2j z krfrj ; (zk1,zk2 z kr)= fij (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 2 2 Proportion of variance explained for attribute j=f1j rj 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. ME Basics 16 8 8 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). 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 (This slide shows only the attributes) Low battery life Keyboard Expandability Distinct Unsuccessful ElegantAvant-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 ElegantAvant-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., sweetness) (e.g., quality, 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) dIA dIB A B A is preferred twice as much as B. (dIB = 2dIA) ME Basics 22 11 11 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 dAC d direction in which preference is 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.
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