Perceptual and Value Maps: the Example of the Hungarian Car Market Gábor Rekettye PhD, Professor of Marketing Pécs University, Faculty of Business & Economics The managerial use of perceptual maps to support product positioning and repositioning decisions is widely discussed in the marketing literature (Crawford, 1997, Hooley-Saunders, 1993, Moore-Pessemier, 1993, Dolan, 1990, etc.). The method suggested by the scientific papers how to produce a perceptual map is however rather complicated for company managers or for business students studying marketing foundation. As a consequence of it papers and marketing text books dealing with this subject either just present the map itself without showing the way how it was produced, or others just describe the method with hypothetical data without a practical example. That was the reason why we decided to carry out an experiment to produce a perceptual map based on real data collected within a survey made by a Hungarian marketing research institute interviewing a representative sample of one thousand households in Hungary. Before showing the methods we applied and the conclusions we made, let's have a short overview about the notions and categories we used during our experiment: Positioning or repositioning A product's or a product line's position is the place they occupy in the mind of the target customers in relation to competitive products or product lines. (Kotler, 1997, Kotler- Armstrong-Sauders-Wong, 1996, etc.) Positioning is managerial activity using marketing, mainly promotional and communicational instruments to influence customers' perceptions and to secure a clear and distinctive place for the company's offering in the mind of the target customers. Perceptual maps inform about the results of the positioning activity. If the company is not satisfied with the achieved location of the product it may try to relocate it. This is called repositioning and its aim is to move the customers' perceptions from the previous location to a new one desired by the marketer. 2 Defining the competitor products One of the most important issues in producing the perceptual map is defining the proper range of competitive products. Our experiment proved that perceptual maps of direct substitutes may better support positioning decisions. If competition is defined too widely i.e. products of completely different quality categories are compared, promotional and communicational means are not sufficient enough to change the brand's position. The perceptual map including not direct competitive brands is of course also useful but not for the same purpose. Let's take the example the perceptual map of the American car market described as one of the first used perceptual map in marketing (Churchill, 1991, pp 450.) Figure 1. Perceptual Map — Brand Images Has a Touch of Class • Lincoln a Car I'd Be Proud to Own Cadillac • Distinctive Looking • Porsche Mercedes • • BMW • Chrysler • Pontiac • Buick • Oldsmobile Conservative Looking Has Spirited Performance Appeals to Older People Ford • • Chevrolet Appeals to Young People • Datsun Fun to Drive • Toyota Sporty Looking Dodge • Plymouth • • VW Very Practical Provides Good Gas Mileage Affordable This map included all important cars of the American market. It was very informative, but on the other hand it had some disadvantages: Volkswagen (VW) might want, say just for the sake 3 of an example, move into the segment of the luxury cars with sporty look represented by BMW or Porsche (upper right box). In this case it wouldn't be enough to reposition the cars by communicating them differently, but it had to make huge developments as far as the quality (performance, design, etc.) of the cars is concerned. Having that in mind we decided to include direct substitutes from the medium and lower medium-sized car market in Hungary. Brands included into the Hungarian survey The Hungarian car market changed a lot since the social and economic transition started in the country in 1989. Before that time the market was flooded with cars manufactured in the Eastern European communist countries. The transition has brought about radical changes: some Western car makers entered the Hungarian market by establishing their local manufacturing and assembly lines (Suzuki, Opel, Audi), others have built up their local dealership networks. Nowadays almost all brands are available in Hungary. That is why the new car sales consist mainly of Western brands, nevertheless the share of the cars made in the socialist or former socialist countries is still very high in the households' inventory. Keeping in mind the importance of the direct substitute issue in constructing the perceptual maps we decided to conduct our survey in the middle, lower middle-sized car market. The other reason for this selection was, that the market of the upper-middle-sized and luxury cars is still rather small in Hungary. We selected those cars which have higher market share, which are popular, and affordable for an average income household. These cares were: 1. Lada Samara (a Russian made car, that used to be the most popular car for decades, and being still manufactured and are still imported to and sold in Hungary) 2. Skoda Felicia (A Check made car, the factory couple of years ago was acquired by Volkswagen, since those time its performance has increased a lot.) 3. Opel Astra (The German (originally GM) car has been assembled in Hungary) 4. Toyota Corolla (Japanese import) 5. Volkswagen Golf (One of the most popular German brand, imported) 6. Suzuki Swift (The Japanese car is being manufactured in Hungary) The process of developing the perceptual map The perceptual maps to serve as an effective visual guide for the marketing manager should consist of two dimensions (see in Figure one). If there are only two main characteristics of the product (which is very rarely the case) the researcher's task is simple: he/she has to ask the respondents to evaluate these two attributes of the brands and show the results on a graph. 4 Most products are however evaluated by not two, but by a set of attributes. In this case two methods are propose by the literature (Dolan, 1990): 1. The attribute rating method. This method is used in those cases where relevant product attributes are easy to identify and articulate. Using this methods the customers are presented the full list of attributes and are requested to rate each brand on each attribute. On the bases of the information the statistical analysis (either "factor analysis" or "multiple discriminant analysis") will prepare the two-dimensional perceptual map. 2. The overall similarity method. This method is used in the case of products where attributes are hard to verbalise. No attribute are specified, respondents are presented the brands pair-wise and are asked to judge them according to their preference. This methods uses the statistical procedure called "multidimensional scaling" to produce a two- dimensional map. The method used in our survey In our survey we used the attribute rating method. The first task was to identify those important and relevant attributes which have important influence on the buying decision of medium or lower medium-sized passenger cars in Hungary. To determine the most important attributes we used the focus group method. As a result of several focus group discussions held at the University among executive MBA students we identified the following attributes: 1. The purchasing price of the car 2. The safety features of the car 3. Form and design of the car 4. The level of the expected maintenance cost of the car (including fuel consumption, insurance, etc.) 5. The technical performance of the car 6. The expected rate of breakdowns 7. The comfort (convenience) of the car 8. The image of the brand (the maker). In the first item of our questionnaire we asked the respondents to evaluate the importance of these attributes in their purchasing decision. A Liker scale was used with a scale of importance from 1 to 10 as follows: 5 Table 1. The First Question To what extent do the following features influence your purchase decision in case of buying a medium or lower medium-sized car? Features Importance (1-10) 1= not at all important 10= extremely important (a) relatively low purchase price (b) safety (c) form and design (d) the low level of operation and maintenance costs (consumption, insurance etc.) (e) technical features of the performance (acceleration, speed etc.) (f) brand image (g) the low expectancy level of developing a fault (f) convenience The results of questionnaire (filled out by 1002 persons) are shown in the next figure breaking down according to the gender of the responding persons. Figure 1. The Importance of Selected Attributes Convenience Breakdowns Image Performance Women Costs of maintanance Men Form and design Safety Price 12345678910 6 Data in figure 1 show that the Hungarian consumers rank safety, costs of maintenance, and the occurrence of breaking downs first followed by the price. Convenience, form and design, performance, and image have smaller influence in their buying decision. This information may have an important role in formulating the communication messages of the car sellers. The Western car makers usually adapt their global communication message to smaller markets like Hungary. The adapted communication is usually built around the image of the brand and it may result in less efficiency here, among those buyers who appreciate other values more due to their different cultural and economic setting. Producing the Perceptual Map The next question was designed to help to develop the perceptual map of the six brands involved in the survey. During the personal interviews the respondents were asked to rank each attribute on each of the six cars according to the following pattern (Table 2). Table 2. The Second Question How would you evaluate the attributes of the following cars? Please mark each on a scale between 1 and 10.