Perceptual Mapping

XMBA 206.1

Session 3
Summer 2008

Ganesh Iyer
 Perceptual Maps

 To gain competitive advantage, a firm must correctly position

itself, its products, or services against competitive offerings.

 Need to develop a “Mental Map” of how our product is

perceived by consumers relative to the different competing
products in the marketplace.
» Linking Segmentation and Positioning.

 Techniques that help us to construct such mental or Perceptual

Maps are called Multidimensional Scaling and Factor
Analysis.

Ganesh Iyer
 What is a Perceptual Map

 A perceptual map is a visual representation of how target

customers view the competing alternatives in a Euclidean space
which represents the market

 The map has the following characteristics:

» Pair-wise distances between product alternatives directly indicate
how close or far apart the products are in the minds of customers
» A vector on the map indicates both magnitude and direction in the
Euclidean space. Vectors are usually used to geometrically denote
attributes of the perceptual maps
» The axes of the map are a special set of vectors suggesting the
underlying dimensions that best characterize how customers
differentiate between alternatives

Ganesh Iyer
 Perceptual Mapping Process

 Specify the "Relevant" Objects or Products.

 Relevance means that the set of products chosen must be the

set of competitive products that are relevant for managerial
decision-making.

 Two possible methodologies to collect information on

consumers perception of products:
» Method 1: Attribute based method (Factor Analysis).

» Method 2: Similarity-Based method (Multi-Dimensional Scaling)

Ganesh Iyer
 Method 1: Attribute Rating Method
Example: Evaluation of a New Laptop concept.

 Select a set of laptop computers of interest to be the target

group including the new concept…(say 4 products)

 Decide on the set of relevant attributes on which to capture

consumer perceptions (6 attributes)
» Prior quantitative or qualitative research that elicits important
attributes for the target consumers.

 Ensure that consumers are familiar with the laptops that are to
be evaluated (e.g., through video presentation, or actual
prototypes)

 Respondents (target customers) evaluate / rank or rate

products.
Ganesh Iyer
 Perceptual Mapping
 Data Matrix = 4 (products) X 6 (attributes) X 300 (respondents).

Consumers
A1 A2 A3 A4
P1
P2
P3
P4
Submit data to factor analysis

Interpret the underlying key dimensions (factors) using the directions of the individual attributes

Explore the implications of how consumers’ view the competing products

Data Matrix Factor Analysis Perceptual map

Ganesh Iyer
 Factor Analysis: Key Concepts

 It is difficult to get a clear picture of the market when dealing with so

many attributes and products.

 All the data/dimensions might not be necessary to capture consumer

perceptions. Why?

 Highly correlated attributes

» Create linear combination of the measures to get a single new dimension of
the original attributes.

 Take out attributes on which all computers are rated about the same.

 Factor analysis output:

» Say 70% of the information contained in the original attributes can be
represented by creating just 2 new dimensions. These dimensions are
called factors.
» Analysis done using commercial software SPSS or SAS

Ganesh Iyer
 Example Plot of Attributes of Laptops on a 2D
Perceptual Map

Common

Toshiba 1960CT
Easy setup
Slow

Performance

Light
Value
C
“Butterfly”

Elegant

Look/Styling
The six attributes were measured on semantic differential scales: 1) Slow–Fast operation, 2) Plain–Elegant,
3) Easy–Difficult setup, 4) Poor–Excellent value, 5) Light–Heavy, and 6) Common–Distinctive.

Ganesh Iyer
 Example Plot of Attributes of
Laptops on a 2D Perceptual Map

(Plain)

Common

Toshiba 1960CT
Easy setup
Slow

Performance

Light
Good
C Value
“Butterfly”

Elegant

Looks/Styling

Ganesh Iyer
 Guidelines for Interpreting
Perceptual Maps (Laptop)

 The arrow indicates the direction in which that attribute is increasing.

 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 in explaining variance.

 Attribute that are both relatively important (i.e., long vector) and close to
the horizontal (vertical) axis help interpret the meaning of axis.

 To represent a laptop on each attribute, draw an imaginary

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

 What practical uses can you now put this map to at this stage?

Ganesh Iyer
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 Limitations

 Researcher should be able to clearly conceptualize the

attributes

 No perception gap between intended and actual perception of

the attributes.

 Works well for hard or functional attributes, (price, product

features).

Ganesh Iyer
1
 Method 2: Overall Similarity Ratings
Multidimensional Scaling

 Suppose we are interested in developing a perceptual map of the ED

market consisting of Viagra, Levitra and Cialis.
 Suppose we ask a respondent for his perceptions of the similarities
among the 3 products by asking for his judgments about all possible
pairs (3 possible pairs)
 Ask the respondent to rank on a scale of 1-7 the similarity of two
products. Do this for all pairs…n products => n(n-1)/2 pairs.
» 1 is very similar
» 7 is very different
 How different are the products perceived?
» What are features distinguish different products

 Commercial software implementation

» SPSS and SAS.

Ganesh Iyer
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 ED Market

Viagra Levitra Cialis

Viagra 1

Levitra 1

Cialis 1

Ganesh Iyer
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 ED Market

Viagra Levitra Cialis

Viagra 1

Levitra 2 1

Cialis 6 5.5 1

The numbers are like distances on a perceptual map

Ganesh Iyer
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 MDS Perceptual Map

5.5

2
What more would you like to know?

Ganesh Iyer
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 Multidimensional Scaling

 With 3 products, I can perfectly represent the information in two dimensions

 With more products to be represented in two dimensions

» information loss

 Multidimensional scaling (MDS) is a mathematical technique that helps

implement this analysis of similarity perceptions with minimum information loss.

 What are advantages/disadvantages of MDS

» Allows you to map products and simultaneously infer attributes.
» Better for softer attributes which we do not verbalize very well (feel, aesthetics)
» Impractical when the number of products are large.

 Commercial software implementation

» SPSS, SAS modules.

Ganesh Iyer
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 Uses of Perceptual Maps

 Customer Analysis and Competitive Analysis

» Understand the competitive market structure as perceived by
customers.
– Position relative to competition
– Select the set of competitors to compete against
» Represent customers’ perceptions in a manner that aids
communication and discussion within the organization

 Product
» Perceptions of a new product concept in the context of existing
brands in the market
» Finding the “gap” in the market to position the product.

Ganesh Iyer
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 Learning

 Perceptual maps are about “How our product is perceived by

consumers relative to competition?”
» Link Segmentation and Positioning

 Segmentation, Positioning and Perceptual mapping involve

careful and sophisticated quantitative analysis and not
vague managerial intuition.

 Two important methods to develop perceptual maps

» Attribute rating
» Similarity rating

Ganesh Iyer
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