Journal of Marketing Theory and Practice

ISSN: 1069-6679 (Print) 1944-7175 (Online) Journal homepage: http://www.tandfonline.com/loi/mmtp20

Product Attributes Model: A Tool for Evaluating

Brand Positioning

Carol F. Gwin & Carl R. Gwin

To cite this article: Carol F. Gwin & Carl R. Gwin (2003) Product Attributes Model: A Tool for
Evaluating Brand Positioning, Journal of Marketing Theory and Practice, 11:2, 30-42, DOI:
10.1080/10696679.2003.11658494

To link to this article: http://dx.doi.org/10.1080/10696679.2003.11658494

Published online: 02 Dec 2015.

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 PRODUCT ATTRIBUTES MODEL: A TOOL FOR
EVALUATING BRAND POSITIONING

Carol F. Gwin
Baylor University

CariR. Gwin
Journal of Marketing Theory and Practice 2003.11:30-42.

Baylor University

A brand's positioning is designed to develop a sustainable competitive advantage on product attribute(s) in the consumer's mind.
Perceptual maps are commonly used to evaluate a brand's positioning. Another tool from the economics literature, the product
attributes model (based on Lancaster 1966, 1979), utilizes three components: attribute ratings, budget constraint, and indifference
curves. The key advantage of this analysis over perceptual maps is the ability to incorporate the impact of price into assessment
of the brand's positioning. This paper discusses how the product attributes model helps managers understand the strategic
implications of positioning decisions and provides an example of its use.

INTRODUCTION tools have relative advantages and disadvantages that make

Positioning "refers to how customers think about proposed
and/or present brands in a market (Perreault and McCarthy
1999)." Through a brand's positioning, a company tries to
build a sustainable competitive advantage on product
attribute(s) - tangible or intangible - in the mind of the
consumer. This advantage is designed to appeal to one or more
segments in that product category. Developing a successful
positioning strategy is not easy; in fact, Schnedler (1996)
states: "Positioning products in a complex market can be one
of a company's most difficult decisions."
To effectively position (or reposition) a brand, the company
must know how this brand is perceived in relationship to other
brands in the product category. Several tools are available for
evaluating a brand's positioning: multidimensional scaling,
factor analysis, discriminant analysis, and multiattribute
compositional models are the most commonly used. These
them more suitable to specific applications as summarized in
this paper. Based on these tools, the marketer can evaluate
whether:
• The brand has a positioning that is differentiated
from other brands in the market.
• Potential opportunities exist for the introduction of
new products or repositioning an existing brand.
• Certain segments are underserved by existing brands
in the category.
One tool that has not achieved common use is Lancaster's
model of consumer demand (1966, 1979), referred to in this
paper as the product attributes model. This model incorporates
price and the consumer budget into the analysis of the
competitive positioning for brands. As such, it has advantages
over other methods when price or value is a key issue in brand
positioning. This paper provides an overview of the theoretical

30 Journal of Marketing THEORY AND PRACTICE .

 basis for the product attributes model. Our primary
contribution is a discussion of how the product attributes
model can be used to make strategic decisions in brand
positioning or repositioning. We further show the results of an
application to the automobile industry. This model allows the
marketer to better understand the customer-perceived value for
the attributes in light of the price of the brand. From a
marketing strategy standpoint, this understanding has specific
implications for product design/re-design and pricing.
THE IMPORTANCE OF POSITIONING
Urban and Hauser (1993) state, "Positioning is critical for a
new product. Not only must a new product deliver the benefits
the customer needs, but it must do so better than competition
(p. 202)." In developing a positioning, the marketer must
consider four things:
• The target market.
• How the product is different or better than
competitors.
Journal of Marketing Theory and Practice 2003.11:30-42.
• The value of this difference to the target market.
• The ability to demonstrate or communicate this
difference to the target market.
These elements roughly relate to the components of a brand
position as described by Aaker (1996): target audience, subset
of identity/value proposition, create advantage, and actively
communicate. The brand identity and positioning are central
to developing a strong customer base and brand equity.
The target market and the perceived differentiation from
competitors are core concepts of positioning. Rao and Steckel
(1998) define a brand's positioning as "how it is perceived
relative to its competitors by a relevant group of customers.
Segmentation and positioning are too often treated as
independent concepts in practice and in the literature.
However, positioning has no value unless it is appropriate for
a target segment (p. 36)."
The concept of value to the customer is central to an effective
positioning. Further, the brand must be able to communicate
this value effectively to at least one segment of customers to
get customers to switch to the brand. Aaker (1998) states, "A
differentiation strategy must add value for the customer, and
the added value must be perceived by the customer (pp. 164-
165)."
Differentiation for new and established products typically
takes the form of attributes that can be built into the product
design to deliver benefits to the customers. The differentiation
can be in quality (higher or lower), additional features,
packaging innovation, to name a few. Or if the fmnhas a cost
advantage relative to competitors, the product may be
positioned on value by offering a lower price.
One of the key tasks of a new product manager is to defme a
brand's positioning, and managers of existing brands must
continue to monitor the effectiveness of the brand positioning
and reposition when needed. Several methods have been
developed to help marketers evaluate a brand's positioning.
These methods are described in the next section.
Methods for Evaluating a Brand's Positioning
Keon (1983) describes four primary methods for evaluating a
brand's current or potential positioning. The methods are:
multidimensional scaling, factor analysis, discriminant
analysis, and multiattribute compositional models. Table 1
provides a summary of the input data, analysis, advantages,
limitations, and best use for each method as drawn from the
literature. The summary is primarily based on Keon (1983)
and Hauser and Koppelman (1979) with additions and updates
from other papers as shown in the table. For each method, a
paper or two using or discussing this method is provided as a
reference.
According to DeSarbo, Young and Rangaswamy (1997),
multidimensional scaling is the primary method used for
positioning. For further information on specific analytical
techniques for multidimensional scaling, refer to Bujmolt and
Wedel (1999) and Carroll and Green (1997) for a detailed
comparison.
Huber and Holbrook (1979) compare and contrast factor
analysis and discriminant analysis with the conclusions
presented in Table 1. According to this analysis, discriminant
analysis is more likely to yield objective dimensions while
factor analysis is more likely to yield affective dimensions.
These fmdings lead to the conclusion about the best use for
each method.
Conjoint analysis is the most common approach in terms of
multiattribute compositional models and is described in the
table. For a taxonomy of conjoint methods, refer to Carroll and
Green (1995). Green and Krieger (1989) conclude that
conjoint analysis provides practical advantages over
multidimensional scaling in terms of measurement and data
collection for evaluating brand positioning. These authors
suggest that the combination of conjoint for analytical
purposes and multidimensional scaling for display purposes
offers an attractive combination for researchers.
Hauser and Koppelman (1979) conclude that attribute-based
techniques such as factor analysis and discriminant analysis
provide better measures of consumer perceptions than
similarity techniques such as multidimensional scaling if the
set of attributes is reasonably complete. In addition, Hauser
and Koppelman (1979) show that factor analysis is typically
better than discriminant analysis. In our table, we provide a
description ofthe "best use" for each method, recognizing that
no one approach is best in all circumstances. Each method has
strengths and limitations that make it more or less appropriate
in specific decision making situations.
Spring 2003 31
 One limitation across all of the methods (with the exception of
the Lancaster model described later in this paper) is the failure
to consider price in the analysis, except as an additional
attribute or dimension. One exception is a study by Hauser and
Gaskin (1984) that used price in developing perceptual maps
with factor analysis. Hauser and Gaskin (1984) use attributes
per dollar as variables. In this analysis, they find that using
attributes per dollar provides a better prediction of share than
traditional methods or than the use of price as an additional
dimension. Urban and Hauser (1993) discuss value maps and
show that these maps provide guidance to new product teams
in setting an initial price for a new product.
In looking at choices across product categories, Hauser and
Urban (1986, p. 448) conclude that price is appropriate as a
dimension when "price itself carries utility, such as in
conspicuous consumption or when perceptions of quality are
based on price." Otherwise, consumers prioritize choices based
on the surplus of utility over price.
The purpose of this paper is to demonstrate the applicability,
Journal of Marketing Theory and Practice 2003.11:30-42.
and advantages and limitations, of the Lancaster model (1966,
1971) in evaluating brand positioning. The Lancaster model
would be categorized as a multiattribute compositional model
in the methods described in the table. This model has been
discussed and extended in the marketing literature (Taylor and
Haines 1975; Hendler 1975; Ratchford 1975, 1979; Ladd and
Zober 1977; Hauser and Simmie 1981). The key advantage of
this method over other methods is that the model explicitly
considers price in evaluating the positioning of brands. Our
paper adds to previous research on the Lancaster model in the
marketing and economics literature in two ways. First, we
provide an overview of the model and discuss its usefulness to
the strategic issues surrounding brand positioning. Second, we
provide an example of the model and show how Lancaster's
model can be applied to brand positioning or repositioning
questions. . is based on maximizing utility ( or t he level 0 f satisfaction
OVERVIEW OF THE PRODUCT
ATTRIBUTES MODEL
The model in Lancaster (1966,1979), which we refer to as the
product attributes model, assumes that consumer choice is
based 0 n the characteristics ( or attributes) 0 fa brand. The
consumer derives utility based on the level of these attributes
existing in the brand that shelhe chooses within a budget
constraint.
In the model, the consumer maximizes utility (U) in herlhis
choice of a brand. This choice is subject to the consumer's
budget constraint (k), which must be greater than or equal to
price (p) in combination with the quantity of the brand
purchased (x). The choice is based on the vector of product
attributes (z) that maximizes the consumer's utility based on
the perceived levels of the attributes in the brand and the
quantity that can b e purchased. B represents the matrix 0 f
products-to-attributes transformation coefficients b jj , showing
the level of ith attribute a j attained from the consumption of
32 Journal ofMarketing THEORY AND PRACTICE
one unit 0 fjth product Xj' A simple form of this model is
shown below (Lancaster 1966):
Maximize U(z) (1)
Subject to px:::; k (2)
With z = Bx (3)
z,x~O. (4)
There are three key components to the analysis for the product
attributes model: the perceived levels of the product attributes
for a brand, the budget constraint (referred to as the efficiency
frontier in this application), and the indifference curve of a
consumer or segment of consumers. The following sections
discuss each of these elements briefly in terms of explicating
the concept and its importance to the model.
Attributes of Products
Lancaster (1966, 1971, 1979) shows that consumers have
preferences for characteristics (or attributes) ofproducts. Each
product is a bundle of attributes. For example, automobiles
and motorcycles differ in gas mileage, horsepower, styling,
safety, and so on. Rather than comparing the products
themselves (as in indifference curve and budget constraint
analysis), the theory assumes individuals choose among the
more basic attributes of the products. Understanding why a
consumer chooses a product based upon its attributes helps us
to understand why some consumers have preferences for
specific brands. This allows an analysis of brand competition.
The product attributes model explains individual choice as a
process of choosing bundles of product attributes inherent in
goods and services. The model assumes that consumer choice
received) from the product attributes subject to a budget
constraint. The model is particularly useful in analyzing
differentiated product markets. These markets have brands that
are substitutes for each other and are distinguished by their
makeup of a specific set of characteristics. Understanding
consumer preferences for attributes that distinguish among
brands can help in defining the best positioning and marketing
mix for a particular brand.
To illustrate the model, we will use a simple example with
only two product attributes. In this case, a two-dimensional
graph reveals the model's main features and links it to the
traditional indifference curve and budget constraint analysis of
individual choice.
Figure 1 shows three products (A, B, and C), each offering
specific amounts of attribute X and attribute Y. Each product
is depicted in attribute space as a ray from the origin. The
slope of each ray is determined by the ratio of attribute Y to
attribute X. The rays are linear if we assume each product

METHOD
Multidimensional scaling
(cf. Green, Wind, and
Jain 1972; Green, Wind,
and Claycamp 1975;
Moinpour, McCullough,
and Maclachlan 1976)
Journal of Marketing Theory and Practice 2003.11:30-42.
Factor Analysis
(cf. Hauser and Urban
1977; Huber and
Holbrook 1979)
Discriminant Analysis
(cf. Pessemier 1977;
Katahira 1990)
Multiattribute
Compositional Models
(The most commonly
used is conjoint analysis.)
(cf. Wilkie and Pessemier
1973; Green and DeSarbo
1978; Green, Carroll, and
Goldberg 1981)
I Keon (1983) and Hauser and Koppelman (1979) formed the primary basis of this table, as supplemented by other
papers shown.
TABLE 1
Summaryo fM et h0 d S Iior D etermmml!a B ran d' S PoSIIOmnl!'
T
INPUT ANALYSIS ADVANTAGES LIMITATIONS BEST USE
Similarity Based on \. The resulting \. Dimensions are often Established categories
or proximity - more dimensions are difficult to interpret. with numerous brands
preference similar brands are based on 2. Repositionings and new in the evoked set.
ratings placed closer
together.
consumer
judgments or
products are hard to evaluate
because the analysis only
· Existing brand
andlor
preferences of the considers existing dimen- attributes.
brands. The sions of existing brands.
results are not 3. Direct similarity jUdgments
dependent on have been shown to have
attributes asked. issues with reliability
2. Maps are (Summers and MacKay
constructed to 1976).
show consumer 4. Data collection is difficult
ideal points and for the researcher and
brands on the respondent. Respondents
same map. have to rate or rank order
numerous pairs of objects in
terms of similarity or
dissimilarity. (Katahira
1990)
./
5 . The analysis requires at least
7 or 8 brands to get a map
with 2 or 3 dimensions. This
is a problem if the evoked set
is small. (Hauser and
Koppelman 1979)
Ratings of Determines key \. The product The factors are a function of the Promotional and
brands on dimensions based dimensions are data collected (i.e., the attributes communications
attributes on the explana- relatively easily asked) rather than the strategies because it
tion of variance determined from importance of the attributes to yields more affective
in the total the factor consumers. dimensions (Huber and
attribute set using loadings. Holbrook 1979).
correlation-
among the
2. The analysis
reduces many
· Potential gaps
or opportunities
attributes. The attributes to key for new
factor scores are dimensions. products.
the input for the
maps.
Ratings of Determines the The dimensions are \. The factors are a function of Engineering or new
brands on linear based on attributes the data collected (i.e., the product design
attributes combinations of that differentiate the attributes asked) rather than because it yields more
attributes that brands. the importance of the objective dimensions
best discriminate attributes to consumers. (Huber and Holbrook
among brands. 2. Dimensions are not easily or 1979).
intuitively interpretable into
managerial actions.
3. Dimensions are based on
attributes that are different
across brands regardless of
relevance to preference or
choice.
Tradeoffs Determines the \. The analysis pro- \. It requires other analysis to New product design
for
consumers
utilities of
combinations of
vides insight about
consumer prefer-
show brand positioning in
relation to competitors and
· Product re-{jesign
or repositioning
between attributes. ence among attri- segments.
attributes butes and brands. 2. The data collection for a
and product 2. The analysis can large number of brands could
configur- provide be onerous for the
ations simulations for respondent and costly to the
determining the researcher.
optimal combina-
tion of attributes
for segments of
consumers.
Spring 2003 33
 FIGURE 1
offers a constant ratio of attribute Y to attribute X as quantity
Journal of Marketing Theory and Practice 2003.11:30-42.
consumed increases. The highest ratio is offered byproduct A,
the lowest by product C. -
The Budget Constraint and Efficiency Frontier
The quantity of a product that a consumer can afford to buy
will depend on the price of the product and the budget of the
consumer. For a given budget constraint and set of prices for
the products, the end points A, B, and C represent the limits of
consumption along each product ray. The end points (or total
attainable attributes) are calculated by multiplying each
attribute level for a single unit of the product by the quantity
of the product that the consumer can afford to buy. The line
segment ABC defmes the budget (or efficiency) frontier for the
consumer. The frontier is called efficient because a consumer
maximizes utility by choosing combinations of attributes on
this frontier.
The efficiency frontier shows the total amounts of attribute X
and attribute Y that the consumer can afford to buy. Product A
offers XA of attribute X and Y A of attribute Y. Similarly,
products Band C offer the attribute bundles (XB' Y B) and (Xc,
Yd respectively.
Indifference Curves
The consumer's choice is made by maximizing herlhis utility,
as defmed by the consumer's set of indifference curves,
subject to the budget constraint. In the product attributes
model, we interpret the slope of the indifference curve at a
particular point (also called the marginal rate of substitution)
as the rate at which the consumer is willing to trade off units
of attribute Y for an additional unit of attribute X to maintain
the same level of utility. Thus, the consumer's choice is
influenced by herlhis preference pattern in attribute space.
34 Journal ofMarketing THEORY AND PRACTICE
Consumer Equilibrium
As shown in Figure 2, the consumer shows a strong preference
for attribute Y and therefore chooses product A. The
consumer's preference is represented by the relatively flat
indifference curves (IC, IC*, IC). The highest indifference
curve that intersects the efficiency frontier is IC*. (We will
always let IC* represent the optimal indifference curve
throughout our discussion of the product attributes model.)
This intersection is at the end point of the ray for product A.
The consumer maximizes utility at this intersection and will
choose Product A.
On the other hand, a strong preference for attribute X would
lead herlhim to choose product C. In this case, the indifference
curves are relatively steep. The proliferation of differentiated
products in a particular market can be explained as the result
of the dispersion of tastes and preferences for various
attributes among different segments of consumers.
FIGURE 2
~--r-IC
IC·
:--';::"~.£-IC
Attribute X
Mixing Products
Note that the consumer will spend herlhis entire budget on a
single product A, B, or C if the highest indifference curve just
touches the respective end point. If the highest indifference
curve touches a point on the line segment between two product
ray end points, then the consumer would choose to split
consumption between the two adjacent products. In Figure 3,
the highest indifference curve that intersects the efficiency
frontier is IC*. The intersection is represented on the graph as
point M. However, there is no product that satisfies the
attributes in the ratio represented by the point M. The
consumer may be able to maximize utility by mixing products
Band C. The consumer buys product B some times and
product C other times. This can lead to brand switching by
consumers for specific uses or occasions or just for variety. An
example of mixing products would be dining out at various
restaurants.
Product Indivisibility
If the product's consumption is indivisible (as in the case ofan
automobile or house), then consumption (or the consumer's
 FIGURE 3
IC·
xA
Journal of Marketing Theory and Practice 2003.11:30-42.
choice) is determined by the highest indifference curve that
touches an end point. This may occur if the-price of the
product is large relative to the consumer's income, and the
consumer can only afford to purchase one of the products.
As shown in Figure 4, the consumer cannot attain the highest
indifference curve IC· if shelhe can only afford to buy one of
the products. The consumer will choose to buy product B
(where the lower indifference curve IC intersects the efficiency
frontier), and then utility will be less than optimal.
FIGURE 4
Lancaster's Model in the Marketing Literature
In the 1970s and early 80s, several papers looked at
Lancaster's model, its advantages and limitations, and the
potential application to marketing. Ratchford (1975) provides
an overview of the model and describes several contributions
of Lancaster's model to consumer behavior (p. 67):
• An explanation for the role of price in determining demand
for differentiated products.
• A framework for estimating the sensitivity of demand to
changes in the relative price of a brand.
• A theoretical perspective for brand share models.
• Aneconornic explanation for brand loyalty.
• A method to understand how brand preferences are formed
given preferences for characteristics and prices.
Ratchford (1975) cites two limitations of the model. First, the
model is static and deterministic. As noted by Ratchford
(1975), most of the models used for evaluating brand
positioning possess these same characteristics so this is a
limitation across many of the methods used, not just
Lancaster's model. Ratchford (1979) in fact provides an
extension of the Lancaster model for stochastic choice.
Second, the model does not address how preferences for the
characteristics are formed. Again, most of the methods for
evaluating brand positioning do not describe this relationship.
To the extent that understanding the formation of preferences
is important for a specific application, Hauser and Simmie
(1981) extend Lancaster's model to include a full information
processing model (physical feature ~ perceptions ~
preferences).
Ladd and Zober (1977) claim the model makes three
assumptions that limit its usefulness: (1) every characteristic
has nonnegative marginal utility, (2) utility is independent of
the distribution of characteristics among products, and (3) the
model uses linear consumption technology. Ratchford (1979)
refutes that these are necessary assumptions of the Lancaster
model except in unusual circumstances (e.g., when a consumer
buys all brands of the product).
For our proposed application to brand positioning as opposed
to product choice, Lancaster's model (1966, 1979) provides an
effective method for incorporating price into positioning
analysis without requiring more elaborate extensions to the
model. The product attributes model is particularly effective
for brand positioning decisions involving product design and
repositioning, especially when price plays a critical role in the
perception of value for the product. In this context, the product
attributes model provides a superior way to look at the
combination of attributes with price and consumer budget
constraints to guide managers in decision making.
Ratchford (1975) concludes: "In defense ofthe work presented
here [Lancaster's model], it can only be said that no
worthwhile model of consumer behavior could take account of
all factors .... The judgment about whether the models
discussed here are 'good' can only be made after their
predictions have been tested empirically (p. 74)." To
encourage this empirical testing, we propose several ways that
the product attributes model can provide strategic guidance in
marketing. We conclude with an example of an application in
Spring 2003 35
 the automobile industry. Our goal is to show the usefulness of
the model in a specific context - brand positioning - and make
the model tractable for academician and practitioner alike.
STRATEGIC IMPLICATIONS FOR
BRAND POSITIONING
The product attributes model can be used to analyze a brand's
positioning and its effect on consumer choice. The product
attributes model has important implications for the brand's
positioning and marketing mix.
Market Segmentation/Target Market
The product attributes model can help the finn understand the
market segment(s) for a product. It can then enable the finn to
identify the appropriate target market(s) for its specific brand.
For example, in Figure 5, the consumer with indifference
curve ICy has a relatively low marginal rate of substitution
(MRS) between attribute Y and attribute X. This consumer has
Journal of Marketing Theory and Practice 2003.11:30-42.
a relatively flat indifference curve and will tend to purchase
product A. Consumers with a low MRS can be called the
"Attribute Y segment."
The consumer with indifference curve ICx has a relatively high
MRS between attribute Y and attribute X. This consumer has
a much steeper indifference curve and will tend to purchase
product C. Shelhe belongs to the "Attribute X segment."
FIGURES
..
;.-
]
·c
~ afford less).
lCx
A finn that knows the tastes and preferences of consumers for
the various attributes can incorporate the attributes into a
product designed for a particular segment of the consumer
base. The fmn may also look for market segment(s) that are
not satisfied with the current market offerings and develop a
product to appeal to this segment.
36 Journal ofMarketing THEORY AND PRACTICE
Positioning
The product attributes model allows the fmn to see how its
brand is perceived relative to the competition on critical
attributes. The fmn can assess whether it operates from a
position of strength or if it is vulnerable to the competition. If
it is vulnerable, it can determine the appropriate action to take:
a new product, changes in the existing product, changes in
price, or a new promotional strategy.
New Product
A finn may introduce a new product positioned to take
advantage 0 f an opportunity represented by a "gap" in the
attribute space between rays. This "gap" indicates that existing
products do not satisfy a specific ratio of attributes. If a
sufficient number of consumers want this ratio, a new product
may be developed with the appropriate ratio of attributes that
maximizes the utility of this market segment.
Changes in Existing Product
The product attributes model indicates on what attribute( s) the
existing product may be deficient. The fmn can then make the
product improvements needed to shift the product to a more
favorable position in the market. The product attributes model
can also help predict increases in market share that will result
from these product improvements.
Changes in Price
If the product's price is reduced, the budget constraint will
shift outward along the product ray (the consumer can afford
more). If the product's price is increased, the budget constraint
will shift inward along the product ray (the consumer can
Look again at Figure 4. What can the finn that sells product C
do to capture the consumer and make a sale? One option
would be to cut price. Cutting the price will shift the budget
constraint outward. A cut in price moves the end point for
Product C from C to C' as shown in Figure 6. The consumer
equilibrium will b eat the intersection of I C· and the new
efficiency frontier. The consumer then will choose to buy
product C.
Pricing a Product Out of the Market
Based upon a consumer's perception of the attributes offered
by a product, there is a maximum price he or she will pay for
the product. In Figure 7, the consumer maximizes utility by
mixing between products A and C. The price of product B at
the point B on the product ray is too high for the consumer.
The price of product B must be decreased to the point
represented by B' in order to capture the consumer. An
alternative approach is to add value through product re-design
to move the product to the same position.
 FIGURE 6
Attribute X
Journal of Marketing Theory and Practice 2003.11:30-42.
FIGURE 7
Ie
Promotion / Changes in Consumer Perceptions
Advertising can change the perception of the product in terms
of attribute content and proportion (distance from the origin to
the endpoint and/or slope o.fthe product ray). It can also
influence a consumer's tastes for attributes (shape of
individual consumer's indifference curve).
Advertising may make an attribute important to consumers
that might not have been considered previously. In this case,
a new attribute dimension must be considered in the product
attributes model.
Price deals and coupons can be used to effectively lower the
price for specific purchase occasions. These promotions adjust
the efficiency frontier on the promoted product for those
particular purchases.
AN EXAMPLE
We will start with a simple example based on two automobile
attributes (gas mileage and horsepower) to analyze the choices
faced by two market segments: environmentalists and racing
enthusiasts. Table 2 summarizes gas mileage, horsepower, and
price data for three automobiles (Focus SE, Taurus, and
Mustang Mach 1), as reported by Edmund's New Car Guide.
Note that these models do not compete in the same
subcategory. However, the analysis shows the positioning
strategies used by one company (in this case, Ford) to appeal
to multiple segments based on different combinations of
attributes.
Figure 8 shows the product rays associated with each brand of
automobile. The slope of each ray is equal to the ratio of gas
mileage to horsepower.
FIGURE 8
~ 250
~
oS
~ 200
v.I
~
CJ
150
100
Mustang
50
0
0 50 100 150 200 250
Horsepower
Table 3 shows the total attainable attributes for each brand of
automobile given the consumer's budget. Total attainable
attributes are calculated as the attribute rating of the
automobile multiplied by the quantity of that automobile
which the consumer can afford to buy (in this case,
automobiles per $30,000). Clearly, the Focus is positioned as
an economy c ar based 0 nits superior performance 0 n gas
mileage. Similarly, Mustang has a well-defined position as a
muscle car based on its strength in terms of horsepower. The
Taurus performs at a mid-level on each of these attributes.
Spring 2003 37
 TABLE 2
ATTRIBUTES AND PRICES OF THREE AUTOMOBILES
- GAS MILEAGE AND HORSEPOWER -

Attribute Rating* Ratio of Gas Automobiles per

Brand of Price Mileage to $30,000**
Automobile (MSRP) Gas Mileage Horsepower Horsepower
(Highway)

Focus SE $15,595 100 36 2.78 1.92

Taurus $19,990 74 51 1.45 1.50

Mustang Mach 1 $28,995 63 100 0.63 1.03

TABLE 3

TOTAL ATTAINABLE ATTRIBUTES

- GAS MILEAGE AND HORSEPOWER-
Brand of Automobile Total Attainable Attributes

Gas Mileage Horsepower

Focus SE 192 69
Journal of Marketing Theory and Practice 2003.11:30-42.

Taurus 111 77

Mustang Mach 1 65 103

Figure 9 builds on Figure 8. The total attainable attnbutes efficiency. As a result, this segment has a very low marginal
defme the end point on each product ray. We then connect the rate of substitution, and its indifference curves are relatively
outennost end points to define the efficiency frontier. Any end flat. We call this segment the environmentalist segment with
points inside the efficiency frontier are effectively priced out the highest attainable indifference curve ICE' Figure 10 shows
of the market. In this case, the end points are defmed by the a representation of this segment's highest attainable
Focus and the Mustang. The Taurus falls inside of this indifference curve superimposed on the graph of Figure 9.
efficiency frontier, and so it appears to be priced out of the
market. We will discuss this more later in the example. The environmentalist segment will choose to purchase the
Focus SE since its highest indifference curve (ICal intersects
FIGURE 9 the efficiency frontier at the end point for the Focus SE. This
segment's willingness to trade off only a little bit of gas
.mileage for more horsepower is best satisfied by the Ford
Focus SE.
~ 250
,; On the other hand, the other segment (referred to as the racing
~
...
)':J 200
enthusiasts) cares little about gas mileage and wants a lot of
horsepower. As a result, this segment's indifference curve
ISO (ICJ is relatively steep in the area of the efficiency frontier,
and a member of this segment will choose the Mustang Mach
100 1.
Mustang
50 Note that the Ford Taurus is ''priced out of the market." This
result is driven by our assumption that consumers only care
about two automobile attributes, gas mileage and horsepower.
O~--~--~----~--~--~ We know that there are consumers who buy a Ford Taurus (in
o SO 100 ISO 200 250
fact, the Taurus is one of the best selling automobiles in the
Horsepower
world). This must mean that there are attributes other than gas
mileage and horsepower that are important to automobile
People who are concerned about the environment or economy consumers. This result points to a need to consider additional
would be expected to give up only a little gas mileage for attributes in the product attributes model. The analysis can be
increases in horsepower since this segment values fuel extended to multiple"attributes through additional maps or

38 Journal ofMarketing THEORY AND PRACTICE

 FIGURE 10 As can be seen in Table 5, the Taurus has the greatest total
attainable attributes for luggage capacity; however, the Focus
SE is very close. This proximity is primarily driven by the
difference in price since the luggage capacity for the Taurus is
approximately 40% larger than that for the Focus SE. This
~ 250
fmding demonstrates the importance of including price in the
=
J! analysis.
~ 200
'"
~ TABLES
Total Attainable Attributes
150 - LU22a2e Capacity -
Total Attainable Attributes
Brand of Automobile
100 Luggage Capacity
Focus SE 146
Taurus 150
50 Mustang Mach 1 66

Figure 11 shows the relative positioning of the Focus, Taurus,

50 100 ISO 200 250 and Mustang with respect to luggage capacity and horsepower.
For segments emphasizing luggage capacity or horsepower,
Horsepower
the Focus does not provide the value offered by Taurus and
Journal of Marketing Theory and Practice 2003.11:30-42.

Mustang. As a result, the Focus, despite its relatively modest

dimensions. Alternatively, the analysis can be extended
price, is priced out of the market because it does not possess
through multiattribute modeling ofutility maximization. These
sufficient quantities of the attributes desired for the price. Of
analyses are demonstrated in a continuation of our example the two cars remaining, the Taurus clearly appeals to the
below. segment that desires luggage capacity which we will call the
family segment. The indifference curve for this segment is
Why is the Taurus so popular? The Taurus is marketed by designated by IC F • The racing enthusiasts who greatly value
Ford as "America's smart family car" on its website. The horsepower over luggage capacity will select the Mustang (as
specifications show that the car is longer and wider than either shown by ICJ.
the Focus or Mustang, plus the Taurus can seat 6, while the
Focus can seat 5, and the Mustang only 4. However, the For completeness, we also show the comparison of luggage
greatest difference in the cars comes in the luggage capacity capacity and gas mileage. In this case, the Mustang is priced
where the Taurus has significantly more room in the trunk to out of the market since it does not offer greater value for either
haul around sporting gear for the children, groceries for the attribute. The family segment will select the Taurus for its
household, and of course luggage for a family vacation. As a greater luggage capacity (as shown by ICF), and the
result, we have used luggage capacity to extend our analysis to environmentalists will choose the Focus (as shown by ICE) for
a third dimension that helps us understand the popularity of the its greater fuel efficiency.
Taurus.
FIGURE 11
Table 4 builds on Table 2, presenting the ratings and ratios for
luggage capacity. The total attainable attributes for luggage
capacity are summarized in Table 5.
200
Table 4 £u
Attributes and Ratios of Three Automobiles =
c..
- LU22age C apaclty -
Attribute Ratings·
U= 150
~
~
IC F
Brand of Ratio of Ratio of
Automobile Luggage Gas =
~
~
Capacity to Mileage to =
....:l 100
Horsepower Luggage
Capacity

LlIggll&e Capacity
50
Focus SE 76 2.11 1.32 ICR
Taurus 100 1.96 0.74
Mustang Mach I 64 0.64 0.98
0
• Attribute ratings have been scaled to 100 points to allow an equivalent
0 50 100 ISO 200
comparison of the attributes. Actual luggage capacity: Focus SE 12.9 cubic
feet, Taurus 17 cubic feet, and Mustang Mach I 10.9 cubic feet. Horsepcmer

Spring 2003 39
 FIGURE 12
~ horsepower over gas mileage. The racing enthusiasts (UJ just
..
~
250
~ 200
Focus
'"
~
\.!)
150
100
50
0 TABLE 6
0 50 )00 150 200 250
Luggage Capacity
Multiattribute modeling of utility maximization requires an
understanding of the willingness of consumers to make
Journal of Marketing Theory and Practice 2003.11:30-42.
tradeoffs among the three attributes. To estimate consumer
utility, marketers can u se surveys 0 r conjoint analysis. For
purposes of our example, we assume a linear utility function
which means that consumers have a constant marginal rate of
substitution. In other words, we assume that the consumers'
willingness to tradeoff among the attributes does not vary
across the levels of the attributes. This assumption seems valid
at the brand level since in any given purchasing situation,
consumers will most likely have one preference based on the
attributes, price and their budget. For our three attribute
example, the utility function takes the form of:
U i = ax + by +cz (5)
In this example, U i is the utility of the individual (or a segment
of individuals); a, b, c are the weights for each product
attribute; and x,y, z are the total attainable attributes for each
product attribute.
As can be seen in this generalized example, the utility function
is a weighted combination of the three attributes. The weights
are assumed to vary across segments (and in fact, defme the
segments). For example, the environmentalists value gas
mileage above all other variables. That does not mean that they
do not want horsepower or luggage capacity, just that the
weights for these attributes will be much lower. We will model
this utility as:
U E = lOGM + HP + LC (6)
In this equation, UE stands for the utility function for the
environmentalists, GM for gas mileage, HP for horsepower,
and LC for luggage capacity. Ten is the weight (or importance)
assigned to gas mileage while the relative weights for
horsepower and luggage capacity are one for this segment. In
other words, this segment values gas mileage at the rate of 10
to lover any of the other attributes.
40 Journal ofMarketing THEORY AND PRACTICE
Similarly, for expositional purposes, we develop utilities for
the family and racing enthusiast segments. The family segment
(UF) values luggage capacity over horsepower, and
care about horsepower and are willing to pay for it.
U F = GM + lOHP + 20LC (7)
U R = GM + 20HP + LC (8)
Based on these utility functions, Table 6 shows the total utility
assigned to each car by each segment. These values are
assigned by weighting the total attainable attributes for each
car. The bold values show the car preferred by each segment.
Total Utility for Three Consumer Segments Across
Three Brands of Automobiles
U< U< Uo
Focus SE 2135 3802 1718
Taurus 1337 3882 1801
Mustang Mach 1 819 2415 2191
As can be seen in these examples, the environmentalist
segment has a strong preference for the Focus SE due to its
superior gas mileage. The family segment prefers the Taurus
for its greater luggage capacity, and the racing enthusiasts
prefer the Mustang for its horsepower. Through this analysis,
marketers can identify the key segments and their preferences
in terms of attributes and brands to determine the best segment
to target, opportunities for new products or the need for
modifications to existing products, appropriate positioning and
promotional strategies, and potential pricing adjustments.
CONCLUSION AND DIRECTIONS FOR FUTURE RESEARCH
The product attributes model provides a powerful tool for
analyzing marketing strategy based on the positioning of a
brand. It provides a framework for incorporating brand price,
consumer preferences, and budget constraints into an analysis
ofthe optimal combination of attributes that appeal to specific
market segments. The model provides direction for marketing
strategy with implications for pricing, product development,
promotion, positioning, and segmentation.
The product attributes model offers many opportunities for a
future research agenda, including:
• Empirically testing the application of the model to
marketing strategy.
• Using empirical research to compare the results of the
product attributes model to other positioning analysis tools
to better understand the relative strengths and weaknesses
of these methods.
• Developing measures to defme indifference curves for
consumers or consumer segments.
• Empirically evaluating the application of the multiattribute
model and its implications for marketing strategy beyond
two dimensions.
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AUTHOR BIOGRAPHY
Carol F. Gwin (Ph.D., University of South Carolina) is a lecturer of marketing in the Hankamer School of Business at
Baylor University. Dr. Gwin's areas of research are marketing strategy and consumer policy. In the area of marketing
strategy, the research stream encompasses strategic implications for decisions in sales management, promotion, and e-
commerce. For consumer policy, her research includes privacy issues and compulsive buying. Dr. Gwin has presented at
the Annual Conferences for AMA and ACR and has a publication in the Journal of Real Estate Research.

AUTHOR BIOGRAPHY
Carl R. Gwin (Ph.D., Indiana University) is an assistant professor of economics in the Hankamer School of Business at
Baylor University. Dr. Gwin's areas of research interest are Industrial Organization and Applied Microeconomics. His
stream of research emphasizes the application and testing of game theoretic principles in understanding how business
responds to asymmetric information problems. Dr. Gwin's publications include Economic Inquiry, the Journal of
Property Investment and Finance, the Journal ofReal Estate Research, and the Antitrust Bulletin. He has an upcoming
publication in the Journal of Money, Credit and Banking.

42 Journal ofMarketing THEORY AND PRACTICE