Professional Documents
Culture Documents
Context Effects and Context Maps For Positioning: Minhi Hahn Eugene Won Hyunmo Kang Yong J. Hyun
Context Effects and Context Maps For Positioning: Minhi Hahn Eugene Won Hyunmo Kang Yong J. Hyun
Context Effects and Context Maps For Positioning: Minhi Hahn Eugene Won Hyunmo Kang Yong J. Hyun
48 Issue 2
Minhi Hahn*
Eugene Won**
Hyunmo Kang*
Yong J. Hyun*
*KAIST Graduate School of Management
**Dongduk Women’s University
Introduction
A scene is shown of two truck drivers competing to see who will arrive
first at a building. The brands on the trucks are shown as FedEx and UPS.
They arrive at the building almost at the same time. The drivers rush into
the building only to find a DHL man coming out with a smile. This is a
recent DHL commercial, comparing it with and differentiating it from
FedEx and UPS. By giving consumers the impression that FedEx and UPS
are similar, DHL may have tried to distinguish its own service as unique.
Market positioning is defined as ‘arranging for a product to occupy a
clear, distinctive, and desirable place relative to competing products in the
minds of target consumers’ (Kotler & Armstrong 2004, p. 55). Similarly,
product position means ‘the way the product is defined by consumers on
important attributes – the place the product occupies in consumers’ minds
relative to competing products’ (Kotler & Armstrong 2004, p. 259). Thus,
156
International Journal of Market Research Vol. 48 Issue 2
PA (i) PT (i)
=
PA (j) PT (j)
P′(1) P(1)
=
P′(2) P(2)
157
Context effects and context maps for positioning
Definition 1
There is a context effect if
P′(1) P(1)
≠
P′(2) P(2)
Definition 2
The context effect is positive for alternative 1 if
P′(1) P(1)
>
P′(2) P(2)
P′(1) P(1)
<
P′(2) P(2)
Definition 3
Suppose the context effect is positive. The positive context effect is defined
to be strong if P′(1) > P(1). The positive context effect is defined to be
weak otherwise.
158
Table 1 Choice outcomes and context effects
[P ′(1)/ P′(2*)]
Classification [P(1)/ P(2)] [P′(1)/P(1)]* Remark
No context effect Equal to one Less than or equal to one Independence from irrelevant alternatives (IIA) (Luce 1959)
Negative context effect Less than one Substitutability (similarity) effect (negative) (Debreu 1960;
Tversky 1972)
Lone alternative effect (Kahn et al. 1987)
Weak positive context effect Greater than one Weak attraction effect**
Weak compromise effect**
Weak uniqueness effect**
Substitutability effect (positive)
Strong positive context effect Greater than one Attraction effect (Huber et al. 1982)
Compromise effect (Simonson 1989)
Uniqueness effect**
* P(1) and P(2) are choice shares with only 1 and 2 in the choice set. P′(1) and P′(2) are choice shares with 1, 2 and the added option in the choice set.
** Newly defined.
International Journal of Market Research Vol. 48 Issue 2
159
Context effects and context maps for positioning
the substitutability effect (Debreu 1960). For example, suppose there are
two animation movies in a choice set for viewing at the regular price (i.e.
The Incredibles and Shrek II). Also, suppose a new option is added of
viewing Shrek II with a $1 discount. The additional option is likely to take
away most of the share from viewing Shrek II at its regular price but not
much from viewing The Incredibles. If alternative 3 is more similar to
alternative 2, it is consistent with the lone alternative effect. Kahn et al.
(1987) suggested that lone alternatives can be in a disadvantageous
position when competing with a group of alternatives that are similar to
one another. If the addition of alternative 3 enhances the attractiveness of
the category characterised by alternatives 2 and 3, it can reduce the share
of alternative 1 more than expected under the IIA condition.
When the added alternative takes away more share from the competing
alternative 2 than 1, there is positive context effect for alternative 1. At the
same time, if the share of alternative 1 is increased, there is a strong
positive context effect. The attraction effect (Huber et al. 1982) and
compromise effect (Simonson 1989) are in this category. Also, the
advantage of a unique alternative over a group of similar alternatives,
observed by Brenner et al. (1999), is consistent with the strong positive
context effect. Simonson and Nowlis (2000) suggest that consumers’ need
for uniqueness enhances the choice of unique alternatives. We will call it
‘uniqueness effect’ if alternative 1 shows a strong positive context effect
when a third alternative (3) is added that is more similar to alternative 2.
With the addition of alternative 3, the market share of alternative 1 may
become lower than its original share but it may still achieve a greater share
than expected under the IIA condition. Such ‘weak positive context effects’
were not discussed in previous studies of consumer choices. If there is a
positive context effect, but not strong enough to be classified as the
attraction effect, compromise effect or uniqueness effect, because the
market share is not increased with the addition of the third alternative, we
will call it ‘weak attraction effect’, ‘weak compromise effect’ and ‘weak
uniqueness effect’, respectively. Weak positive context effects can arise
from the substitutability effect as well. When the added alternative is more
substitutable with alternative 2 than 1, it may take a disproportionately
greater share from alternative 2.
Context maps
Previous studies on context effects suggest that IIA situations are quite
ideal and do not often occur. Consumer preferences for the focal product
160
International Journal of Market Research Vol. 48 Issue 2
SRM(1, 2|3)
P′(1)
= log and
P′(2)
SRM(1, 2|None)
P(1)
= log
P(2)
SCM(1, 2|3)
P′(1)
= log and
P(1)
SCM(1, 2|None) = 0
161
Context effects and context maps for positioning
Strong
positive
context
effect
Case 1
Case 5 Case 3
Weak
Negative
Case 4 positive
context
context
effect
effect
SCM(1, 2|k)
= log [P′(1)/P(1)]
No context
effect (IIA)
162
International Journal of Market Research Vol. 48 Issue 2
Preference-substitutability maps
In this section, measures of relative preference and substitutability are
suggested through the application of the measures developed in previous
sections. Relative preference, in a binary choice case, can be represented
simply by the share-ratio of two compared alternatives. Suppose our focal
product is alternative 1. We define the relative-preference measure (RPM)
of alternative 1 with respect to alternative j as:
P(1)
RPM (1, j) = SRM(1, j|None)= log
P(j)
163
Context effects and context maps for positioning
N
1
RSM(1, k) = ∑
N − 2 j ≠1,k
{SRM(j ,1 | k) − SRM(j ,1 | None)}
1 N
P′(j) P(j)
= ∑ log
N − 2 j ≠1,k
P ′(1)
− log
P(1)
where j is the main competitor selected for the two-alternative choice set
and N is the total number of alternatives considered including 1 and k.
The greater share alternative k takes away from 1 rather than its
competitors, on average, the higher the value of RSM(1, k). Thus, higher
scores imply that 1 is more substitutable for k.
RSM(i, k) values can be calculated, assuming each brand i in the market
is the focal alternative. The overall score of RSM at the industry level is
N
1
Overall RSM (i ) = ∑
N − 1 k=1,k≠ i
RSM(i , k)
Note that the average value of all the notations RSM(i, k) is always zero
and the average value of overall notations RSM(k) is zero as well. This
means that the proposed substitutability measure shows the relative
164
International Journal of Market Research Vol. 48 Issue 2
165
Context effects and context maps for positioning
in Type A, for cell phones in Type B and for digital cameras for Type C.
Thus, no subjects answered the two-alternative questions and the three-
alternative questions for the same products. Between the two-alternative
questions and three-alternative questions, subjects answered questions on
demographics and possession of the products. The three questionnaire
types were randomly assigned to subjects. Questions on perceived
similarity among alternatives were presented in the final part.
Subjects were told that all the cell phones had been launched recently.
They were told that all the phones featured a one-megapixel digital
camera, an MP3 player and a video messaging function. Thus, the five
alternatives differed only in brand name and price. For digital cameras,
information regarding megapixels, size of memory and price was given for
each alternative. In the case of the movies, short introductions regarding
the genre and synopsis were presented to the subjects. We present the data
for the cellular phone category in Table 2.
Our raw data show that predicting market share based on the IIA
assumption can be quite misleading. For example, SK Teletech and
Pantech have market share of 64% and 36% respectively in a paired
comparison case. When LG Cyon is introduced into the choice set, it takes
an overall share of 7%. According to the IIA principle, the shares for SK
Teletech and Pantech should be 60% and 33% after the new brand
introduction. However, the data show that market share for SK Teletech
and Pantech is 82% and 11% respectively after the introduction. There is
a 22.4% deviation from what the IIA assumption predicts. The data verify
the importance of analysing the context effects.
166
Table 2 Shares of cell phones
167
Context effects and context maps for positioning
168
International Journal of Market Research Vol. 48 Issue 2
169
Context effects and context maps for positioning
Cell phones
Comparison brand
Focal brand Samsung SK Teletech Pantech LG Motorola Overall
Samsung – –0.000 –0.588 2.120 2.120 –1.207
SK Teletech –0.000 – –0.588 1.792 0.747 –0.782
Pantech –0.588 –0.588 – 0.747 1.299 –0.218
LG –2.120 –1.792 –0.747 – 0.000 –1.165
Motorola –2.120 –0.747 –1.299 0.000 – –1.042
Cell phones
Comparison brand
Focal brand Samsung SK Teletech Pantech LG Motorola Overall
Samsung – –0.312 –0.302 –0.343 –0.241 –0.149
SK Teletech –0.429 – –0.555 –0.516 –0.687 –0.547
Pantech –1.144 –0.833 – –1.404 –0.833 –1.054
LG –0.371 –0.313 –0.098 – –0.094 –0.034
Motorola –0.345 –0.834 –0.156 –0.544 – –0.392
170
International Journal of Market Research Vol. 48 Issue 2
Samsung
1 Canon 1 Notebook 1
Nikon
Substitutability
Substitutability
Substitutability
SK Teletech Pantech Taxi
Sony DMZ
0 0 0
–1 0 1 2 –1 0 1 2 –1 0 1 2
Clean
Olympus
Pretty
–1 –1 –1
LG Samsung
Motorola
–2 –2 –2
Preference Preference Preference
171
Context effects and context maps for positioning
Substitutability
Substitutability
1 1
Olympus
DMZ
1 Taxi
Sony
Pantech
SK Teletech 0 0
–1 0 Nikon 1 –2 –1 0 1
0
–1 0 1
–1 –1 –1
Preference Preference Preference
2 2 1
LG
Motorola
–1 0 Motorola 1
0
Substitutability
Substitutability
Substitutability
Motorola 1 1
LG Pantech
Pantech –1
SK Teletech
0 0
–1 Samsung 0 1 –1 0 1 2
–2
Samsung Samsung
SK Teletech
–1 –1 –3
Preference Preference Preference
172
International Journal of Market Research Vol. 48 Issue 2
SCM
SCM
–0.2 Pantech
SRM
0.1 Motorola 0.0 Motorola
LG 0 1 2 3 –0.4
SK Teletech
0.0 –0.1 Motorola SK Teletech –0.6
0.0 0.3 0.6 0.9
SRM
Motorola
0.4 0.0 0.0
–3.5 –2.5 –1.5 –0.5 0.5 –0.9 –0.6 –0.3 0.0 0.3 0.6
SCM
Pantech
0.3 SRM SRM –0.5
Samsung –0.5 Samsung
0.2 –1.0
Pantech
SK Teletech
–1.0
Motorola
0.1 –1.5
SCM
SCM
SK Teletech
Motorola
0.0 –1.5 –2.0
–2.5 –2.0 –1.5 –1.0 –0.5 0.0
SRM
0.0
–0.6 –0.3 0.0
0.0 –0.1 Pretty
0.0 0.5 1.0 1.5 2.0 –0.1
SCM
SCM
Sony Taxi
–0.2 Olympus –0.2 –0.2
SRM
173
Context effects and context maps for positioning
The focal brand of the first three context maps (the upper row) is
Samsung in the cell phone category. The first map assumes that Samsung
and SK Teletech are in the choice set. It is natural to consider SK Teletech
as the main competitor for Samsung because it is almost equally preferred
in the cell phone market. The context map clearly shows that it is to the
advantage of Samsung to influence consumers who have the two brands in
their choice sets to include another competitor. Strong positive context
effects can be expected when a third alternative is included. The map
implies that the biggest increase in share for Samsung is expected when
Pantech is included in the choice set as a third alternative. The second map
shows the context effects when Samsung and Pantech are in the choice set.
For Samsung, it is best to include LG as the third alternative in the choice
set as a substantial increase in share is expected. Because consumers tend
to perceive LG and Pantech to be similar, Samsung may be easily
differentiated from the two competitors. When Motorola or SK Teletech is
included as the third alternative, Samsung can expect positive context
effects, but not an increase in market share. The third map shows the
context effects when Samsung and LG are included in the choice set. In this
case, Samsung should try not to include any third alternatives in the choice
set. When a third alternative is included, Samsung will observe a negative
context effect. It is likely to face a substitution effect or a lone alternative
effect.
The three context maps in the second row are drawn from the
perspective of LG, which is one of the weakest brands in the cell phone
market. The left context map implies that LG will be better off by adding
another competitor for consumers who have LG and Samsung in the
choice sets. In fact, LG can expect an increase in market share if Pantech
is included in the choice sets. The addition of Motorola or SK Teletech to
the choice set will not change the share of LG. For those consumers who
have LG and SK Teletech or LG and Pantech in their choice sets, the
addition of a third alternative will not increase LG’s share.
The first two maps in the third row are selected from the digital camera
category. In this market, Canon is the leader, with Sony following close
behind. The first map shows the context map of Canon for consumers who
have Canon and Nikon in their choice sets. For these consumers, if
Samsung or Olympus is added to the choice set, strong positive context
effects for Canon arise. As consumers tend to perceive Olympus or
Samsung to be more similar to Nikon, Canon is likely to enjoy the
uniqueness effect, easily differentiating it from other competitors. Adding
Sony shows the weak positive context effect. Canon’s market share will be
174
International Journal of Market Research Vol. 48 Issue 2
decreased but will still be greater than expected under the IIA condition.
Even if Sony is considered in the choice set, it will be Nikon that is more
critically affected rather than Canon. The bottom middle map shows that,
for consumers who have Sony and Canon in their choice sets, adding
Nikon or Samsung will be beneficial for Sony and not for Canon. Because
consumers tend to perceive Samsung or Nikon to be much different from
Canon, the effect could be a compromise effect, making Sony an
intermediate alternative. For Sony, it is not desirable to add Olympus as
the third alternative. It may make consumers perceive Canon as being
more differentiated. The decrease in share for Sony is expected to be
substantial.
The last map is selected from the movie category. It is drawn from the
perspective of DMZ for consumers who have DMZ and Notebook in their
choice sets. Note that Notebook was the most popular movie at the time
data were collected. In this case, adding Clean as the third option will help
DMZ increase its share. If Pretty or Taxi is added, DMZ will show
positive context effects but still lose share. Because consumers perceive
Clean to be similar to Notebook, DMZ may enjoy the uniqueness context
effect by the addition of Clean to the choice set.
A strong merit of context maps is the visualisation that they offer of the
outcomes of adding another competitor to consumers’ choice sets. Such
analysis helps marketers identify the most ‘beneficial’ competitors to be
considered as competitors in making positioning decisions.
Discussion
Context effects have been investigated under the names of attraction
effects, compromise effects, substitution effects and lone alternative effects.
Marketers should incorporate such context effects in determining their
strategic competitors and making positioning decisions. This study
provides a scheme for classifying context effects into exclusive and
exhaustive categories. Also, key measures in analysing context effects are
proposed: the share-ratio measure and the share-change measure. Using
these measures, marketers can draw context maps to visualise the context
effects of adding another competitor as the third brand in consumer choice
sets. Based on the measures, two additional useful measures analysing
brand positions were proposed. With the relative preference and relative
substitutability measures, positioning maps can be drawn from a brand’s
perspective with respect to its relative preference and its relative
substitutability with its competitors. The overall positions of competitors
175
Context effects and context maps for positioning
References
Batsell, R.R. & Polking, J.C. (1985) A new class of market share models. Marketing
Science, 4, Summer, pp. 177–198.
176
International Journal of Market Research Vol. 48 Issue 2
177