Differentiation and

Positioning
Differentiation: The creation of tangible
or intangible differences on one or two
key dimensions between a focal product
and its main competitors
Positioning: The set of strategies that
firms develop and implement to ensure
that the differences occupy a distinct
and important position in the minds of
consumers

Perceptual Maps
Key research tool for positioning:
Perceptual Map
A perceptual map is a spatial
representation in which competing brands
are plotted

To create a map we need

Data: Attribute and Preference data
Methodology: Factor Analysis
solutio
n

Perceptual Map of Automobiles (from WSJ, 1984)

Lincoln
Cadillac

Has a Touch of
Class
A Car to be Proud
to Own
Distinctive Looking

Porsche

Mercedes
Chrysler
Buick
Oldsmobile
Conservative looking
Appeals to Older
People

BMW
Pontiac

Ford

Dodge

Chevrolet
Datsun
Toyota

Plymouth
VW
Very Practical
Provides Good Gas Mileage
Affordable

Has Spirited
Performance
Appeals to Young
People
Fun to Drive
Sporty Looking

Many Attributes?
Respondent 1
Popular
with
men

Popular
with
women

Good
Value

Full
Bodied

Heavy

Special
Occasio
n

On a
Budget

Bud

Becks

Strohs

Use Factor Analysis. Basic idea: Perceptions about

several attributes reflect the same underlying
perception of a deeper characteristic.

Input to Factor Analysis

Heavy

Pop/Men

Pop/Women

Full Bodied

Blue
Collar

Good
Value

Spec Occ

Beck's
Budweiser

Coors

Ratings of the brands on each attributes

averaged across all respondents

Coors light
Heineken
Meister
Brau
Michelob
Miller
Miller Lite

Stroh's

Vectors of attributes can be plotted based on factor loadings.

Individual brands location on the perceptual map is based on
factor scores.

Perceptual Map of Beer Market

(only Brands)

Old Milwaukee

Budweiser

Meister Brau

Miller

Becks

Heineken

Coors

Strohs

Michelob

Old
Milwaukee Light

Miller
Lite

Coors
Light

Perceptual Map of Beer Market

(only attributes)
Heavy
Heavy

Full Bodied

Popular
with Men

Special
Occasions
Good Value

Blue Collar

Dining Out Premium

Budget

Premium
Popular
with
Women

Pale Color
On a
Budget

Light

Light

Less Filling

Perceptual Map of Beer Market

(both products & attributes)
Heavy
Heavy

Full Bodied
Old Milwaukee

Budweiser

Meister Brau

Good Value

Popular
with Men

Miller

Becks

Strohs

Budget

Heineken

Special
Occasions

Coors

Blue Collar

Dining Out Premium

Premium

Michelob

On a
Budget

Pale Color

Old
Milwaukee Light

Light

Coors
Light

Miller
Lite

Light

Less Filling

Popular
with
Women

Guidelines for Interpreting

Perceptual Maps
The arrow indicates the direction in which that attribute
is increasing
The attribute is decreasing in the direction opposite to
the arrow.
In the map on previous slide, a beer positioned farther
and farther in the North East direction are popular
with men, whereas a beer positioned in the South
West direction is less popular with men.
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 in helping you to interpret the map.
Thus, Good value and Less filling are relatively
more important than Pale color and Blue collar in
explaining how this group of customers discriminates
between the different beers.

Guidelines for Interpreting

Perceptual Maps
Attributes that are both relatively important and close to
the horizontal (vertical) axis help you in articulating the
meaning of the axis.
Here, the two dimensions along which these customers seem to
discriminate between the beers appear to be Budget-Premium
for the horizontal axis and Light-Heavy for the vertical axis.
This interpretation can be based on attributes most correlated
with the axes (Premium, Special occasions, Blue collar, Budget,
etc. for the horizontal axis, and Heavy, Light, Pale color for the
vertical axis).

To position a particular beer on an attribute, draw an

imaginary perpendicular line from the location of that beer
onto that attribute.
Use both the direction and closeness to the attribute to interpret

How to read the perceptual

map
Old Milwaukee

Heavy

Budweiser

Becks

Meister Brau

Heinek
Miller
en
Coors

Michelob

Old Milwaukee Light

Miller Lite
Coors Light

What about demand?

Should we always seek out the gaps in
the map?
No we need to think about demand
Two things required to ideal positioning:
No strong competitors in the same location
Demand is sufficiently large

How do we add the demand aspect to

the map?