Multidimensional Scaling

MULTIDIMENSIONAL SCALING

• Management of a company is always interested in knowing

the position of its products as compared with the position of
competitor’s product in the market.
• Multidimensional scaling is an attempt to answer such
questions.
• Multidimensional scaling commonly known as MDS is a
technique to measure and represent the perception and
preferences of respondents in a perceptual space as a visual
display.
 MULTIDIMENSIONAL SCALING (Cont.)

• Multidimensional scaling handles two marketing decision

parameters.
• As a first case, the dimension on which respondents evaluate
objects must be determined.
• As a convenient option, only two dimensions are worked out as
the evaluation objects are graphically portrayed.
• As a second case, objects are to be positioned on these
dimensions.
• The output of multidimensional scaling happens to be in the form
of location of objects on the dimensions and is termed as spatial
map or perceptual map.
 MULTIDIMENSIONAL SCALING (Cont.)

• Multidimensional scaling attempts to infer the underlying dimensions

from the preference judgment provided by the customers.
• This is done by assigning responses of the respondents to a specific
location in a perceptual space in a manner that the distances in the
space match the given dissimilarity as closely as possible.
• Data obtained from the respondents can be metric or non-metric.
• As a case of metric data, rating of respondent’s preference can be
obtained and as a non-metric data, ranking of the respondent’s
relative preference can also be obtained.
• Multidimensional approaches are available for analyzing metric as well
as non-metric data.
Some Basic Terms Used in Multidimensional Scaling

• Stress: Stress measures lack of fit in multidimensional scaling. A

higher value for stress is an indication of poorer fit.
• R-square (squared correlation): R2 value indicates how much of the
variance in the original dissimilarity matrix can be attributed to
multidimensional scaling model. Higher value for R2 is desirable in
multidimensional scaling model. In fact, R2 is a goodness-of-fit
measure in multidimensional scaling model.
• Perceptual map: Perceptual map is a tool to visually display
perceived relationship among various stimuli or objects in a
multidimensional attribute space.
The Process of Conducting Multidimensional Scaling
 Step 1: Problem Formulation

• A minimum of 8 to 10 brands can be included to construct a well-defined

perceptual map, and a maximum of 25 to 30 brands can be included in
multidimensional scaling model.
• In fact, the number of brands or stimuli to be included is based on some
factors such as research objective, past researches, decision of
researchers, or requirement of management.
• We will take a hypothetical example of 10 edible oil brands for better
understanding the concept of multidimensional scaling with special
reference to obtaining a perceptual map.
• These 10 edible oil brands are Fortune, Sundrop, Saffola, Gemini, Nutrela,
Dhara, Ginni, Maharaja, Vital, and Nature Fresh.
 Step 2: Input Data Collection

• The input data used for multidimensional scaling may be connected with the
similarity data or the preference data.
• Similarity Data: Similarity data are collected through the respondents by just
noting the perceived similarity between the two brands or objects.
• These data are often referred to as similarity judgment. Figure 19.16 provides
respondent’s similarity judgment between two pairs (Fortune–Saffola) of
edible oil brands.
• As a second way, derived approach for data collection in terms of conducting
multidimensional scaling can also be used.
• Using this approach, the respondents are supposed to rate the brands for
identified attributes on a rating scale.
• Responses obtained from a single respondent are summarized in Table 19.9
above.
 Step 2: Input Data Collection (Cont.)

• Preference Data: In some cases, a researcher may be interested in

knowing the respondent’s preference for a stimuli or object.
• In such situations, the respondent is asked to provide rank order for all
the objects or stimuli as per their preference.
• The configuration derived from similarity data and preference data
are not the same but are different.
• Two objects can be perceived differently through a similarity data
produced map but may be close together for a preference data.
• For taking care of this dimension, an ideal object approach is
considered.
FIGURE 19.16 : Respondent’s similarity judgment between two
pairs of edible oil brands
TABLE 19.9 : Similarity score data for different brands of edible
oil (data that will be used for multidimensional scaling)
Step 3: Selection of Multidimensional Scaling Procedure

• Non-metric multidimensional scaling procedure is based on the

ordinal nature of input data, whereas metric multidimensional scaling
procedure is based on the assumption that the input data are interval
scaled.
• In multidimensional scaling procedure, ordinal or non-metric
information is preferred.
• It is important to learn that non-metric multidimensional scaling
procedure results in a metric output.
• Obviously, metric multidimensional scaling procedure produces a
metric output.
• Here, it is important to note that metric and non-metric
multidimensional scaling procedure both produce similar type of
results.
Step 3: Selection of Multidimensional Scaling Procedure (Cont.)

• As a second issue, a researcher has to determine whether

multidimensional scaling procedure should be performed on an
individual or an aggregate data is required.
• Individual-level multidimensional scaling procedure results in a
perceptual map for each respondent.
• While performing multidimensional scaling procedure on aggregate
data, a perceptual map on the basis of average similarity rating can
be obtained very easily.
• Our discussion of multidimensional scaling is based on the edible oil
brands example for which data are rank ordered (ordinal) and the
adopted procedure is non-metric.
Step 4: Determining Number of Dimensions for Perceptual Map

• In the light of the visual interpretation objective of

multidimensional scaling procedure, a two-dimensional or at most
a three-dimensional perceptual map is desirable.
• Stress measures lack of fit in multidimensional scaling as the higher
value for stress is an indication of poorer fit.
• A widely used criteria to determine the number of dimensions in
multidimensional scaling is to construct a plot between stress
values (obtained as the SPSS output) and dimensionality.
• An elbow in the plot indicates number of dimensions to be
included in the study to construct a perceptual map.
 Step 5: Substantive Interpretation
The SPSS output for edible oil data is presented from Figures 19.17(a) to
19.17(d)

FIGURE 19.17 : (a) SPSS output exhibiting iteration for stress value
improvement, stress value, and R2 value
 Step 5: Substantive Interpretation (Cont.)

Stress index indicates lack of fit in multidimensional scaling.

This stress value is commonly known as S-stress or Kruskal’s stress.
This value ranges from the worst fit (stress value as 1) to best fit (stress value as
0).
In fact, stress value is based on the type of multidimensional scaling procedure
adopted and the data on which multidimensional scaling is performed.
The acceptable stress value is suggested by Kruskal (1964) as given below:
 Step 5: Substantive Interpretation (Cont.)

Higher value for R2 (close to 1) is desirable in multidimensional scaling. An R2

value greater than or equal to 60% is considered acceptable.

FIGURE 19.17 : (b) SPSS output exhibiting stimulus coordinates

Step 5: Substantive Interpretation (Cont.)
 Step 5: Substantive Interpretation (Cont.)

• Figure 19.17(c) is the desired SPSS-produced perceptual map (two

dimensional).
• Spatial map may be interpreted by examining the coordinates of
the map and relative position of the brands with respect to these
coordinates.
• The labelling of horizontal axis (X-axis) and vertical axis (Y-axis) is a
matter of researcher’s judgment and depends on factors such as
researcher’s insight, obtained information parameters, and so on.
• In some cases, the respondents are often asked to provide the base
of similarity they have used for judging the different brands or
objects.
FIGURE 19.17 : (d) SPSS-produced perceptual map (three
dimensional)
FIGURE 19.18 : Perceptual map (two dimensional) with
labelling of dimensions
 Step 5: Substantive Interpretation (Cont.)

• Figure 19.18 exhibits perceptual map (two dimensional) with

labelling of dimensions.
• Brands located close to each other may have competitive nature
on related dimension.
• A brand located in isolation may have unique image. This
perceptual map is based on the similarity judgment of a single
respondent.
• If we take an aggregate score of the responses, a perceptual map
based on multiple responses (when taken as aggregate) can also be
constructed and is very helpful for marketing managers to assess
the positioning of their own brand as compared with different
brands on some defined attributes.
 Step 6: Check the Model Fit

• As a first step of checking reliability and validity of the model, the value of
R2 must be examined. As discussed, an R2 value greater than or equal to
60% is considered acceptable.
• In edible oil multidimensional scaling model, R2 value comes to 0.9707
(97.07%), which is very close to 1 and hence the model is very well
acceptable.
• As a second step, stress value must be examined.
• In edible oil multidimensional scaling model, stress value comes to 0.0746
(close to 5%). This is an indication of a good-fit multidimensional scaling
model.
• Original data should be divided in two or parts and obtained results must
be compared.
• Input data must be gathered at two different points of time and test–
retest reliability must be computed.