Perceptual Mapping EWMBA 206

Fall 2007 Professor Ganesh Iyer

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 Map of Beer Market (This slide shows only the products)

Old Milwaukee

Meister Brau

Budweiser Becks

Strohs

Miller

Coors

Heineken

Michelob
Miller Lite

Coors Light

Old Milwaukee Light

Ganesh Iyer

Perceptual Map of Beer Market (contd) (This slide shows only the attributes) Heavy
Full Bodied Heavy Popular with Men

Special Occasions Good Value Blue Collar Dining Out

Premium

Budget

Premium
Popular with Women Light Less Filling
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Pale Color On a Budget

Ganesh Iyer

Light

Perceptual Map of Beer Market (contd) (This slide shows both products & attributes) Heavy
Full Bodied Old Milwaukee Heavy Popular with Men Becks

Meister Brau

Budweiser

Premium

Good Value Blue Collar Strohs

Miller

Special Occasions Coors

Heineken
Dining Out

Budget

Premium

Michelob
Pale Color Miller Lite Light

Coors Light

Popular with Women

On a Budget
Ganesh Iyer

Old Milwaukee Light

Light

Less Filling
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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.
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Ganesh Iyer

Perceptual Mapping
 Data Matrix = 4 (products) X 6 (attributes) X 300 (respondents).
Consumers

A1 P1 P2 P3 P4
Submit data to factor analysis

A2

A3

A4

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
Ganesh Iyer

Factor Analysis

Perceptual map

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

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

Common

Slow

Easy setup

yToshiba 1960CT

Performance
Light Value

y -&1C
Butterfly

Elegant

Look/Styling
The six attributes were measured on semantic differential scales: 1) SlowFast operation, 2) PlainElegant, 3) EasyDifficult setup, 4) PoorExcellent value, 5) LightHeavy, and 6) CommonDistinctive.

Ganesh Iyer

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

(Plain) Common

Slow

Easy setup

yToshiba 1960CT

Performance
y -&1C
Butterfly Good Value Light

Elegant

Looks
Ganesh Iyer

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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 capturing 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?
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Ganesh Iyer

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

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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 pairsn 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 Viagra 1 1

Cialis

Levitra Cialis

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ED Market

Viagra Levitra Viagra Levitra Cialis 1 2 1 5.5

Cialis

The numbers are like distances on a perceptual map

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MDS Perceptual Map

5.5

6 2
What more would you like to know?

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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.

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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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