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 Ganesh Iyer Techniques that help us to construct such mental or Perceptual Maps are called Multidimensional Scaling and Factor Analysis 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 Budweiser Meister Brau Miller Beck s Heineken Coors Stroh s Michelob Old Milwaukee Light Ganesh Iyer Miller Lite Coors Light Perceptual Map of Beer Market cont d This slide shows only the attributes Heavy Heavy Full Bodied Popular with Men Special Occasions Good Value Blue Collar Dining Out Budget Premium Popular with Women Pale Color On a Budget Ganesh Iyer Premium Light Light Less Filling Perceptual Map of Beer Market cont d This slide shows both products attributes Heavy Heavy Full Bodied Old Milwaukee Budweiser Meister Brau Good Value Popular with Men Miller Beck s Coors Stroh s Budget Heineken Special Occasions Blue Collar Dining Out Premium Premium Michelob On a Budget Ganesh Iyer Pale Color Old Milwaukee Light Light Miller Lite Light Coors Light Less Filling Popular with Women 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 Ganesh Iyer Perceptual Mapping Data Matrix 4 products X 6 attributes X 300 respondents Consumers A1 A2 A3 A4 P1 P2 P3 P4 Submit data to factor analysis 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 1 Example Plot of Attributes of Laptops on a 2D Perceptual Map Common Easy setup Slow Toshiba 1960CT Performance C Value Light Butterfly Elegant Look Styling The six attributes were measured on semantic differential scales 1 Slow Fast operation 2 Plain Elegant 3 Easy Difficult setup 4 Poor Excellent value 5 Light Heavy and 6 Common Distinctive Ganesh Iyer 1 Example Plot of Attributes of Laptops on a 2D Perceptual Map Plain Common Easy setup Slow Toshiba 1960CT Performance C Butterfly Good Value Light Elegant Looks Ganesh Iyer 1 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 Ganesh Iyer 1 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 1 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 pairs n 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 1 ED Market Viagra Levitra Viagra Levitra Cialis Ganesh Iyer Cialis 1 1 1 1 ED Market Viagra Levitra Viagra Levitra Cialis Cialis 1 2 6 1 5 5 1 The numbers are like distances on a perceptual map Ganesh Iyer 1 MDS Perceptual Map 5 5 6 2 What more would you like to know Ganesh