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
solution
Perceptual Map of Automobiles (from WSJ, 1984)
Has a Touch of Class
A Car to be Proud to Own
Distinctive Looking
Lincoln
Porsche
Cadillac
Mercedes
Chrysler
Buick
Oldsmobile
BMW
Pontiac
Conservative looking
Appeals to Older People
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
Occasion
On a
Budget
Bud
4
6
7
2
2
3
7
Beck’s
7
3
4
3
5
5
3
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Stroh’s
3
2
3
6
5
5
2
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
brand’s location on the perceptual map is based on factor scores.
Perceptual Map of Beer Market
(only Brands)
•
Old Milwaukee
Budweiser
•
Meister Brau
•
Miller
Beck’s
•
• Heineken
•
•
•
Coors
Stroh’s
• 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
•
Beck’s
•
Stroh’s
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
Heavy
Old Milwaukee
Budweiser•
•
Beck’s
Heineken •
Miller
Coors
Meister Brau
•
•
•
•
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?