Marketing Modeling course

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Key Concepts

Differentiation (What you do to an offering): Creating tangible or
intangible differences on one or more attributes between a focal
offering and its main competitors.

Positioning (What you do to the minds of customers): A set of strategies
a firm develops to differentiate its offering in the minds of its target
customers. Successful positioning will result in the offering
occupying a distinct, important, and sustainable position in the minds
of the target customers.

Mapping: Techniques that enable managers to develop differentiation
and positioning strategies by helping them to visualize the competitive
structure of their markets as perceived by their customers. The maps
are derived from data of customer perceptions of existing products
(and new concepts) along various attributes, perceptions of
similarities between brands, preferences for the products, or
measures of behavioral response of customers toward the products.
Positioning–1
Crowded Markets
Consumers face increasing number of choices
 Over 8,200 mutual funds
 Over 150 models of cars
 Over 30,000 products in a grocery store
 Over 100,000 prescription drugs
If we can figure out in the crowd, we will have a better
handle on our future profitability.
Positioning–2
Some Positioning Bases
 Life style (self-concept) positioning
 Attribute positioning
 Benefit positioning
 Competitive positioning
 Time-based (e.g., usage occasion) positioning
Positioning–3
Generic Positioning Strategies
 Our product is unique (eg, Perdue chicken).
 Our product is different (eg, Listerine).
 Our product is similar (eg, Meister Brau).
Positioning–4
Some Successful
Positioning Themes
Apple iPod
BMW
Burger King
Charmin Tissue
Coke
Chevy Trucks
Colgate Total Toothpaste
Disney
GE
Mobil Service Stations
Universal’s Orlando
Visa
Volvo
Viagra
Lipitor
1000 songs
Exceptional performance
Have it your way
Softness
Authentic, real, original
Tough, strong, durable
Total dental protection
Wholesome family entertainment
Improves the quality of life
Fast, friendly service
Thrills, excitement, escape
Accepted everywhere
Safety
Quality of life
More potent at lower price
Positioning–5
Marketing Opportunities
Associated with Positioning
 Find unmet (or inadequately met) customer
needs and wants.
 Identify product strengths that are unique and
important.
 Determine how best to overcome product
weaknesses.
 Identify market segments for which a
particular product or new concept would be
appealing.
Positioning–6
Initiating Positioning Studies in
Companies
Four questions that could trigger positioning analyses
 Who do we need to target?
 What do they think now?
 What do we want them to think, now and from now
on?
 How do we do that?
Positioning–7
Why Mapping?
An organic chemist
reads diagrams such
as the one here
An Electrical Engineer
reads diagrams such as the
one here
Positioning 8
Positioning–8
Can You See Patterns
in These Customer Data?
Ratings of nine brands of notebook computers on several attributes
Attractive
Light
Unreliable
Plain
Battery life
Screen
Keyboard
Roomy
Easy service
Expandability
Setup
Common
Value
Preference
B1
B2
B3
B3
B4
B5
B6
B7
B8
New
5.1
6.0
3.4
1.5
3.3
3.5
2.6
5.5
4.5
5.5
5.6
4.1
3.5
7.4
3.6
3.5
4.1
4.1
4.9
5.3
3.5
4.3
4.9
4.3
3.5
3.5
4.8
3.4
3.5
5.0
4.5
2.9
4.3
3.4
2.5
5.4
3.3
5.4
5.6
3.3
4.4
4.8
5.4
3.9
2.1
2.3
4.1
6.4
3.4
3.1
5.0
3.1
5.4
2.9
3.6
6.6
3.9
3.3
4.5
4.5
3.9
5.4
3.8
3.4
4.4
3.4
2.5
4.0
3.6
4.4
4.8
5.3
2.7
2.7
3.0
5.2
3.3
3.3
4.5
3.3
4.2
4.3
2.7
7.4
5.2
5.0
4.5
3.5
3.5
3.3
2.8
4.7
3.3
4.7
5.2
2.2
3.2
7.1
4.0
2.5
3.7
4.3
6.2
6.0
5.0
3.5
4.7
3.5
3.3
4.2
4.7
3.8
5.2
5.5
2.5
2.2
3.5
3.3
4.3
4.3
3.8
4.3
5.8
3.3
3.5
6.9
4.0
2.5
3.8
5.2
4.0
4.8
4.7
4.2
4.5
4.2
2.5
4.2
4.0
3.3
Positioning–9
Marketers Need to Learn to
Read Perceptual Maps!
Positioning–10
Conventional Mapping Using
Snake Charts
Describes it
completely
|
|
0
1
|
2
|
3
Does not
describe
it at all
|
|
4
5
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Company provides adequate insurance coverage for my car.
Company will not cancel policy because of age, accident
experience, or health problems.
Friendly and considerate.
Settles claims fairly.
Inefficient, hard to deal with.
Provides good advice about types and amounts of coverage to buy.
Too big to care about individual customers.
Explains things clearly.
Premium rates are lower than most companies.
Has personnel available for questions all over the country.
Will raise premiums because of age.
Takes a long time to settle a claim.
Very professional/modern.
Specialists in serving my local area.
Quick, reliable service, easily accessible.
A “good citizen” in community.
Has complete line of insurance products available.
Is widely known “name company”.
Is very aggressive, rapidly growing company.
Provides advice on how to avoid accidents.
Positioning–11
Uses of Mapping Techniques

Check how customer perceptions of your products compare to
those of your competitors.

Identify product strengths and weaknesses.

Select competitors to compete against.

Determine exactly how much change is need on key product
attributes to move your products to more favorable positions.

Visually determine whether your communications programs are
having the desired impact on market perceptions (Before-After
study).

Compare perceptions from different demographic, geographic,
or psychographic subgroups in your market.
Positioning–12
Mapping Techniques
 Mapping perceptions

Attribute-ratings methods (particularly useful for
functional products)

Overall-similarity methods (particularly useful for imageoriented products)
 Mapping preferences

Include an overall preference vector in a perceptual map

“External” analysis to fit preferences of individuals on a
common perceptual map
Positioning–13
Mapping Methods in Marketing
Joint Space Maps
Perceptual Maps
Preference Maps
(includes both
perception &
preference)
Similarity-based
methods
Ideal-point model
(unfolding model)
External analysis
using PREFMAP-3
Attribute-based
methods
Vector model
Simple “joint space
maps” using
modified perceptual
mapping methods
Included in Marketing Engineering. Coming soon: Ideal-point model
Positioning
14
Perceptual Maps Using
Attribute Ratings
Example: Positioning of Beers
 Select a set of Beers e of interest to the target group of customers.
 Identify a set of key attributes on which these Beers evaluated by
the target group (e.g., through focus groups).
 Ensure that customers are familiar with the products of interest.
 Have customers evaluate the products on the chosen set of
attributes (e.g., Light-Heavy; Cheap-Expensive; Drink alone-Share
with friends).
 If desired, include “Preference for the Beers” as one of the
attributes.
Positioning–15
Perceptual Map of Beer Market
(This slide shows only the products)
•
Old Milwaukee
Budweiser
•
Meister Brau
•
Miller
Beck’s
•
• Heineken
•
•
•
Coors
Stroh’s
• Michelob
•
•
Miller
Lite
•
Coors
Light
Old
Milwaukee Light
Positioning–16
Perceptual Map of Beer Market
(This slide shows only the 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
Positioning–17
Perceptual Map of Beer Market
(This slide includes both products and 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
Interesting web site to visit: www.ratebeer.com
Light
Miller
Lite
Light
•
Coors
Light
Popular
with
Women
Less Filling
Positioning–18
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). Thus, 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.
Positioning–19
Guidelines for Interpreting
Perceptual Maps (contd.)
 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 “BudgetPremium” 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. (These are shown by dashed lines on the map). Thus,
Budweiser is perceived to more popular with men than Coors.
Positioning–20
Interpreting Perceptual Maps
Another Example
Positioning–21
Mapping Preferences
Objective—Introduce customer preferences into perceptual maps:

A simple ideal point method: Introduce an “ideal” brand as an
additional stimulus evaluated by customers.
1. Combine attribute ratings of ideal brand with the other brands.
2. Compare how similar the ideal brand is to the other brands included in
the study.

A simple vector method: Introduce “preferences” as an additional
variable in the attribute ratings data
1. Analyze the preference variable simultaneously with evaluations of the
cars on each attribute.
 Identify which attributes influence consumer preferences the most
 Identify which brands are most preferred in the aggregate.
2. Analyze preferences separately for each customer.
 Identify target segments that prefer the brand of interest the most.
Positioning–22
Mapping Preferences cont’d

PREFMAP-3 External Analysis

First, develop a perceptual map of competing alternatives.

Given the fixed positions of the alternatives on the perceptual map, add
the preferences of each customer on the perceptual map (this approach is
called external analysis).
Marketing Engineering includes an option to do External Analysis.
Positioning–23
Two Preference Models
Ideal-Point Preference Model
Vector Preference Model
Increasing
Preference
Preference
Preference
Decreasing
Preference
Ideal Point
Attribute
(eg, sweetness)
Attribute
(eg, service speed)
Positioning–24
Interpreting Preference Maps
Ideal-Point Map
Vector Map
Ideal
Point (I)
dIB
Preference
Vector
dIA
A
dAC
B
A
dAB
C
B
(a)
A is preferred twice as much as B.
(dIB = 2dIA)
(b)
A is preferred to B and B is preferred to C.
With reference to A, C is preferred half as
much as B.
(dAC = 2dAB)
Positioning–25
Vector Method for Representing
Aggregate Preferences

Matrix of inputs:
A1
4
6
3
A2
3
3
6
A3
4
7
2
A4
1
2
7
...............
A15,
2
8
6
PREF
2
8
6
Dell 320N
C1 TI Travelmate
Toshiba concept
•
•
•
Dell 320N
C2 TI Travelmate
Toshiba concept
Note: A higher number on PREF indicates higher preference for that brand.

Compute average ratings of each brand on each attribute and the average preferences for
each brand.

Obtain a “joint space” map from Marketing Engineering software showing relationships
between brands and their evaluations on each attribute.

Interpret the map. The relative locations of the brands are directly provided by the map. The
orientation of the attributes (including preference) are determined by drawing vectors from
the origin to each attribute. The position of a brand on an attribute is determined by drawing
a perpendiclar line from the brand location to the attribute orientation.
Positioning–26
Preference Map Using
Vector Model
Low battery life
Keyboard
• Toshiba
Unsuccessful
Heavy
Reliable
• IBM
• Compaq
• AST Exec
• Dell
Difficult to use
• NEC
Poor setup
• Samsung
• New Concept
Expandability
Elegant
Distinct
Avant-Garde
Fast operation
• Sanyo
• TI
• Good design
Value
Graphics
Screen quality
• Preference
Positioning–27
Data for PREFMAP-3 for
External Analysis
 Matrix of inputs:
Newton
HP200LX
Canon
•
•
•
C1
2
7
3
C2
3
7
8
C3
9
2
3
C4 ...............
3
5
5
An element of this matrix is the stated preference of each consumer (C1, C2, . . .) for
each brand. A higher number indicates higher preference for that brand.
 Use the Preference Map option in Marketing Engineering to obtain a “joint
space” map showing relationships between brands and preferences between
brands for each consumer.
 Interpret the map. The relative locations of the brands are directly provided
by the map. The direction in which an individual consumer’s preferences are
increasing is determined by drawing a vector from the origin to each
consumer’s ID displayed on the map. The relative preference for a brand for
an individual consumer is determined by drawing a perpendicular from the
brand location to the preference orientation. Identify target segments by
examining consumer groupings on the map.
Positioning–28
A Joint-Space Map
(This Example Only Shows Preferences and Brands)
Positioning–29
Evaluating Perceptual and
Preference Maps


Technical adequacy

What percentage of the total information (variance) in the raw data is captured
in the map?

What percentage of the information of each attribute (variance) is captured in
the map?
Managerial interpretation (example questions)

What underlying dimensions seem to characterize how customers view the
products?

What is the competitive set associated with the target product or new concept?

How well is a target product positioned with respect to the existing products?

Which attributes are related to each other?

Which attributes influence customer preferences positively? negatively?

What improvements will enhance the value of a product or new concept?

Which customer segments have positive perceptions and high preference for the
product?
Positioning–30
Example Positioning Statements
For [target segment], the [product/concept] is [most important claim]
because [single most important support].
Iomega
For [PC Users], the [IOMEGA Zip drive] is the [best portable storage
device] because [it is most cost-effective system].
JC Penney
For [Modern Spenders and Starting-outs in mid-income levels who shop
for apparel, accessories, and home furnishings] we offer [private-label,
supplier exclusive, and national brands] that [deliver greater value than
that of our competitors] because of [our unique combination of quality,
selection, fashion, service, price, and shopping experience]. (From
jcpenney.com)
Positioning–31
Example Positioning Statements
Pantene

For [females 18-49 who possess dry damaged hair and believe they
cannot achieve truly healthy/shiny hair] Pantene is a [hair care
system (shampoo/conditioner/ styling aids)] that offers [“hair so
healthy it shines”] because it [“penetrates from root to tip” through
its patented Pro-Vitamin B5 formula].
Microsoft .NET

For [companies whose employees and partners need timely
information], Microsoft.NET is a [new protocol and software
system] that enables [unprecedented levels of software integration
through XML Web services], because [unlike Java, .NET is infused
into the Microsoft platform, providing the ability to quickly and
reliably build, host, deploy, and utilize connected applications].
Positioning–32
Implementing Positioning
 Leverage strategically advantaged resources:

Product characteristics
 features, performance, durability, conformance, reliability, style, etc.

Service attributes
 delivery, installation, consultation, customer training, repair, etc.

Personnel
 competency, credibility, courtesy, responsiveness, etc.

Brand image
 symbols, emotion, personality, etc.
Positioning–33
Positioning is not ...
 just clever slogans or gloss
 what we push on our customers -- it is what customers
will realistically grant us
 a one-time activity
 an appeal to everyone
 a way to make our product superior -- it is about
finding a superior position in the minds of customers.
Positioning–34
Limitations
 Provides a static model - ignores dynamics of
customer perceptions.
 Interpretation is sometimes difficult.
 Does not incorporate cost or likelihood of being
able to achieve a desired positioning.
 Does not incorporate a “probability model” to
indicate goodness of a map.
 Generally, need about 6 to 8 products in a
category to make the technique useful.
Positioning–35
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