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The Model

Positioning analysis uses perceptual and preference mapping techniques to visually represent how customers perceive competing products or services and to represent customers' preferences for these products or services. The resulting maps are useful for developing positioning strategies. The perceptual-mapping software we use is based on the MDPREF model, which relies on a factor-analytic approach to derive attribute-based maps. The preference-mapping software produces an external vector model version of PREFMAP3.

A perceptual map is a spatial representation in which competing alternatives are plotted in a Euclidean space (or a graph in two dimensions). The map has the following characteristics: (1) The pairwise distances between product alternatives directly indicate the "perceived similarities" between any pair of products, i.e., how close or far apart the products are in the minds of customers. (2) A vector on the map (shown by a line segment with an arrow) indicates both magnitude and direction. Vectors denote attributes in perceptual maps. (3) The axes of the map are a special set of vectors that suggest the broad underlying dimensions that best characterize how customers differentiate between alternatives. Maps usually incorporate orthogonal axes (straight lines at right angles) to represent the dimensions of the map, although nonorthogonal axes can also be used. In either case, the axes can be rigidly rotated to aid interpretation. For example, in a two-dimensional map, the horizontal and vertical axes are often used to characterize the two dimensions of the map. However, the axes can be rotated so that the South-West to North-East becomes one axis, and South-East to North-West becomes the other axis.

Regular perceptual Maps present one major weakness:

They say nothing about the brand locations that are most attractive to customers. Without such insights, firms risk investing in differentiating products along dimensions that are not aligned with increased customer preference. An example of such ineffective differentiation is the Westin Stamford Hotel in Singapore, which advertises that it is the world's tallest hotel, an attribute that is not important to any customer segment (Kotler 1991). To identify meaningful dimensions for differentiation, a perceptual map should incorporate the preferences of customers. That's why we use "joint-space" techniques to incorporate both perceptions and preferences within the same map.


Getting started

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Read this help section and the Tutorial carefully before running the software. You can also see how the software actually works by running the Demo.

You can download here two example files (G20 Infiniti Case) you can load into the software.

To learn how to write your own Data Sets for our Software, Click here.

To learn how to conduct a study to gather attribute-based data for a perceptual map, Click here.


Running the software

Step by Step instructions on how to run the software can be found at the Demo Section.
You will find a complete, commented Demo of the G20 Positioning Analysis.


Understanding the results

What is a Perceptual Map and how do I read it?

A perceptual map is a spatial representation in which competing alternatives are plotted in a Euclidean space (or a graph in two dimensions). The map has the following characteristics: (1) The pairwise distances between product alternatives directly indicate the "perceived similarities" between any pair of products, i.e., how close or far apart the products are in the minds of customers. (2) A vector on the map (shown by a line segment with an arrow) indicates both magnitude and direction. Vectors usually denote attributes in perceptual maps. (3) The axes of the map are a special set of vectors that suggest the broad underlying dimensions that best characterize how customers differentiate between alternatives. Maps usually incorporate orthogonal axes (straight lines at right angles) to represent the dimensions of the map, although nonorthogonal axes can also be used. In either case, the axes can be rigidly rotated to aid interpretation. For example, in a two-dimensional map, the horizontal and vertical axes are often used to characterize the two dimensions of the map. However, the axes can be rotated so that the South-West to North-East becomes one axis, and South-East to North-West becomes the other axis.

An Example:

Consider the perceptual map below which summarizes how a group of customers views the beer market (Moore and Pessemier 1993). In this map, the perceived distance (dissimilarity) between Budweiser and Miller is about the same as the perceived distance between Coors and Michelob. Further, Beck's and Heinekin are perceived to be the closest pair among this set of brands.
In looking at the vectors, note that as you move in a northeast direction from the origin, the beers increase in their popularity with men. Budweiser is the most popular with men, and Old Milwaukee Light is the least popular with men.
Budweiser (and then Beck's) is the farthest along the northeast direction. To see this most clearly, drop perpendicular lines from the point denoted as Budweiser and Beck to the vector denoted "popular with men."
Likewise, if you drop a perpendicular line from Old Milwaukee Light to this vector if it were extended in the southwest direction, you will see that it is the least popular beer with men.
Customer perceptions of these beers along each of the attributes can be interpreted in the same manner.

Example of a Perceptual Map
A perceptual map of the Beer market, showing (among other things) that Budweiser is the most popular beer with men while Old Milwaukee Light is the least popular with men. The map summarizes customer evaluations of beer on 13 attributes into two dimensions: (1) budget-premium and (2) light-heavy. Source: Moore and Pessemier 1993, p. 145.

Note also that the horizontal axis (in the east direction) is most closely associated with attributes "premium," "dining out," and "special occasions." In the west direction, the horizontal axis is most closely associated with the attributes "on a budget" and "good value." Thus, the horizontal axis (the west to east direction) indicates an underlying dimension of "budget-premium," along which customers seem to characterize their perceptions of the differences between these beers. This map captures some of the significant factors defining the competitive structure of the beer market.

We can draw several other conclusions from this map:

  • The clusters of beers such as Beck's and Heineken help to identify (sub)categories of beers that may be different from the way that the brand managers define their competitors.
  • Michelob is located between the "Heavy" beers and the "Light" beers. If its advertising positions it as a 'mid-strength' beer, it has a differentiated position; otherwise it is likely to be regarded as a 'nothing' beer.
  • Old Milwaukee Light has very little direct competition (no other brand is near its location), indicating potential opportunity for a new beer positioned in this quadrant (if there is a large enough segment of customers in this location). To be positioned in this quadrant, a beer needs to be pale in color and low priced. For experienced beer drinkers this is probably not a good combination of attributes. For a novice beer drinker, this combination may be more suitable. Thus, a new brand targeted to new beer drinkers may choose a name that better reflects its benefits for this segment of consumers.
  • Whether or not a beer is popular with women does not indicate anything about whether it will be popular with men (these two attributes are perpendicular to each other). Thus, although Beck's and Budweiser are equally popular with men, among women, Beck's is more popular than Budweiser.