Product Positioning and Perceptual Mapping

What is a Perceptual Map?

The word “perceptual” comes from the word “perception“, which means the consumer’s
understanding, opinion and assessment of a brand or a product. As a result, a
perceptual map shows the consumers’ perception (understanding, opinion,
assessment, etc.) of the positioning of competing brands in a market.
In most cases, perceptual maps are constructed from a market research survey of
consumers, where they are asked a series of image and brand questions. In some
cases, perceptual maps may be constructed from the collective knowledge of
experienced managers who estimate how consumers perceive the positioning of
competing brands.

What is product positioning?

Product positioning is a strategic exercise that defines where your product or service fits
in the marketplace and why it is better than alternative solutions. The goal is to distill
who your audience is, what they need, and how your product can uniquely help. Product
positioning is the basis of your marketing story.
The outcome of product positioning is an internal document that informs external
messaging — including how you will communicate product benefits to customers.
Positioning helps ground your product marketing efforts in the real value you provide
beyond features and functionality.

Positioning means choosing the image you want your product to have in the minds of
your target consumers – an image of a distinctive product not found elsewhere and
superior to the products of competitors.

The environment is filled with an excess of advertising and promotional images,

messages, and symbols that, in the name of offering a variety of choices, tend to
distract consumers in the choices they make. One goal of positioning is to win the
consumer’s attention and loyalty to your tourist product (often by creating a brand
image). To be successful, a product must be remembered. It has to be distinguished
from all other similar products. Research shows that products are remembered by
categories. Each category contains a ranking with a leader or preferred product at the
top, a challenger near the top, and several followers in the middle and bottom. People
will buy leading products if they can find them and afford them, and challenger products
as substitutes. Fewer people will choose to buy follower products.

Product positioning (sometimes called perceptual mapping) entails developing

schematic representations that reflect how products or services compare to those of the
competitors on dimensions most important to success in the industry. Product
positioning is widely used for deciding how to meet the needs and wants of particular
consumer groups.
5 steps of Product Positioning:
1. Select key criteria that effectively differentiate products or services in the
industry.
2. Diagram a two-dimensional product-positioning map with specified criteria on
each axis.
3. Plot major competitors’ products or services in the resultant four-quadrant matrix.
4. Identify areas in the positioning map where the company’s products or services
could be most competitive in the given target market. Look for vacant areas
(niches).
5. Develop a marketing plan to position the company’s products or services
appropriately.

Because just two criteria can be examined on a single product-positioning (perceptual)

map, multiple maps are often developed to assess various approaches to strategy
implementation. Multidimensional scaling could be used to examine three or more
criteria simultaneously, but this technique is beyond the scope of this text.

Some rules for using product positioning as a strategy-implementation tool:

1. Look for the hole or vacant niche, which is a segment of the market currently not
being served.
2. Do not serve two segments with the same strategy. Usually, a strategy
successful with one segment cannot be directly transferred to another segment.
3. Do not position yourself in the middle of the map. The middle usually indicates a
strategy that is not clearly perceived to have any distinguishing characteristics.
This rule can vary with the number of competitors. For example, when there are
only two competitors, as in U.S. presidential elections, the middle becomes the
preferred strategic position.

2 criteria for an effective product-positioning strategy:

1. it uniquely distinguishes a company from the competition and
2. it leads customers to expect slightly less service than a company can deliver.

Perceptual mapping is done in different ways. The perceptual map below shows how
consumers perceive two attributes of a company’s product as compared with
competitors’ products, using a two-by-two matrix.
 Figure 1

What influences how a product is perceived?

Your product positioning shapes how you want your product to be known in the market.
But there are many different factors that can affect how your product is perceived. The
major influence is what customers experience when they actually use your product and
interact with your company. It is the summation of the Complete Product Experience
(CPE) that determines what customers think and feel about your product.
There are seven core areas that contribute to the CPE:
Marketing How potential customers learn about your product and decide if it
might be a fit

Sales How prospects get the information they need to make a

purchasing decision

Technology The core set of features that customers pay for

Supporting systems The internal systems that make it possible to deliver the product

Third-party The ecosystem of products the customer uses

integrations

Support How customers receive product training and assistance

Policies The rules that govern how your company does business

Remember, every touchpoint with your company either reinforces or undermines your
positioning. So while you should consciously plan how to position your product, you
should think broadly about every aspect of the adoption process. Because your
customers will decide what they really think about your product.

The product positioning map, or perceptual map, in Figure 2 shows consumer

perceptions of various automobiles on the two dimensions of sporty and conservative
and classy and affordable. This sample of consumers felt Porsche was the sportiest and
classiest of the cars in the study (top right corner) and Plymouth was the most practical
and conservative (bottom left corner). Car manufacturers focus their marketing efforts
on various target groups, or design features in their vehicles, based on research and
survey information illustrated in perceptual maps.
Perceptual maps can aid marketers in being more effective in spending money to
promote products. Products, brands, or companies positioned close to one another are
perceived as similar in the relevant dimensions. For example, in Figure 2, consumers
see Lincoln, Mercedes, and Cadillac as similar. They are close competitors and form a
competitive grouping. A company considering the introduction of a new or improved
model may look for a vacant niche on a perceptual map. Some perceptual maps use
different size circles to indicate the sales volume or market share of the various
competing products.

Figure 2: A Perceptual Map for the Automobile Industry

Perceptual maps may also display consumers’ ideal points. These points reflect ideal
combinations of the two dimensions as seen by a consumer. Dots are often used to
represent one respondent’s ideal combination of the two dimensions. Areas where there
is a cluster of ideal points indicates a market segment. Areas without ideal points are
sometimes referred to as demand voids. A company considering introducing a new
product will look for areas with a high density of ideal points. They will also look for
areas without competitive rivals (a vacant niche), perhaps best done by placing both the
(1) ideal points and (2) competing products on the same map.

Companies commonly develop several perceptual maps to better understand

competitive advantages and disadvantages versus rival companies. For example, the
largest homebuilder in the United States, D. R. Horton (DRH), competes with Pulte,
Lennar, KB Home, and other homebuilders. Figures 9-3, 9-4, and 9-5 reveal recently
developed D. R. Horton perceptual maps. Note the author commentary provided for
each illustration.

Example Illustration 1
Price versus Quality is used in a perceptual map because these two factors are often
viewed as the most important considerations when purchasing a home.

Figure 3: Price versus Quality

The average sale price per DRH home is lower than any other major homebuilders in
the United States, which is why they are the lowest on the perceptual map. Oftentimes,
however, being the low-cost provider can mean actual, or perceived, low quality. The
map reveals that DRH is above only KB Home in quality. Quality was determined
through interpreting online ratings of the companies, as well as reviewing all of the
competitor’s websites for proof that quality was being provided. Note that Lennar is the
closest to DRH on the Price versus Quality perceptual map.

Example Illustration 2
When buying or building a new home, consumers not only want to make sure it can be
built where they want it but also with the layout or options they desire.

Figure 4: Number of options/Layouts versus

geographical Availability

By comparing coverage maps of the largest homebuilders in the United States, it was
concluded that DRH has the highest geographical coverage of all the competitors.
Additionally, through a review of the homebuilder’s websites, it was determined that
DRH has the largest quantity of options and layouts for new homes. Neither of these
facts should come as a surprise, as DRH does hold the title of “Largest Home Builder in
the USA.” Rival firms are placed accordingly on the perceptual map. Note that Lennar is
the closest to DRH on the Number of Options and Layouts versus Geographical
Coverage perceptual map.

Example Illustration 3
Consumers increasingly are concerned with what and from whom they are purchasing.
Thus, customer service and green conscientiousness are often key factors
considered by consumers.
Figure 5: Quality of Customer Service versus
extent the Firm is green Conscientious

After examining online ratings of the largest homebuilders and reviewing competitor’s
websites, it was determined that DRH has, at best, average customer service. There
were numerous complaints at several websites, and not very many resolutions, or ways
to find resolutions. Furthermore, through a review of the competitors’ websites, it
appears that DRH is the least green conscientious builder among the major players. It
had very little, if any, mention of green considerations, whereas some firms had very
involved and detailed sections on their web pages about green building. Note that
Lennar is the closest to DRH on the Quality of Customer Service versus Extent the Firm
is Green Conscientious perceptual map.

Every advanced society is saturated with images, messages, symbols, and signs that
distract people in the name of market efficiency. Virtually every organization, for-profit
and non-profit, is in the business of reaching the minds of consumers, and reaching
them quicker and more effectively than their competitors. One way to capture consumer
attention is to communicate the high quality and value of a line of products and
services. A second way to attract consumer attention is to develop distinctive products
that appeal to particular niche markets. A third way is to promote products and services
that are only found in a single organization or place.