Perceptual mapping is a graphics technique used by asset marketers that attempts to visually display the perceptions of customers or potential customers. Typically the position of a product, product line, brand or even a company is displayed relative to their competition.
In general, marketers have two broad objectives in mind when undertaking perceptual mapping. One objective is to determine where a target brand is positioned versus the competition. The other objective is to help identify product attributes which are determinant in influencing customer choice for the product class. Determinant attributes are those which are important to customers and also exhibit differences across brands. Often, the determining aspects of a product are latent and unobservable. Perceptual mapping techniques can be very useful in uncovering these latent dimensions.
So in the 1st bit of today’s marathon run, we learnt how perceptual mapping helps Product Positioning with a practical example.
For the understanding of my non-marketing friends, Product Positioning is defined as the act of designing the image of the firm's offering so that target customers understand and appreciate what the product stands for in relation to its competitors. Each brand within a set of competitive offerings is thought of as occupying a certain position in a customer's "perceptual space." Perceptual mapping refers generally to techniques used to graphically represent this product space.
So what we did was, we chose a product category we were well versed with (laptops in our case); Zeroed in 6 brands that stood for something, and rated them against one another (in pairs) on an overall similarity level and tried to delve into the perceptions each of these brands had in our minds!
Now, displaying consumers’ perceptions of related products is only half the story. Many perceptual maps also help indicate market segments! So a company considering introducing a new product will look for areas with a high density of ideal attributes and will also look for areas without competitive rivals. This helps them test the product idea much before its launch! A very useful application indeed!
Correcting perceptions of weakness or taking advantage of perceived strengths can both strengthen the brand’s position in the marketplace. Now if you can relate your findings from this perceptual mapping to your 1st level analysis you might very well make some observations which might change the way you look at your business!
For instance, in today’s class, we took up a Retail store, tried to gauge the level of satisfaction customers felt and then tried to link it with possible factors for such satisfaction levels.. Our 1st level findings showed us that, service satisfaction and overall satisfaction had a high correlation. Which meant if you provided a quality service, in all probability, your customer will be happy to shop with you!
We then went into further depths to try and establish a meaningful relationship between the distance a person travels, to satisfaction level he achieves in terms of price, quality, service, variety and so on. From our set of data, we learnt that the closer the store, higher the price satisfaction. Through this one can infer that a customer wouldn’t mind paying a little extra, for the convenience of proximity that a store nearby gives him. Another finding showed that, for quality, people do not mind travelling that extra distance! These inferences seem pretty straight forward, but imagine the power in a tool as this! Loopholes that went unnoticed for years, can be plugged within a matter of minutes!!
So imagine this, when you look at a set of stocks and ask investors to rate them against one another thereby gaining a relative scaling.. you could go into the depths of psyche to understand why a certain stock with the same fundamentals and opportunities is traded far more and at a far higher price than its peer! At last an explanation for the inefficient markets! Not just an application for the marketers eh?!