## Tuesday, 30 August 2011

### Perceptual Maps (Multidimensional Scaling)

A perceptual map is a visual representation of variables in a Euclidean space which represents the market.

The map has the following characteristics:

· Pair-wise distances between product alternatives directly indicate how close or far apart the products are in the minds of customers.

· A vector on the map indicates both magnitude and direction in the Euclidean space. Vectors are used to denote attributes of the perceptual maps

· The axes of the map are a special set of vectors suggesting the underlying dimensions that best characterize how customers differentiate between alternatives

There are two methods in Perceptual Mapping:-

Method 1: Overall Similarity-Based method (Multi-Dimensional Scaling)

Method 2: Attribute based method (Factor Analysis).

Overall Similarity Based

The similarity of the product is ranked on the scale of say 0-9 where 0 being most dissimilar and 9 being most similar according to the customer's judgment or perception. The ranks are then mapped on a matrix which is then represented as a distance on perceptual map. It is easier to represent two dimensional data on the frequency distribution or cross tab distribution. Whereas in case of multi dimensional data the cross tabs do not give a clear picture of the relationship of multiple variables with each other.

A perception map here allows us to see the relationship between multiple variables and helps us take decisions without information loss.

Allows you to map products and simultaneously infer attributes. Better for softer attributes which we do not verbalize very well (feel, aesthetics).

Impractical when the number of products is large.

Uses of Perceptual Maps

1) Customer Analysis and Competitive Analysis

» Understand the competitive market structure as perceived by customers.

Position relative to competition

Select the set of competitors to compete against

» Represent customers’ perceptions in a manner that aids communication and discussion within the organization

2) Product

» Perceptions of a new product concept in the context of existing brands in the market

» Finding the “gap” in the market to position the product.

Author :- Shweta Bhosale(13106)

Group :- Operation 3