February 9, 2011
Perceptual mapping is a graphical technique allowing you to plot competitor brands and identify holes where new products can profitably be developed. Consumer perceptions of products are the input used to produce two-dimensional or multi-dimensional perceptual maps. So, how can your company use perceptual maps to create new technology products?
First, take a look at the above example of a perceptual map, courtesy of Wikipedia.
In this graph, we’re plotting perceptions of automobiles based on their affordability versus their styling. A couple of things are important to notice about this perceptual map from a strategic standpoint.
- Chrysler, Oldsmobile, and Buick failed to adequately define their brand – they all seem to be perceived by consumers as the same products. The same is true for Cadillac, Mercedes, and Lincoln. This is very bad, as consumers don’t have a clear reason to buy the individual brand.
- Holes exist where there are NO direct competitors – these show opportunities for profitable new products. For instance, a huge hole exists at the extreme sporty end of the spectrum below Porsche. A company could own this market if they develop something very sporty and moderately affordable.
- Other holes exist, so it’s a matter of matching one (or more) of these holes with the competencies of your firm. These opportunities offer a significant strategic advantage over the competition.
- You need to be careful; some holes are there not because no one has developed a product for that niche, but because there are NO customers in the niche. For example, the point of origin reflects cars that are neither sporty nor conservative and neither distinctive or practical. Likely a car like this would have little appeal to ANY target market.
This example of perceptual mapping used the automobile industry, but it can be done for any industry – especially in technological industries, where significant opportunities still exist. In theory, perceptual mapping is very easy, but perceptual mapping, like any analysis technique, can be dangerous if not done correctly; leading to bad decisions that cost you money. Here are some guidelines if you want to do perceptual mapping right.
- Perceptual maps are MORE valuable if they contain an estimate of the market share each competitor has of the overall market – usually done by manipulating the size of the competitor on the map. Estimating the strength of the competition (as reflected in the share of the market they’re able to attract), produces even more opportunities for new products. For instance, if an attractive space is already occupied (as shown by competitors who already have a particular combination of characteristics), but by weak competitors, you would likely be successful creating another new product in that space.
- You need to pick product characteristics that are IMPORTANT to customers. For instance, if you’re creating a new social networking platform, you need to know what consumers want from a platform, such as privacy, easy communication, ease of linking with friends, few rules, reliability, … You can graph perceptions across a number of product characteristics at once (especially using some of the software solutions listed) but make sure these characteristics are truly meaningful to consumers. And you need to ASK consumers what characteristics are meaningful – don’t assume they all want the same things as you or others in your circle.
- When you poll perceptions of existing products, make sure to ask the RIGHT people. Respondents should reflect average consumers across various demographic and geographic areas to ensure you get an accurate read on perceptions.
- In determining new products that can be profitably developed, there needs to be a hole not currently filled by another (strong) brand – head-to-head competition just divides a market among the competitors. However you need to make sure there are customers who WANT that combination of characteristics and that YOU can make the product – you have the know-how and it fits with your current products.
You can get more information on constructing a perceptual map (including step-by-step instructions) from: How to Build Perceptual Maps.
Here are links to a few software programs for creating perceptual maps:
Guest contributor Angela Hausman is an Associate Professor of Marketing at Howard University and owner of Hausman and Associates, a full-service marketing firm operating at the intersection of marketing and social media. Specialties include behavioral modeling, market research, brand management, innovation, marketing planning, and developing sustainable competitive advantage. Previous clients include the USO, Cincomm, Xerox, Fisher Scientific, and ITT Financial.
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