PRODUCT POSITIONING: A COMPARISON OF PERCEPTUAL MAPPING TECHNIQUES

Chiranjeev S. Kohli
&
Lance Leuthesser

Chiranjeev S. Kohli and Lance Lancaster are Associate Professors of Marketing at California State
University, Fullerton, California.

Chiranjeev S. Kohli would like to thank Dr. Franklin Acito for his valuable suggestions on an earlier
draft of the article.
 COMPARISON OF ALTERNATIVE PERCEPTUAL MAPPING TECHNIQUES

Abstract

Product positioning is a crucial component of competitive marketing strategy. Perceptual

mapping techniques are frequently used to aid managers in making product positioning decisions.

This paper presents an overview of perceptual mapping, explains the conceptual foundation, and

compares three widely used techniques -- factor analysis, discriminant analysis, and

multidimensional scaling. Differences in these analytical techniques are highlighted, with

implications for marketing managers.

 INTRODUCTION

A key element of competitive marketing strategy is product positioning. Product

positioning has been 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.

Although marketing managers typically engage research professionals to perform product

positioning studies, an understanding of the basics of product positioning techniques will enable

these managers to make better evaluations of proposed research undertakings, and ultimately better

decisions. Accordingly, in the first section of the paper we review three frequently used perceptual

mapping techniques: (1) factor analysis, (2) discriminant analysis, and (3) multidimensional scaling.

Keeping with our objective of explaining the concepts, we discuss the techniques in their basic form.

In the second part of the paper, we highlight the relative strengths and limitations of each of these

approaches to perceptual mapping and suggest guidelines for their use which should assist

managers facing product positioning decisions. Focusing on the differences in these techniques, we

identify contexts in which each is most appropriate.

REVIEW OF PERCEPTUAL MAPPING TECHNIQUES

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. No matter how important a product attribute

is, if brands are not perceived to differ on that attribute, then the attribute will not be influential in

customers' choice decisions. Often, the determining aspects of a product are latent, unobservable

1
constructs which subsume a number of manifest, observable attributes. Perceptual mapping

techniques can be very useful in uncovering these latent dimensions.

Factor Analysis

The Concept. Factor analysis is essentially a data reduction technique in which the objective

is to represent the original pool of attributes in terms of a smaller number of underlying dimensions

or factors. After the factors have been identified, the brands' ratings on these factors are used to

position the brands in perceptual space.

Input Data. An example will clarify the type of data which is used as input to factor analysis.

Consider m brands of automobiles, which we wish to map. Each of the m brands is rated on p

attributes by n respondents. The resulting input data form a matrix containing mn rows and p

columns.

Generation of the Perceptual Map. Table 1 shows hypothetical rating data for the automobile

example. In this example, three brands (m = 3) are rated on four attributes (p = 4). Three

individuals (n = 3) each rates all brands on the four attributes (typically, likert-like scales containing

from five to nine rating points are employed for such measures). The next step is generation of a

correlation matrix for the p attributes. For this example, the correlation matrix appears in Table 2.

An examination of the correlation matrix reveals that the attributes "reliability" and "resale value"

are highly correlated. Similarly, "exterior design" and "aerodynamic body" are highly correlated.

However, the first pair of attributes shows very low correlation with the second pair. Thus we may

conclude that there are really two underlying dimensions represented in our respondents' ratings of

these automobiles, not four, as the number of observed attribute measures might suggest. On

statistical grounds, at least, the data suggest that "reliability" and "resale value" might be two

indicators of some underlying concept. For example, we might hypothesize that these two measures

both tap the concept "intrinsic value." Likewise "exterior design" and "aerodynamic body" might be

indicators of, say, "styling."† We cannot, however, rule out the possibility that the correlation

2
between these measures is due to another, unobserved (and unmeasured), variable. Thus any

conclusions about the existence of meaningful factors must ultimately be supported by theoretical

considerations.

Having identified the factors, the brands are then evaluated on these factors by computing

an overall "factor score." The factor score is simply the average of all the attribute evaluations

contributing to that factor, which may be averaged over n individuals for the brand's overall

position on the map.‡ Brands are then positioned by factor scores. (Refer to Figure 1 for the

automobile example.) The positioning of the brands for each individual is shown in Figure 1 as J1,

D1, S1...J3, D3, S3. For example, John's positioning of Brand 1 (point J1) appears in the lower left

portion of Figure 1 as J1(3, 1.5). (Disregard the ellipses at this point.) The overall brand position is

shown by the respective number of the brand and the mark "„."

Discriminant Analysis

The Concept. Discriminant analysis also requires that respondents provide attribute ratings.

Like factor analysis, an objective of this method is to reduce the number of attributes to a smaller

number of underlying dimensions. However, unlike factor analysis, discriminant analysis focuses

on attributes which show differences between brands. This approach will tend to ignore attribute

ratings which show a large variation within brands; these latter dimensions will not be "significant"

in discriminant analysis. In discriminant analysis, sets of observations represent different "groups."

In product positioning studies, the set of ratings for each brand constitutes a group. As its name

suggests, discriminant analysis will identify those underlying dimensions which are most useful in

discriminating among groups.

Input Data. Input data requirements for discriminant analysis are similar to those for factor

analysis.

Generation of the Perceptual Map. Refer, again, to Figure 1. Using the same data employed for

factor analysis (see Tables 1 and 2), discriminant analysis identifies the first dimension of "intrinsic

3
value" (represented by the X axis in Figure 1) as the first discriminating dimension. The ellipses in

the figure indicate the variation in the ratings of each brand by different respondents. Note the

relatively short axes of the ellipses along the X axis (intrinsic value) and the relatively long axes in

the Y direction (brands 1 and 2 in particular). It is clear from Figure 1 that respondents show

substantially greater overall agreement when rating the two attributes representing "intrinsic value"

than when rating the two attributes representing "styling." Stated another way, knowing a value for

styling conveys little information about a particular brand's identity. A styling rating of 4, for

example, could pertain to any of the three brands. On the other hand, the intrinsic value dimension

conveys complete information as to brand; an intrinsic value of 4 uniquely identifies brand 2. In this

case, therefore, discriminant analysis will identify only the "intrinsic value" dimension as significant.

4
 Table 1

RATINGS OF THREE BRANDS OF AUTOMOBILES

ON FOUR ATTRIBUTES BY THREE RESPONDENTS

Attributes

Factor 1 Factor 2
Reliability Resale Exterior Aerodynamic
Value Design Body
Respondents

John 3.0 3.0 1.0 2.0

Brand 1 Doug 3.0 2.0 9.0 9.0
Scott 2.0 2.0 3.0 4.0

Attribute Average 2.7 2.3 4.3 5.0

Factor Average 2.5 4.7

John 3.0 4.0 3.0 3.0

Brand 2 Doug 5.0 4.0 5.0 4.0
Scott 4.0 4.0 9.0 9.0

Attribute Average 4.0 4.0 5.7 5.3

Factor Average 4.0 5.5

John 7.0 6.0 5.0 4.0

Brand 3 Doug 7.0 6.0 3.0 3.0
Scott 6.0 6.0 4.0 4.0

Attribute Average 6.7 6.0 4.0 3.7

Factor Average 6.3 3.8

Attribute Variance 206.0 173.0 256.0 248.0

Factor Variance 379.0 504.0

5
 Table 2

CORRELATION MATRIX OF THE ATTRIBUTES

Reliability Resale Exterior Aerodynamic

Value Design Body

Reliability 1.00

Resale Value 0.93 1.00

Exterior Design 0.02 0.16 1.00

Aerodynamic Body 0.20 0.32 0.97 1.00

6
Multidimensional Scaling (MDS)

The Concept. MDS enables us to map objects (brands) spatially, such that the relative

positions in the mapped space reflect the degree of perceived similarity between the objects (the

closer in space, the more similar the brands). When the map has been generated, the relative

positioning of the brands, together with knowledge of the general characteristics of the brands,

allow the analyst to infer the underlying dimensions of the map.

Input Data. Respondents evaluate brands in pairs, judging the overall similarity between the

paired brands. Respondents may either rate (metric scaling) or rank-order (non-metric scaling) the

similarity for each pairing of brands. This is a major distinction from both factor and discriminant

analysis. Unlike those methods, MDS asks respondents to rate brands on overall similarity, not

individual attributes.

Table 3

SIMILARITY MATRIX

A B C D

A X

B 3 X

C 2 1 X

D 1 5 6 X

Entries in the matrix show the rank-order of similarity of the two brands in a pair. Thus, brands "B"
and "C" are most similar, and brands "C" and "D" are least similar.

Generation of the Perceptual Map. For illustration sake, we take a hypothetical "similarity

matrix" shown in Table 3. First, consider three brands only: A, B, and C. Note that the matrix has

rank-ordering of similarities (non-metric scaling). Non-metric scaling requires, at most, m-2

7
dimensions to map the brands, where m is the number of brands. Thus, in our example we can

represent the three brands on a one dimensional map with perfect fit. This is illustrated in Figure 3.

Now, assume we introduce a fourth brand, D. Its similarity rankings when paired with the

other brands are also shown in Table 3. If we now try to reconstruct the map for the four brands,

three additional conditions need to be satisfied (these conditions arise from the data appearing in

the bottom row of Table 3). First, AD (i.e., the distance between A and D) should be greater than AB,

AC, and BC. Since AC and BC are already less than AB, the new condition dictates that AD should

be made greater than AB, without disturbing the earlier set up. Thus, referring to Figure 3, D should

lie somewhere outside a circle centered at A, with a radius AB. Placing D at the position shown in

the map satisfies this condition, and preserves our one-dimensional solution. The next condition is

that BD must be greater than all the above distances, and this is already satisfied with the existing

positions. Finally, however, the condition that CD be the largest of all inter-brand distances creates

a problem if we wish to maintain a one-dimensional map. With a bit of trial and error it will soon

become apparent that mapping the four brands cannot be accommodated with a one-dimensional

solution. However, a possible outcome in two dimensions is shown in Figure 3, with positions for

the four brands depicted as A, B, C', and D'. In this case the two-dimensional (m-2, where m = 4)

solution allows perfect fit. Similar to the simple trial and error process suggested here, algorithms

used for MDS generally entail an iterative estimating routine wherein each step seeks to reduce the

"stress," or lack of fit, until an acceptable level of fit is obtained.

8
 COMPARISON OF THE PERCEPTUAL MAPPING TECHNIQUES

MDS versus Factor and Discriminant Analysis

The following issues are important when comparing MDS with factor analysis and

discriminant analysis:

1. Under MDS, it is desirable to have as many stimuli (brands) as possible because the number

of stimuli puts a limit on the number of dimensions which can be extracted (m - 1 for metric

scaling and m - 2 for non-metric scaling). Too few stimuli may lead to unstable solutions or

the obscuring of subtle dimensions which may differentiate the brands. As a rule of thumb,

at least nine stimuli are desirable for a two-dimensional solution, thirteen for three

dimensions, and seventeen for four dimensions.4

2. Despite its desirability, a large number of stimuli significantly increases the complexity of

9
 respondents' tasks. For m stimuli, Cm2 similarity judgments are required, which implies C92

= 36 paired comparisons if the Kruskal-Wish criteria are followed. This may result in

judgment errors due to increase in fatigue or non-cooperation on the part of respondents.

One way to alleviate this problem is to increase the number of respondents q times, thereby

requiring each respondent to perform only one qth of the total number of judgments

required. This reduction may be accomplished through either random or systematic

selection of one qth of all possible pairs. MDS has been found to be robust to either

modification.6

3. Because MDS requires only similarity judgments for brand pairings, it is not necessary a

priori to specify all product attributes which are relevant to consumers' choice decisions.

Thus in cases where it is not clear that the relevant attributes can be specified, or where only

a subset of such attributes are thought to be available, MDS is recommended over factor and

discriminant analysis.

4. Programs used for MDS, such as INDSCAL, do not allow changes in rank order among

subjects. At most they allow a complete reversal. No such constraints are imposed for the

other two techniques. Thus, MDS should not be used if there is a large variation in the way

consumers perceive products in the category.2

5. MDS has been shown to be robust to embedding an existing stimuli set with new stimuli, as

long as the new stimuli are not drastically different in nature.5

6. Three related theoretical issues are of concern when using MDS:

a. Do consumers normally make overall similarity judgments for the stimuli of

concern? If not, it is unlikely that they can give meaningful responses to such

questions in a research setting. For example, MDS performs very well in mapping

geographic locations based on proximity judgments, where comparing distances is

perceived as a very "natural" task. In contrast, lower validity should be expected in a

10
 relatively complex marketing application such as automobiles, where there is a large

number of concrete dimensions.8

b. It is assumed that a perceptual map generated using MDS reflects a respondent's

actual internal cognitive space. However, it is possible that a relatively simple two

or three dimensional representation may be the result of short term memory

constraints; that is, the respondent's ability to make similarity judgments during the

task may be limited to using two or three dimensions only. If the actual

representation is much more complex, MDS will generate unstable dimensions that

are highly dependent on the task. The extent of this problem may be assessed by

repeating the task at different points in time. For example, mapping of health care

services may reveal that a respondent based comparisons on "deductible" and

"choice of physician" on one occasion, and "premium" and "quality" on another

occasion, suggesting task-dependent instability.

c. Similarity judgments may be performed differently by different individuals. While

some individuals consciously weigh stimuli on different attributes to come up with

overall similarity judgments, others may use Gestalt impressions about the stimuli to

make that judgment. Thus, while some individuals may perceive the Mazda Miata

to be similar to the Chevrolet Corvette, both being in the overall category of "sports"

cars, others may find the Corvette to be nearer to the Ford Mustang based on specific

attributes such as engine size, horsepower, gas consumption, and domestic origin.

The validity of MDS is diminished in cases where there is large variation in the way

respondents make similarity judgments.8 For example, respondents who are

knowledgeable about the product category are usually able to make attribute level

comparisons, whereas respondents with low knowledge tend to make holistic

judgments. Variation in the perception of similarity should be assessed after the task

11
 by asking respondents to report the way in which they made similarity judgments.

7. MDS is fairly robust to the metric used; both metric and non-metric scaling techniques yield

similar dimensions.1 Accordingly, it is advisable to base the choice of scale on factors such

as the information load of respondents, or the ease with which the task may be completed.

Thus as discussed earlier in this section, when the number of stimuli becomes large, ranking

(non-metric) the similarity judgments becomes difficult. In this case, the problem may be

alleviated by having the respondents rate (metric) the similarity judgments.

8. The "ease of interpretation" criterion has been advocated over statistical significance for

retaining dimensions produced by MDS.7

In summary, MDS is likely to be preferred when a large number of stimuli are available, and

only a subset of determinant attributes have been identified. It is also preferred when a large

variation in respondents' similarity perceptions is not expected, and the stimuli are not very

complex. Finally, it is preferred in situations where consumers naturally make overall similarity

judgments for the product class, and extract underlying dimensions as a part of their internal

cognitive process.

Comparison of Factor Analysis with Discriminant Analysis

The following points are worth noting:

1. Recall that discriminant analysis defines dimensions which show maximum differences

between groups, tending to ignore those dimensions of brands which show large variation

across all consumers. For this reason, discriminant analysis is likely to generate fewer

dimensions than factor analysis, because factor analysis will include those dimensions that

account for a significant amount of the total variation even when such dimensions do not

show variation across groups.2 This may or may not be desirable, depending on the

objective at hand. To clarify this point, refer to the two-dimensional map shown in Figure 4,

which depicts three brands. Discriminant analysis will identify the dimension defined by

12
line aa as its first discriminating dimension. In contrast, factor analysis will identify the

dimension bb. The ellipses indicate the variation in the evaluation of the two brands on the

two dimensions mapped. As the diagram indicates, discriminant analysis gives more

weight to the Y dimension, and factor analysis gives more weight to the X dimension.

Again, this is because X explains less of the variation between groups.

This distinction is very important. Typically, respondents are more likely to agree on

objective dimensions (length, weight, color, and so on) than on evaluative dimensions

(good/bad, like/dislike, and so on). Accordingly, discriminant analysis generally places less

emphasis on evaluative dimensions than does factor analysis.3 This is an important point to

keep in mind when designing positioning studies that include both types of measures. This

13
 leads us to the next issue.

2. Factor analysis and discriminant analysis should not be viewed as conflicting techniques. If

factor analysis gives more emphasis to a dimension than discriminant analysis, it is likely

that the response frequency distribution for that attribute is as shown in Figure 5.

Figure 5 suggests that though the reliability rating of B is superior to that for A, there

is a large variation in the way it is perceived. This information, by itself, is useful to the

manager responsible for Brand B, suggesting that he/she may wish to explore possible

reasons for lack of image clarity or focus concerning this attribute. As Figure 5 further

illustrates, narrowing the frequency distribution for Brand B to curve B' will strengthen the

perceived difference between Brands A and B, even though the mean score on Brand B

remains unchanged. In sum, then, factor analysis and discriminant analysis can be used

together to highlight attributes which differ significantly in the degree to which consumers

perceptions vary.

3. The maximum possible number of dimensions in factor analysis is the number of attributes

14
 on which ratings have been obtained. In discriminant analysis, the maximum possible

number of dimensions is given by the lesser of p - 1 and m - 1, where p is the number of

brands and m is the number of attributes on which these brands are evaluated. Thus, it is

important that m and p be sufficiently large. As previously mentioned, too few brands leads

to the possibility that important discriminating dimensions may be overlooked. In

circumstances with a limited number of brands and/or attributes factor analysis is preferred.

In summary, (1) discriminant analysis should be generally preferred over factor analysis

when objective dimensions, as opposed to evaluative dimensions, are of interest, (2) factor analysis

and discriminant analysis may be used as complementary techniques to highlight those dimensions

which differ substantially in the level of perceptual agreement among consumers, and (3) factor

analysis is generally preferred when attribute ratings are available on very few brands.

CONCLUSION

This article has presented a brief overview of three methods of analysis frequently used in

product positioning research: (1) factor analysis, (2) discriminant analysis, and (3) MDS. MDS

differs from both factor and discriminant analysis in that, under the first method, consumers make

overall similarity judgments of brands, whereas under the latter two methods interval scaled ratings

must be provided for each product attribute. Accordingly, MDS is particularly useful in instances

where consumers naturally tend to make overall similarity judgments, or in circumstances where

attribute data are sparse. Conditions favoring the use of factor and discriminant analysis are

generally opposite to those favoring MDS.

Factor analysis and discriminant analysis are both data reduction techniques, and both are

useful in condensing a large number of product attribute measures into a smaller set of meaningful

underlying dimensions. A key difference between factor analysis and discriminant analysis is that

the former method identifies product dimensions which account for overall variation in consumers'

responses, whereas the latter identifies only those dimensions that account for significant variation

15
between brands. Because the overall variance in consumers' responses for evaluative dimensions is

generally greater than for objective dimensions, an implication of the above difference is that factor

analysis tends to place greater emphasis on evaluative dimensions than does discriminant analysis.

The differences in these two methods make it useful to view them as complementary techniques.

16
 References

1. Green Paul, 1975, "Marketing Applications of Multidimensional Scaling," Journal of Marketing

Research, 39 (January), 29-31.

2. Hauser, John R. and Frank S. Koppelman, 1979, "Alternative Perseptual Mapping Techniques:

Relative Accuracy and Usefulness

3. Huber, Joel, and Morris B. Holbrook, 1979, "Using Attribute Ratings for Product Positioning,"

Journal of Marketing Research, 16 (November), 507-516.

4. Kruskal, Joseph B., and Myron Wish (1978), Multidimensional Scaling. Beverly Hills, CA: Sage

Publications, Inc.

5. Malhotra, Naresh, 1987, "Validity and Structural Reliability of Multidimensional Scaling, Journal

of Marketing Research, 24 (May), 169-173.

6. Malhotra, Naresh, Arun Jain, and Christopher Pinson, 1988, "Robustness of Multidimensional

Scaling in the Case of Incomplete Data," Journal of Marketing Research, 25 (February), 95-102.

7. Shephard, Roger N. (1972), "A Taxonomy of Some Principal Types of Data and Multidimensional

Methods for their Analysis," in Multidimensional Scaling: Theory and Applications in the

Behavioral Sciences, Vols. 1 and 2, Roger N. Shephard and Sara B. Nerlove, eds. New York: Seminar

Press, 23-51.

8. Summers, John O., and David MaKay, 1986, "On the Validity and Reliability of Direct Similarity

Judgments," Journal of Marketing Research, 13 (August), 289-295.

17
 Footnotes

† The first dimension identified by factor analysis is the one that shows maximum variance.

The second dimension has the next highest variance subject to the constraint that it is orthogonal to

the first one. In the example (using rough estimates), the first dimension identified will be the one

described by "styling," which is likely to explain greater variance than the one defined by "intrinsic

value." See Table 1 for approximate estimates of variance explained by each factor. Actual variance

explained by different factors is proportional to the eigenvalue of the respective factors.

Factors may be rotated for ease of interpretation.

‡ The precise method is to evaluate each respondent's brand attribute on the first and second

factor (i.e., the extracted orthogonal linear equations containing p elements), which may then be

averaged over n individuals for the brand's overall position on the perceptual map.

18