Positioning a product correctly on the market is essential for all businesses. How will the business differentiate its product or brand from competitors? How will it persuade consumers to choose its new product over competitors' products? There are a variety of competitive analyses businesses can conduct to find out where exactly they stand in the market based on existing industry data. But how can businesses know exactly where their product stands in the eyes of their customers? How can they gain further insight into customers' attitudes and perceptions of their competitive environment? One way of finding this out is through market mapping. Read along to find out more about how we can construct market maps.
Market Mapping Definition
Market mapping is the process of visually organizing information about various competitors in a specific industry to understand their positions and identify potential market trends. It's a simple yet powerful technique that helps businesses uncover strategic insights based on the relative standing of their rivals in the market.
Market mapping, is a strategic analysis tool that involves gathering data on competitors, such as revenue, growth rate, and industry sectors, and subsequently representing this information visually on a graph or chart to discern market trends and derive insights into competitors' relative positioning and potential strategic directions.
A perceptual map is based on customer perception rather than market and industry data. As a result, the process of constructing a market map is a form of market research. Companies must actively seek information on customer perceptions using surveys, focus groups, or other market research methods.
Check out our explanation of Market Research to learn more about the different techniques used for consumer research.
Imagine a town called Techville with several smartphone shops offering different brands and models. To stay ahead of the competition, the owner of Gadget Galaxy decides to create a market map. They collect data on all the competing shops, including the brands they offer, price ranges, and customer reviews. By plotting this information on a graph, the owner can clearly see which shops are thriving and which are struggling. Additionally, they can identify gaps in the market, such as a lack of budget-friendly smartphones or a specific brand that is not currently available in town. With these insights, Gadget Galaxy's owners can make informed decisions on which products to stock and how to position their store strategically in the competitive landscape of Techville.
The steps of creating a perceptual map are as follows:
Collect customer insights,
Select essential attributes,
Create the perceptual map,
Identify areas where competition is concentrated (and not concentrated),
Examine how closely brands compete.
Market Mapping Tools
To create a perceptual map, the market researcher must ask consumers to identify important brand attributes and evaluate specific aspects of the brand including which brands are seen as competitors. This process can be conducted through surveys, interviews, focus groups, or a combination of two or more methods.
From this information, the researcher selects the most important brand attributes. These attributes will make up the two dimensions of the market map's scale. These brand attributes could include quality, taste, texture, price, etc.
Based on this information the researcher can plot all the different brands or products and identify which areas of the diagram are heavily competitive. They may also observe how close competitors are to their brand.
Once the competition has been evaluated, marketers may use the market map to identify which competitors to compete with or to come up with new ideas for product development in untapped markets. The market mapping process also helps marketers gain deeper insight into consumer behavior in terms of attitudes and perceptions.
Advantages and Disadvantages of Market Mapping
Market mapping serves as a valuable tool for businesses looking to gain insights into the competitive landscape, identify market trends, and develop strategic plans. Market mapping allows companies to spot opportunities and potential challenges by visually organising information about competitors. Now, we will discuss the advantages and disadvantages of market mapping, shedding light on its benefits and limitations as a strategic analysis technique.
Benefits of Market Mapping
Some of the advantages of perceptual mapping:
Provides a visual representation of information.
Clear and easy to interpret when the marketer needs to make a quick decision.
Helps marketers understand market segments.
Based on quantitative data.
Useful for market researchers.
Helps evaluate the performance of marketing campaigns.
Illustrates changes in customer preferences.
Tracks how new product developments are performing in the market.
Limitations of Market Mapping
Some of the limitations of perceptual mapping include:
It represents a very simplistic version of consumer decision-making.
It is often time-consuming and expensive to collect this type of data.
There can be differences between the customer's perception of a product and the actual qualities of the product.
Market Mapping Example
Let's now take a look at an example of a perceptual map.
Fig. 2. Makeup Brands Perceptual Map, StudySmarter Originals
Marketers of a new makeup brand have decided to survey consumers on their attitudes and perceptions towards a list of existing makeup brands. Figure 2 above represents the perceptual map the researchers have constructed.
You can see that the two dimensions being used to represent the position of each brand are price and quality. Tom Ford Beauty and Guerlain are placed as the makeup brands that offer the highest quality product for the highest price (top right quadrant). Elf Cosmetics is placed as the lowest price, lowest quality product (bottom left quadrant). Further, we see that Rimmel London and Elf Cosmetics are competing closely in the low-price and low-quality segment. The market map also shows a potential gap in the market, in the lower-priced, mid-quality segment. This could potentially be an effective way to position your new product - targeting the low-price, high-quality segment.
On the other hand, the same makeup brands could also be plotted on a market map based on two different dimensions. For example, if the two dimensions being used were 'cruelty-free' and 'convenient packaging' the makeup brands would be positioned differently, resulting in a completely new market map.
Perceptual Map Marketing
A perceptual map in marketing is a visual representation that shows how customers perceive various products or brands in relation to one another. It helps businesses understand consumer preferences and identify potential opportunities for differentiation based on specific attributes that matter to the target audience.
A perceptual map is a graphical tool used in marketing to visually display the perceptions of consumers regarding the positions of products or brands along multiple dimensions, typically based on key attributes or criteria that are important to the target market.
Imagine a group of friends who are passionate about eco-friendly cosmetics. They decide to create a perceptual map to compare various cosmetics brands based on their environmental impact and product quality. After conducting research and gathering consumer opinions, they plot each brand on a graph with one axis representing environmental impact and the other representing product quality. By examining the map, they can easily see which brands excel in both dimensions and which ones lag behind. The perceptual map helps them make informed decisions about which cosmetics brands align with their values and provide the best product experience.
Positioning Map Marketing
A positioning map is a visual tool that illustrates how different products or services compare to one another within a market based on specific attributes or factors. It enables businesses to identify their competitive position and uncover potential opportunities for differentiation.
A positioning map is a graphical representation used in marketing and strategic planning to display the relative positions of products, services, or brands within a market based on specific dimensions, such as price, quality, or features, allowing companies to assess their competitive standing and inform their positioning strategy.
The positioning map is represented on a scatter plot diagram, and it maps the positioning of competitors in relation to the brand. The market is mapped based on two dimensions (for example, price and quality), similar to a perceptual map. A positioning map is useful for spotting gaps in the market and understanding where your competitors have positioned themselves in the market. It is also useful for planning purposes - to figure out where you would ideally want your product or brand to stand in relation to competitors.
A positioning map is not the same as a perceptual map. A perceptual map shows how consumers view your product, whereas a positioning map is not based on consumer perceptions. Positioning maps show where existing products and services are positioned in the market.
A positioning map is useful for understanding competition in a given market. It is, however, important to understand that different types of competitors can compete with your product, even if these competitors position themselves differently on the market.
A company that positions itself in the low-price segment could spot a gap in the market, and in the future create a new brand targeting the high-price and high-quality segment.
This is why positioning maps are important for examining current competition, positioning, and identifying gaps in the market. A positioning map also shows which brands or products are market leaders and which ones follow behind.
Take a look at our explanation of Competitor Analysis to find out more about competitive market positions.
Positioning map benefits
There are a couple of reasons why a business would use a positioning map:
To analyze competition and competitors' positioning.
As a tool that helps market researchers.
To help marketers differentiate their products and brands.
To understand the product positioning aspect of the marketing mix.
As a tool to help create an effective marketing strategy for new products.
To adjust existing strategies for their current product/brand offering.
Positioning map limitations
Some of the disadvantages of a positioning map are:
The business will most likely have to conduct further research to come up with effective strategies.
Just because researchers have identified a market gap does not mean the product will be successful.
The scale or dimensions that the marketers used might not be the most effective one for the market or industry they are trying to examine.
Positioning Map vs Perceptual Map
Positioning maps and perceptual maps are two valuable tools used in marketing and strategic planning to understand the competitive landscape and identify opportunities for differentiation. While both maps serve similar purposes, they have distinct focuses and rely on different data types. Let's compare the two in a table to understand their differences and applications better.
| Positioning Map | Perceptual Map |
|---|
| Focus | Product or service position | Consumer perception |
| Data source | Objective market data | Subjective consumer opinions |
| Purpose | Assess competitive position | Understand consumer preferences |
| Basis for comparison | Specific attributes or factors | Key attributes or criteria important to the target market |
In summary, a positioning map focuses on objectively comparing products or services based on specific attributes or factors. In contrast, a perceptual map emphasizes consumers' subjective perceptions regarding the positions of products or brands along key attributes important to the target audience. Both tools can be used together to understand the competitive landscape comprehensively, allowing businesses to make informed decisions about product positioning and differentiation strategies.
Differentiation and Positioning
As you may have already suspected, differentiation and positioning are closely related in marketing. Firms can position their products based on how they differentiate them from competitors' products. However, this is not always a simple process. Some companies might offer superior service or innovative packaging as their main differentiating attribute. However, if there are multiple firms competing for the same market segment's attention in the same market position, differentiation becomes more difficult. This may also be the case when a firm tries to tap into a new market opportunity it found based on a positioning map. Other firms will likely also aim for the same market position. Therefore, each firm must differentiate itself based on a number of unique benefits it offers to a significant portion of its target customers.
Market Mapping - Key Takeaways
- Market mapping is the process of visually organizing information about various competitors in a specific industry to understand their positions and identify potential market trends
- A perceptual map is a visual representation of how customers view a business' product or brand.
- A perceptual map is based on consumer perceptions instead of industry data.
- Marketers can construct a perceptual map by:
- Collect customer insights,
- Select essential attributes,
- Create the perceptual map,
- Identify areas where competition is concentrated,
- Examine how closely brands compete.
- Marketers may use the market map to identify which competitors to compete with or to come up with new ideas for product development in untapped markets.
- The market mapping process also helps marketers gain deeper insight into consumer behavior in terms of attitudes and perceptions.
- A positioning map is a visual representation of market positioning. It represents a range of positions a product has or could have in the market.
- The positioning map is represented on a scatter plot diagram and it maps the positioning of competitors in relation to the brand.
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