Welcome to Powerpoint slides for

Chapter 14

Multidimensional Scaling for Brand Positioning

Marketing Research Text and Cases by Rajendra Nargundkar

Slide 1 1. The most common and useful marketing application of multidimensional scaling is in brand positioning. 2. Positioning is essentially concerned with mapping a consumers mind and placing all the competing brands of a product category in appropriate slots or positions on it.

3. For example, a product category of shampoos could be identified as having 5 attributes important to the consumer - price, lather, fragrance, consistency and favorable effects on hair.
4. If these were to be rated on a 7 point scale for say, six leading brands of shampoo A, B, C, D, E and F, then we could pickup any two attributes and plot the six brands on a map according to the consumer ratings. 5. This is called a perceptual map of consumer perception about competing brands in a product category. This is the type of map useful for deliberate positioning of a new brand, based on "gaps" in the current map, or for finding out the current position of an existing brand on the map. If the desired position of an existing brand owned by our company is different from the one perceived by consumers, an option is to "reposition" the brand.

Slide 2 1. The above method may not capture the consumers mind accurately. 2. If we assume that the consumer simultaneously thinks of several product dimensions or attributes rather than one attribute at a time, the above method is only an approximation of that process

3. Multidimensional scaling, on the other hand, captures the complex interactions between attributes and brands in a particular way, and then derives attributes or dimensions which explain the positions given by consumers to various brands.
4. There are two basic methods used in multidimensional scaling-Attribute based approach, and Similarity/Dissimilarity based approach 5. The attribute-based approach is similar to what we have described in the previous section, except that these input data are then further analysed using either factor analysis or discriminant analysis. 6. The second approach is very easy to understand intuitively, and quite useful in gaining a good understanding of consumer psyche, so we will discuss only this (similarity and dissimilarity based) approach.

Slide 3

1. In the similarity/dissimilarity-based approach, we need some kind of a distance measure between the brands being rated. The distance measure being input could be a simple ranking of distances between a brand and all other brands by a customer. 2. One way to do this is to provide a customer (respondent) with cards, each containing a pair of brands written on it, and asking him to write down a number indicating the difference between the two brands on any numerical scale which can represent distance. 3. This is then repeated for all pairs of brands being included in the research. No attributes are specified by which the customer is asked to decide on the difference. 4. This distance measure or dissimilarity measure can be compiled into a matrix of the type shown in Fig.1.

Slide 4
Fig.1 Var1 Var2 Var3 Var4 Var5 Var6 Var7 Var8 .00 3.00 6.00 8.00 1.00 2.00 7.0 8.00 3.00 .00 4.00 6.00 4.00 5.00 2.00 5.00 6.00 4.00 .00 3.00 2.00 4.00 6.00 1.00 8.00 6.00 3.00 .00 3.00 5.00 4.00 7.00 1.00 4.00 2.00 3.00 .00 2.00 8.00 5.00 2.00 5.00 4.00 5.00 2.00 .00 3.00 6.00 7.00 2.00 6.00 4.00 8.00 3.00 .00 5.00 8.00 5.00 1.00 7.00 5.00 6.00 5.00 .00

Var1 Var2 Var3 Var4 Var5 Var6 Var7 Var8

1. Fig. 1 takes the example of eight brands of TV available in the Indian market. Both the rows and columns represent brands of TV. Eg: Var. 1 is brand 1, var. 2 is brand 2, and so on. 2. Input data were collected from a sample of respondents each of whom was asked to rate the dissimilarity between all pairs of TV brands on a numerical scale 3. We will use multidimensional scaling to determine how these 8 brands are perceived by Indian consumers, and plot a positioning map of the eight brands. We will also attempt to find out how many dimensions the consumers seem to be using, when they think of TV brands.

Slide 5

1. In Figs. 2(a), 2(b), 3(a), 3(b), 4(a) and 4(b), we have the SPSS outputs of multidimensional scaling on our data.
2. Figs. 2(a) and 2(b) contain the 3-dimensional solution. Figs 3(a) and 3(b) contain the 2- dimensional solution. Figs. 4(a) and 4(b) contain the 1-dimensional solution. 3. Our first task is to determine how many dimensions the data seems to indicate (in which we feel the best solution exists). For this, we look at the stress value for various solutions in different dimensions. From Figs. 2(a), 3(a) and 4(a), we see the following values of stress. 3-dimensional solution : 0.05230 2-dimensional solution : 0.24015 1-dimensional solution : 0.43159 4. Clearly, the 1- dimensional solution is not a good one. Remember, the stress value indicates lack of fit, so it should be as close to zero as possible. The 2dimensional solution is better, but the 3-dimensional solution looks the best, as the stress value is a low 0.05.

Slide 6 1. Let us assume we have decided that the 3dimensional solution is the best, based on the low stress value. 2. Then, our next task now would be to name the dimensions. For doing so, our previous knowledge of the brands may become important. For example, let us assume that the eight brands of TV were as follows :1. Aiwa 2. Videocon 3. LG 4. Samsung 5. Sony 6. Onida 7. Thomson 8. BPL

Slide 7
If these had been the eight brands, then we look at the qualities of various attributes offered by these brands either through our judgment or knowledge of the market or through a survey of consumers, or a combination of these methods. Fig. 2(b) Stimulus Coordinates for 3 dimensional solutio

Stimulu 1 2 3 4 5 6 7 8

Stimulus VAR00001 VAR00002 VAR00003 VAR00004 VAR00005 VAR00006 VAR00007 VAR00008

1 1.9512 -.1995 -.6043 -.9038 .8931 1.1045 -1.1031 -1.1381

2 .2028 1.3140 -1.3429 -.2969 -1.0092 .1529 1.6088 -.6295

3 .0664 .7743 .4680 -1.8497 -.0350 -.7070 -.1289 1.4121

For example, we could look at the above 3 dimensional solution of multidimensional scaling, and the scores for the eight brands on the 3 dimensions, and decide on the following names for the 3 dimensions -

Slide 7 contd...

Dimension 1 Dimension 2 Dimension 3

: Value for Money : After Sales Service : Current Brand Image

We could then look at the brand scores (positions) on the three dimensions and conclude that some brands like BPL, and Videocon, currently enjoy a good brand image, but brands like Aiwa, Onida and Thomson are leading in Value for Money perceptions. Also, Videocon and Thomson may be perceived as having the best after-sales service.

Slide 8 If we were to choose the 2-dimensional solution instead of the 3-dimensional one, it could be plotted on a graph and would be visually easier to interpret. Just as an illustration, we will do it for this example. The plot of the 2-dimensional solution is shown in fig. 5 and the brands can be seen to form distinct clusters based on their perceived similarity.

Slide 8 contd...
Fig. 5 MULTIDIMENSIONAL SCALING 2-DIMENSIONAL OUTPUT : 8 COLOUR TVS DIMENSION 1.5 2 1.0 0.5 -1.5 -1.0 -0.5 0.5 8 4 3 -0.5 -1.0 5 1.0 6 1.5 DIMENSION 1

BRANDS : 1 = AIWA 5 = SONY 2 = VIDEOCON 6 = ONIDA 3 = LG 7 = THOMSON 4 = SAMSUNG 8 = BPL

Slide 8 contd...

For example, brands 1 and 6 are perceived to be similar, whereas brand 5 is a standalone brand. So is brand 3, to some extent. Here again, knowledge of the brand names and their attributes or qualities would be used to name the two dimensions. Again, dimension 1 could be value for money. Dimension 2 could be after-sales service. But notice that we are losing some information on the third dimension which we had called brand image in the 3dimensional solution. The loss of information may turn out to be critical in some cases.

Slide 9 Additional Comments 1. MDS can be performed even with a sample size of 1. 2. It can be used to get a composite picture of a segment's perception, by combining the responses of any one segment, and repeating the MDS for each of the major segments.

3. It can also be done across all segments (a single MDS) by aggregating responses for the entire sample.
4. If we have a significant marketing decision hinging on the results, the author recommends that approaches 2 and 3 (segment wise and across segments) both be used and if there are significant differences, try and see if the positioning needs to be different for different segments. That may indeed be the case, in these days of diversity of consumer preferences. 5. It would be tempting to do one MDS for each respondent, but the analysis would remain meaningless unless there are sufficient numbers of each consumer type which means determining the segments after the MDS. This is a possibility, but would involve a lot of work in the analysis stage. 6. It is best left to the judgment of the researcher which approach he would like to follow.