Mapping Your Competitive Position Utilizing

¶ … Mapping Your Competitive Position

Utilizing a unique methodology to define price-benefit positioning maps from the perspective of customers for specific products, the article Mapping Your Competitive Position (D'Aveni, 2007) provides a useful framework for graphically classifying and then analyzing the relative positioning of products in a market. What is interesting about the methodology is the low price it can be completed for relative to more expensive and time-consuming market mapping methodologies including the Boston Consulting Groups Growth/Share Matrix or the Market Attractiveness/Market Potential Matrices that rely more on qualitative assessments that actual measures of relative product performance as defined by perceptions of customers.

Analysis and Critique

The steps to creating a positioning map involve first defining the market to include all competitive and substitute products to the one of interest being measured. This includes products specifically in the substitute category that do not have an immediate association with the given product of interest yet are strong substitutes for it. The second step in the methodology is to track the price customers are actually paying and have paid for the products, including if the pricing was made contingent on a specific package or bundling scenario. In conjunction with this second step, also identify what customers of the product of interest see as its primary benefit. The intent of this step is to isolate the specific attributes of the product of interest that explain the greatest variation. In this step also is the cost savings, where the author (D'Aveni, 2007) advocates using secondary data as the basis of the regression analysis to determine which of them most explain the variation in price. This is a relatively simple statistical procedure which can be done with the Analyst's Pack for Microsoft Excel or through the use of SAS or SPSS as well.

The final step is to draw a map by plotting the position of every product in the market you've selected by its price on one access and level of primary benefit on the other. Drawing a line between these coordinates defines the segmentation graphically and provides insight into how one series of products compare to another.

Implications

As with most graphically oriented analytical approaches to defining differentiation, this cannot be used in isolation; it must be included as part of a broader set of analyses to measure the relative strengths and weaknesses of specific products and segment. The level of profitability and profit potential, (sometimes called profit pools) is also not specifically measured in this approach as well. Yet for an analysis of what differentiates one segment of a broader market from another, this inexpensive and quickly implemented methodology can be effective.