2.1.5 Market Segment Positions on the Perceptual Map

Customers within each market segment have different positioning preferences. Low End customers want inexpensive products that are slow performing and are large in size. They want products that fall inside the set of circles to the upper left in Figure 2.2. High End customers want products that are fast performing and small in size. They want products that fall within the set of circles to the lower right.

Over time, your customers expect products that are smaller and faster. This causes the segments to move or drift a little each month. As the years progress, the drift becomes significant. Figure 2.3 shows the location of the market segments at the end of the fourth year. Figure 2.4 shows the segments at the end of the eighth year.

High End, Performance and Size customers demand greater product improvement than Traditional and Low End customers. Therefore the High End, Performance and Size market segments drift at a faster rate. As time goes on, the overlap between the segments is less and less.

Drift rates are published in the Industry Conditions Report.

Market segments will not move faster to catch up with products that are better than their expectations. High End customers will refuse to buy a product to the lower right of the circles. Customers are only interested in products that fall within the circles on the Perceptual Map!

In the simulation, there are zero customers interested in products positioned outside of the dashed circles.

Your R&D and Marketing Departments have to make sure your products keep up with changing customer positioning requirements. To do this, R&D must reposition products, keeping them within the moving segment circles. See 4.1 Research & Development (R&D) for more information.

Perceptual Maps can be used to plot any two product characteristics. For example, cereal manufacturers could plot nutrition and taste. The dots in the figure to the right represent sales of breakfast cereals based on ratings of taste and nutrition. There are few sales in the upper left corner– not many consumers want products that have poor taste and poor nutrition.
As they review product sales, marketers would notice three distinct clusters; the cluster to the lower left indicates a group of customers that is more interested in nutrition than taste. The cluster to the upper right indicates a group that is more interested in taste than nutrition. The cluster to the lower right indicates a group that wants both good taste and good nutrition.

The clusters, or market segments, could then be named “Taste,” “Nutrition” and “Ambrosia.” The simulation uses a similar positioning method to name its market segments.