Perceptual Maps – A Visual Representation of Competitors in the Market Place

June 1, 2018

One of the biggest issues that inhibit the opportunity for an individual to identify the benefits of doing their homework and due diligence, is the inability to visually and perceptually see what the hard work and research is telling them. This is even more the case for small business owners, who are not only trying to stay afloat in competitive local and national markets; but are trying to worry about the “big picture” issues as well.

According to several pieces of research in circulation, it is agreed that 65% of the population are visual learners. This means the best way to understand something is through the use of a visual representation of data retrieved. Which brings me to my point and the purpose of this post. Perceptual Maps.

One thing I wish businesses would utilize more often when thinking about “big picture” issues, are perceptual maps. A perceptual map is nothing more than a graphical representation of where an organization’s competitors are positioned, based on two characteristics that are most important to the organization. It is almost always inherent that the y-axis is price, because organizations usually choose from the beginning (regardless if it is the right or wrong thing to do) to be a low cost or differentiated service/product. The beauty of the perceptual map is that it identifies gaps or uncontested areas in your industry; ultimately showing where an organization may be able to gain a competitive advantage.

Above is a prime example of a perceptual map from Web Designer Depot. Two axis were chosen that the individual believed were relevant to their specific industry being analyzed, and then competitors were placed appropriately. Now make believe we are executives for Lindt and we need to identify an area in the marketplace that is uncontested. After viewing where our competition falls, it would become apparent that there is no high quality and high price tag (Differentiated) chocolate companies out there.

Obviously I am over simplifying a concept that requires extensive research behind it, which removes any subjectivity that one would have when placing their competition and organization on the map. However, the concept is intuitive enough that perceptual maps need to be utilized. Like I said, extensive research needs to accompany this visual aid (Competitive analysis, situational analysis, market demographics analysis, etc.), however when an individual completes this process; the perceptual map should reinforce the confidence that your organization is appropriately positioned.

By: Michael Smith, MBA