Strategic Analysis and Planning with MATRIX V5
Tutorial Step 14 - Perceptual Maps
Whilst it has been criticised for oversimplifying what can be
sometimes be complex commercial problems, the two-dimensional Perceptual Map has become
a particularly useful vehicle for management to draw attention to an emerging market
opportunity, a new strategic direction, or a changing market condition.
The 'Customer Matrix' example
illustrated to the right was developed by Cliff Bowman, Professor of Business Strategy at
Cranfield School of Management. A proactive supplier will always consider how to maintain
initiative within the market. A useful starting point is to consider competitive position
as a perceptual map in which 'Perceived Price' is plotted against 'Perceived Use Value'.
If the supplier determines that his solution is 'average' when compared to the competition,
the alternative courses of action are:
- to achieve the status of lowest cost producer and offer lower prices than the
competition - i.e. move West. Here Bowman sites the work of Porter, and emphasises the
need for all organisations to become low cost (if not lowest cost) producers so that at
the very least market fluctuations can be accommodated.
- to move North by adding Perceived Use Value. Here Bowman is at pains
to point out that market segmentation plays a critical role in determining what customers
do actually value and that any advantage must be sustainable.
Bowman then goes on to explore the interactive nature of these axes.
For example an increased share obtained by adding value can result (through economies of scale)
in lowest cost producer status. The move North West - sequentially adding Perceived Use Value and
cutting price - may offer the company the best strategy to tackle the market and offer global
potential, but the company must be nimble in order to maintain its competitive position.
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If you would like to know how Perceptual Maps and other concepts of strategy can be applied to
your business, then please contact Market Modelling Limited.
We promise a quick response, and look forward to hearing from you!
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MATRIX V5 ...
"Create living strategies,
not deadweight plans!"
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Perceptual Maps And MATRIX V5
Below - An example of a Perceptual Map produced by MATRIX
V5, the software application for business strategists.
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The opportunities in which the company is likely to be most
competitive are those in which it is able to offer a strong Product Design at
a Strong (or low from the customer’s perspective) Price. The three ‘Composite Assembly’
Niches are conveniently grouped together and show modest Product Design at a strong
Price. The two ‘Industrial / Metallic Assembly’ Niches show a strong Product Design at
a relatively weak (i.e. expensive) Price. Further evidence of HandyMan’s misaligned
strategy is shown by the two ‘Hobby’ Niches, where an excellent Product Design is
offered at the weakest (i.e. most expensive) Price.
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- Each 'bubble' represents a Niche. The colour of each bubble matches the colour of the
Niche in the Segmentation Matrix.
- Underlying data for each axis (Critical Success Factor) is entered via the
Criteria Scorecard. There are no limits to the number of
different 'Critical Success Factors' and supporting Criteria that can be created.
- The diameter of each bubble is directly proportional to the Volume or Revenue accruing
to the supplier. Corresponding data was entered via the Market
History And Forecast Data Editor.
- Where 'Pie' format has been selected, the diameter of each pie is directly proportional
to the Volume or Revenue accruing to the Niche. Corresponding data was entered via
the Market History And Forecast Data Editor.
- The Angle of the 'Pie Slice' is directly proportional to the Supplier's share.
Corresponding data was entered via the Market History And Forecast
Data Editor.
A 'key' can be revealed on the left-hand side of the chart by clicking and
dragging the chart edge. 'Hotspots' accessed by moving the cursor over the map provide on-screen information
about the Niche, Volume (or Revenue), Critical Success Factors, and other relevant information. The map
can also be copied and pasted into a compatible graphics or presentation package
by means of the Right-Hand Mouse Click / 'Copy to Clipboard' function.
The 'Select Perceptual Map' Dialogue
MATRIX V5 is an 'expert user' software tool which provides great flexibility when plotting
Perceptual Maps. Tabs on the 'Select Perceptual Map' dialogue give the user choice in the
format and detail of the plot.

To open the 'Select Perceptual Map' dialogue, click the 'Perceptual Map' button
(above) which is located upon the toolbar.
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To display the Perceptual Map shown earlier, the following settings are required
within the ‘Select Perceptual Map’ Dialogue:
- Plot: Select X-Axis Plot (Competitive Strength) ‘Product Design’, and Y-Axis Plot (Competitive Strength) ‘Price’
- Format: Select ‘Bubble’
- Scope: Select ‘HandyMan PLC / All Niches’. Tick the ‘Use Niche Colours’ Tick Box
- Data: Select ‘Revenue’
- Time: Drop Down Start Year ‘2006’ and End Year ‘2010’
- Axes: Ensure the ‘Reverse X-Axis’ Tick Box remains blank. Tick the ‘View X-Axis Scale’ and
‘View Y-Axis Scale’ Tick Boxes
- Also, tick the ‘View Key’ Tick Box
Clicking the ‘Plot’ button now reveals the required example.
The Tabs In Detail ...
1. Scope
Options include
- Host company , which shows the total distribution of business for the Host
company.
- Competitor . Note that sizes and positions of the bubbles will
change (reflecting differing abilities to compete in different Niches.
- All Suppliers into the 'Active' Niche - i.e. the Niche currently
in focus.
2. Format
Options include representations as spot , bubble or pie
chart.
3. Plot
Select a Market Attractiveness Factor, 'Overall Market Attractiveness', a Critical Success
Factor, or 'Overall Competitive Strength' for each axis.
4. Data
Depending upon the options selected in File / Preferences (Input and Analysis), enables either Volume
, or Revenue based analysis. Note that the area covered by each 'bubble' or
'pie' MAY be different in each case but the co-ordinates of the pies (for equivalent Niches / Suppliers)
will remain identical.
5. Time
Enables the user to define the 'Start' and 'End' dates for the plot.
6. Axes
Enables a 'Conventional' representation for the Perceptual Map in which the 'Strong' mark is
to the right, or the 'Reverse X-Axis' view in which the 'Strong' mark is to the Left
. Also enables scales to be plotted on both Axes.
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