How to win at Markstrat (Markstrat Tips and Tricks) – Perceptions and Ideals

Following on from Markstrat market Forecast and Market Segments, I will discuss the importance of Markstrat Brand Ideals and Brand Perceptions.

Markstrat Semantic Scales and Multidimensional Scaling

There is two main market research data, Semantic Scales and Multidimensional Scaling, both have their advantages, Semantic Scales are more closely tied to product characteristics, new products must use Semantic Scales Ideal Values when designing the characteristic of products. Multidimensional Scaling combines the multiple characters into three simplified groups, this makes it a lot easier to change Brand Perceptions with advertising as you can chose two of the three, rather than two of the five.

It is important to note, Ideal Values are constantly evolving, so forecasting is required. Additionally, Ideal Values change by spending on Advertising to change Perceptions.

Plotting the Ideal Values of a given segment (Savers) and it can be observed that each characteristic is evolving at a different pace. If the current period’s Idea Values are used, they would have changed by next period. Add similar linear trend lines and the Ideal Values of each characteristic can be extrapolated.

Below shows variance between the trends of four points and actual periods ideals.

There is significant deviation between Processing Power and Design Index, possibly from the ranking of Importance of Characteristics. Companies will generally change Brand Perceptions (through advertising) of the important characteristics, which intern would alter the Ideal Values.

 No. of Features Design Index Battery Life Display Size Processing Power Price 1.2 2.7 1.5 3.0 5.7 10.0

Similarly, the same can be done with Multidimensional Scaling, the below trends using three points and actual periods ideals.

The higher number of periods past, the closer the exploration would be to ideals.

Once we know the ideal values for a given period, this can be used to calculated the desired characteristics of a product to meet a segments ideals.

Markstrat Product Characteristics

Let’s assume we want to create an ideal product for the Shoppers segment, it is know that it will take one period for development, so the Ideal Values of the following period must be forecast. If you are developing a product over multiple periods (a Vodite product), more than one period into the future must be forecast.

Using a simple past two period example, the Excel TREND formula calculates the next periods values.

Using LINEST, the direction (positive for up, and negative for down) can be calculated for determining if to round down or up, this is critical, as it can’t be assumed all characteristics are increasing.

 No. of Features Design Index Battery Life Display Size Processing Power Price Period 0 1.75 5.20 2.95 3.95 3.13 3.30 Period 1 1.81 5.24 2.89 4.04 3.30 3.41 Est Period 2 (TREND) 1.87 5.28 2.83 4.13 3.47 3.52 Gradient/Direction (LINEST) 0.1 0.0 -0.1 0.1 0.2 0.1

To calculate the characteristics from the Ideal Values, there are two methods.

Range method

Knowing the ideal value is on a scale from 1 to 7, and knowing the range of the characteristic, one can calculate the characteristic with the following;

$Range_{min}+(Range_{max}-Range_{min})\frac{Value_{ideal}-1}{6}$

The characteristics are calculated as;

 No. of Features Design Index Battery Life Display Size Processing Power Ideal Char. 1.87 5.28 2.83 4.13 3.47 Calc Char. 7.18 7.99 45.96 22.78 44.11 Trend +ve +ve -ve +ve +ve Rounded 8 8 45 23 45

Note, the above can’t be used for price, as the range is unknown.

Trend method

The second method is to trend ALL market product brand perceptions vs. product characteristics.

Similarly, the Excel TREND function can be used, the following characteristics are calculated;

 No. of Features Design Index Battery Life Display Size Processing Power Price Ideal Char. 1.87 5.28 2.83 4.13 3.47 3.52 Calc Char. 6.90 7.75 45.72 22.52 44.25 306.25 Trend +ve +ve -ve +ve +ve +ve Rounded 7 8 45 23 45 307

Using this method, the Recommended Retail Price (RRP) can also be calculated, it may be worth using an Exponential trend rather than Linear, since price increases are more dramatic at the higher-end of the scale.

The only difference between the two methods is the ‘No. of Features’, and it can be seen that both values were hovering around 7, but the first range method was slightly over, which rounded it up to an 8. In this example it may be worth using a 7 for the ‘No. of Features’ value.

In the next Markstrat post, marketing Advertising and Commercial Teams will be discussed.