Ivey’s Erik Bohlin, Professor and Chair in Telecommunications Economics, Policy and Regulation convened a workshop with leading academics, regulators and practitioners to discuss the most pressing issues facing the global telecommunications industry.
Volume 21, Number 7
The research of Niraj Dawar and Charan Bagga reveals how consumers see brands.
Perceptual maps have long been the gold standard for helping marketers understand what consumers think about their brands. But these two-dimensional diagrams that compare brand attributes have a problem and it lies in the name: They are merely perceptual.
These maps are based on assumptions of what consumers want. For instance, these diagrams might map shampoo brands based on their products’ fragrance or lather, when really consumers care about other attributes such as the bottle design or colour-treated hair protection.
The quest to more effectively show what consumers think of brands led Ivey Professor Niraj Dawar and Charan Bagga, PhD ’15, to create a new way of mapping brands based on how central or distinctive they are in their product or service category. This new system is called a Centrality-Distinctiveness Map. See their article, “A Better Way to Map Brand Strategy,” in the June 2015 edition of Harvard Business Review.
If brands are central, consumers think of them first and consider their products or services more often, leading to increased sales. Coca-Cola is an example in the soft drink category. Brands that are distinctive may not have as frequent sales, but can command a higher price due to their uniqueness in their product or service category, which can make up for the shortfall in sales. Tesla is an example in the car category.
“Once we started to cross the two dimensions of centrality and distinctiveness, we found they are not just dimensions that are important to marketers. They are also related to how the consumers see the product categories,” said Dawar.
To show where brands fall in terms of centrality and distinctiveness, Dawar and Bagga use a four-quadrant mapping system grouping brands as follows:
- Unconventional: Brands with unique characteristics that distinguish them from traditional products in the category;
- Aspirational: Brands that are highly differentiated but also have wide appeal;
- Mainstream: Brands that tend to be the first that come to mind when consumers think of the category; and
- Peripheral: Brands that have little to distinguish them and are unlikely to be first choice for most consumers.
Although most brands aim to be either central or distinctive, brands in all four quadrants can be successful.
“One of the surprising things was there were viable brands in all four quadrants. Not all brands have to be Coca-Cola,” said Dawar. “We found we could also link a brand’s position on the map to marketplace performance.”
Knowing their place on the Centrality-Distinctiveness Map, can help shape brands’ pricing and pace or direction of innovation. They might shift their strategy with hope of moving into another quadrant.
“It’s always a mammoth effort to be central, but it can be done,” said Bagga.
Bagga pointed out that if Tesla, a brand that is highly distinctive but low on centrality, wanted to become more central to the car category, it might do so by promoting policies that favour electric cars, launching a wider range of cars, and investing more in distribution and communication. A similar strategy helped Toyota grow to the central brand it is today.
“When Toyota first came to North America in the late 1950s it started as a fringe brand, but, over the last 30-40 years, through creating a wide variety of products and heavy investment in distribution, promotion and communication, it has now become a central brand in the car category,” he said.
This is what gives the Centrality-Distinctiveness Map an edge over perceptual maps. Traditional maps just show a brand’s positioning, but the Centrality-Distinctiveness Map shows them how a shift toward another position on the map might yield better business results.
“Traditional perceptual maps might identify gaps in the market, but they don’t identify whether there is a market in the gap,” said Dawar.
Dawar and Bagga found even a small shift toward centrality can greatly increase a brand’s sales.
Alternatively, if a brand wants to be more distinctive, Bagga said it needs to communicate how it is different from other brands. Everything from packaging, colours, and celebrity endorsements need to make it stand out from the crowd.
“If you think of a brand like MINI, which is distinctive, every communication is about it being a fun car – a vastly maneuverable car. Even its shape stands out,” said Bagga.
Sometimes brands start out unconventional, but, due to shifts in consumer behaviour, eventually end up more central. An example is Toyota’s Prius, an environmentally-friendly car that started as a niche product, but is becoming mainstream as consumers become increasingly more conscious of environmental concerns when buying cars.
“Markets evolve and consumer behaviours evolve. Things that were not central yesterday may become more central today,” said Dawar
Dawar and Bagga are also working on related research that explores how new product introductions from central brands can shift consumer perceptions of an entire product or service category. Their paper, co-authored with Theodore J. Noseworthy, PhD '12, “Asymmetric consequences of radical innovations on category representations of competing brands,” will be published in the Journal of Consumer Psychology in January 2016.
Bagga’s PhD dissertation, which he defended in June, also revealed central brands, more than others, can gain a sustained competitive advantage by launching products with trivial attributes, such as vitamins in shampoo. Bagga will start this month as a visiting assistant professor at Tulane University’s Freeman School of Business.
For more on Dawar and Bagga’s research on the Centrality-Distinctiveness Map, watch their video on mapping brand strategy.