Market Strategy Homework

Attachments

Niraj Dawar is a professor
of marketing at the Ivey
Business School, in London,
Ontario. He is the author of
Tilt: Shifting Your Strategy
from Products to Customers
(Harvard Business Review
Press, 2013).

Charan K. Bagga, a
doctoral candidate at
the Ivey Business School,
will be a visiting assistant
professor at Tulane’s
Freeman School of
Business, starting in
July 2015.

A Better
Way to
Map Brand
Strategy

by Niraj Dawar
and Charan K. Bagga

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June 2015 Harvard Business Review 91

Central brands, such as Coca-Cola in soft drinks and
McDonald’s in fast food, are those that are most rep-
resentative of their type. They’re the first ones to
come to mind, and they serve as reference points for
comparison. These brands shape category dynamics,
including consumer preferences, pricing, and the
pace and direction of innovation. Distinctive brands,
such as Tesla in cars and Dos Equis in beer, stand out
from the crowd and avoid direct competition with
widely popular central brands.

Striking the right balance between centrality
and distinctiveness is critical, because a company’s
choices influence not just how the brand will be per-
ceived, but how much of it will be sold and at what
price—and, ultimately, how profitable it will be. And
yet, marketers have lacked the tools needed to get
this balance right. Traditionally, companies have
analyzed brand positioning and business perfor-
mance separately: To locate gaps in the market and
gauge how people feel about their brands, marketers
have used perceptual positioning maps, which typi-
cally represent consumers’ perceptions of brands or
products on opposing dimensions, such as budget
versus premium or spicy versus mild. To assess per-
formance, they have used a different set of strategic
tools that map or measure brands on yardsticks such
as market share, growth rate, and profitability.

In this article, we present a new approach called
the centrality-distinctiveness (C-D) map, which to
our knowledge is the first tool that allows companies
to directly connect a brand’s position on a perceptual
map with business outcomes such as sales and price.
Using the tool, managers can determine a desired
market position, make resource allocation and brand
strategy decisions, track performance against com-
petitors over time, and evaluate strategy on the basis
of results. In the process, they will find that central-
ity and distinctiveness need not be contradictory
goals; companies may choose to pursue both—and
benefit substantially.

Positioning and Performance
Creating a C-D map of a brand category is a straight-
forward but labor-intensive process. A company be-
gins by identifying the geographic market of interest
(an entire country, a region, a single city) and the cus-
tomer segments to be surveyed. As we will discuss,
a brand’s position on the map can vary dramatically
depending on those variables. The company then
conducts a survey to collect data on consumers’ per-
ceptions of the brand’s centrality and distinctiveness
(scored on a 0–10 scale). This data yields unique co-
ordinates for each brand’s position on a 2×2 matrix.
The map also captures market performance: The

“bubble” for each brand is sized proportionally to its
unit sales volume, price, or other metric. (See the ex-
hibit “The Centrality-Distinctiveness Map.”)

By focusing on centrality and distinctiveness—
dimensions that, unlike narrow product charac-
teristics, apply to brands in all categories—compa-
nies can make comparisons across categories and
geographies. Where a brand falls on the map has
implications for sales, pricing, risk, and profitability.
Marketers can also make important strategic assess-
ments such as “This market is more crowded with
distinctive brands than that one.”

Two Case Studies
Consider C-D maps for two brand categories, cars
and beer in the U.S. market. (See the exhibit “C-D
Maps for Cars and Beer.”) Brands in both are broadly
distributed, showing that it’s possible to effectively
compete across a wide range of positions—even,
surprisingly, with brands that are neither central
nor distinctive. Let’s look at each quadrant of the
maps in detail.

Aspirational brands—those that fall into the
upper-right quadrant—are highly differentiated
but also have wide appeal. For cars, this quadrant
accounts for a solid 30% of unit sales and contains
powerhouse brands such as Mercedes and BMW.

Marketers have always had to juggle two
seemingly contradictory goals: making
their brands distinctive and making
them central in their category.

A BETTER WAY TO MAP BRAND STRATEGY

92  Harvard Business Review June 2015

For beer, this quadrant accounts for the lion’s
share of sales (62%) and includes strong perform-
ers such as Heineken and Sam Adams. These high-
distinctiveness brands tend to command higher
prices than brands that score low on this dimension.

Brands that have wide appeal but low distinc-
tiveness fall into the lower-right quadrant. These
mainstream brands tend to be the first that come to
mind when consumers think of the category. Their
lack of distinctiveness reduces their pricing power,
but they are very popular and most often chosen by
consumers. For cars, mainstream brands like Ford
and Chevrolet account for about 44% of sales; for
beer, popular brands like Miller and Busch deliver
19% of sales.

Peripheral brands have little to distinguish
them. They are unlikely to be top of mind or the
first choice for most consumers. Examples in the
lower-left quadrant include Kia and Mitsubishi for
cars and Old Milwaukee for beer. Despite their low
prices and lack of distinctiveness, many peripheral
brands clearly succeed in this seemingly unattract-
ive position; they account for 24% of car sales and
about 15 % of beer sales.

In the upper-left quadrant are unconventional
brands—those with unique characteristics that dis-
tinguish them from traditional products in the cat-
egory. Think of Tesla, Mini, and the Smart car, each
of which departs in some way from the standard
view of a “car.” Among beers, Dos Equis and Stella
are both unconventional in the U.S. market. The low
share of sales of brands in this quadrant (about 2%
to 4%) suggests, as you might expect, that this is a
niche strategy.

Now let’s consider how centrality and distinc-
tiveness affect business performance on two key
metrics—sales volume and price—in the categories
we studied.

Sales volume. In both the car and beer markets,
the higher a brand scores on centrality, the greater its
sales volume. Toyota, the car brand with the high-
est score on this dimension in our survey, is the only
one that sold more than a million passenger cars
in the United States in 2014. Budweiser, the most

Idea in Brief
THE PROBLEM
Companies have long used perceptual
maps to understand how consumers feel
about their brands relative to competitors’
and to develop brand positions. But their
business value is limited because they
fail to link a brand’s position to market
performance metrics. Other marketing
tools measure brands on yardsticks
such as market share, growth rate, and
profitability but fail to take consumer
perceptions into consideration.

THE SOLUTION
The C-D map links perception and
performance in a new way. It shows brands’
relative position in the marketplace
according to perceived “centrality” (how
representative a brand is of its category)
and “distinctiveness” (how well it stands
out from other brands). It also captures
financial performance along a given metric,
such as sales volume or price.

THE IMPLICATIONS
Using the tool, marketers can determine a
brand’s current and desired position, predict
its marketplace performance, and devise
and track marketing strategy and execution.

In-depth examples of the car and beer
markets demonstrate the value of this tool
for managers of brands in any category.

THE CENTRALITY-DISTINCTIVENESS MAP

The C-D map links consumers’ perceptions about brands with
their business performance. Brands are positioned in quadrants
according to how customers score them on two universal
dimensions: centrality (how representative of the category they
are) and distinctiveness (the degree to which they stand out from
others in the category). Bubbles are sized according to brands’
performance on a financial metric, such as sales volume or price.

Each quadrant carries strategic implications for sales, pricing,
risk, and profitability. The distribution of brands across the map
offers insights about competitive opportunities and threats.

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CENTRALITY

UNCONVENTIONAL

MAINSTREAMPERIPHERAL

ASPIRATIONAL

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June 2015 Harvard Business Review 93

one-point increase (on the 0–10 scale) corresponds
to greater sales of about 200,000 cars per year, on
average, for a given brand and a sales volume boost
for a beer brand by an average of 10.3 million barrels
per year. These are theoretical numbers, of course,

central beer brand, also had the largest sales vol-
ume in its category—it captured almost 30% of the
U.S. beer market.

The impact of boosting centrality even slightly
is dramatic: Our regression analysis suggests that a

STACKING UP Many brands succeed by being both central and distinctive (BMW and
Guinness, for example), while others compete by being neither (Kia and Old Milwaukee).
Firms can use a C-D map to identify positioning opportunities and unexpected threats.

BY THE NUMBERS As these C-D maps show, sales volume tends to
increase with centrality, and prices tend to fall. The more distinctive
a brand is the lower the sales volume and the higher the price.

BRANDS ARE AT THE PARENT LEVEL. CARS ARE PASSENGER ONLY.

To create these maps, we surveyed adults across the U.S. about their perceptions of 30 car brands and
23 beer brands, asking them to rank the brands, on a 0–10 scale, on centrality and distinctiveness.

C-D Maps for Cars and Beer

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CENTRALITY

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ES
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CENTRALITY

CARS (SALES VOLUME)

Toyota

Tesla

Subaru

Smart

Scion

Porsche

Mitsubishi

Mini

Mercedes

Mazda

Lincoln

Lexus

Kia

Jaguar

Hyundai

Fiat

Buick

BMW

Volvo
VW

Nissan

Honda
Ford

Dodge

Chrysler

Chevy

Cadillac
Audi

Acura

Infiniti

CARS (PRICE)

Toyota

Tesla

Subaru

Smart

Scion

Porsche

Mitsubishi

Mini

Mercedes

Mazda

Lincoln

Lexus

Kia

Jaguar

Hyundai

Fiat

Buick

BMW

Volvo

Nissan

Honda
Ford

Dodge

Chrysler

Cadillac

Audi

Acura

VW

Chevy

Infiniti

BEER (PRICE)

Yuengling

Tecate

Stella

Sierra Nevada

Samuel Adams

Rolling Rock

Pabst

Old Milwaukee

Newcastle

Natural

Modelo
Miller

Michelob

Icehouse

Heineken

Guinness

Dos Equis

Corona

Coors

Busch

Budweiser
Blue Moon

Milwaukee’s Best

BEER (SALES VOLUME)

Yuengling

Tecate

Stella

Sierra Nevada

Samuel Adams

Rolling Rock

Pabst

Old Milwaukee

Newcastle

Natural
Modelo

Miller

Michelob

Icehouse

Heineken

Guinness

Dos Equis
Corona

Coors

Busch

Budweiser
Blue Moon

Milwaukee’s Best

A BETTER WAY TO MAP BRAND STRATEGY

94  Harvard Business Review June 2015

consistent with its business model. Let’s look now at
the strategic implications for each quadrant.

Aspirational. Because aspirational brands are
both central and distinctive, companies can take ad-
vantage of high sales volumes and premium pricing.
These trusted brands are well positioned to launch
innovations that redefine the category. With the
Prius, Toyota introduced hybrid cars into the mar-
ket and became the dominant player, paving the
way for many other brands. Experiments with fuel
cell technology by Daimler (Mercedes-Benz’s parent
company) and Toyota are intended to start the next
revolution in the car category.

The key for aspirational brands is to make their
distinctive features sufficiently mainstream to
be widely appealing without becoming run-of-the-
mill. They must defend their position against chal-
lengers coming at them from the mainstream and
unconventional quadrants.

Mainstream. Mainstream brands build their
central position through careful engineering and
product development to align with (or even shape)
popular tastes and through heavy advertising to
make the brand synonymous with the category.
Their strategic position calls for risk-averse steward-
ship of the brand; they avoid rocking the boat. But
because of their heft, they can shape markets and
consumer preferences more adeptly than brands
in the other quadrants can. Coca-Cola, for example,
recognized consumers’ shift to less sugary and less
carbonated drinks and successfully led the market
migration first with its diet brands and then with
its Dasani water brand.

The primary competitive challenge to main-
stream brands comes from peripheral and un-
conventional products that could become central
as consumer tastes shift. Take vacuum cleaners.
iRobot’s Roomba sells more than a million units

produced by mathematical modeling of the data. In
practice, sales volumes are affected by many factors,
and for many firms, shifting position by one point
would require an overwhelming commitment of R&D,
marketing, and other resources. However, the mes-
sage is clear—and the opportunity very appealing. In
fact, increasing centrality is a key strategic goal for
the highly distinctive, pricey, all-electric Tesla.

In contrast, increased distinctiveness is asso-
ciated with lower sales volume for both cars and
beer, though the effect is less dramatic. Our analysis
suggests that increasing a brand’s distinctiveness
by one point would reduce annual sales by about
144,000 units for a car brand and about 8 million
barrels for a beer brand.

Price. If higher distinctiveness results in lower
sales, why do so many brands aim for the crowded
higher-distinctiveness quadrants? (Together these
account for more than 65% of beer sales volume,
even though being more central yields higher sales
volume.) The answer lies in the higher prices that
more distinctive brands can charge.

Porsche, the most distinctive car brand in our
survey, had the highest average base retail price. The
most distinctive beer brand, Guinness, also had the
highest retail price. For cars, a one-point increase
in distinctiveness is associated with a retail price
increase of $12,900, on average, per unit. For beer,
a one-point increase translates into a retail price
increase of about $2.59 for a 12-pack.

Centrality, on the other hand, tends to be nega-
tively related to price in both categories, though the
reduction was not statistically significant for cars. A
one-point increase in centrality in the beer category
was associated with a reduction in retail price of
about $1.10 for a 12-pack.

Strategic Implications
A brand’s position on the map can vary dramati-
cally depending on the customer segment, region,
or other factors. In our national survey of cars, for
example, the Subaru brand was considered neither
central nor distinctive; however, a survey of con-
sumers in the Northeast would most likely position
Subaru in the aspirational quadrant. Likewise, older
consumers would probably perceive the Cadillac
brand as aspirational, while younger consumers
would most likely give it a peripheral position.

Regardless of where a brand falls on the map, its
position should reflect a company’s strategy and be

Aspirational brands must
defend against challengers
from the mainstream and
unconventional quadrants.

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June 2015 Harvard Business Review 95

not that far from its sister brand, Kia,
and second-tier Japanese brands such
as Mazda. Finally, peripheral brands
are more likely than brands in the
other quadrants to exit the market
(Pontiac and Saturn are examples), but
their low-cost business models can be
designed to fortify their relatively un-
competitive positions. RC Cola, for ex-
ample, has survived in its category for
almost a century.

Unconventional brands. Brands
in this quadrant are niche players.
Their business models must be de-
signed for profitability at low volumes,
as those of Mini and Dos Equis are, or
their position in the quadrant must be
a stepping-stone for greater centrality.
Efforts to become more central can
include making the brand’s unique
features more mainstream (as Tesla
is doing, for example, by promoting
policies that favor electric cars) or
adding mainstream features (Stella
beer is now available on tap as well as
in bottles). A reasonable strategy for
Tesla and Stella would be to migrate

from the unconventional to the aspirational quad-
rant. This would increase sales volume without
compromising distinctiveness (and the premium
prices that go with it).

How to Use the C-D Map
As we’ve shown, brands’ map positions carry stra-
tegic implications. Using regression analysis, com-
panies can create what-if scenarios for a range of
strategies to move a brand along the centrality or
distinctiveness dimension and assess how those
moves would affect sales or profitability. By map-
ping the positions of its brands (and competitors’)
over time, companies can develop an understand-
ing of the costs associated with different strategies
and the impact that the resulting shifts in position
have on brand performance.

We see five potential applications of C-D mapping.
Assess your brand’s positioning strategy.

Brand managers typically believe that their mar-
keting differentiation strategy distinguishes their
brand in consumers’ minds and accounts for its
sales. Measuring customers’ perceptions of a brand’s

annually, and robotic vacuums claim 15% of the mar-
ket. These unconventional products are now posing
a legitimate threat to mainstream incumbents.

Peripheral. These brands tend to follow a “me
too” strategy. They offer benefits similar to those of
more central brands; consumers typically buy them
as substitutes, generally because they are attracted
by lower prices or have minimal engagement with
the category. Peripheral brands, on average, pull in
neither the volume of more central brands nor the
price premium of more distinctive brands. Still, this
can be a viable position for brands with business
models that call for low marketing and innovation
costs—such as generic or private-label players in the
pharmaceutical and grocery industries.

Peripheral brands may attempt to shift their po-
sitioning by adding distinctive features or launch-
ing advertising campaigns, but this is an uphill and
expensive battle. Over the past decade, for instance,
Hyundai has introduced longer warranties and lux-
ury models such as the Genesis and Equus. These
moves have boosted sales volume but have not
budged Hyundai’s position as a peripheral follower,

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96  Harvard Business Review June 2015

Manage global brands. Many companies that
attempt to manage global brands in a standardized
way find themselves stymied by differences across
markets. C-D maps offer a way to visualize differ-
ences in consumer perceptions and in performance
across markets. Consider Chevrolet and Tide. Both
brands are highly central in the United States but
score relatively low in centrality and distinctive-
ness in emerging markets such as India. The ability
to gauge these differences is useful on three levels.
First, it helps a firm set realistic performance goals
for a global brand across geographical markets.
Second, it helps explain differences in cross-border
performance. And finally, it helps global manag-
ers make decisions about brand standardization
versus localization.

Track and analyze results. Managers often
struggle to quantify the impact of their marketing
efforts on consumers’ perceptions. The two dimen-
sions that C-D maps track—centrality and distinc-
tiveness—are shared by all brands and remain rel-
evant over time. By repeatedly charting the position
changes that result from marketing initiatives, mar-
keters should be able to gauge how their (and their
competitors’) actions affect consumer perceptions.

For example, companies should tie pricing dis-
ruptions (such as E-Trade’s slashing of brokerage
fees) or focused advertising campaigns (Apple’s “I’m
a Mac…I’m a PC” campaign) to movements of brands
on the C-D map to yield insights about what drives
consumer perceptions—and brand performance.
The more frequent the mapping, particularly in
categories that have a lot of innovation and market
churn, the clearer the resulting picture.

WHICH QUADRANT a brand occupies on the C-D map
reflects the firm’s strategy, capabilities, and the na-
ture of the market, but that position isn’t set in stone.
Companies may, for good reason, shift a brand’s
location—to exploit less crowded territory, for ex-
ample, or grow sales. Unconventional brands may
seek to become more central in consumers’ minds
to gain market share, as Tesla is doing. Peripheral
brands may also see opportunities in becoming more
mainstream, as Kia has.

By allowing a firm to evaluate a brand’s strategic
position, assess the risks and rewards of shifting it,
and monitor progress along the way, C-D maps can
help ensure that the investment pays off.

HBR Reprint R1506G

distinctiveness and linking that statistically to per-
formance provides an instant check on a strategy’s
effectiveness. For example, if the marketing goal is
to maximize price, but the brand is becoming more
mainstream in consumers’ minds, the C-D map will
reveal the disconnect between strategy and objec-
tive. Companies can then use the tool to assess
whether strategy adjustments are having the desired
effect on business performance.

Track the competition. Conventional maps
usually gauge consumer perceptions about nar-
row product characteristics. For example, a map
may evaluate brands of beer on bitterness and
foaminess. However, neighbors on such maps aren’t
necessarily competitors. Heineken and Old
Milwaukee may be equally bitter and foamy, but
they don’t directly compete.

C-D maps overcome this sort of challenge be-
cause they reveal a brand’s location relative to
others in a way that reflects consumers’ mental
representations of the category. This helps focus
competitive efforts on actual rather than perceived
competition. For instance, it may come as a surprise
to managers of the Lincoln brand that their brand
is closer to Chrysler than to Cadillac in consumers’
minds. Similarly, while Dodge and Chevrolet might
consider themselves competitors, C-D maps suggest
that consumers perceive substantial differences
between the two.

Manage your brand portfolio. Because C-D
maps can be made for any brand in any category, they
allow companies to compare brand performance and
strategy across categories. Thus a company that sells
multiple brands of different product types could use
the maps to allocate resources objectively across cat-
egories. Suppose the consumer goods conglomerate
Unilever wanted to increase sales of two brands that
are noncentral in the U.S. market: Tigi in hair care
and Degree in deodorants. Using C-D maps, it could
estimate the amount of marketing resources to allo-
cate to each brand (after controlling for category size
and advertising expenditures) to achieve a given ob-
jective—for example, a specific increase in centrality
that would yield a specific increase in sales volume.
The C-D map not only would help Unilever stan-
dardize and provide a rationale for budget allocation
across brands but also would allow the company to
track how effectively marketing dollars were uti-
lized by the brand teams, by measuring how far the
brands moved on the maps.

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