The procedure for constructing a strategic group map and deciding which firms belong in which strategic group is straightforward:
1. Identify the competitive characteristics that differentiate firms in the industry such as:
(i) Price/quality range (high, medium, low);
(ii) Geographic coverage (local, regional, national, global);
(iii) Degree Of vertical integration (none, partial, full);
(iv) Product-line breadth (wide, narrow);
(v) Use of distribution channels (one, some, all); and
(vi) Degree of service offered (no-frills, limited, and full).
2. Plot the firms on a two-variable map using these differentiating characteristics.
3. Assign firms that fall in about the same strategy space to the same strategic group.
4. Draw circles around each strategic group making the circles proportional to the size of the group’s respective share of total industry sales revenues.