Category Creation: 4 Reasons to NEVER Do It

Aug 13, 2021

You've read books on category creation like Blue Ocean Strategy, The 22 Immutable Laws of Marketing, Differentiate or Die, Play Bigger.

You’ve listened to all of the podcast episodes mentioning category creation or category design.

You’ve followed tech startups’ success stories like Drift, HubSpot, or Google that created new categories with success.

Books that talk about category creation

Who doesn't want to live in a world where their product is the only product in a specific category that they’ve just created, where they are the de facto leader, where they inspire everyone, where they have no competition, where they're living in this pristine blue ocean with no sharks in sight?

It seems like creating a new category is the best way to stand out. You can grow like crazy whether you’re a small business or a big one, a consultant or a freelancer. You just have to come up with your own category; everyone flocks to you because they love you. Then they buy your product.

Boom. Job done.

It's the way to go, right? ...Right?!

Please, I beg you, don’t try to create a new category

It may not end well.

→ Reason #1 - Most “category creation” case studies are not about creating a category

Those companies might have sailed to the edge of the red ocean full of sharks, but they have not left it. It might sound like a small distinction, but it's not.

The authors of Blue Ocean Strategy give this example of the air fry maker, developed by the French company SEB. It's not using as much oil as other fry makers (40% fewer calories and 80% less fat, to be exact), but, and this is important: it’s still a fry maker!

Air fry makers are not a new category

It's not a new category. It's a subcategory. Everyone knows what a fry maker is, so you don't need to educate the market about it.

There lies the crucial difference.

SEB is using the existing “fry maker” category to their advantage. They are leaning against it, playing inside that box that the market is already familiar with.

They don’t need to “educate the market.” They just need to focus on a group of people who can’t wait for such a product (in that case, probably folks who want to lose weight).

→ Reason #2 - It requires more resources than you probably imagine

Pulling a “category creation” move requires more time, more influence, more resources than you probably think.

April Dunford on why category creation won't work for most entrepreneurs

April Dunford, positioning consultant and author of Obviously Awesome:

What we're doing is so amazing. It's so wild. It's so out there it's still revolutionary. It doesn't fit in a bucket anywhere. So I got to create my new market to do it.

This is actually the most difficult style where you first have to prove to people that your market deserves to exist. And then you got to position yourself in that market as the best choice. As a solution in that market.

It takes money, time, effort. The reward is great because you define the market to be perfect for your solution. So if you convince me it exists, you've got a good shot at being the leader of it. But it's hard. Generally, only big, venture-backed companies with deep pockets and very mature, patient investors can pull that off.

One of the toughest challenges of marketing is to attempt to change people’s minds and habits. A study mentioned in Play Bigger states that “it takes on average six to ten years for a category to be effectively created.”

Why does it take so long? Because humans are humans.

For a new category to be created and a product to become mainstream, you still need to reach the innovators, then the early adopters, then the early majority, and then the late majority and laggards.

Word-of-mouth remains essential for things to spread. You need early adopters to take a leap of faith because they like the new and shiny. They need to spread the word to the early majority, who are much more conscious about their purchase decision.

Those things take time. Years, actually. And money. Millions of it.

Here’s a famous example to illustrate this: Drift.

They’ve created the “conversational marketing” category a while back and have been mentioned on every marketing podcast on the planet.

They've raised more than $100 million to date thanks to their seasoned founder, David Cancel, who has built and sold multiple startups before:

Just because one person successfully creates a new category doesn't mean you should

He’s not your stereotypical founder, and this wasn’t your stereotypical startup.

→ Reason #3 - It’s selfish as fuck

You don't get to decide whether you're creating a new category. It's not up to you to say.

A new category happens due to your obsession with a specific market, solving a particular problem. That problem is usually new thanks to a massive political, environmental, cultural, and/or technological shift.

Take HubSpot, for example. Did they deliberately create the “inbound marketing” category?

Here’s what Meghan Keaney Anderson, ex-VP of Marketing for HubSpot, says:

Let me be clear. I do not think that you have to create a category. I think that you have to name the enemy, and so inbound marketing became a category.

But with or without that category, we still needed to name outbound [marketing] and irrelevant ads as the enemy. So it's more about whether you need every sales rep to be able to say we're the anti chaos at work or we’re the anti form. What's essential to name is what you're fighting against, not the category you're in.

Meghan Keaney Anderson on why you shouldn't create a category.

Certainly, category creation is a strategy that people do. It's not always easy. Right? It depends on the field you're in. Why add more work so that you have to explain the category before you can explain the product you’re selling?

We did a really good job nailing the enemy, so we didn't go out there saying we have to create a category.

Look, I understand.

We all have this desire to be unique, to make a dent, to crush our objectives.

But we must put our ego aside and obsess over a small group of people for long enough so that the category gets created thanks to that work.

→ Reason #4 - Your product is not as different as you think

Whether you’re an in-house marketer or a founder, chances are, you already know too much about your category, your direct competitors, and your product to be objective. Youngme Moon, the author of the excellent book Different, has a name for it: category connoisseurs.

If you think you can build a new category from scratch because your product is slightly different from the competition, think again.

Your market doesn’t see it this way.

For your prospective customers, you are all the same.

“The niche thing:” a much better alternative to creating a new category

You can still stand out from the competition and ‘own’ a specific market without creating a category. April Dunford, again:

People are scared to do the niche thing because they think it's so small, they're like, ‘Oh my God, I'm supposed to be a billion-dollar business here. How am I going to be a billion-dollar business? I'm only still in investment banks. That sounds bad.’

And the reality is, look, you're only selling investment banks right now, but once you get investment banks, then you're going to get insurance companies. And once you get insurance companies, then you're going to get retail banks. And then once you get retail banks and you're eventually going to get the whole thing, this is Geoffrey Moore's Crossing The Chasm bowling pin strategy.

You knock over the lead pin, and then there are all these adjacent pins that you can now knock over because now you've got credibility and traction in the market. And that's how every big company starts practically is where they say, well, you know, we're just going to get this one thing. When we're bigger and have more force behind us, now we can take on a leader in something bigger.

But when you're just little, you just need to survive it. Like most of the startups I work with, they'll say, no, it’ll be too small. And I'll say, well, how many deals do you need to do this year? 10, like, you know, let's just make a list of a hundred companies we'd go after. Just do ten deals.

Don't worry about where you are going to be ten years from now. Let's just survive this year and nail our number this year. And then we can expand it out later. It's not like we're saying, ‘Oh, this is our positioning for all time.’ This is our positioning for the next six months, dude. And we're going to run it that hard.

And then we're going to look at it six months from now and say, ‘You know what? That's too small for us now. Cause we're so cool.’ And we'll broaden it out.

Going niche is the way forward.

You start small with a small market.

You make sure that you are the de facto kind of leader in that small market for this specific category.

And then you can expand.

Three steps to niche down

1) Pick your minimum viable market

There are a few questions to ask yourself to pick the right market (or, as Seth Godin would call it, your minimum viable market) to start with:

  • Who stays awake at night, staring at the ceiling because they really want to solve the problem and the pain you solve?

  • Who wants to reach that goal the most? Who is really desperate to move?

  • Who loves you the most?

  • Who hates the things you hate?

  • Who has the money to pay?

2) Obsess over that market

Forget about your needs and obsess over that market. In the words of Seth Godin in our first episode together, “build a fort high enough that everyone looks and then say, ‘I could never build a fort that high!’”

Focus on one thing.

One market. One niche. One category. So you become the de facto leader.

3) Become “the only”

The intersection of your category, your minimum viable market, and the value you provide is what enables you to become radically different and dominate your niche.

Three examples of “the niche thing”

→ Example #1 - La République En Marche

La République En Marche (LREM) is a French political party created by Emmanuel Macron (who’s now the French President) in 2016. He didn’t try to create a new category by stating that LREM was not a political party.

Instead, he used what was expected of a typical French political party to succeed but challenged a few norms inside it.

LREM didn't create a new category. They differentiated their political party.

He prohibited “career politicians” to have multiple jobs at the same time to focus entirely on their mission. He avoided picking a side between Left or Right to appeal to the portion of the French electorate sick of endless debates between the two sides.

I'm not trying to be political here.

I just want to give you an example outside of Big Tech to show you that this strategy is used everywhere.

As a result, LREM became the only French political party (category) that goes beyond Left vs. Right (value) for people disenfranchised from politics (market).

→ Example #2 - Pepsodent

When Pepsodent launched in 1915, toothpaste was made out of charcoal and sold in big, cumbersome jars. They didn’t aim to create a brand new category but chose to challenge its norms.

Pepsodent didn't create a new category. They differentiated toothpaste.

They replaced the jars with tubes to make the product more convenient and added their famous “minty fresh” ingredients to form deeper habits.

As a result, Pepsodent became the only toothpaste brand (category) that gives a fresh sensation (value) for middle-class America (market).

→ Example #3 - Nintendo

Nintendo started selling playing cards more than a century ago (in 1889, to be exact). They became a sensation in Japan when they started to sell video games with their Nintendo Entertainment System (or NES), but they were unknown in the US, a big market for them.

Nintendo didn't create a new category. They differentiated games.

Instead of orchestrating a gigantic national launch, they tested the waters in New York City first. The launch wasn't a massive hit, but they got enough sales to move ahead.

Nintendo did not create a new category; they were part of the third generation of video game consoles. But they were the first to offer the ability to play popular arcade games such as Donkey Kong on a home television set.

As a result, the NES became the only video game console (category) with the ability to play popular arcade games (value) for American arcade fans (market).

To summarize

  • I beg you, don't create a category; most of the time, it's much easier to go niche within an existing category.

  • Creating a new category requires more resources than you can imagine; more patience, more time, more resources, more influence.

  • It's a very selfish endeavor; category creation happens as a byproduct of market obsession.

  • The intersection of the category you’re in, the minimum viable market you seek to serve, and the value you provide is what gives you a chance to stand out from the rest and grow.

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