Breaking Through with Category Creation

Category Creation

“The most exciting companies create. They give us new ways of living, thinking, or doing business, many times solving a problem we didn’t know we had – or a problem we didn’t pay attention to because we never thought there was another way.” – Play Bigger.

Category creation is the latest evolution of startup marketing, building upon the principles outlined in the influential books Positioning and Crossing the Chasm, which have shaped startup marketing methodologies well into the twenty-first century. This strategic discipline entails the creation of a new market segment and dominating it over time. It involves not only educating the market about a problem that’s often ignored but also introducing the market to a new category of products or services as the solution.

Category creators establish a new game and make their own set of rules. However, products don’t make new categories by themselves. Founders are responsible for designing a new product, business model, and category at the same time. Here is all you need to know about Category Creation.

Category Creators

Category creators are founders and startups who challenge the status quo, shaping the world according to their vision. They create and subsequently capture the exponential value generated by a new category and ecosystem of employees, customers, partners, investors, and communities.

Think about the time before Uber existed. You had to either wait on the street for a taxi or pre-book one well in advance. However, with the advent of Uber and “Ridesharing,” all it takes is a simple tap on your phone to call a car to pick you up and drop you at your desired destination. This is category creation.

Initially, we did not perceive taxis as a problem until the introduction of “Ridesharing” as a new category. Once the existence of this category became known, it became hard to see how things could be any other way.

Below are a few more examples of startups that have successfully created new categories:

• HubSpot – “Inbound Marketing”: recognizing the shifting landscape of marketing, HubSpot rendered traditional outbound marketing methods obsolete by introducing engagement tactics that drove customer interest. By creating the category of “Inbound Marketing,” HubSpot has fostered a thriving community of bloggers and content creators.

• Asana – “Task Management”: Asana identified the need for improved project and task management within teams, aiming to solve the limitations of email overload and unproductive status meetings. Their belief in finding a better way for teams to collaborate led to the creation of the “Task Management” category centred around transparency.

• Slack – “Workplace Communication”: Slack revolutionalized the category of “Workplace Communication” by providing employees with a centralized platform to chat, share files, and exchange information. Prior to Slack, there was no streamlined solution that allowed individuals to gain visibility into the work of others and different teams.

• Gainsight – “Customer Success”: recognizing the importance of a positive customer experience, Gainsight leveraged technology and big data to improve retention rates, reduce churn, and increase sales. By creating “Customer Success,” Gainsight has established itself as a leader in this category.

• Dropbox – “File Hosting”: addressing the challenges of a digitally expanding world, Dropbox resolved the issue of scattered files and photos across multiple devices. Their digital storage solution eliminated the need for USB memory sticks and created a brand new “File Hosting” category.

• Zendesk – “Helpdesk Software”: Zendesk recognized the shortcomings of outdated customer tracking and incident reporting software. In response, they introduced a new web-based “Helpdesk Software” category that offered a simplified alternative to the often complicated customer service landscape.

• Terminus – “Account-Based Marketing”: departing from the traditional broad approach of B2B marketing, Terminus shifted its focus to a smaller, targeted group of ideal customers. By inverting the B2B sales funnel and creating “Account-Based Marketing,” Terminus solidified its position in this category.

• Canva – “Graphic Design”: Canva’s founder was motivated by a dissatisfaction with the barriers imposed by design software. Consequently, Canva redesigned the category of “Graphic Design” and integrated the entire design ecosystem into a single platform, with the mission of democratizing graphic design and making it accessible to everyone.

Being a category creator does not necessarily require being the first to market with a product or service. Instead, it is about being the first to define a problem and provide a solution that resonates with customers. At the root, all these startups offered more than just a better product or service – they introduced entirely new ways of doing things, occupying distinct categories. Today, they have become leaders in their respective categories and are synonymous with the activities they revolutionized.

Marketing

Marketing a new category presents a unique set of challenges that makes it very different from marketing any other product. The main hurdle lies in starting and growing a conversation that does not yet exist. Building awareness and recognition of a new problem requires more investment in education compared to introducing a familiar but tweaked idea to the market.

Category creation is not disruption. Disruption focuses on developing a better version of an existing product, aiming to compete within an existing market category by being smaller, cheaper or faster. Disruptors typically focus on product marketing and highlight the specific ways their product is better than the competition.

Category creation is about being radically different. You want to help people understand that the existing market category is focused on the wrong problem – that there’s an entirely different problem to be solved, and then aligning every aspect of your company towards educating and meeting the needs of this new market. Therefore, if you want to be a category creator, you must focus on the people within your market, not just your product.

Besides a catchy name, category creation requires the consistent development of thought leadership content. In fact, you will likely spend more time explaining why a problem exists than promoting your product at first. If you can successfully put the people you help, industry influencers, and subject matter experts at the center of the story, you will have a good shot at category creation.

You must also put in intentional effort in building a community. While this advice holds true for any startup, it needs to be taken one step further if you want to be a category creator. You can foster a community by hosting live and digital conferences, producing podcasts and video tutorials, establishing community forums, and facilitating community groups.

Brand

In today’s market, customers are smarter and well aware of companies’ tactics to get their money. However, category creation offers a unique opportunity for you to set yourself apart and to be perceived as different.

Think of the legendary brands you admire – what do they have in common? They’re all category creators.

This is because categories make brands, not the other way around. While Xerox and Dell may have been great brands in the past, they no longer hold the same significance because they’re no longer in relevant categories. When people truly care about your category, they will also easily value your company and brand.

Thus, the more valuable your category, the more valuable your brand.

Ultimately, the goal is to become the leading brand in the category you have shaped over time – a benchmark against which all others are compared. As a result, subsequent companies will need to measure up to your standards and compete with you.

A Different Game

Category creation is a new way of looking at startups. That just like products, services, and business models, market categories can be intentionally created too.

This approach is fundamentally different from the traditional strategy of competing within an existing market category, which is commonly pursued by most startups. It calls for creativity and courage; you must be ready to not play by any existing rules and be clever enough to create your own. Those who do go down this path often find success because they generate a new market specifically tailored to their product or service. Essentially, they’re marketing to a captive market segment.

This is why category creators are so hard to compete against – they’re quite literally playing a different game. And in a world where more and more legacy categories are becoming commoditized, being a category creator is the ultimate advantage.