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Owning a New 'Market Space' or Product Category
By Tom Brown, CEO, Power Decisions Group

In additon to all these important brand management functions, I suggest searching for category-building options among your markets, products, and targeted segments.

Category Makers

These brands built new 'market spaces' or product categories. They aimed at newly-discovered needs in the market, or looked at old needs in a fresh way.

Brand

Old Category

Opportunity / New Category Created

Starbucks

Coffee Shops; bars

Premium coffee drinks in a social, fun place

FedEx

Airfreight

Overnight & small package air express

Amazon

Bookshops; Big Box Bookstores

Online book shopping; reading habits information

TiVo

Watch-as-broadcast TV

On-demand watch-when-you-want/what-you-want TV

Healthwise

Unreliable information; medication-only treatment model

Information therapy as a part of treatment

Category-building starters.

  1. If you create it, you own it. Creating a category or niche means that, at first, you own it. While market development and ramp-up costs can be high and time horizons long, owning it means high eventual ROI. Once established your category-domninant brand will likely have a high and profitable market share.

  2. Categories live in customers' minds. A product category exists in the mind of a customer. Brand managers may describe the category, and suggest ways to invent new ones, but how the category is viewed depends on the customer and her needs, concerns, and buying motives.
  3. Ignored customers. When looking for opportunities, search for ignored customers. Someone in the advertising business told me about the time when she would have to buy a full fare airplane seat to get a package overnight from San Francisco to New York. My own story recalls asking a clerk in a book store if I could get fast delivery for a book gift, or if there were similar titles he had in stock. The answers were 'no' and 'no'.

    Ignoring customers and lost customers means not listening to them in an organized way. Conducting 'voice of the customer' research is a must..

  4. Well established competitors. Category-building opportunites emerge when competitive players are seemingly immovable in the "old category". Xerox in copiers, independent and big box book stores, US Postal Service, Airborne Freight all come to mind as well entrenched and sassy competitors when the category was changed on them by innovators. Of course, many dominant players stay that way, continuing to define and own their categories: Coke, Tide, Heinz, Hershey, Wells Fargo, eBay.
  5. Asleep at the wheel. Whether an "old category" consists of many players (book stores), or a few (airfreight), they may become complacent, looking to the past, and have tunnel vision. This can be a seedbed for opportunity for the innovator to redefine the business, the products, and establish a new category and, possibly, brand leadership within it.
  6. Airfreight companies were blindsided by Fred Smith and FedEx when they were caught tied to point-to-point and multiple hub routing. FedEx created a new category -- inexpensive overnight anytime -- by innovating a single Memphis-based hub-and-spoke design.

Steps for creating new categories.

Here are some proven methods to search for and create new categories:

  • Make opportunity scanning an ongoing activity.
  • Basic principles include: 1)Keep an open hopper and an open mindset for new opportunities: it promotes innovation within your organization. 2) Question and challenge your own brands. Look for opportunities to redefine your current category and position your brand as the leader in the newly defined category. Be creative. 3) Know your customers; know the market. Opportunities emerge as you continually listen to customers. Classic market research methods work well for general tracking of customer satisfaction and oppenings for new brands and categories: qualitative research such as depth interviews, customer panels and photo ethnography are a few proven methods for uncovering unmet needs. Surveys can be useful, but they must be designed with opportunity scanning in mind. For example, our design of opportunity scanning research focuses specifically on finding current categories vulnerable to new brands, and new category creation.
  • Position an existing brand within a 'new category' you create. This new category might be a new use for your existing brand, or a newly identified segment. The most famous example of "repositioning" a current category is 7-Up. Through their customer research, they knew that the monster category is soft drinks was colas, not clear lemon-lime drinks. They redefined themselves and their category by positioning themselves against colas when they announced, " 7-Up, the Un-cola."
  • Invest in product research. R&D can be a starting point as many great market-shaking ideas come straight from a lab. Have your development team listen to customers along the way as ideas and technologies are born.

Opportunity scanning research

At Power Decisions Group, we've found one research approach useful to uncovering opportunities across many industries, from technology to consumer products. In brief, it involves measuring customer attitudes and beliefs across two fundamental dimensions: 1) Brand loyalty, and 2)Category satisfaction. The Opportunity Matrix chart shows the generic nature of opportunities either by entering an existing category with a new brand, or modifying or creating a new category. It can be used as a guide when assessing established categories.

Opportunity Matrix

Opportunity Matrix Chart

Other measures include category importance, customer substitute-seeking, and brand loyalty.

Wrap up

Marketing conversations are dominated by 'branding': building the brand, defending the brand, brand essence, brand equity, etc. The brand focus usually has the premise of an existing category, a known battlefield where your brand is fighting it out with a slew of others.

In additon to all these important brand management functions, I suggest searching for category-building options among your markets, products, and targeted segments. The Opportunity Matrix is but one way to think about your markets and the strategies you might deploy to build market share.

Think now about creating a new category; one that your team invents, and one your new brand might own.



Solid strategic intelligence delivers better decisions. Tom Brown, founder of Power Decisions Group, helps clients make important market, product, branding and market entry and repositioning decisions using his straight-forward Decision Pathway model and well-conceived marketing research to quickly move clients to decision points and be faster and smarter in the marketplace. An MBA from UC Berkeley-Haas, Tom counts among his clients many Fortune 500, and mid-sized companies in financial services, manufacturing, technology, and health care.

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