So You Want to Create a New Category!?

Over the course of my career, both inside of companies and as a consultant, I have come across many people who state that if you don't like the category you're in, then change the category. That has become somewhat of a marketing mantra. The problem is, it is wrong.

Categories exist in people's minds. There is a search engine category, a fast food category, a luxury goods category, etc. Categories are collections of companies meeting similar needs. Categories do not exist because someone has decided they should. Rather, they exist because the market has put them together. It is the market that determines if a category exists.

Let's look at a few examples: FaceBook was a new type of social networking site, but it joined the category of social networking sites with MySpace, YouTube, and others. It did not form a new category. It positioned itself as point of parity against its competitors--that is, like but better than others. It's value proposition was that it fulfilled a need and interest other sites did not. When Google came into the search engine market, it did not try to form a new category. One already existed called search engines. It too sought out a point of partity differentiation.

Recently, I heard a Wendy's commercial in which it says it is "way better than fast food". Really? There is a fast food category. What category is Wendy's in if it is not in the fast food category?

Al Ries, the brand expert, talks about "category before brand". People think category first and then seek the brand that defines the category.

It is possible to create a new category, but that can only happen when there is a disruptive technology that allows a company to change the entire way something is done. As Clay Christensen of Harvard Business School, the creator of the concept of disruptive change, notes, this type of change occurs when an industry is doing things in a certain way and then something comes along to change the way it is done. It can create a whole new category because it is so different. The Internet was such a disruptive technology. It helped to create whole new categories that never existed before.

Just because a company believes it may have a better value proposition than its competitors does not mean that it can create a new category, even if it does not like the category that already exists. Differentiation is important in brand and reputation, but differentiation does not mean a different category.

There is a brilliant article in the current issues of Corporate Reputation Review by King and Whetten who note that there is a difference but a link between what they call ligitimacy and reputation. Companies they note must first establish legitimacy within their industry group. Reputation is being distinguished from peers. It is a great concept. Similarly, brands must establish their legitimacy within their category and can enhance their equity when they are distinguished. But, it takes a whole new way of doing things to create a new category.