You have probably heard the success stories of companies like Uber and AirBnb: how they created something completely new and, in turn, dominated their markets. What you might not have known is how they achieved so much success and growth in just a few years.
So, how did they do it? They used a technique called “category design”.
In this blog post, we’re going to go through the basics of category design and how you can start putting them into practice. And if you want to learn more, be sure to watch our category design webinar.
What is category design?
Category design is a business strategy that helps companies carve out their own niche in the market. Instead of competing directly with competitors, who may already have a good share of the market, category design encourages companies to create their own business category and own it.
Category design can take a lot of time and energy, but the results can be worth the effort: becoming a market leader, outperforming your competition, and positioning your company for significant growth and recognition.
How category design works
You've likely heard of HubSpot: they're the first name that comes up when most people think of the term "inbound marketing." And that's because they created the inbound marketing category.
HubSpot was founded in 2006. Do you remember what digital and content marketing looked like in the mid-2000s? It was a sea of banner ads, popups, and blue underlined links. It was all about "interruption marketing" - using flashy and annoying ads to interrupt user and make them shift focus to the ad itself. Standing out was hard because everything was fighting to pull the reader's attention.
And people didn't like it.
The founders of HubSpot had an idea, and that idea became a new marketing category:
"As fellow graduate students at MIT in 2004, Brian and Dharmesh noticed a shift in the way people shop and buy. Consumers were no longer tolerating interruptive bids for their attention — in fact, they’d gotten really, really good at ignoring them.
From this shift, a company was born: HubSpot. It was founded on “inbound”, the notion that people don’t want to be interrupted by marketers or harassed by salespeople — they want to be helped.
Today, the inbound movement continues to empower businesses around the world to stop interrupting, start helping, and return their focus to the customer."
HubSpot saw a need, created a category, named it, and defined it. Then they became the leader in their category. Instead of going head-to-head with marketing automation companies like Eloqua and Marketo, Hubspot instead made a new category for themselves and called it “inbound marketing.”
But even an established business can create design a new category for themselves. Take Netflix, for example. They started as a “movie rental by mail” business, but eventually became the category leader in streaming movie services. Instead of trying to compete with video stores, they created a new category. Today, when you think of “streaming movies,” Netflix is likely the first place that comes to mind.
Designing a new category for your business
Do you want to create a new category for your business? Here's what you need to do.
- Define the problem your product solves.
- Take a good, hard look at your competition. What are they doing? What markets are they serving? And, most importantly, who and what are they NOT serving?
- Position your company to serve that under-served market. What do they need? What difference can you provide?
- Evangelize the category, not your product. Create content explaining why this new category is important. If you create buzz around this new category, and you have the best product in the category, interested buyers will flock to your product.
HubSpot is a master of this. Their blog has provided so much content around marketing over the last 10 years or so. Barely anyone has able to keep up with their pace on educating the market, and all their free online portal applications are top notch.
Of course, establishing a category isn't a short-term project. It can take a decade to become a category leader, so you need to be there for the long term. But if you're willing and committed to creating a new category for your business, the results can be phenomenal — you might even become the next HubSpot.
Want to learn more about category design? Watch our category design webinar on demand.
