The challenge of defining a new product category
TL;DR
- Category defining products are addressing a job that is underserved — or not served at the same level of abstraction — by current, established products.
- People will always think and hence tend to compare new products with existing products and product categories.
- This poses a marketing challenge where a new product has to be explained via relying on existing categories — and at the same time pointing out the differentiation of the new product.
To be honest, the title of this story is misleading — as we should be talking plural here, its “the challenges” of defining a new product category. The challenges pose questions to be answered — but also bring some potential benefits along, that one can reap, if product category definition succeeds. All this shall be addressed in this article. As a side note, in this article (and already the title) I will talk about product a lot — but all said here applies to all sorts of value propositions, products and services alike.
Before diving deeper into the challenges of category definition and creation, we have to talk about where the line is between a new category, vs a mere deviation from an existing product category. To do so, I suggest it might be best to look at products or services through the lens of jobs to be done (see jobs to be done theory, Christensen). New product category definition implies that a company launches a value proposition of a novel kind, one, for which no real category or box exists, making comparisons to established solutions difficult. Many companies claim that what they do is category defining — and just as many venture capital funds are looking for “category defining” products. Yes, it sounds more radical, more disruptive, of course it has an appeal.
This article will touch on several examples of category definition. Let’s answer the definition question of category definition with a first example: energy drinks.
Energy drinks did not start with RedBull, but they were certainly brought to the mainstream and western markets through RedBull and it’s Austrian and now late founder Dietrich Mateschitz (†10/2022), who discovered sodas enriched with supplements such as taurine or caffeine in Thailand. When trying to introduce the drink, that was semi-popular in Asia, to the western markets, Mateschitz encountered a lot of resistance. “What a disgusting lemonade”, was a most common answer. Tastes aside, as they are wildly subjective, the underlying issue is another one: RedBull is no lemonade. It’s trying to get another job done. In Thailand that was clear: RedBull was marketed and mostly popular among truck drivers — with the job to be done of keeping them awake on long distance rides. This is an entirely different job, compared to the lemonade’s “refreshing and taming thirst” job.
[bar-fact box]
Here is a few interesting facts related to RedBull:
- RedBull sells about 8bn cans per year, globally
- The majority of the company still belongs to the original Thai-Family
& initial product creators
- One of the biggest RedBull production & filling sites is in Switzerland
(next to Austria). The value of exported RedBull from Switzerland is greater
than the value of Swiss exported cheese & chocolate combined 🤯
This brings us to challenge no.1, the main challenge:
The comparison trap : people compare new things with old things that they know
The problem associated with this is, that a new product has to be just as good as the old product — in the eye of the user, along the old and known category in which the users sees the new product. Hence, RedBull would have to be just as good of a refresher and thirst tamer, in order to win over a user who thinks of RedBull as a lemonade.
Products that define a new category are usually creating their space somewhere between two (ore more) established categories. While defining their new space, they try to combine aspects of their adjacent and established categories.
In the case of RedBull, the old established things could be lemonade and coffee. RedBull combines aspects of both and users will compare it to the one old thing, to which they see most resemblance. However, RedBull will not win any of those comparisons, as it does not cover all aspects of the old categories — and it was not built to fulfill their same job. This leads to:
The marketing challenge: people must know where you are coming from
To avoid comparisons with false, or not fitting product categories, companies that introduce category defining products must try to make clear that what they are selling is something new. At the same time, one cannot just throw a new category name around and expect people to understand it:
“What is this?”
“An energy drink.”
“A what?!”
While selling a new category, category creators have to appeal to the established categories that users know — while trying to avoid a direct comparison.
This is a tough challenge. How to overcome it? One approach would be to look for the established category to which your new offering is actually most similar and then use that as starting point and differentiation opportunity simultaneously. What do I mean by that? Let’s move on to another example to bring the point across: Google.
Google, when first introduced, was not “the yellow pages” and was not part of the established directory category. Still, this can be used to tell people what it is: “the yellow pages of the digital age”. People will know it is somewhat of a directory — but online, for the internet and digital age. You could not just go out there and throw the term search engine around, people would not get it.
Another approach is to again take one of the established products/categories most similar to the new offering and add a differentiator that speaks to a special user group. So your new product could be the x for professionals, or the y for athletes, or the z for women. This way, its immediately clear where you are coming from — people understand this — and you differentiate your new offering at the same time.
The marketing opportunity: you can create a new category name
That is, you can try, if you throw a lot of marketing smarts and dollars at it. But ultimately, it will be the consumers and media who decide how your new category is called. In the best case, you brand name becomes the category name: “let me search engine that for you”, nobody, ever. Apart from Google, there are other famous examples where brand names took over product categories, not in all those, the category as such was new: Kleenex (boxed tissues), Tempo (tissues to go), Jeans — Denims — Levis (that one style of pants), Shazam (recognizing music), Hoover (vacuum cleaner), etc.
The product development challenge
There are many mantras in entrepreneurship, one of them teaches to develop products that “do one job extremely well”. But if your new product is a certain job on another level — or simply a job not directly addressed by established products, combining aspects of several jobs, this can be a conflicting mantra.
To elaborate on that, let’s look at the scheduling software category, where the well established Calendly is (finally) getting some competition, even by Microsoft themselves (Scheduler & Bookings). But there is another kid on the block as well: Cal.com. Cal is different, in that it not only takes care of scheduling, it has a video conferencing solution integrated. So you no longer have to link your Zoom, Teams, or Hangouts (video conferencing software) account to your Calendly (scheduling software) account. I don’t know anyone at Cal, nor it’s founding story, but I presume they just looked at the job to be done question from a bit further away. For most people that use a scheduling software, the job to be done (and ultimately the customer success linked to it) is not “scheduling a meeting”, it’s “organizing a meeting”, to which providing a video conference link clearly belongs as well — at least, since 2020.
So Cal is offering scheduling and video conferencing in one product — and it violated the entrepreneurial mantra of “doing one thing extremely well” by design. There are better scheduling options than Cal, and there are better video conferencing options than Cal. Zoom’s features and (potentially unnecessary) extras outplay the video conferencing capabilities of Cal with ease. But Cal does not care, they are operating at a different level of the job of meeting organization. There remaining question is where this market and category will go next. Will it make sense for Calendly to remain a pure scheduler — while offering integrations to all sorts of adjacent job-doers — or will the customer expectation shift to having one solution for “meeting organization”, inclusive note taking and polling and summarization and etc.?
How this is linked to us
Varia Research is a SaaS application for efficient online research. So what is our product category? Research software? Potentially yes, but this is a very poorly defined category, starting with the issue that “research” as a word can be interpreted in many different ways.
What makes Varia Research unique, is that we combine media monitoring and research organization in one application. Similar to Cal, we are looking at the job of research on a higher, more abstract level. With that view of the job to be done, we seek to eliminate workarounds and fragmented tool chains. Users should be able to monitor their topics and research areas in the same place as they store all the found research information — one story, one place — is how we think about research. Similarly to Cal, we have chosen this level of abstraction by design, integrating several jobs in one application, with the goal of providing efficiency gains.
Our beachhead market is journalism, where the overall process for a journalist looks like above (simplified). So far, the three boxes of research are done in different applications: the finding is done with products from the search engine category, the saving and organizing is done with products from the bookmarking category — or not at all (you would be shocked). Keeping up to date is achieved with media monitoring solutions, if necessary.
For a long time, we were not aware that we are to some extent defining a new product category with Varia Research. It dawned on us, when we got a similar question more than once: “are you building a new Google, or a new Pocket (a bookmarking service)?”
Well, both and neither. This is exactly the analogy dilemma that I pointed out above; people think in products and product categories that they know — and they will compare your product to those. Varia Research is not a search engine and it will lose a search engine type comparison against Google on any day. But, that’s fine. We are not trying to build a better search engine, we are trying to enable efficient online research. We even invite users to continue to use Google and other search engines — and then save what ever they have found in Varia Research — where they can collect all sorts of documents in smart dossiers (one story, one place) and get automated summaries for all articles that they store (among other advanced features).
Our challenge then, is to further define our category, make clear what we are and what we are not, by relying on and differentiating us from what already exists in the greater realm of online research. Hence we could brand ourselves e.g. as “the smart Pocket” or “the Pocket for journalists”. In a recent article, we were labelled “the Marie Kondo for researchers”. This shows that the analogy towards something known and related can also span to humans, who exemplify traits associated with the new product.
In any case, marketing, for all companies that try to launch a category defining product (to what extent it’s actually category defining does not really matter), will always have to receive special attention. To establish a new product category will take more time and consume more money.
To close the loop, let’s look back at what RedBull has grown into: a marketing powerhouse. While one could criticize that RedBull is “only” marketing, one also has to acknowledge that they are very successful with it. After all, at the bar you order a Vodka-Bull, not a Vodka-Energy-Drink.
Thanks for your time. All feedback and comments are welcome. Where do you see challenges and opportunities related to category definition? For instance, how do you think about Beyond Meat and the like? Are these companies in a category defining challenge — or are they addressing the same providing tasteful nutrition job and are hence rightfully compared to known, established products?
This article was researched using Varia Research.
