5 Essentials for Creating a New Market Category
Position yourself for growth in 2017—join us live at the Entrepreneur 360™.
Flash Sale—save up to $200 on registration. Ends Thursday. Secure Your Seat »
There are few professional experiences as exhilarating and inspiring as creating a new market category. There is no greater satisfaction than when customers tell you they can not imagine doing their jobs without your product or that it has changed their lives for the better. Beyond being personally rewarding, creating a new category is typically financially rewarding, too, with greater growth and higher valuations for the company.
All this glory comes with both challenges and frustrations, sometimes even in the same day. It’s not an easy endeavor but with fortitude and perseverance you can make your vision of creating a new category a reality. Having helped create two new categories in healthcare - one of the most risk adverse and resistant to change – I’ve learned a few lessons that can be applied across all industries.
1. Start with the why.
Simon Sinek’s “Start with the Why” provides valuable insight on how great leaders inspire action. When it comes to creating a new category, it is all about the “why”. People don’t buy “what” you do or “how” you do it, they buy why you do it (even though your product managers may beg to differ).
It’s difficult to create a category without inspiring others and getting them to realize they had a problem they didn’t know existed or that fundamentally changes how they interact with the world.
2. Select the right team.
It’s essential to have team members who can talk the talk and understand why things that may not be sensible on the surface, make complete sense. More importantly, they need to be able to communicate this effectively in many different ways to many different audiences, and embrace the challenge to continue to do so. A team will never create the next “Uber” or “LinkedIn” unless they have a balanced mindshare of employees who understand people as consumers. For example, the healthcare industry has failed miserably at this for years because they continue to view consumers only as patients and not consumers.
3. Bigger is not always better.
Even with a huge marketing budget, it’s tough to create a new category. However, it certainly can be done and doesn’t always need to break the bank. In fact, a modest budget is often a driving force in being resourceful, creative and thinking about things differently.
How do you leverage your most passionate enthusiasts? How do you make key influencers gush about you? How do you leverage social media to create unbridled demand for your product or service?
4. Embrace and acknowledge your competition.
It may sound counterintuitive, but when you are creating a category, competition helps legitimize a market and increases the size of the pie. This is especially true for startups: you will actually benefit if others are spending their marketing dollars to help popularize the value of what you are doing. The key, however, is to preserve your first “mover” advantage – being first to market - and continue to find ways to elevate yourself above the crowd, while maintaining both a product and thought leadership position.
Never for one minute believe you don’t have any competition. Perhaps nobody else in the market is doing exactly what you are doing, but your customers always have substitutes such as doing nothing, continuing with the status quo or even doing it themselves.
While it can be frustrating when customers say they are going to build their own solution but don’t be deterred. It can actually end up being a positive sign. It means they see real value in what you are doing and view it as a strategic imperative for their organization. You are well positioned to pick up where they leave off when many of them realize they don’t have the expertise or it’s too expensive to build it themselves.
5. Stay on message.
As tempting as it is when you have a team of passionate, creative people who want to jazz up your messaging, success will be determined in the early days by consistently describing what you do and continuing to repeat the same message over and over and over until it clicks with your audience. Some companies focus on getting a product to market and then marketing it. But it is important to prime the market and spend significant time early on crafting your message, testing it in the market and then repeating it often.
Building a new category is not for everyone. It takes vision, stamina and lots of guts. But when you get it right, there is glory for you, your company and the market that benefits from the new category created.