High-touch offline interactions have been replaced by instantaneous digital interactions. The variety of products has gone up from a small number of well-known brand names to an increasing number of niche brands. In order to compete in this new economy, businesses need to be more creative, act faster, and comprehend the needs of their customers.
If category creation is done right, the path less taken can easily be considered the gold standard for any CMO. It can be measured in terms of its impact on a company. A framework for building your company and product around a big idea is called category creation. The Harvard Business Review looked at Fortune's lists of the 100 fastest-growing US companies. The 13 companies that were instrumental in creating categories accounted for 53 per cent of revenue growth and 74 per cent of market capitalisation growth over the three year period. It should come as no surprise that companies that create new markets are more valued by investors than companies that only make small innovations. A game-changing product isn't enough to create a category. For category creation to be successful, there needs to be a consistent vision throughout the entire business. It improves internal focus and helps the c-suite allocate resources and be efficient with go-to-market activities.
Amplifying brand value helps people recognize that the existing category is centred on the wrong problem and that a completely different problem needs to be solved in order to create a new category. All of the brand's efforts should be focused on satisfying this new market after that. In order to create awareness and recognition of the new challenge, there needs to be more investment in knowledge building and dissemination. Marketing in the digital age can really shine. Community-building can be used to accomplish much of the lifting at this stage. Brand in category creation comes into play here. A brand becomes more than just a product when it represents values. It makes people part of the community. Are you a Starbucks person? The brand gave customers a third place to hang out, away from home and work. Starbucks customers showed up in droves to help create a modern coffee shop that is now deeply woven into the social fabric.
The community and connections need to be bridged.
Many people think that category creation is the sole responsibility of the products or services department. Change is driven by brand marketers. The demand for new categories is created by a brand's evolution and its communities. Some of the brands that weren't the first to enter their markets were the first to brand their markets. Most of the brands created emotional connections with their communities and consumers. They were the first to make us want to go somewhere else. The brands had to come up with a marketing plan to explain why the conventional approach is not effective in the face of a better option. Premium content costs will go up and the marketing budget will be stretched. The category creation costs will pay off as the brand will have established a thriving community that will expand over time and solidify its market position.
The risk is worth it. It is possible for brands to transform their businesses through the creation of a new category, but doing so requires big ideas and a team of decision-makers who are innovative at heart. It may require a financial commitment above and beyond the marketing budget. A higher degree of risk is involved. Some new categories will fail or take a long time to catch on. Most CMOs won't venture down this path for fear of the unknown and the assumption that category creation is best left to startup. They were wrong. The key innovation that allowed Apple to shift from computers to consumer electronics and media was the launch of iTunes. Nike is a great example of a legacy company that uses a Next-Gen approach to stay ahead of competitors and capture the attention and loyalty of their customers.
The views expressed in the article above are those of the authors and do not represent the views of this publishing house. The author is writing for himself or herself. They are not meant to represent official ideas, attitudes, or policies of any agency or institution.
This article has certain tags assigned to it.Magazine 11 Feb 2023