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Read Time: 4 Minutes 08.09.2017 Strategy

Category Creation: The Power of Defining Your Buyer's Problem

With technology continuing to lower barriers to innovation, bringing a SaaS product to market has never been easier — and becoming an unrivaled industry leader has never been more difficult.

Technology is also allowing us to create completely new ways to address problems. Often those approaches are so different that they require a new way of thinking in order to really understand the benefit. That is a real challenge. You don’t want to put your sales team in the position of having to dig the hole for the customer before they get to tell them how your product can do a fantastic job of filling it.

Category design is the art of creating a compelling picture of the hole that exists in the market then ushering your customers into an urgent desire to want to see it filled. It is about introducing a different way of thinking, a new understanding of what is possible, the ability transform the status quo and allow something that was never before possible to occur.

Once that understanding is reached, then you are ready to introduce your solution. And since you are the one who helped them understand the void, of course you are the most qualified to fill it for them. When that void represents a significant market problem being a category creator is a powerful and enviable position to aspire to.

Let's take a look at the value of market categories, including one company's success with establishing a new category, and the essential elements needed to create your own.

The Importance of Market Categories

When you define the market problem better than anyone else, your buyer will assume that whoever best defined the problem would naturally have the best solution. For category creators, that assumption is an incredibly powerful market force. In 2013, researchers discovered that, out of 100 companies, the 13 companies that were instrumental in creating their market categories accounted for 74% of market growth in the timeframe they examined.

Concert Genetics is a great example of the power of category creation. Their team is on a mission to provide tools that connect, unify & simplify the world of genetic testing. They are addressing a huge problem with lots of dollars at stake. The world of genetic testing is growing so fast that it is virtually impossible to track. New genetic tests appear on the market daily focused on highly specific issues. Even the most experienced physicians can’t now for sure if they are ordering the best test for their patient and insurance companies have no idea if they should authorize test “A” that cost $250 or test “B” that is $2,500. Concert has been working for years to develop a framework that brings this information together in one place to provide fast, clear and accurate information to empower informed decision.

Since the lack of clarity in the genetic testing realm is a new and fast growing problem no one had ever stopped to consider what this reality should look like. This was Concert’s opportunity. They have the broadest view and experience of the genetic testing ecosystem of anyone in the market. This afforded them the ability to knowingly paint a picture of the way the world of genetic testing should be and show how they fit in that picture.

Their “ah-ha” moment came in the context of a positioning workshop when they recognized that they needed to define their category in order to give their buyers a clearer sense of who they are and the problem they are trying to solve. Using that as the foundation, we helped them create a category called the Genetic Health Information Network. It sounds ubiquitous, like it has been there forever, but it hasn’t. The creation of a cooperative exchange of information designed to raise the level of the whole science has not existed — until now.

The newly-defined market category is bringing together disparate groups from across the genetic health ecosystem and rallying them around the same goal: unifying, connecting, and simplifying the genetic testing space in order to empower smarter decisions and better care.

In order to announce their new category, Concert published a “Vision Paper” that outlined the core pillars of the Genetic Health Information Network and invited readers to become part of the movement. They sent that document to 100 top stakeholders in the space, which also generated press recognition. They are planning a GHIN conference this fall where many of those stakeholders will come together to present and discuss the most pressing topics in their field. In doing so, Concert has established themselves as the de facto category leaders.

How to Define Your Market Category

The message is clear: Effectively create or define your a category around a real market problem and you are positioned to win big. However, in our experience, the road to defining and dominating your market category can be difficult. Here’s what you need to get started:

1. Courage: Don’t start the conversation unless you are willing to take some risks, because designing a new category and introducing it to the market is not for the faint of heart. It will require time, energy, and resources. It will also ask you to drop comfortable assumptions and sacred cows in order to explore the potential of your company to truly stand out in the market.

2. Clarity: Category creation starts with your differentiator. It may be your product itself or it may be your approach, but whatever you are bringing has to focused on a real market problem that, when identified, will elicit a response.

3. Story: There has to be a story, or point of view, behind your brand. You can think about it like a personality: when buyers understand who you are, it helps them know what to expect. Companies with a strong market presence carefully structure their persona in ways that appeal to their target audience. Your POV should drive category design, steer product development, and permeate the company culture.

4. Commitment: Designing a new category is an intense deliberate process that lands with a dramatic and powerful declaration. Announcing your market category can’t just trickle out. It needs to be an unmistakable storm of communication across a variety of appropriate channels, such as Concert Genetic’s targeted communications campaign and inaugural conference. Half-baked efforts here will be doomed to fail.

A well-formed category surrounds a real market problem and clarifies it in a way that no one else has yet attempted. That clarity inherently drives demand. It positions category creators as leaders in the space and ultimately attracts buyers, users, and investors.

You can consider this article an introduction to the seminal work on the topic: the book Play Bigger by Dave Peterson, Christopher Lochhead, Al Ramadan and Kevin Maney. They defined and distilled the idea of market categories to express what we in action every day in the course of our work with clients.

Once the above aspects are in place, you are positioned to explore category design. If you feel like you have these critical aspects of category creation covered, then you are in an exciting place. We’d love to hear your story.

John Farkas

John Farkas

CEO/Storyteller John founded Golden Spiral to help companies uncover a market-focused story that will transform the way people see their world.