If you’re a fan of the TV show Shark Tank or interested in venture capital and entrepreneurship, you know that the best way to succeed is to create a completely new category — one you can own and dominate (think Ikea, Pixar, Netflix, and HubSpot). According to a 2013 Harvard Business Review article, 13 of the 100 fastest-growing U.S. companies from 2009 to 2011 “that were instrumental in creating their categories accounted for … 74% of incremental market capitalization growth over those three years.” Yet despite these highly visible giants, first movers are more often at a disadvantage — according to a 1993 article in the Journal Of Marketing Research, they fail eight times more often than fast followers. Gaining traction with a new category is incredibly difficult.
Why Is It So Hard To Create A New Category?
Some insights come from the award-winning work of Daniel Kahneman and Amos Tversky about how our minds make decisions. In the 2011 book summarizing their research, Thinking, Fast And Slow, Kahneman postulates that we use two systems for decision-making. We mostly use system 1, which involves fast thinking and effortlessly using heuristics and other shortcuts to make judgments instinctively. We use system 2 — slow, deliberate thinking — much less frequently because it’s hard work that requires focus.
When we present B2B buyers with a new category, they aren’t likely to use slow thinking to consider the merits of this new way of solving a problem. Instead, they’re likely to consume this information with their fast-thinking brain, which tends to reject anything that contradicts their existing beliefs.
Position Your Offering For Fast Thinking
Kahneman is careful to point out that the heuristics that lead us away from considering new information aren’t bad … they’re simply “efficient.” Without them, every trip to the grocery store would take forever. As marketers, we must recognize that our audience will take shortcuts and position our offering along these shortcuts instead of at the top of a tall hill of cognitive effort.
Using Kahneman’s insights, we can see how positioning an offering in an existing category gives us an advantage in connecting with our fast-thinking prospects. We can benefit from familiarity bias — not wanting to weigh two options, individuals tend to prefer the familiar over the novel. We can also benefit from priming — those exposed to one stimulus are likely to respond quickly to a subsequent stimulus in the same category.
When Kahneman and Tversky talked about food in front of their research subjects, then asked them to fill in the blank in the word “so_p,” they got answers that differed significantly from those after they talked about cleaning. Similarly, when we mention an established category, we bring to mind a set of attributes and qualities associated with that category. Moreover, we can prime the buyer for how to think about the category — describing our offering as the “most feature rich” in the category primes the buyer to assess other offerings in terms of how many features they provide.
Position Your Offering Wisely
Choosing a category is only one element of positioning. Our recent report “Positioning An Offering For Market Success” describes three elements of strong positioning: audience, category, and distinction. Before you pick your category, define who your offering is for. This will help you select a category and prime buyers to assume certain attributes associated with that category. For example, a solution for healthcare is expected to be HIPAA compliant. A solution for CFOs is expected to help them maximize profits.
Next, choose a category that’s relevant to your audience. If you’re selling billing software to hospitals, you may want to position it in the patient portal category rather than the online bill pay category. Finally, and perhaps most importantly, prime the audience for how to think about offerings in the category by setting an axis for distinction (with your offering at the far end — e.g., the easiest to use, the most features, the best value).
We often think about positioning as an exercise for determining where to place our offering in the marketplace among potential competitors. But it’s more useful to think about it as an exercise for choosing where to place our offering in the mental models of our buyers’ mind so that we can gain interest quickly. Join Beth Caplow and me at B2B Summit North America for our session “Stake Your Claim: How To Position Offerings To Gain Market Advantage” to learn more about how to position your product for your buyers. We’ll present methodologies for how to choose your category and distinction and examples of how companies have used positioning to successfully introduce a new product, enter a new market, and overcome tough competition.