Category Pirates
Millions of companies rely on legacy marketing strategies to make their products and services seem “better” than the competition.
But legendary companies do not compete. Instead, they design new categories for their breakthrough products and business models to live within. And these categories create the future.
But without many resources on category design, you are likely wondering, “What is category design? How can I use it to create a niche and dominate market share? Will it even work for my business?”
We’re here to answer your questions and set the record straight on this new and different strategy called category design.
So, let’s dive in.
Category design is a business strategy that helps companies earn the majority of market share in a specific category of products or services.
You do this by synchronizing The Magic Triangle of product, company, and category design. The result is you become known for a niche you own, attract a loyal following of Superconsumers, and earn the majority of market share. This makes it impossible for someone else to “do what you do.”
But to design a category, you must have a unique point of view.
This POV must move the world from the way it is to a new, different way of doing things.
In order to design a new and different category that changes the world, you have to reject the premise with a unique POV. This helps you niche down and create specific Languaging (the strategic use of language to change thinking) about your offering to attract customers, who then evangelize your offering and turn you into the Category King or Queen.
So the goal of category design is to be different.
More specifically, the goal is to illustrate different thinking—not just say what has already been said in a “better” way.
Do this, and you’ll reap the benefits of category design.
If you successfully apply category design, you’ll enjoy these benefits:
Sure, this all sounds good in theory. But how does it play out in the real world?
To show you the advantages of category design, let’s look at an example from The Campbell Soup Company.
100 years ago, the company had a breakthrough. For its first 30 years, the business sold little else besides produce, canned tomatoes, vegetables, condiments, minced meats, and of course, soups. Business was good, but there was nothing “radically different” about Campbell’s products. Fresh foods were difficult to scale, so many food manufacturers relied on canning. Soup, for instance, was cheap to make, but all of the water made it heavy and expensive to ship.
Until, in 1895, a chemist within Campbell’s named John T. Dorrance came up with a radically different idea.
If Campbell’s halved the water in each can, the business could produce and ship exponentially more soup(the excess water was no longer needed)! Simultaneously, the company could drop the price of a can of soup from 30 cents to 10 cents, expanding both their distribution and lowering the barrier to entry for new customers in a way no other food production company had been able to.
As a result, Dorrance and Campbell’s invented “condensed soup.”
This new category fundamentally transformed the business.
Today, the company (with a $15 billion dollar market cap) is referred to as The Campbell Soup Company. But if Campbell’s was a food startup today, marketers and branding experts, other founders, executives, and even venture capitalists would likely attribute the company’s success to a wide variety of things. “Campbell’s successfully achieved product-market fit,” they might say. Or, “Campbell’s found white space in the market and stood out from the competition.”
But are any of those reasons truly why Campbell’s was so successful?
We would argue, no.
What made Campbell’s successful was John T. Dorrance’s ability to move the world from the way it was, to the way he *wanted it to be—*a world where soup became inexpensive to ship, still easy to prepare, and just as flavorful for the customer.
He used category design to create a different future.
Category design works across any and all industries, so let’s dive into a few more legendary category design examples.
There’s a reason why men have “erectile dysfunction” and not “impotence.”
Impotence has very negative implications attached to the word. If a man says he is impotent, it’s as though he has a character flaw. It means “not manly” or “unable to be a man.” That’s not a word very many men want to be associated with—meaning men don’t want to admit to having such a problem.
Hard to sell a solution to a problem no one wants to admit to having!
To solve this problem, Pfizer (the makers of Viagra) had to invent a disease.
They called it “erectile dysfunction” to make impotence a more approachable problem. And then they shortened it to “ED” to make it even safer to associate with. It’s a whole lot easier for a man to say, “I am experiencing ED” than to say “I am impotent.”
This is what category design (specifically, the strategic use of languaging) does.
It changes the way people perceive the thing they’re looking at.
You may not have heard of the company Axon Enterprise, Inc., but you likely know its breakthrough product—the TASER. This is the device used by law enforcement that shoots electrified wires to stun and disable a subject.
Axon’s mission is to make bullets obsolete—that’s the company’s unique POV. To realize this vision, and to move law enforcement as an industry from the way it was (“Bullets are the only way to stop a subject”) to the way they believed it could be (“What if we could temporarily stun them using electricity instead?”), they created the TASER M26. By 2004, Axon had successfully created this new category of law enforcement (non-lethal weapons), gone public, and reached $60 million in revenue.
Then, something exciting happened.
In 2008, Axon Enterprise, Inc. unveiled its newest innovation: the Axon Pro.
The Axon Pro was a head-mounted body camera with the capability to upload footage to the company’s web-based service, Evidence.com. This was a step forward for the company, using their expertise in one category to inform how they would continue redesigning adjacent categories. (It did this by creating a data flywheel to understand its Superconsumers.)
By 2015, Axon Enterprises, Inc. had come to realize this new category of law enforcement transparency had even more potential for growth than even non-lethal weapons.
Axon was able to leverage its category dominance to create and own more than 80% of the adjacent, newly designed, body camera market share among police departments. This has enabled them to grow revenues from $268 million to $420 million from 2016 to 2018, at a 15% EBITDA margin. Axon also has a $3.5 billion-dollar valuation—7x revenue and 159x EBITDA.
And this might seem insane to the average analyst, until you realize their total addressable market (TAM) is $8.4 billion, of which they are unquestionably the Category Queen.
For more examples, check out our post that shares 11 category design examples.
Category design isn’t just for tech startups or entrepreneurs.
It’s a business strategy that any executive, marketer, creator, writer, investor, or leader (at any company) can apply.
But no matter who you are or what you are offering, there is only one single point of failure.
You can get the product wrong and tweak it over time. You can get the company/team/business model wrong and tweak it over time. But if you get the category wrong, you’re finished.
So, we urge you to ask this very important question: What are you DOING with your marketing?
If you invite a comparison, you rely on legacy brand marketing. If you force a choice, you’ll reap the benefits of category design. But in order to chart your own course with category design, it’s important to find the right resources.
So we rounded up resources to help you learn the fundamentals, study the Category Kings, and create your own niche.
Whether you are new to category design or need fresh inspiration, these books, podcasts, blogs, and newsletters are a great place to start. All offer something unique. And all help you learn the core frameworks while sharing examples of how companies (and individuals) use category design.
Most business and marketing strategies regurgitate unoriginal thinking from last year’s template. They are not original or new. They are not different.
Category design turns last year’s template on its head.
Because before you even think about marketing, your company needs a category to market itself within. If you create a NEW and DIFFERENT category/market, you’ll have free rein to market within it. And you’ll follow in the footsteps of legendary category designers.
Keep in mind, category design is not for those who like to follow the status quo.
It’s for people who dare to design the future and break new ground.