I’ve now been doing sessions in The Strategy Shortcut System for 2 weeks, and it’s cool because it’s given me a new perspective.
The “mass” nature of the product has shown more clearly where the most common strategic missteps lie for most founders – and, as expected, they are in the places you least expect.
So today I wanted to address one that has been coming up quite a lot:
Category choice.
In other words, what pre-existing category of goods and services are you going to root your business in, and then push on from there?
This is a topic people tend not to think about at all – either because they see it as being completely obvious, or because they implicitly see their product as just this unique thing floating in the ether, which will sell on its own terms.
Both of these are untrue.
There are three reasons thoughtful category choice is essential before doing anything else:
- Because this is the way customers will understand what you do
- Because this determines the norms you are going to push against (i.e. it dictates the rest of your strategic thinking)
- Because this determines where your customers are going to come from
This final one is particularly important. You see it is incredibly hard to sell something people aren’t “shopping for” – no matter how good that thing is. You need your business to tap into an existing “buying process”, otherwise you basically have to generate interest from zero – which is possible, but exceptionally difficult.
Let me give you an example.
The other day I was on a group call and someone said that the category of their product was “online learning”. Bam – immediate red flag. Why? Because nobody is going around saying “man, what I really need is some online learning!”. No, what they are shopping for more likely is the skill being taught in the online learning. The whole “online learning” part has nothing to do with it, that’s just the delivery method.
I too am in the “online learning” space with The Strategy Shortcut System. However the category I have rooted this in is not “online learning” – it’s strategy consultancy. I see this as an alternative to paying someone $100,000 to come and develop a strategy for you.
Now which of these categories sounds like it would afford me more leverage? And which make my product more clear?
That is how big a decision category choice truly is.
So how do you pick it?
The first thing to note, is that category is determined by the value the customer gets, not the physical nature of the product.
Yes, there are some exceptions to this – some categories that are so mature and clear that they are synonymous with “form” as well as “value”. For example I think it would be very hard to conceive of a laundry detergent existing in any other category other than “laundry detergents” – and so that’s totally fine.
Sometimes it is indeed a no-brainer.
But if there’s any hint of ambiguity (and btw, most B2B businesses will exist in ambiguous spaces), then you have a degree of choice and flexibility – and so the first place you should be looking is at the job that’s being done by your business.
The second key consideration is “shoppability”. Is there an existing purchase cycle you can hijack?
I had one case recently of a woman whose innovative business could be attached to a clear pre-existing category (great), BUT this category was traditionally B2B and she wanted to make it D2C. This is a problem because although consumers were using this product, they weren’t shopping for it. Instead they were using it indirectly via other services. This means that if she started selling it directly to them, she would have to generate a whole new purchase behaviour where none currently exists.
Now theoretically this is possible, but it would be far better for her to either 1) continue selling B2B to tap into that purchase flow, or 2) choose a different plausible category entry point where consumers are already shopping, and then push them to her innovative product through that channel.
Hope this makes sense!
Finally you of course need to consider where you have leverage. This is where category choice tilts over into strategy. What do you bring to the table here?
Bringing it back to the idea that my “course + tool” product exists in the category of “strategy consultancy”, you don’t have to think very hard to see that there are all sorts of forms of leverage there. It’s massively cheaper, there is no limit to supply, it’s accessible to smaller businesses, etc.
So that’s your checklist.
- Does your category reflect value (not just product)?
- Is it something people are shopping for?
- Do you think you will have leverage there?
For many of you, if you get this choice right… the rest will write itself.
