You’re Not Competing In The Category You Think You Are! (How to Find Out)

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Many of you know my 7-step CatSight™ Process for Insight Development. The first step is to identify the category in which you are competing. I get so many questions about this step that I decided to dedicate a whole post to this important topic.

But before I start, I suggest you first read the post (“Customer Centricity is Today’s Business Disruptor, Insights its Foundation”) as background. You will also find the description of the seven steps of the CATSIGHT™ process included. In the article, I summarise the very first step of Insight development, that of category definition, like this:

C = Category

Whenever you want to develop insight, the first task is to decide on the category you want to study. This may seem obvious to you, but in many cases, it isn’t as clear as you might think.

Identify the category by zooming inFor instance, suppose you are planning on launching a new fruit-flavoured soft drink. You may think that you are competing with other juices or perhaps other soft drinks. But rather than just assuming the category in which you are competing, I highly recommend that you check; you may be very surprised.

In working with one client in just such a situation, we actually found that their main competitor was an energy drink!

The reason was that this category is seen as being for lively, energetic, fun-loving people who need a boost. Whether this comes from the caffeine of an energy drink, or from the added vitamins and minerals which was my client’s offer, it didn’t seem to matter.
If we’d only looked at other fruit-flavoured soft drinks, we would have missed a whole – and much larger – segment of category consumers. By starting our analysis by looking at all beverages and then slowly zooming in as we learnt more, we were quickly able to discover this perhaps surprising positioning for the new drink.
This shows the power of taking the consumers’ perspective, especially when segmenting a market. But more about that in a moment. 
The above example is a great start. But so many clients ask me to help them with their own category definitions, I decided to share the five most important steps so you can do it for yourself:

 

Step 1. What is the category definition you are currently using? 

In any process, we should always start by identifying where we are today. In the case of your category definition, it should be the one you think you are competing in at the moment. Depending upon whether you are offering a product or service, you might define it as:

All hot beverage consumers …….. or …….. users of a particular insurance service.

All consumers of coffee …….. or …….. people who have bought insurance for natural disasters.

All consumers of instant coffee powder …….. or …….. house owners in Florida who have bought insurance for natural disasters.

All consumers of instant coffee powder costing less than US$ 2.50 per 100 gms …….. or …….. owners of houses valued over US$2 million in Florida who have bought insurance for natural disasters.

As you can see from just these four examples, the bottom definitions are far more focused than the top ones. Hopefully you can appreciate why targeting such precise groups of customers is more likely to meet with greater success, than the wider, less specific first groups mentioned.

In any process, we should always start by identifying where we are today. #Process #Category #Business Click To Tweet

The Zoom tool you decide to use (in or out), will depend upon whether you are looking to grow your brand through your marketing activities or planning to develop a new product or service offer.

I call this zooming in and zooming out of the category. In general, understanding the category by zooming in is best for growth and precise targeting, whereas zooming out provides more opportunities for considering innovative new products and services.

Now take a look at your own current category definition. I bet it’s too broad for successful use isn’t it? This is the mistake that most businesses make, big and small. They want to attract the largest number of consumers or users of a category, but as is often quoted:

“If you try to please everyone, you end up pleasing no-one”

The more precise you are in defining the group of customers you are trying to attract, the more focused will be your actions and communications, and the more successful you will be. In addition, the tactics and strategies you use are more likely to resonate with your target audience.

The more precise you are in defining the group of customers you are trying to attract, the more focused your actions and communications will be. #Segment #Category #Marketing #CEX Click To Tweet

 

Step 2. How is this category changing?

Once you have identified the precise category in which you are playing, you next consider what is currently happening to it. Is it stable, growing or declining? And why?

Understanding how the category is changing and more importantly why, will help you to understand it better and will allow you to evaluate its attractiveness more precisely. For instance:

Is the category growing? If so, is it the leading brands which are increasing, or are there new brands that were recently launched, which explain the growth? Identifying which brands are growing and the reasons for this growth will enable you to take corrective action.

Is the category stable? Are category shares stable, or are some brands gaining and others losing? Again, why? What do the brands which are gaining have in common? What are the losing brands lacking? Are the changes making a difference to the category definition?

Is the category declining? Are all major brands in the category losing or are some gaining at the expense of others, but not maintaining overall category size? If so, What are the declining brands lacking? Where are customers who are leaving the category going to? Is there a new category which is better meeting their needs? If so, how? Should you be targeting this one instead?

Your answers to these questions will help you to understand whether the category in which you are currently competing is going to remain as attractive as it is today. 


Check out C3Centricity’s popular training course and speaking topics to help your team be more successful in their category definitions and target audience identification. Download the brochures.Download brochure of C3Centricity training


Step 3. How will this category change in the future?

In addition to current category trends, you also need to assess what is likely to happen in the marketplace in the coming years and how this may impact it.

Things are changing and changing fast these days. There is no more “business as usual” especially since the covid pandemic. Expecting the unexpected has become the norm, which is why I am such a big fan of scenario planning.

There is no more business as usual. Expecting the unexpected has become the norm, which is why I am such a big fan of scenario planning. #Scenarios #Business Click To Tweet

Industries are being disrupted and companies starting up and closing down at an ever-accelerating speed. According to a 2016  IMD article

“A recent study by McKinsey found that the average life-span of companies listed in Standard & Poor’s 500 was 61 years in 1958. Today, it is less than 18 years. McKinsey believes that, in 2027, 75% of the companies currently quoted on the S&P 500 will have disappeared.”

Of course, these numbers are likely to have changed significantly thanks to covid-19 and most certainly not for the better in most industries!

Understanding who and what will impact your category is the first step to preparing for the changes which could come. Preparing for likely future opportunities and risks is the second step, and the reason scenario planning is so vital to ongoing busines success.

75% of the companies currently quoted on the S&P 500 will have disappeared by 2027! @McKinsey #Business #Trends #Future Click To Tweet

 

Step 4. Which of the category users are you attracting?

This question surprises some people. They expect that once they have identified the category in which they are competing that they can just start trying to attract everyone in it. However as the infamous quote from John Lydgate mentions:

“You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time.”

You, therefore, need to identify which of the category users would be most interested in what you have to offer. One of the many tools I use with my clients to help them identify the best segment for their brand, is the attractiveness and ability to win matrix, sometimes referred to as the BCG Matrix.

You can find out more about it in the article “How to Sell Less to More People: The Essentials of Segmentation.” The post provides a detailed explanation of how to divide all category users into relevant sub-groups, which you can then plug into the BCG Matrix.

Understanding which sub-group of all the category users you are most likely to appeal to with your offer, is one further step in focusing on the very best target audience for your brand.

 

Step 5. How are your customers changing?

After identifying which category users would be / are the most attracted to your offer, you also need to consider how this sub-group is changing. Is it increasing or decreasing in size. And how and why it is changing.
 
As with the category changes mentioned above, it is important that you target a viable and hopefully expanding group of customers. This can either be a currently growing segment or one that you have serious reason to believe will grow in the future, thanks to positive trends and increasing customer sensitivities that you are following. If you find that the segment is growing or declining you may still consider developing a plan to attract customers who are switching out with a separate or new offer
There are many reasons why a segment may decline:
  • The introduction of a new category segment that is taking customers away from yours.
  • Natural decline because of customers’ ageing.
  • Behavioural changes that make the category less relevant than in the past.
Having identified how your customers are changing today, you then need to consider societal trends and their impact on your customers. That is the ultimate test to choosing the right group of category users to target.
 

Conclusion

Going through these five steps will give you the very best understanding of the category in which you are competing, as well as the customers who make up the sub-segment you decide to target.

Have you successfully mastered every suggested step? What have you forgotten?

Is there something I myself have forgotten or that you would add? If so, then please share your ideas in the comments below. Thanks

Are you struggling with your own category definition or the customers you should be targeting for your brand? Then let’s talk. Contact C3CentricityThis post is an update of the article first published on C3Centricity in 2017.

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How to Fast-Start your Customer Centric Journey and Accelerate Ahead of Competition

Many of my clients tell me that they underst and they should be paying more attention to their customers, but admit that they just don’t know where to start when it comes to becoming more customer centric.

I can empathise with them; the task may seem overwhelming at first. After all, it is not something that can be corrected by just starting a new project or taking a single action. It dem ands consistent effort over the longterm, to make an organisation truly customer centric. Here are a few of the ideas I give them at the start of their journey, taken from my latest book Winning Customer Centricity, now available in Hardback, Paperback and eBook formats on Amazon, andnoble.com/w/winning-customer-centricity-denyse-drummond-dunn/1121802409?ean=9782970099802″ target=”_blank”>Barnes and andnoble.com/w/winning-customer-centricity-denyse-drummond-dunn/1121802409?ean=9782970099802″ target=”_blank”> Noble,  iBook and in all good bookstores.

As I am often quoted as saying:

“Customer Centricity is a Journey and not a Destination(>>and%20not%20a%20Destination%22%20%20[tweetlink]%20%23CRX%20%23Quote” target=”_blank” rel=”nofollow”>Tweet this<<)

So where do you start?

The first action to take when turning around a product or service-based company is to start by thinking about how your organisation is currently working. What is its structure and what processes are used to develop your offers? It is only by underst anding how your company functions, that you can identify the priority changes that need to be made. Therefore these are the first five things I suggest to do when starting on your own journey to improved customer centricity:

1. Identify a C-suite sponsor

Customers on the board with c-suiteEvery project needs a sponsor, but when it involves a major culture change, it must be sponsored at the very top, ideally by the CEO. (>>Tweet this<<) If this is not possible, the most customer – savvy executive should be the sponsor, whether that is the CMO or the SVP of marketing services or customer insight.

The initiative must be recognised as a priority company objective by everyone in the organisation, so the higher the level of the project sponsor is, the better it will be.

2. Make every employee aware of the priority initiative

Once you have a senior sponsor, the next step is to make everyone aware of the initiative. It always amazes me how many departmental projects go unnoticed by other groups within the same organisation. (>>Tweet this<<) In my consulting practice, I often uncover overlapping projects when I am invited to work with a client on a project. Perhaps this is because I work across departments and therefore don’t suffer from the silo effect impacting most employees. I also have the privilege of being able to ask “silly questions” which of course are never redundant.

In order to make all employees aware of the project, it must be mentioned at every opportunity. This means signing your emails with a suitable quote such as:

“We don’t pay your salaries, our customers do, every time they buy our product” (>>Tweet this<<)

or

“There may be customers without br ands, but there are no br ands without customers” (>>ands%2C%20but%20there%20are%20no%20br ands%20without%20customers%22%20%20[tweetlink]%20%23Customers%20%23Br ands” target=”_blank” rel=”nofollow”>Tweet this<<)

You can also mention it in newsletters, on bulletin boards, or through internal memos, with clear explanations as to why it is important and how everyone is expected to participate. This alone will make the project st and out from the tens if not hundreds of other projects in your organization, which are most likely driven by a single department or group.

3. Identify your categories

Identify the category you are in This may seem strange to be asked to evaluate the categories in which you are active, but I am always surprised how many companies identify the category from a manufacturers perspective and not that of their customer. (>>Tweet this<<) For example a carbonated fruit juice could be seen by customers as being a part of carbonated soft drinks, of fruit juices, or in a completely new category of its own. It all depends on how they consume it.

Another example might be a dried soup mix, which customers may use to make soup, but also to make a sauce, to add taste to a casserole or dip, or to enhance the flavour of a dish made from scratch with fresh ingredients. In each case, the soup mix would be competing with products in those different categories, such as sauce mixes, flavour enhancers, and not just other (dried) soups.

4. Identify the category users

As you can imagine, if your product is being categorised in different product segments by consumers, then the users themselves will most likely differ. Taking the above example of dried soups, the category user might be:

  • Young singles – using the product to make a quick and easy soup
  • Mothers of teenage children – to make their sauces more flavourful
  • Couples – to add to their scratch cooking recipes

In each case the group of consumers have differing needs and therefore different segment descriptions. This is why underst anding the category in which you are active and the customers of the sub-group that you are appealing to, is a vital first step to underst anding your customers. (>>anding%20the%20category%20%26%20customers%20of%20the%20sub-group%20you%20are%20appealing%20to%2C%20is%20a%20vital%20first%20step%20[tweetlink]%20%23Customer%20%23Underst anding” target=”_blank” rel=”nofollow”>Tweet this<<)

5. Choose your category segment

Choose your customer segmentAgain taking dried soups as our example, the description of your users will be very different depending upon how they use the product. The simple demographic breaks mentioned above would be insufficient to be able to get to know them well. The more descriptions you can add to these basic demographics, the more likely you are to underst and and therefore delight your customers. (>>and%20your%20customers.%20[tweetlink]%20%23Customer%20%23Personas%20″ target=”_blank” rel=”nofollow”>Tweet this<<)

In C³Centricity we use the 4W™ Template to identify and store everything we know about category users. For more information on this useful template, see the post and-underst and-your-customers/” target=”_blank”>How well do you know your customers? or the Video series on YouTube. You can also download the free template in the Members area.

These are the first five actions to take when starting out on your own journey to increased customer centricity. Getting the whole company and every employee in it, behind such an initiative, is the only way to make it happen. As Tony Hsieh, CEO of Zappos is often quoted as saying:

“We believe that customer service shouldn’t be just a department; it should be the entire company”

Your customer centric journey starts with these first steps, and then it’s just a matter of knowing intimately the people you are hoping to satisfy and delight, and ideally surprise too. Have you already started your journey to Customer Centricity? If so, what has been your biggest challenge to date,  and if you solved the issue, how did you do it? Others who are just starting on their journey would love to hear from you.

Winning Customer Centricity BookThis post has been inspired by the first chapters of Winning Customer Centricity and includes images from the same book. You can buy it in Hardback, Paperback or EBook format in the members area, where you will usually find a discount code. It is also available on Amazon, andnoble.com/w/winning-customer-centricity-denyse-drummond-dunn/1121802409?ean=9782970099802″ target=”_blank”>Barnes and Noble, iBook and all good bookstores. If you prefer an Audiobook version, or even integrated with Kindle with Amazon’s new Whispersync service, you’ll have to be patient a little longer.

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