It’s a question we get asked quite a bit from prospective clients: What category should our company be in? It’s a great question, and, in fact, demonstrates a company’s awareness of the benefits of being in the right category. The right category just makes everything about marketing easier. Customers, partners, media, analysts, investors all understand your company a little bit better when the right category is used to describe it.
As a quick refresher, a category is a classification or group your company is put into, either by the marketing team or other entities who have interest in knowing what your company is and what it does. It provides a quick label for your company that can be used across a variety of content, including your value proposition, press release cutline, elevator pitch and other content elements in your marketing arsenal. It describes at a high level what your company does and where it fits compared with the millions of B2B companies in the AI, IoT, mobile, wireless and telecom markets today.
When selecting a category for your company, there are several factors to keep in mind:
- Who do they say you are? And by they, we mean the investors, analysts, customers and others who want to bestow a short label on your company for the purposes of competitive analysis and making buying decisions. In other words, they want to compare apples to apples and need an easy way to find out which companies they should be talking with. Analysts are one group who can play a valuable role in helping companies find the right category. Part of their role in the industry is understanding the positioning of each company in a particular category. They’ll definitely provide (often very direct) feedback on how well you’ve differentiated your company.
- They’re not always right. The majority of the time, the hundreds of current major categories are perfectly accurate to describe your company and its products. However, companies are also categorized incorrectly so that they are in a bucket. In these cases, it makes much more sense to develop a new category that better fits where your company is at a given point in its lifecycle. While it’s nice to be in an established category, the wrong category can be detrimental to your company’s overall success. Finding the right category isn’t always easy. There are schools of thought that say marketers should eschew existing categories and create their own. There are, after all, some inherent benefits, including the ability to claim market leadership in a category that you own.
- Who are your direct competitors? What companies do you win business against or lose business to? What category are they in? If there is a perfectly acceptable category that your company fits into, that makes your job a little bit easier. The key is determining your key differentiators against these companies and play those up in your messaging.
- Is the category you want to be in too broad, or too narrow? Some categories are so broad that they effectively become useless. Take, for example, a “digital transformation company.” While it’s a perfectly nice term, thousands of companies can claim to be in the digital transformation space. Positioning your company at that level and then defending it would be incredibly difficult. Likewise, if your category is too narrow, you might wind up being positioned by media and analysts as a niche company only serving specific markets. This can be damaging as your company seeks to scale.
Why a Category Is Important
So why is it so important to be in the right category? There are a number of reasons, but the first is the ability to claim leadership. The first few companies in any category have the ability to stake their claim to leadership benefits in a few key areas:
- First-mover leadership in the category for the company as an early entrant
- Thought Leadership for company executives as early spokespeople about the category
- Market leadership in the category for companies named the “winners”
- The ability to quickly identify competitors within the space as they begin to use the category name
- Better understanding from media and analysts (and, subsequently, end users) about where the company fits into the overall ecosystem
Want to understand more about how to ensure your company is in the right category? Contact Calysto today.