Does Your Product Need Its Own Category?
Whether you’re talking about an actual battle or a metaphorical battle, defining the battlefield is a classic strategy. For SaaS companies, this means taking the leap into category creation, a sophisticated positioning exercise that allows a company to name—and own—a new space. This gives a brand the advantage of being “the first,” which is typically an excellent position from which to defend market dominance.
The trick to successful category creation is knowing when it’s appropriate to make this bold move—and then creating a category with lasting power.
Astha Malik, currently COO at VTEX, stopped by the OV BUILD podcast to talk about the idea of category creation and how to manage it well. Astha’s direct experience going through this process at PagerDuty provided some valuable insights. Listen to the episode below, or scroll down to read the highlights.
Determining if it’s time for a new category
There are a lot of questions to ask, like: Is your best bet to position yourself in an existing category and focus on strong differentiation, or should you strike out on your own by creating an entirely new category? How do you know when it’s time to break away from the pack to define a playing field that’s all your own?
But here’s the big question: Are people confused about what you do?
“There are a lot of leading indicators to help you answer the question,” Astha says. “One is whether your customers are constantly confused. If they’re asking basic questions about whether your product is this kind of technology or that kind of technology, it’s clear they can’t pin you down in a certain category—which means they don’t know where to put you in their tech stack.”
“Just because you don’t think you fit into any existing categories, you can’t just go and create one.”
You can also look to the analyst community as another bellwether. Analysts have their own market scopes, quadrants, and reports, so they’re experts at knowing how to categorize a product. If they are either confused, or trying to force-fit you into a category that doesn’t feel quite right to you, that’s another sign that it may be best to start thinking about defining your own space instead of trying to shoehorn your solution into an existing one.
While confusion from customers and analysts is a strong indicator of the potential need for a new category, Astha cautions against leaping before you take a closer look. “Just because you don’t think you fit into any existing categories, you can’t just go and create one,” she says. “There are additional qualifiers to consider.”
For example, is what you’re doing really different enough to warrant a whole new category? Is anyone else doing something similar, or is your solution truly unique? And, most importantly, is the market you want to operate in big enough to support its own category and sustain your business over the long term?
These are tough questions, but it’s important to really think them through.
Defining your new category
When PagerDuty started out, they were operating in a very complex technical stack that was constantly evolving. Customers routinely asked whether PagerDuty was an APM solution or a log management solution. It was clear that the product didn’t fit neatly into any of the existing categories.
“In the early days, we called ourselves an alerting tool,” Astha says. “But, that’s not a category. It’s not meaningful, and it’s certainly not sexy. We needed a bigger story that would resonate and ultimately transfer into a public company.”
In essence, category creation is about aligning what you do today with your long-term vision for your company. “You need to think about what you want to become as a company,” Astha says. “And you need to make sure that your category attaches your company to something bigger.”
For PagerDuty, the bigger story was about the ubiquitous trend of traditional businesses being forced to go digital. PagerDuty plays a critical role in that transition because it aggregates all the insights and data streams tied to a company’s critical digital services, helping ensure that an organization’s operations environment is “always on.”
“As we thought about the way businesses and their operations are becoming digital, and how the complexity of those environments requires constant monitoring and management, we realized that what we do is ‘digital operations management,’” Astha says. “And, once we’d identified that category, we found it resonated really well with both our customers and our analyst team.”
Bringing your new category to life
The team at PagerDuty did a lot of research and internal work to define their new category. From customer outreach and data analysis, to internal think tanks and consults with analysts, they considered every aspect of the opportunity carefully. They soon realized, however, that identifying the new category is only half the battle.
Coming up with the right name—in their case, “digital operations management”—was the first hurdle. “Specific category names are very important,” Astha says. “Words matter.” She strongly advises keeping things simple—no fancy words or jargon.
The second step in bringing a new category to life is cementing it in the market lexicon. Repetition is the key to validation. “You don’t want to be the only ones talking about the category,” Astha says. “You want to create a chain reaction that gets everyone talking.”
One way to start that chain reaction is to tell a compelling story. The story should be bigger than your product and address a universal trend or challenge. It should speak to the things your customers and prospects care about most. And your story needs to be consistent and reinforced across all your channels. Everyone on your team—sales, marketing, your community, your analyst team, your press relations, and so forth—needs to tell the same story in as many places as possible. That’s how you get the whole market on board.
Final note: Only do it for the right reasons
Done right, category creation sets you up in a uniquely defensible position as a category leader. It can help establish you as an innovator who is ahead of the curve, on-trend, and creating the future.
Just look at the massive success stories of brands like Netflix, Uber, and Airbnb. And there are plenty of examples in the B2B software space as well. HubSpot created inbound marketing, and Salesforce created cloud-based CRM.
But category creation only works if you’re doing it for the right reasons. You can’t approach it like some slick marketing ploy. You have to base it on what’s happening in the real world with your product, your customers, and your market. If all the indicators point toward the need for a new category—and you’ve got the goods to fill it—that’s when to move forward and stake your claim.
Check out the full episode of OV BUILD to hear more valuable insights from Astha—including her thoughts on the purpose of product marketing (and the role it plays in early-, mid-, and late-stage organizations), what to look for in a product marketer hire, and how product marketing teams should respond to unexpected disruption (like COVID).