Designing a New Category - Part 1

On this week's Brand Shorthand podcast, Mark and Lorraine dive into the complex, yet highly effective business move to design and build a new category. This move isn't for the faint of heart, but the glory that can follow makes this strategy one that has allowed companies like Uber, IKEA, and maybe now, Poppi, to dominate. Learn the first three rules – from nine total – to properly design and build a new category.

Spend 30ish with Mark and Lorraine as they talk all things marketing, advertising, and positioning.

Transcript

Mark Vandegrift
Welcome to the latest episode of the Brand Shorthand Podcast. I'm your host, Mark Vandegrift, and with me is the progeny of the positioning greats, Lorraine Kessler. Welcome back, Lorraine. How are things?

Lorraine Kessler
Good, it's good to be thought of as a progeny. It sounds like I'm really young instead of old. Yeah, things are good. It's, you know, that time of year, Mark, it's the garden. I was in there about nine hours yesterday and seven bags later sending John to the dump. 

Mark Vandegrift
Well, I wanted to give you a chance today. I got to rant on our last episode about the Celebrity Cruise new brand position announcement and the misuse of marketing language. So I have to give you an opportunity to rant if you have something on your mind. Do you have anything come to mind right now?

Lorraine Kessler
Yeah, as a matter of fact, I do. Because I stream a lot of podcasts on regular YouTube, I see the same commercials over and over, and they're unusual commercials in the sense that you don't normally see them on regular programming, let's say YouTube TV-kind of programming. But this one for Eargo is such a direct ripoff.

Remember the Mac-PC guy? Yeah, Mac's the cool guy. He's kind of flippin' Simple two people and the other guy's dressed in a stodgy suit and you know, he's trying to hawk PCs and they do. Now it's an Extremely effective ad. It may be one of the most effective ever run by Apple Because it so contrasts the differences between the products but Eargo's doing the same thing. I mean, it's, I just, I feel like there's got to be a copyright infringement on the creative idea, right? So, you know, I hope when we air the podcast, you're able to show some of these because I was just flabbergasted watching, I was like, I can't believe I'm watching this. It's extremely effective. I really would buy an Eargo because I think that the biggest ripoff in healthcare community. And if you've ever had a parent who's needed hearing aids is the hearing aid devices and the expense that they represent, which boggles my mind. So it's certainly an interesting concept and they do a great job making this seem affordable and approachable. But the entire construct or conception, let's say of the ad itself is a total ripoff.

Mark Vandegrift
Now, Eargo, are they the ones that do the one where there's the father in the room and there's, I don't know if it's a I think it's a daughter and her boyfriend or something like that. And she's going, did you bring that? And she's saying it really quietly. And then he goes, the condoms. Did you bring the condoms? Is that the same one? Okay, I have to run that.


Lorraine Kessler
Yes, it's the same brand. And then that one gets credit for great creativity. And I think because they do something that's a little shocking, right? A little untourered, it gets your attention. That's kind of the shock theory of advertising. After you see a shock five or six times, it diminishes in its value.

The first time you see it, it's like, whoa. And then it becomes a water cooler kind of thing.

[Eargo commercial]

Lorraine Kessler
Yeah, that ad is really good for … I would give that creativity kudos. But the other one… someone’s head should roll

Mark Vandegrift
Yeah, you would think Apple would give them a call and say there's an issue. Good. Well, hopefully you feel better now. Doesn't it feel good to rant sometimes?

Lorraine Kessler
Yeah, it does, because I have no one else here that really cares.

Mark Vandegrift
Well, you were able to turn it into a positive spin. I mean, you said it was good and I happen to remember the other commercial they do, which I, you know, me even saying that C word “condom” was probably a shock to you!?!

Lorraine Kessler
Oh my gosh.

Mark Vandegrift
Well, our topic today is about creating a new category. And knowing how much content we have on this, I anticipate we'll end up needing a second, maybe even a third episode to cover it all, but we'll see. So where I'd like to start is I use this acronym TRIUMPH when I cover the topic of consumer behavior. And basically it's how do you win with consumers you triumph. And I won't go through that acronym. Maybe that's another, you know, episode or 10, but I'd like to pull out the T in TRIUMPH and talk about that. And what it stands for is Taxonomy and it's how our brains work. So if you aren't sure what this word means, think of it as classifications and we classify everything. We classify animals, we classify minerals, we classify stars, you name it. And our brains need a way to organize the information that they take in.

And one way to do that is to organize things into little file folders in the brain, if you want to call it that. You've probably all heard the line, “let me organize my thoughts.” Well, that's the brain trying to organize new information so that it then can make sense of it. And that's kind of taxonomy in a nutshell. And the reason I bring it up is because that's how market or industry categories work.

We are organizing everything around us, and each product even, like bottled water is a good example. I'm going to think of it as sparkling water, regular water, or all types, even flavored water. So let me do a quick example. Right now, I know that no one listening to this podcast is thinking about the category I'm about to say. But the moment I do, you will have brands come to the top of your mind. 

I did this as an exercise in an Appreciative Discovery™ last week and immediately everyone in the room shouted out a brand. So Lorraine, you're gonna be my participant. And as soon as I say this category, shout out a brand. Are you ready? Okay, toothpaste. Okay, there you go. 

Lorraine Kessler
Crest.

Mark Vandegrift
Now, until I pulled out the category, no one listening to this podcast was thinking about a toothpaste brand unless you're listening to it while you're brushing your teeth in the morning. But even then you're brushing your teeth, you probably didn't think about the brand. But the moment I brought it up, you probably had even more brands at the top of your mind, like maybe three to four brands that come to the top of your mind. It takes like, it took you half a second to do that. 

And therein lies the challenge for your marketing because our minds in most categories can only hold about three to four brands on what they call a category ladder. And if your brand isn't on that ladder, chances are you're going to lose. So how do you get on that ladder and in the mind when someone pulls out, bloop, that category? And we would say it's by positioning. So let me give you an example. If you aren't Colgate or Crest, which are number one and number two, chances are you aren't commonly called out whenever toothpaste is thought about. 

Unless, I give you a value of some sort, what we would call maybe an attribute. So Lorraine, I'm going to use this as a test case again. You're my participant, okay? I'm going to give you another category, or the same category, but it's going to have an attribute to it. You ready? Sensitive toothpaste.

Lorraine Kessler
Sensodyne

Mark Vandegrift
Okay, let me try another one. Organic ingredient toothpaste. 

Lorraine Kessler
Toms.

Mark Vandegrift
Toms of Maine, right? So you see, depending on what you value, you likely have brands on your toothpaste ladder that some others don't.

And that's what we're talking about, and that's creating a new category. We have nine points that are involved when doing this, but first Lorraine, walk us through what it means to create a new category, not how we do it, but what it means to create a new category.

Lorraine Kessler
Well, what it really means is it's setting up a sandbox, a new sandbox that you alone can control because you're the one who owns that sandbox, right? So right away, and some people have used the term blue ocean, right? You've just set up a game that only you can win. I like the sandbox idea because eventually if it's a valuable category, if it's one that catches on, you know, if it isn't, then you better cut bait quickly. 

But if it's a meaningful category to a tribe, to use that term or segment, who cares a lot about that idea, whether it's sensitive teeth or Close-Up was the kissing toothpaste for a fresh breath, then you alone stand there. So you have for a time the ability to dominate the sandbox and to lay down the rules of play, if you will.

Mark Vandegrift 
Yeah, and it's interesting because if that category matters more to you than the generic category, you automatically jump there. A good example, when I was guest lecturing at Grove City a few weeks ago, I used the car category, right? I said, give me some car brands. And it was funny in both classes I taught, there were a couple young men that responded. And guess what they responded with? Performance cars. So it was Lamborghini and all the brands that were in that category. And I use that as an example of the fact that no one's just going to list cars. No one's going to go Honda, Ford. I mean, that list isn't even considered anymore because we already have in our mind what category we care about.

Of course, I joke back, I said, I'm in the minivan category because I have a family. So I got a car around a lot of people. So here's my list. And it really, it struck a chord with them because, cars is one of the examples that, you know, we use a lot of time. And of course, of course, toothpaste is a good example because we do think about some of the attributes that we have there that are important to us and they're more likely to be coming top of mind because they sit in that category. 

Let's go through the nine considerations of creating a new category. Now, one of the things that is important to understand is this isn't just I declare a new category and all of a sudden all my marketing works. There's a very, I would call it a pretty major, discipline that you have to work through, including before you even build the category, you have to design the category. And those aren't the same things. Designing the category is kind of more what we're going to talk about today, so that when you go to build the category, it's been strategically thought through. It's the strategy before the execution.

So, Lorraine, let's start out here. Our first rule is what you already kind of brought up, which is build your own sandbox. But there's some words to it that are important “that only you control.” Okay. So when we talk about if you're not number one or number two, be something new, what the goal of creating the new category is, is to move away from a crowded category where when someone mentions that category, you're not even in that list. But it has to have meaning to it, right? Because if you're going to create distance, you have to come up with something that just doesn't say, well, there's green digital camera cameras. Mine's purple now. So that has no value to it. 

Lorraine Kessler
It's a meaningless difference.

Mark Vandegrift
It is a meaningless difference. OK.

So when we talk about building your own sandbox, give us a little insight as to what's required to consider whether or not that sandbox can survive and create enough business for us.

Lorraine Kessler
Well, I think first you have to think about who does this idea appeal to? What is the nature of the value or the idea or the meaning? Is it an aesthetic that is missing in the general category? Does it solve a problem that's not being solved by another product? Is it going to appeal to someone's self -image in a way that others products in the category might be more functional and purposeful, but not necessarily something that has prestige or esteem attached to it. So you have to really kind of understand the value of the idea. Then you have to be able to make sure, and this is a very important thing, that the total customer market for that idea, the people who care a lot about it, is large enough for you to make money.

Now, if you're one person selling in Canton, Ohio, and you only need 100 people to really love this idea, that's a little different. But if you're, you know, obviously the broader your geography, the more people you're going to need, and you have to make sure you have enough that it returns on your advertising a profit at the end of the day. That people are willing to pay the price that it's going to cost to create this product so that you have a sufficient margin to continue to support the product in the marketplace. So total customer market is a really big factor. And it has to, like you said, you know, I'm going to have a purple camera. How many people really are demanding a purple camera and or, and this is one of the things Michael Porter would hit on, right, in his book is when he talks about competitiveness is how easy is that feature to replicate? If I'm doing purple camera and I want to be all alone and go against Nikon, how easy is it for Nikon to see there's a lot of people who want a purple camera and make one? Pretty easy. 

So whatever your idea is, it really has to attack what we've talked before about an inherent weakness in the leader's strength and what's an inherent weakness versus a weakness. A weakness is something I can fix. Mainly if I'm a leader, I have a lot of money, I can make purple cameras tomorrow. But if it's an inherent weakness, that let's say my cameras are extremely expensive because they're so fine-tuned, but this is kind of a disposable digital camera you can take on vacation and throw away and you don't care about.

Well, that becomes very hard for Nikon to shift because it shifts its position to attack you in a way that's not healthy for that brand. So it has to attack an inherent weakness.

Mark Vandegrift
Yeah, and you know, this could be confusing to those that follow us on a regular time because I'd almost sounds like positioning, but let's clarify that a little bit. So Coke was the original Pepsi's the new right? Those aren't different categories. They're still in the soda category. OK, then Uncola comes along. Right. Still in the soda category, but they did something. They took the syrup out of - the dark syrup - out of what they did with 7UP. And so clarify for us, is that a new category or is that just a position against an existing category? And then I'm going to take that a step further.

Lorraine Kessler
Well, I think it's a, yeah, I think uncola is a subcategory because it's a very different, it's a soda. Go back to taxonomy, right? And there's always kind of a family, how does that work? There's Janet, you know this stuff better than I do.

Mark Vandegrift (20:20.878)
Yeah, kind and yeah, there's all the different levels.

Lorraine Kessler
And it works down. So it depends on the spectrum. So they're all sodas. But uncola is a wider field difference than the caramel colored colas that most people were used to. It's a light color, no caramels. It has a whole different aspect or attribute to offer to those who want that product. So I would call that a subcategory and a pretty clear one within soda, still soda, but now it's a subcategory, sub classification, if you will, we're thinking of the animal kingdom. And then, but some subcategories can be less afar, afield. They could be a little closer to the original idea. So that could be fruit flavored sodas, right? A little closer to...regular coke, cherry coke, whatever. So it's hard to say so I think the further apart from the Let's call the most dominant idea in the soda category, the further Different then the more it takes on a construct of a pretty clear subcategory.

Mark Vandegrift
And we've seen that lately. We covered Poppi in our Super Bowl commercials and we've talked about them since. They become the healthy soda. And how much they separate from regular soda is pretty significant because I think most people in their mind have always said, man, I love pop, as we say here in Ohio, versus soda. But boy, I really love that. Wouldn't it be great if that was good for me?

And so here comes Poppi and how long did it take? We're in 2024 and Coke's been around since what, 1896 I think. So you're talking well over 125 years before a healthy soda comes out. And I don't know if you've had Poppi yet, but I wouldn't even know that I could compare it necessarily to Coke. It's not like I'm drinking a Coke or tasting a Coke. It has its own unique flavor to it. But it's interesting that they kind of glommed onto soda, but then they said, okay, we're the healthy soda.

Lorraine Kessler
Yeah, so they, I mean, because first to the boat were drinks that are just healthier drinks, right? That didn't call themselves soda, right? Like fruit drinks and different types of pretty healthy kinds of drinks and even smart water and things like that. And so it's almost weird that they went back to the idea of we're going to just say we're a soda. So they must have identified there's a bunch of people who really want a soda. They don't want those other healthy drinks that they can't pronounce and don't know what the ingredients are unless they go to some health food store or whatever. And that there's a significant number of people who would drink what they would think is a more classic soda that's healthy.

Mark Vandegrift
Yeah. Well, and it's interesting because it's on a range. So I have sparkling water here, right? And I can get sparkling water with what they call the essence of flavor. So, I think you open it up and they have like lemon scent, but it's still this sensation of drinking something bubbly, right? If you've had a Poppi, it is thicker. It's syrupy in nature, but they're using apple cider vinegar along with other things to really give it, there's more robustness to the flavor of it along with the bubbly. 

So, it's interesting that, as you said, some things are far afield, others are just like, they're a derivative of an existing category. But I would say that healthy soda is definitely a new category as we're talking about it here. And we should probably warn people, before you get too excited and start creating categories, understand that category creation is very laborious and very expensive. 

What we're going to talk through today and probably next week is it requires companies to play the long game because there's a couple of things: Public relations is usually the primary marketing discipline employed because you have to build the category. If the category is new, how much business is in that category? Zero.

You might have 100% market share of that new category, but you still have a market of $0. So, you have to build the category first. And it takes a while for the public to first become aware of and then trial the new category. Now you could shortcut that and be like Poppy and just do a Super Bowl commercial.

Lorraine Kessler
Or at least, you need to build the category in a one, two step. So I wouldn't want people to think that you have to expend all your marketing to build the category and wait back. But what you have to do is create demand for the category, understanding and then demand and attach your name to it right away.

Mark Vandegrift
So, when you're considering building a new category, let's talk about now we've created our own sandbox. How do we rightly design the new category? And I think as our second point here, you use the word coherence. And it's the idea of connecting to an existing idea or category. So go ahead and talk about that.

Lorraine Kessler
Yeah, the name of the category becomes extremely important, right? So you have to use words that help people connect the new thing to something existing. And you've made this point, we've made this point many, many times that the original automobile wasn't called an automobile. People didn't know what that was. It was called a horseless carriage. So two points: One is you have to pick an idea that blends something new with something familiar or old. And this really plays to a psychology that's that actually an author called Derek Thompson or named Derek Thompson talks about in his book, The Hitmakers, that people love a familiar surprise, but they they want a product that they understand that is sneakily familiar. So, they are simultaneously, to use some big words, neophilic, right? Which is, curious to discover new things. And neophobic, which is afraid of anything that is too new or too different. So, yeah. So it's kind of the genius of the marketer is to name the category. And that is really the first job, is to find a name that really resonates. And that one gets that aha, but at the other end of the spectrum gets that, okay, makes sense. So creates understanding. 

And when you can marry this moments of new with the old, what you do is you reduce anxiety and you increase understanding. So, it's super important. So, you know, and the other thing is to be aware of is that you could name a category something and it's iteration. It's origination like horseless carriage or the typewriter was called the personal printing press, right? And it will change as adoption changes, right? 

So that's okay. There's nothing wrong with that. In fact, that allows new competitors to kind of come back in and redefine the category in ways that give to the audience the credit that they now understand. Like they now understand what vinyl upholstery is. So, you can call it performance fabric, right? And they have a cognitive understanding for that. So, naming a category, I always think is one of the most creative jobs that an agency can render to a client, because very often clients are way too close to these things, and they tend to come up with either names that are just very difficult to remember or too technical based on the ingredients or the formulation or the science. And you really do need agency people who I think are the architects of familiar surprises. So, there's an oxymoron for you.

Mark Vandegrift
Yep, yep, absolutely. Yeah, and that really moves into the next step, which is the KISS principle. I know it stands for keep it simple, stupid, but in this case, keep it simply straightforward is a good way to think about that. As we were defining this before, but before we really latched on to healthy soda for Poppy, they were calling it a functional beverage.

Mark Vandegrift
So here's, well, here's what I read.

Lorraine Kessler
I put that in my digestive category, okay? That's not a good category to be in.

Mark Vandegrift
Yeah. No, and here's what I read. Someone described functional as pointing to the prebiotics that are in it. And I thought, well, no one can read into functional that it has prebiotics in it or even the ingredients or anything else. There's no benefit to functional. Everything's functional. And then they use beverage.

Lorraine Kessler
Well, not at my age, not everything is functional. So that's why I put it in the digestive category.

Mark Vandegrift
Yeah. Maybe it functions, helps you function again. And then they took the broader category of beverage. Well, holy cow, beverage goes from, you know, water clear to heavy liquors, right? So, you had to go back to soda. So healthy conveys a benefit because what's the opposite of healthy is unhealthy. We all know sodas are unhealthy. I mean, there's just too many studies that say you can't drink Diet Coke 20 times a day and expected to have good health. So healthy soda makes a lot of sense. 

Even uncola, that kind of seems like, okay, that doesn't describe anything, but they were able to display very quickly. Even when they revealed it, they unzippered that outer coating that was on the Coke bottle. And you saw the dark syrup just fade away and there's the uncola, the clear liquid. And so people could understand that.

Lorraine Kessler
Well, the beauty of both those ideas is, again, it attacks an inherent weakness in people's leading perception of what soda is, right? It's a heavy caramel-based kind of thing that's not good for you. And if you want something lighter, well, then you want an uncola, right? If you want something healthier, then you want Poppi. And in each, there's what I talked about, that aha, there's that aha kind of juxtaposition of it's soda, but it's healthy. It's soda, but it's not heavy. It's light. So there's that beautiful kind of oxymoron.

Mark Vandegrift
Good. Well, we got through three of our steps today. And in our next episode… 

Lorraine Kessler
How many do we have? 44?

Mark Vandegrift
…we'll cover three out of 44. No, three out of nine. I promise we'll get through the next six on our next episode. But yeah, but thank you for joining us today. And if you haven't liked, shared, subscribed, or told your friends about the Brand Shorthand Podcast,

Please do, and Lorraine, you want me to say it again, please subscribe. We love the fact that we have so many followers now and listeners. And until next time, have an amazing day.