The Law of the Category: Creating and Dominating New Markets

Business

April 28, 2025

If You Can’t Be First, Create a New Category

In the competitive world of marketing, being first to market with a new product or idea provides a significant advantage. However, when entering a crowded marketplace with established players, being better than the competition often isn’t enough to secure a leadership position. This is where the Law of the Category becomes relevant. If a company cannot be first in an existing category, the next best strategy is to create a new category altogether.

Creating a new category allows a brand to position itself as the pioneer and leader, even if it is not the first to market. This approach involves introducing a product or service that addresses a unique need or problem in a way that no other competitor does, essentially creating a new space in the market. By doing so, a company becomes synonymous with that category, establishing itself as the go-to brand for consumers who are looking for a solution to a new or previously unrecognized problem.

For example, when a company introduces a new product that is radically different from anything available before, it can define an entirely new category and claim dominance. Instead of competing directly with established brands, it shifts the competition to defining and owning the new space. This creates a unique opportunity to build a brand from the ground up and become the market leader within the newly created category.

Redefining Markets to Your Advantage

Redefining a market involves shifting the way consumers view and approach a particular product or service. By re-framing existing categories or redefining market boundaries, a company can carve out a unique niche that gives it a competitive edge. This requires both deep insight into consumer needs and an innovative approach to meeting those needs in a way that hasn’t been done before.

Reframing can be a powerful tool for companies that are entering an existing market with a new perspective. By presenting a product or service as a solution to a new problem or enhancing it in a way that shifts consumer perceptions, a company can essentially redefine the rules of the market. This approach allows the company to distance itself from existing competitors and attract customers who may not have been satisfied with traditional offerings.

For example, some companies have successfully redefined what it means to be “luxurious” by offering high-quality goods at a more accessible price point. In doing so, they’ve created an entirely new market segment—luxury for the everyday consumer—that didn’t exist before. This strategy can work in any industry, from fashion to technology, by focusing on redefining the value proposition and repositioning a product in the minds of consumers.

Real-World Examples of Category Creation

There are several examples throughout history of brands that successfully created new categories and became market leaders as a result. These examples demonstrate how the Law of the Category can be leveraged to achieve market dominance, even when a company is not the first to introduce a product or service.

One of the most notable examples is the creation of the smartphone category. While mobile phones existed long before the introduction of touch-screen smartphones, the company that pioneered the smartphone category did so by introducing a revolutionary new way to interact with a phone—a touch screen that allowed users to engage with their devices in a more intuitive and user-friendly manner. This was a new category that went beyond simple mobile phones and created a whole new ecosystem of apps, services, and accessories that were previously unheard of.

Another example can be found in the rise of electric vehicles. While cars had existed for over a century, the introduction of electric cars created a new category within the automotive industry. By positioning electric cars as an environmentally friendly alternative to traditional gasoline-powered vehicles, the company that led the charge in this market didn’t just improve an existing product but created an entirely new category that’s grown exponentially in recent years.

These examples show how powerful it can be to create a new category. By offering something fundamentally different from existing products, companies can carve out a niche for themselves and redefine what customers expect from the product or service.

Naming and Owning a New Category

Once a company has successfully created a new category, the next challenge is to name and own that category. The name is essential for branding and market positioning, as it needs to resonate with consumers and clearly convey the essence of what the product or service offers. A strong category name not only defines the product but also influences consumer perception and can help build loyalty.

In order to own a category, a company must consistently associate its name with that category in the minds of consumers. This involves a mix of strategic marketing, consistent branding, and customer education. Over time, the name of the category should become synonymous with the company’s brand. Ideally, consumers should automatically think of the brand when they think of the category.

A well-known example is the word “Kleenex,” which has become the de facto term for facial tissues, regardless of the brand. The company behind Kleenex successfully positioned itself as the leader in the tissue market, and over time, the name has become synonymous with the category. This kind of brand recognition is the ultimate goal for any company seeking to own a newly created category.

Challenges of Being a Category Creator

While creating a new category can be a powerful strategy, it is not without its challenges. One of the primary obstacles is consumer education. When a company introduces a new product or service that has no direct comparison, it must invest significant time and resources into educating the market about the benefits and uses of the new category. This can be a slow process, and success is not guaranteed.

Another challenge is the risk of competitors entering the market. Once a new category has been established, other companies are likely to follow suit and create similar offerings. As more players enter the market, maintaining leadership becomes increasingly difficult. A company that created the category must continue to innovate and refine its product to stay ahead of the competition and retain its position as the leader in the space.

Moreover, creating a new category often requires substantial financial investment. There is a risk that the market may not embrace the new product, and the company may not recoup its investment. It requires careful planning, research, and market analysis to ensure that the new category will have enough demand to sustain long-term growth.