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Creating category leading companies

Randy Dobson

Randy Dobson

Creating category leading companies

In today’s fast-paced business landscape, achieving “Category King” status is the ultimate goal for companies. As Peter Thiel put forward in his book “Zero to One”, category owning companies share some common characteristics, such as proprietary technology, network effects, economies of scale, and branding. However, these are merely the table legs.

To create a successful Category King business, companies need to go beyond these traditional characteristics and establish a new category in the minds of consumers which generates a gravitational pull on the market. Research shows that Category Kings don’t just offer better products or services; they offer a new point of view on the world, making what came before seem outdated, clunky, inefficient, costly, or painful.

MOI launch new product

M.O.I Cosmetics is Vietnam’s leading domestic cosmetic brand

To establish a new category, companies must adopt a category design mindset that conditions the market so that they can own real estate in people’s minds. As Warren Buffet said when discussing some of his most notable investments, “Share of mind is more important than share of the market. If you own a favorable place in people’s minds the market will follow”. This requires companies who want to own their category to market the problem, not just the solution.

Warren Buffet

Warren Buffet is an American investor, and business magnate, who is widely considered one of the most successful investors in history

Winning companies today focus on marketing the problem and creating a new category, which becomes synonymous with their brand. Think Tesla, AirBNB, or Redbull. Each created a new category within well-established industries like automobiles, travel accommodations, and soft drinks, completely rewriting the rules of the game.

Moreover, it’s not just about owning a category; it’s about building momentum into the business. To do this you need to create a “flywheel” of momentum which requires three key elements:

1. A Clear New Category

Companies need to establish a category that is unique and different from what is currently available in the market. This requires creativity, strategic thinking, and the ability to identify efficient ways to condition the market to your new point of view.

2. A Product that Provides a Meaningful Solution

Companies need to provide a product that meaningfully solves a problem or addresses a need. There are two types of products: “Aspirin” to stop pain or “Vitamins” to improve the quality of life. Aspirin that can make an existing pain point go away, is always more effective in quickly moving a market to a new point of view.

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3. A Revenue Model that Aligns with the Target Customer and Product

Companies need to have a revenue model that aligns with the target customer and product. The revenue model should match the current market conditions allowing the company to scale and grow while generating cash flow. New businesses are in a race for survival and being too early is the same as being wrong when it comes to getting momentum and growing your business.

A Revenue Model that Aligns with the Target Customer and Product

When these three factors are optimized, companies can establish a Category King business that is hard to stop. This approach not only creates a successful business but also disrupts existing categories, making the old ways of doing things irrelevant. By offering a new point of view on the world and creating a new category, companies can dominate their market and achieve long-term success.

The path to becoming category category leading companies is not an easy one, and keeping that status over the long term requires constant innovation & marketing but it is achievable. Companies need to focus on category design, offer a meaningful solution, and align their revenue model with their target customer and product. By doing so, they can establish a new category, create a flywheel of momentum, and become a Category King that dominates their sector for many years to come.

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