How to Increase What People Are Willing to Pay for Your Product or Service
Implement this marketing strategy to help customers better understand your value and make it more relevant to them, while putting competitors at a disadvantage (or making them irrelevant).
Note: This framework is one of the many featured in Growth Marketing SuperBoost.
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A business or organization’s category (or frame of reference) is the foundation of its brand. And its brand is the foundation of perceived value.
The more perceived value your business or organization has, the more people are willing to pay for your product or service, and the less they are willing to consider your direct and indirect competitors.
As UC Berkeley professor George Lakoff explains, a frame of reference is absolutely essential; get it wrong and your difference may be ignored.
“Framing provides a mental structure that shapes the way we see the world,” according to Lakoff. “If a strongly held frame doesn’t fit the facts, the facts will be ignored.”1
Plus, it is human nature to categorize; it makes the big, busy, bustling world easier to understand. And the more innovative, disruptive, or unique your offering is, the more it needs a frame that customers can relate to. If your business or organization cannot easily be defined, people often push it to the margins and leave it there. This is because its complexity is easier to ignore than to figure out.
Choosing the right category is about defining, or framing, what people are buying in such a way that your perceived value dominantly shines through. The goal is to identify the best category that will help your customers understand your value and make it relevant to them, while putting competitors at a disadvantage (or making them irrelevant).
Customers ultimately do not care about products or services, or the businesses and organizations that provide them; they care about categories, especially new ones.
For example, consumers do not care about the company Domino’s Pizza; they care about whether or not their pizza will arrive in 30 minutes. By first preempting a new category (as Domino’s did with the home delivery of pizza) and then aggressively promoting the category, you create both a powerful brand and a rapidly escalating market.2
According to one data set, 13 companies that were instrumental in creating their categories accounted for 53 percent of the incremental revenue growth and 74 percent of incremental capitalization growth over three years.
When businesses and organizations gain early leadership in a category, they gain more resources to innovate, create, market, and sell their brand. The perception of leadership and innovation has high value. By creating a new category, your business or organization will be in a solid position to surpass the competition or break into a flooded market.
On top of that, your business or organization will be positioned to own the category as the de facto leader. Category creation is nothing short of a game-changer.
But creating a new category is not necessarily suitable for every business or organization, typically because of budgetary and/or bandwidth constraints. If this is your business or organization, you can also associate it with an existing category, which gives customers a quick mental shortcut to connect your business or organization to known “elements of value,” self-select whether they should learn more, and consider how and where it fits into their life.
For businesses and organizations that aim to be a leading brand in an existing category, you should “promote the category, not the brand,” according to marketing experts Al Ries and Laura Ries.
Furthermore, the brand leader “owns a word” that stands for the category. Not a complicated word. Not an invented one. And not a word that another business or organization owns. The simple words are best, words taken right out of the dictionary.
This is what marketing experts Al Ries and Jack Trout call the “law of focus.” You “burn” your way into the mind by narrowing the focus to a single word or concept. If your business or organization is not a leader in its category, and does not aspire to be, then your word should have a narrow focus. Even more important, your word has to be “available “in your category; no competitor can have a serious claim to it.3
The most effective words are simple and benefit-oriented. No matter how complicated the product or service, no matter how complicated the needs or desires of the market, it is always better to focus on one word or benefit rather than two or three or four.
And words come in different varieties. They can be benefit-related (e.g. cavity prevention), service-related (e.g. home delivery), audience-related (e.g. younger people), or sales-related (e.g. preferred brand).
There are also times when it is best to reevaluate your category (whether you chose it or it chose you). In order for businesses and organizations to grow and win, the category and business or organization must seamlessly fit.
Sometimes, the category you are or have been associated with is no longer serving your business or organization. Here are some criteria that indicate it might be time to break out of your current category:
Your category is in crisis or has fallen out of favor with the majority of your ideal customers.
Your current category prevents your key differences from standing out as “must haves.”
You are altering your strategic direction and your business or organizational model is shifting.
You have created a significant innovation or proprietary advantage.
Direct and/or indirect competition is stifling your ability to grow.
You are best off and ready to extend your brand beyond existing customer bases.
Whether you are eager to start a new category or improve your status in an existing one, the process for categorization looks like this:
1) Research and Analysis
Develop a deep understanding of the category dynamics within the current market. What direction is the market going? What is the threshold for change amongst your target audience?
Track the dynamics of existing category labels to determine when a window of opportunity will open up for a new category, or for your repositioning in an existing one.
Additionally, use data (such as Google search analytics and software like SimilarWeb) to understand how customers are categorizing emerging brands, so you can fine-tune your new category development or repositioning.
Also, look at your competition (both direct and indirect). How does your offering differ?
Lastly, analyze your ideal customers. What language are they using to describe your business or organization and its offering?
2) Finding the Sweet Spot
Imagine there are three overlapping circles. One circle is what your business or organization does really well, another circle is what your competitors do really well, and the last one is what the category’s customers really want.
Again, customers do not care about products and services, or the businesses and organizations that provide them. They care about categories, so think outside of your business or organization and its offering.
Now, think about the intersection of these two circles: what your business or organization does really well, and what the category’s customers really want. Once you think that you have found this sweet spot, put your competitors in your place and ask yourself, honestly, if they also fit there.
If they do, you have not drilled deep enough. Keep drilling, and then put your competitors in your place again and ask yourself, honestly, if they also fit there. Once the answer for all your major (and up-and-coming) competitors is a confident “no,” you have found your sweet spot.
3) Keeping It Simple, Clear, and Relatable
It is tempting to come up with a catchy, quirky, or unique word or set of words for new category development or repositioning within an existing one. And it can seem, understandably, that this word or set of words will quickly grab people’s attention, to help your business or organization stand out too.
But that is not the purpose of establishing your business or organization within a new or existing category. Words that are not recognizable create confusion and uncertainty for customers. When the category name is not immediately clear, the business or organization and its offerings become unattractive.
4) Managing Expectations
There are two types of expectations to manage: which businesses or organizations truly belong in the category or subcategory, and what consumers should expect from it.
A category or subcategory name should represent the “rules of membership” — the specific characteristics that the businesses or organizations and their offerings within the category or subcategory must have in order to belong to it.
For consumers, your marketing messaging should first and foremost communicate the importance of the category or subcategory — why it matters. Again, customers do not care about products and services, or the businesses and organizations that provide them. They care about categories.
Therefore, use the strongest assets of your business or organization to go beyond features and benefits. Prove that your business or organization is poised to be the category leader because its purpose and promise are head and shoulders above the competition (and there is always competition).
Speaking of competition…
5) Generating Competition
It may sound counterintuitive, but when you are creating a new category or subcategory, competition helps legitimize a market and increases the size of the pie. Your business or organization will actually benefit if others are spending their marketing dollars to help popularize the value of the category or subcategory.
The key, for those aiming to build a new category or subcategory, is to be the first to market, so to speak.
The last piece of the category puzzle is to develop a category-centric statement, which goes like this: For (buyer persona), who wants to (motivation), in order to receive (“elements of value”), unlike (primary competitors), we deliver (job to be done). If you have multiple buyer personas, complete this statement for each one.
Lansing Valle, Paige. “Brand Category Creation: A Strategy for Success.” Emotive Brand.
Ries, Al and Ries, Laura. “The 22 Immutable Laws of Branding.” Harper Business, 2002.
Ries, Al and Trout, Jack. “The 22 Immutable Laws of Marketing.” HarperBusiness, 1994.