How to Create a New Product Category (Barbra Gago)

TL;DR

A product category only becomes real once competitors emerge to validate it, so early rivals are a good sign, not a threat. Create a category when your scope is too big for an existing label, when buyers lack budget for the old term, or when that term carries a bad reputation. Validate it through analysts, directory sites, thought leadership, and educational content.

Transcript

when you're building a category you need to make sure that there is a category that's validated by analysts and directory sites and things like that but also you want to have a lot of traction in terms of thought leadership like why is this the category what are the unique kind of value propositions of this particular thing what are the pain points... Read More

Key Insights

• A product category is a set of features or products solving a specific pain point that customers likely have budget allocated for, as organized by review and directory sites like G2 Crowd or Software Advice.
• Category creation is not complete until competitors arrive: a category is not officially a category until more companies claim to do the same thing, so new entrants validate rather than threaten it.
• Scope is the main driver of category creation. Miro moved beyond the small 'online whiteboard' label to 'visual collaboration' because the platform's potential was far larger than what product or engineering teams alone would use.
• Buyer budget determines category viability. Companies had a budget line for applicant tracking systems but not for visual collaboration, so creating a new category also requires educating buyers to allocate new budget.
• The language customers use to describe their pain points and situation is a key factor in deciding whether to create a category, alongside budget and existing competition.
• Greenhouse tried to steer clear of the applicant tracking system (ATS) label because it had a bad name from transactional predecessors like Jobvite, but ultimately stayed within and competed in the ATS space.
• Validating a new category requires proof from analysts and directory sites plus strong thought leadership explaining why the category exists, its unique value propositions, and the pain points it solves.
• A category functions as the pitch: it becomes the headline and the way you sell the product, such as positioning as 'the leader in visual collaboration.'

Questions & Answers

Q: What is a product category?

A product category is a set of features or products that solve a specific pain point customers most likely have budget allocated for. Barbra Gago suggests exploring your relevant categories on review and directory sites like G2 Crowd or Software Advice, which categorize products based on feature sets. Within each industry there are many category types, ranging from wide all-in-one solutions to narrow best-in-class tools, and how granular versus broad a category is maps to how big the market is.

Q: How do you decide whether to create a new category or win an existing one?

The decision comes down to your overall objective and the current competitive situation. Key factors include scope (whether an existing label is too small for your ambitions), whether companies already have budget for the existing category, the language customers use to describe their pain points, and whether competition exists. At Miro the scope of the platform made the small 'online whiteboard' label limiting, so they created 'visual collaboration' instead.

Q: Why does a category need competitors to be considered real?

According to Gago, you are not actually building a category until there is competition, because it is not officially a category until more companies claim to do the same thing. This was a big learning for her: it is okay when new companies enter and say they are in your category, because their presence validates that the category exists. Competitors therefore strengthen rather than weaken a newly created category.

Q: Why did Miro create the visual collaboration category?

When Gago joined, Miro was positioned around the concept of an 'online whiteboard,' which was a real but much smaller category that few people searched for and that risked being used only by product teams, engineering teams, or schools. The motivating factor was making Miro something big and needed by every company. Given the platform's enormous possibility, which she likened to an ever-extending universe, the 'online whiteboard' label was simply too small.

Q: Why did Greenhouse try to avoid the ATS category?

Greenhouse operated in the applicant tracking system (ATS) category, but at the time ATS had a really bad name. Earlier systems, including Jobvite which arrived in the mid-2000s as the new and improved ATS focused on social recruiting, were very transactional and not strategic. Greenhouse wanted to steer clear of the ATS space even though it was an ATS. Ultimately, however, the ATS market remained the space it competed in.

Q: What role does budget play in category creation?

Budget is one of the main factors in deciding whether to create a category. Some existing categories, like ATS, already had budget allocated by companies, while newer concepts like visual collaboration did not. When you generate a new category, you also need to educate buyers that there is now a category they can budget for and explain why they should allocate budget for it, which adds an education burden to the category-creation effort.

Q: How do you validate a newly created category?

Validation requires making sure the category is recognized by analysts, directory sites, and similar sources. Beyond that, you need a lot of traction in thought leadership that explains why this is a category, what its unique value propositions are, and what pain points it solves. Generating substantial content around the category is also essential, because you must educate buyers that a new, budgetable category now exists and justify why they should invest in it.

Q: How is a category used once it is established?

Practically, the category becomes the way you pitch your product. It often forms the big part of the headline and the core of how you sell, for example positioning yourself as 'the leader in visual collaboration.' A single product can also tick off boxes for multiple categories; Gago notes Miro created visual collaboration as a category while still satisfying criteria for other categories as well, giving it broader market reach.

Summary & Key Takeaways

• Barbra Gago, drawing on her marketing leadership at Miro, Greenhouse, and Culture Amp, explains category creation. At Miro she replaced the small 'online whiteboard' label with 'visual collaboration' because the platform's scope was far larger than any niche team use, aiming to become something every company needs.

• Deciding whether to create a category depends on scope, whether buyers have budget for the existing term, the language customers use for their pain points, and existing competition. At Greenhouse, the ATS label had a bad reputation from transactional predecessors, so they tried to avoid it but remained an ATS.

• Counterintuitively, competitors validate a category rather than undermine it, since a category is not real until multiple companies claim it. Creating a category also means educating buyers to budget for it, backed by analyst validation, directory listings, thought leadership, and supporting content.