What is Category Design (and why the best product isn't enough)

What is Category Design, in plain terms?

Before we buy anything, each of us puts it in a box: “mineral water,” “accounting software,” “sofa,” “marketing agency.” Inside the box we compare the options, and when they all look alike we choose on price. That's why so many companies spend years explaining that they're a little better than the others: same box, same comparison, thinner and thinner margins.

Category Design moves the work one step earlier. Instead of asking how to beat the competition, it asks what problem the customer has that nobody is naming, what the solution to that problem is called, and how to make sure that, in the customer's mind, that new box holds only one name. When it works, the question the customer asks changes, from “who's cheapest?” to “who does this?”

A quick example. Listerine was created in 1879 as a surgical antiseptic and for decades it wasn't much of a success. In the 1920s it was promoted as a remedy for “halitosis,” a medical term few people knew at the time for bad breath. The liquid in the bottle was the same. What changed was the problem it answered, and with it the box the customer put it in.

Where does Category Design come from?

The name and the method spread with Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets, published by HarperBusiness in June 2016. It has four authors: Al Ramadan, Dave Peterson and Christopher Lochhead, Silicon Valley consultants, and the journalist Kevin Maney. The book studies companies such as Amazon, Uber and IKEA, and uses the term “category king” for the company that defines a category and then dominates it.

Two years earlier the same authors had published a study, Time to Market Cap, on American tech companies founded in 2000 or later and backed by venture capital. Its most quoted conclusion is that the king of a category usually takes 76% of the market value of the entire category. The number helps explain the logic of the method, but it should be read for what it is: research by the consultants who sell the method, based on a sample made up only of American tech companies.

The underlying idea is older than the book. In the spring of 1972 Al Ries and Jack Trout published three articles on “positioning” in Advertising Age, which led in 1981 to the book Positioning: The Battle for Your Mind. Later, in The 22 Immutable Laws of Marketing, the second law is precisely the law of the category: if you can't be first in a category, set up a new one you can be first in. Play Bigger takes that law and turns it into work that involves the whole company, from the product to the organization to the way the salespeople talk.

How does Category Design work, step by step?

There's no single recipe, but well-run projects follow roughly this sequence.

1. Listen to the market's own words. You interview real customers, lost customers, salespeople and resellers, with one simple question: “How would you describe to a friend what this company does, and why would you choose it?” The answers show which box the market has already put you in, which is often not the one you think.
2. Write the problem before the product. The sentence you're looking for has this shape: “today the customer loses something because nobody does a certain thing.” If the problem doesn't convince the buyer, no name will save it.
3. Name the category. Two, three or four words that describe the solution, not the product. You test several names with real customers, because a name that wins the meeting and leaves the customer cold is useless.
4. Write the point of view. One or two pages: what the world looked like before, what no longer works, what the new world looks like and why the company is its reference point. The website, the videos, the sales decks and the trade show talks all come out of this text.
5. Change what needs changing. If the category promises something the product, price or service doesn't deliver, the customer notices with the first purchase. The hardest part of the work is often inside the company, not on social media.
6. Launch, then keep at it. You need a public moment when the company names the category first: an event, a trade show, a product release, a video. Then you need years of consistency, until the name of the category and the name of the company become the same thing in the buyer's mind.

Which companies have done Category Design?

None of the companies below talked about Category Design when they started: the name came later. But they are cases where the mechanism is easy to see and the facts can be checked.

Salesforce and the “end of software”

Salesforce was incorporated on March 8, 1999. On February 7, 2000, it introduced itself to the public in San Francisco with an event called “The End of Software,” in front of 1,500 people and with a concert by the B-52's. In March of the same year it paid actors to stage a fake protest outside the conference of Siebel Systems, the leading name in customer management software installed on company premises. The Wall Street Journal covered it.

People remember the protest, but the real move was the phrase. Salesforce never argued that its software was better than Siebel's: it argued that software you buy and install was over. If the customer accepts that frame, Siebel stops being a competitor to beat and becomes the past.

Listerine and the problem that had no name

Joseph Lawrence developed the formula in 1879 in St. Louis as a surgical antiseptic. In 1881 he licensed it to a pharmacist, Jordan Wheat Lambert, who founded the Lambert Pharmacal Company to sell it. The product didn't take off until the 1920s, when it was presented as the solution to “chronic halitosis.” In 7 years the company's revenue went from $115,000 to more than $8 million.

The advertising scholar James B. Twitchell summed it up this way: Listerine didn't create mouthwash, it created halitosis. In our view, this is the second step of the method above, done almost a hundred years before anyone gave it a name: write the problem before the product.

Moleskine, a notebook sold in bookstores

In 1986 the last workshop making the black notebooks that the writer Bruce Chatwin bought in Paris closed in Tours; Chatwin wrote about their disappearance in The Songlines, published in 1987. In 1997 a small Milan company, Modo & Modo, registered the Moleskine trademark and put the first 5,000 notebooks on sale. The decisive choice was where to sell them: mainly bookstores and design shops, rather than stationery stores.

In a stationery store, a hardcover notebook gets compared on price with every other notebook. In a bookstore, between novels and travel guides, it becomes the notebook of people who travel and write, and there usually isn't another notebook on the same shelf to compare it with. The object is almost the same. What changes is the category in which the customer meets it.

What's the difference between Category Design, branding and positioning?

The three terms are often used as synonyms, but they answer different questions.

The three don't exclude each other. A new category still needs a recognizable brand, and Ries and Trout already allowed for opening a category instead of fighting inside the leader's. The practical difference lies in the starting point: branding starts from the company, positioning from the competitors, Category Design from the customer's problem. It also lies in the scope of the work: a new logo gets approved in one meeting, while a new category often forces you to change product, price and the way you sell.

When does Category Design make sense for an Italian company?

Many Italian small and mid-sized businesses share the same profile: a very good product or service, often sold through agents and resellers, in a market where the customer compares price lists. In these cases Category Design becomes worth a look when certain signs appear:

• you lose customers on price to companies you consider worse than you;
• customers describe you in the words of your industry's leader (“you're like them, but...”);
• you do something nobody in your market names, a service, a delivery time, a way of working, and you give it away without talking about it;
• whoever runs the company is willing to change something beyond the communication.

At Project Mantra, to find out on the very first call, we start with two questions: “When you lose a customer, who do you lose them to, and why?” and “If you raised your prices 15% tomorrow, what would happen?” If the answer to the first is “to whoever is cheaper” and the second is met with a long silence, the company is working inside someone else's box.

There are also cases where the method is the wrong tool. If the problem is that nobody knows you because you don't communicate, you need content first. If what you do really is the same as what everyone else does, no new name will make it different. And if you need results within a quarter, it's worth knowing that even a success story like Listerine needed 7 years to really grow its revenue.

What are the most common Category Design mistakes?

Starting from the name. The category name is decided at the end. A brilliant name without a problem the customer recognizes is a slogan, and slogans get changed every year.

Building a category that exists only in the slide deck. If the website announces a new category and the customer gets the same product, at the same price and with the same service as before, the first purchase undoes everything.

Accepting a competitor's rules. When a company responds to a newcomer by copying its rules, it concedes the category. In early October 2003 Siebel Systems, whose founder had dismissed customer management software sold by subscription over the internet two years earlier, launched exactly that kind of service with IBM, at $70 per user per month. A Gartner analyst commented that the move validated a model that until then had been explained mostly by Salesforce. Seen through the lens of Category Design, Siebel was playing in the box its opponent had drawn.

Confusing the first to arrive with the owner of the category. Getting there first isn't enough. Small Parisian bookbinders were already making hardcover black notebooks between the late 1800s and the early 1900s, yet today that category carries the name of the company that revived them in 1997 and put them in bookstores.

Stopping at the launch. A category opens in a day and is won over years. Companies that go back to talking the old way after the event leave the category free for the first competitor that takes it seriously.

One last figure, useful the next time someone says having the best product is enough. Opened up, a Moleskine is a notebook: paper, a hard cover, an elastic band. In 2025 the company that makes it had revenue of €117.8 million.