In the current marketing environment, it seems daunting for any one company to dominate its category, and yet many do. In fact, examples of  “Category Killers” emerge all the time – companies that have discovered how to redefine and dominate their markets, make the older versions of their category irrelevant, and force their competitors to change or go out of business.
 
Category Killers can be found in every industry, but some of the best known examples have emerged in retail over the last 20 years. With the ascension of large-format, warehouse-style retailers such as Wal-Mart and Home Depot, traditional Main Street retailers either had to fundamentally redesign their value propositions to customers or go out of business. If the value of retail is defined by warehouse-style selection and extremely low prices, the rules of engagement favor the Category Killers. The only way for a Main Street retailer to survive is to redefine its own value proposition in such a way that is different, and more appealing to target consumers than Wal-Mart's. The Main Street retailer is now typically relegated to serving a niche segment of the population.
 
Other examples of Category Killers are all around us. In the last 5 years, “reality” television programs have dramatically redefined the landscape of television programming by combining contests with documentary-style editing. Traditional programming now has to adapt or perish in order to re-connect with audiences and create new opportunities for advertising revenues. When Southwest Airlines entered the market over 25 years ago, they fundamentally redefined the category of air travel. Early on, they defined their competition as not only the other airlines, but also lower-cost bus and auto travel… and Southwest Airlines is the most consistently profitable airline in the history of aviation. This was accomplished by completely redefining the consumer experience and value proposition.
 
Companies don’t have to be start-ups to redefine their categories.  Chrysler combined the cargo van and the station wagon to create a whole new form of vehicle, the mini-van. Harley-Davidson redefined itself from motorcycle manufacturer to lifestyle brand and saved the company.
 
True Category Killers achieve enviable positions in their markets.  They have clear leadership positions, fast-growing market shares, high margins, and the ability to dictate the terms of their competition.
 
Becoming a category killer is not an easy undertaking. There’s much more to category redefinition than changing messages. The context for the relationship with customers has to be re-aligned in a way that not only better fulfills a customer’s need, but also plays directly to the unique strengths of that company. A successful category redefinition alters the customer benefit, re-aligns products or services to support that benefit, and/or changes focus to a new customer group and sometimes even changes the competitive set.
 
Most companies never manage to break free of their existing categories — not for want of desire, but often because it is always extremely difficult to imagine and deliver upon a new context for a company.  Difficult as it is to make this kind of fundamental change, it is possible if a company is able to focus in on three required elements for category change:
 
1. a clear understanding of who the company is, how the category is currently defined and what/who their competition is,
 
2. a new definition of the customer need, products and services to better favor the company’s strengths, and
 
3. a platform of products and services that support continued growth of the redefined category.

The redefinition process needs to help build a context for where a company’s true strengths lie, and how those strengths can be reapplied in a new context. Frank assessment and diagnosis is required, and can only be served by methodical research, analysis and customer interviews.
 
Once a thorough analysis has been done, it’s possible to pick out threads of strategies to build a new platform. At NPI, we use a diagnostic technique called, NewCat^® Transfer that was developed to help companies rethink their businesses from a completely different point of view by using case histories of companies that redefined or created new categories (NewCats^®). By shifting the point of view away from current operational challenges and by learning from companies in completely different industries or sectors, it is possible to open up new applications and new contexts for a company.
 
NPI clients in such industries as financial services, telecommunications, retail, consumer and business-to-business services have successfully redefined their categories by using NewCat^® Transfer cases such as Starbucks, which dramatically changed its category from a commoditized daily staple to a social coffee experience.  In the 1970s, there was little to no price elasticity — whenever price rose, consumption went down.  Sold in 2 pound cans, pre-ground coffee appealed to a relatively narrow target market and delivered slim profit margin.
 
By redefining the category from bulk ground coffee to a premium coffee experience, Starbucks became a Category Killer.  Starbucks has become the leader in distribution of premium style coffee, now a necessity for millions at a price point never previously believed possible.  Moreover, they succeeded in redefining their customer benefit, making their premium flavored and espresso drinks “social beverages,” routinely purchased by broad market of users. They deliver this experience through a wide variety of gourmet flavors, significant consumer participation through the ordering experience and a European café-like environment. They also expanded the coffee market itself to a younger group of historically light consumers of coffee.
 
Starbucks continued to ensure its category dominance through innovation, developing beverage options for non-coffee drinkers, leveraging its market position to develop a new music distribution channel, and working backward into the traditional coffee channel of grocery stores.
 
Starbucks redefined their category, changed the rules, and became the dominant force in U.S. coffee distribution. By using NewCat^® Transfer cases such as Starbucks, NPI clients have been able to re-imagine their entire strategy and ultimately redefine their category of business. As new products, services and distribution elements are developed, the new category becomes increasingly more tangible — and ultimately more valuable to customers.
 
Do you want to become a Category Killer? Consider the following two questions the next time you reflect on your marketing challenges:
    
• How is your category now defined and who is your competition?
   
• How can you change your category and change the rules of engagement in you favor?

NPI has advised a range of Fortune 100 Companies, such as Proctor & Gamble, Wells Fargo, Pillsbury, and Sprint for over 35 years.