Category Creation – Understanding Your Customers Better!
Leading Tolaram Brands in Nigeria

Category Creation – Understanding Your Customers Better!

Movies were watched by audiences outside of theatres, mobile or video games were not a new invention, and footwear or noodles were not a new product in the culinary world. 

Yet, Netflix, Apple, X-Box, Crocs, and Indomie created a strong category for themselves across multiple markets. 

How? The answer is simple - They understood the consumer better than others! 

Before we dig deep into it, let's understand the basics first. 


What is Category Creation?  

Simply put, category creation means bringing a new product/offering into the market and creating a consumer base for yourself that was earlier alien to the concept. 

But practically, it is much more than that. Category creation is also habit creation. And it is well known how tough it is to promote a habit, that too at a population scale. 

As I had stated earlier once, category creation is the ability to place the product within the lifestyle of your audience so effortlessly, that one finds it almost impossible to imagine the ordinary customer journey without the product. 

That's exactly what these three, and many more, category-creating companies did with their products. 

 

Why go through all the trouble?

Practically speaking - Business Growth! 

Category creation can essentially create strong moats and build sustainable monopolies for the companies. 

In one of the studies of Fortune's 100 fast-growing companies, it was discovered that companies that were successfully able to create a category within a market witnessed revenue growth as high as 53% and a significant market share growth in a span of 2 to 3 years only. 

So clearly there is a business case for investing in category-creation projects within an organization, especially the ones that are planning on market and portfolio expansion. 

Now, category creation need not be a highly innovative new product always. As in the case of X-box or Indomie, both were essentially business model innovations that were tuned to suit the need of the target audience and fill available whitespace in the market. 

 

Essentials for category creation

  • Consumer First Approach

Companies should focus on providing consumers with something that would improve or simplify their lives. The point to remember here is to know where to start and where to stop. Not to offer something hardly incremental or something highly incremental, beyond a consumer's reach. 

The best example can be taken from Microsoft, which was able to create a category for itself via Xbox but failed to do so with Zune against Apple's iPod. 

"If I had asked people what they wanted, they would have said faster horses" - This quote famously attributed to Henry Ford reiterates the same point. Companies need to identify the core consumer need and then offer a product that is well within the consumer's reach and solves the problem. 

At Tolaram, Indomie did that with its instant noodle meal packs. Even though the product was new to the market, it solved the core need of the majority population, which was to get a complete meal at an affordable price that can be cooked quickly. 

Fast forward to 2022, Indomie is a market leader and a category in itself in the region, serving millions of people every day. 

 

  • Ability to Innovate and Try Persistently:

Of the many obstacles that an organization needs to fight, one of the first is the mental obstacle of "Will it work?" 

Category creation, especially in Nigeria goes through a process that involves trials, errors, and iterations. Especially in a market that ‘seems’ cluttered or saturated, what an organization need is innovation and belief. 

In the case of Nigeria, meal alternatives were already present in the region for the population. It was the sheer ability to try and innovate, that Indomie was able to bring in a new product and replace it with the conventional options. This took multiple product iterations, testing, etc. but eventually, the process paid off and continues to grow to date after 3 decades. 

 

  • Ability to Communicate

There have been numerous examples where an idea that failed for one company, was a big hit for another simply because it was communicated the right way and to the right audience. 

Indomie's communication through activities ensured that the product and messaging reach the end user most effectively. Identifying the right benefit for the right TG is crucial to create a fresh category in a new market. If done properly, effective communication can amplify the category-creation process by multi-folds. BTL and ATL go hand-in-hand on this side of the world. Personal touch with consumers is vital and valued by them for years.

Hence, reiterating the same point - category creation is surely not simple, but it’s also not rocket science. Great technology, process innovations, or a growing consumer basket are just table stakes, at the end, it’s all about knowing the audience, understanding what truly matters to them, and offering them real value both in terms of product as well as experience.

A consistent effort will always ensure that you are to place the right product in the right hands and can do so for a long time! 

 #Innovation #Marketing #FMCG

Mukesh Dave

Technical Advisor at N.K.Industries Ltd

2y

Girish Nice, And Precise and short so any one can read start to end and get feel. I know Our ( Tolaram ) Guiding Priciples and working culture being part of Tolaram Family for more then 11 years. I still feel excited to be again come and be a part of the Team and Big Tolaram Family

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Azuka Ezemakam

Pan-African Banking | Financial Advisory | Business Development

2y

Love this. Thanks CEO.

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Adegboye Adegboyega

Freight forwarder Customs broker Airport to Airport Door to Door Generally Cargo handling Warehousing Haulage

2y

Thanks for posting Girish Sharma looking forward to working with you and your esteemed organisation soon.

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ASHISH K RAJGARIA

DLF| Commercial Leasing | CRE Marketing & Sales | Portfolio Management

2y

Insightful post...

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Dhruv Kumar

Founder@keeK; Delivered Multi-Million $$ Growth for Brands Across Europe, Africa & Asia Markets 🌏 | Ex - Colgate, Kellogg Tolaram

2y

Habit creation and category building go hand in hand. It is tough but builds the strongest foothold for brands. The noodle category in Nigeria is flooded with brands over the last decade after Indomie's category building efforts. But it still doesn't move Indomie from its throne! I ❤️ my Indomie, the words of every Nigerian consumer!

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