37. KNOW THE PRODUCT –MARKET CATEGORY MAP
INTRODUCTION
One of the most important research and analysis requirements is to identify the ‘market
category’ in which the ventures ‘product’ competes, along with other brands. This is a
significant challenge, not alone at start-up /emerging stage, but also an ongoing basis for
established entrepreneurs. Markets develop, consumer needs change and competitor brands
evolve. Any or all of which create the challenge – are you competing in the right market
category?
MARKET CATEGORIES
A market category is created by a common customer need and aggregate buying power,
which in turn, typically spawns (many) product solutions – each of which form into differing
groups, offering alternative ways to satisfy the customer need. In the dynamic that is a
market, these alternatives evolve into ‘product type markets’- big and small, growing and
declining- each with its set of competing ‘brands’. According to research by McKinsey & Co
the top three brands in each product type market get 70% of the sales opportunities.
Entrepreneurs must know their ‘market category’ in order to create and continually re-invent
the top-three brand positioning, needed to achieve sustainable competitive advantage and
success.
START POINT
A good starting point to mapping a product’s market category is to review the markets'
competing, but existing products. Rarely does a new venture have an entire market to itself,
regardless of the innovative quality of its product. Customer needs are seldom created by new
products. Rather, new products provide new ways of meeting existing needs. For example,
Sony’s Walk Man Music Cassette Player - a very innovative consumer product- met the needs
of customers who wished to listen to music - while on the move!
This relationship between customer needs and varied product solutions is the basis for the
concept of the market category. Market categories are created by needs, buying power, and
products to satisfy needs. If a need is present, the overwhelming odds are that there are
already some products around to satisfy that need. Thus, such products become a source of
competition. For each customer need, there are typically several products available to satisfy
that need. A ‘generic class’ groups all these products into one category, and each product in
the generic class provides an alternative way of satisfying the need. Each alternative product
can then be grouped into the different product types or forms. Finally, each product type has
one or more similar brands (i.e., different company offerings) competing with each other.
PRODUCT TYPE
MARKET NO.1
BRAND 1
BRAND 2
GENERIC
PRODUCT
MARKET
PRODUCT TYPE
MARKET NO.2
BRAND 3
PRODUCT TYPE
MARKET NO.3
EXAMPLE
For airline passengers a generic need, or interest, is in being entertained during the flight. The
generic class of products available to satisfy this need is termed by the industry as ‘In Flight
Entertainment (IFE)’ which basically comprises entertainment content (movies, music, short
programmes, etc) and an audio-visual system to see and listen to it. The generic product
market (IFE) has four different product-type markets, each satisfying the passenger need in
alternatives ways: single channel, multi-channel, on-demand and real-time entertainment.
Each IFE product-type market has its competing brands. To build an edge over competitors,
each company offers a somewhat unique brand, to position itself in the minds of the producttype market.
In-Flight Entertainment ‘Product –Market Categories’
MARKET CATEGORY
THE PRODUCT-TYPE MKTS
SINGLE CHANNEL
AUDIO VIDEO
MULTICHANNEL
AUDIO VIDEO
IN-FLIGHT
ENTERTAINMENT
INTERACTIVE /
ON-DEMAND
AUDIO VIDEO
REAL-TIME
TV & INTERNET
CONTENT
OVERHEAD
SYSTEM
THE COMPETING BRANDS
Panasonic
Rockwell Collins
Thales
IN-SEAT
SYSTEM
Panasonic
Rockwell Collins
Thales
IN-SEAT
SYSTEM
Panasonic
Rockwell Collins
Thales
HAND-HELD
CONSOLE
Pioneer
Sony
IN-SEAT
SYSTEM
Panasonic
Rockwell Collins
Thales
HAND-HELD
CONSOLES
Airvod.
Digecor
Panasonic
LiveTV
IN-SEAT
SYSTEM
IT DEFINES THE COMPETITION ZONE
Market categories, product type-markets and competing brands comprise the
competitive market arena. Each company and its brand is competing for business in
this arena, taking on both similar and dissimilar brands of other product types when
competing for a share of sales. In the ‘IFE’ market arena, for example; the hand-held
on-demand entertainment console is really competing with other in-seat on-demand
entertainment systems, as well as all other types of entertainment systems like multichannel and real-time.
OPPORTUNITY KNOCKS
Understanding this larger arena is not just important for a new start-up/emerging
venture. It is also very important to track changes in categories, product-type markets
and competitor brand positions on an on-going basis. The obvious benefits of this lie
in pre-empting threats to the business from missing competitor moves and not
responding to changing customer needs. Tracking changes in the market arena also
yield opportunities to create new markets and growth for the venture. Coke Cola
missed the change in the ‘thirst’ market category. They continued to see the market in
their own ‘brown liquid’ product-type market terms. New entrepreneurial competitors
looked at the category differently and saw opportunity to meet the thirst need in new
ways:
 Snapple created the ‘fruit-flavoured teas’ product-type market and won the
no.1 brand position within the market.
 Gatorade created the ‘sports drinks’ market
 Nestle created the ‘designer water’ market
 Red Bull created the ‘novelty drink’ market
CONCLUSION
The task of defining the market category and constituent product-type markets is
challenging, because more than one market category and product type classification is
possible. Ultimately, management must decide what product-market structure makes
the most strategic sense for the company. Outcomes to that definition of productmarket structure leads to; strong, sustainable brand position; identification of new
market opportunities and knowing the entrenched competitors who will not easily
yield their positions in these markets.