Should You Create a New Category, or Compete in the One You're In?
Category design has a reputation for being the ambitious answer to every positioning question, and category designers, myself included, have done a lot to earn it. But creating a new category is expensive and slow, and for plenty of companies it’s the wrong call. The more useful question is whether your problem is the category you’re in, or the way you compete inside it.
Creating a category and owning one aren’t the same thing
Creating a category means naming a problem the market doesn’t have a name for yet, and then teaching buyers to look for it. Owning a category means being the company everyone else in it gets compared to. Buyers use your language to describe the problem, and when a competitor pitches, they’re asked how they’re different from you.
Ownership is what pays. Creation is one way to get it: if you name the category, you start as its reference point, and later entrants have to explain themselves in your terms. But you can also end up owning a category you didn’t start, by redefining what it’s about, and you can create a category and still lose it to a better-funded company that arrives two years later and tells the story louder.
So the decision isn’t really “create or compete”. It’s which route to the reference point you can actually afford.
When you should compete where you are
Stay in your category and compete harder inside it when these are true:
- When you lose, you lose on terms you accept. Buyers compared you with the right competitors, on the right criteria, and picked someone else. That is a product, pricing or sales problem, and a new category won’t fix it.
- Buyers already budget for the category. A line in someone’s budget is worth a lot. Leaving the category means asking every buyer to find budget for something new, which is a much longer sale.
- Nobody owns it yet. If the category is crowded but has no clear leader, the reference point is still available, and taking it is cheaper than building a new market from scratch.
When the category is the problem
Consider a new category, or a redefined one, when the evidence looks more like this:
- When you lose, it’s on terms that don’t describe you. You keep getting scored on features you deliberately don’t build, against competitors who solve a different problem. The comparison itself is working against you.
- Buyers keep asking “so you’re like X?” And your team keeps answering “sort of, but…”. Every “but” is a salesperson doing category education on their own, one call at a time, without a script.
- The problem you solve has no name. Buyers describe it in a paragraph rather than a word, which means they can’t search for it, can’t budget for it, and can’t easily explain to their boss why they want it.
Three questions before you commit
Can you fund the story for years? A new category is only designed once it’s in use: when your team sells in that language and customers, analysts and press use it back. That takes years of repetition, not a launch. If the company can’t sustain it through a bad quarter, the category will belong to whoever can.
Is it bigger than what you’d be leaving? A niche you call a category is still a niche. The new category has to describe a problem that enough buyers have, or will have, to be worth leading.
Is leadership prepared to say no? Owning a category means turning down deals, features and messages that belong to the old one. If the company isn’t willing to disappoint some existing buyers, it will drift back to competing on the old terms, only now with a new name on top.
Where we’d start
Before anyone decides between the two, it’s worth finding out how buyers currently see you, which is often different from how you see yourself. The Positioning Stress Test is built for that. In ten business days, it tears down how you actually show up to buyers, around one question: can they tell you apart? If the answer points to a new category, you’ll know why. If it doesn’t, you’ll have saved yourself a very expensive detour.