In this post, we will discuss the topic of product category creation and address the following questions:
Should I create a new product category?
What are the basic requirements to creating a category?
To Create Or Not To Create
In B2B technology marketing, a few conditions must exist before you should even ponder creating a product category.
Companies should consider creating a new product category if the sales cycle is unnaturally long. If you find yourself saying “it’s like X but…better,” your sales cycle will lengthen because you are now selling X long before you begin selling your own product. You want your sales rep to say “Have you heard of X? This includes X but is purpose-built or specifically for scenario Y.” It is far easier to “land and expand” into the rest of the infrastructure than to replace or displace everything at the outset.
Next, products that compete with multiple large incumbents may require disruptive product category creation due to the need for the former to be anchored against the latter. It is good to be the “Next Gen Firewall” (e.g., Palo Alto Networks) but never good to be the “Cloud Security Platform” (e.g., WTF is that?). In cases where there is no established category, you should consider establishing your brand first in lieu of a new product category.
And, lastly, there should be at least two or more emerging products that can be classified into this new product category. In the beginning, the vendor alone will need to scream loudly and frequently. But, eventually, more than one voice needs to describe and extol the virtues of the new category. To co-develop the new category, think of industry partners beyond the competition. Regional VARs and large national/global SIs. Adjacent technology vendors. Even your first few lighthouse customers.
Real World: App Delivery Born
In early 2003, I was at a then-struggling startup called NetScaler. We developed and marketed an advanced load balancer. To any rational person, NetScaler should have been doomed to fail. Alteon WebSystems (Nortel), Arrowpoint (Cisco), F5 Networks, Radware, and a dozen other vendors were selling practically the same thing to the same set of customers.
The existing category for our products was - at the time - called server load balancing (SLB). It was an established category that buyers recognized. And, there were a few giants or gorillas in the space. We needed to do something dramatically different.
Our sales people struggled to find the right words to describe how our “load balancer” was significantly better than the competition’s “load balancer.” In infrastructure, vendors often fall into the “speeds and feeds” trap.
We went to work trying to figure out the category strategy. We knew that we wanted to turn the major category (load balancing) into a subset of a new, broader (and more advanced) category. To accomplish this, we did something quite different than the status quo. Traditionally, vendors view the product from the buyer’s (person managing the product) point of view. In the case of load balancers, the buyer uses it to balance the load across servers. Thus, SLB is highly descriptive and clear. That is, SLB views things from the server’s perspective - not from the user’s perspective.
We forced ourselves to think harder. We needed something to anchor against but not to mimic as a “me too.”
A server’s role is not to be merely balanced. It needs to balance load in order to serve applications, content, data, services, and so on TO END USERS. Thus, from the user perspective, an appliance front-ending the server (farm) is delivering applications in a highly secure, accelerated manner. It’s an Application Delivery product.
We reached out to both major analyst firms as well as to a set of smaller, upstart competitors and boutique analyst firms to join us in developing this new category. Several quarters later, Gartner ended up calling it the ADC (Application Delivery Controller) market and the rest, as they say, is history.
Our sales reps now had a kick-ass weapon on their side. Knowing that almost every datacenter was running load balancers of some form, we would confidently assert to prospects that “NetScaler had the best App Delivery product in the market.” And, if you are interested in replacing your aging load balancers with something more advanced, let us tell you what this thing does. It was a door nail simple proposition. Two and a half years later, we were acquired for what was a record exit at the time. NetScaler went from being nearly bankrupt to being the gold standard for hundreds of enterprises and Internet companies (including Google’s global infrastructure). Today, as part of Citrix, it continues to touch nearly three quarters of the U.S. Internet traffic.
Where did my confidence in category creation come from? Earlier in my career, I was at Oblix where we transformed the SSO (Single Sign On) and WAM (Web Access Management) categories into a super-set new category called IdM (Identity Management). It was initially called IAM (Identity and Access Management). Oblix, Netegrity, and Securent were the three emerging startups that partnered tightly with Jamie Lewis and his team at the Burton Group to craft the category development strategy. I immersed myself in what my senior colleagues and CEO were doing. And, later, we would replicate the category method time and again with a different group of people with success.
At NetScaler, we turned SLB into Application Delivery. At Infineta, we turned WAN Optimization into Datacenter WAN Optimization. At FireEye, we gave birth to the Botnet Defense system. At StackIQ, we turned server automation into Warehouse-grade Automation.
To recap, you can consider creating a new product category if: (a) your sales cycle is unnaturally long, (b) your product belongs in an established category (to leverage it), and (c) there is more than one vendor or partner (besides you) that can help co-pilot the market awareness for this new category.
Why 85 Advisors
A major reason why we introduced a Go-To-Market marketing service capability for early- to growth-stage B2B startups is to help them strategically and tactically, including product category creation initiatives that we touched on in this post.
If you are interested in learning more about 85 Advisors, contact me at firstname.lastname@example.org.