How to Dominate Markets and Win Loyal Customers

Apr 25, 2017
9 Min Read
How to dominate markets and win customer loyalty


How to dominate markets and win customer loyalty


Want your business to thrive? Then start thinking about all your pet peeves and how to solve them.

That’s the advice of Dave Peterson, who says that this is exactly the strategy that made Uber so successful.  In 2008, Travis Kalanick and Garrett Camp had trouble getting a cab on a snowy night, and came up with an app to help them get a ride.

It seems simple enough, and yet the number of established businesses that are in real trouble these days points to the fact that many companies are still missing the point about how to attract and retain loyal customers.

Peterson is one of the founders of Play Bigger Advisors, billed as the world’s first “category design firm.”

He explains that companies like Uber, Salesforce and Netflix are dominating their markets because they create a solution to a problem (not being able to get a cab) and become “category kings.” The companies that beat the competition and survive for the long term are those that focus on creating a category and then dominating it.

In his book, “Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets,” Peterson and co-authors Al Ramadan, Christopher Lochhead and Kevin Maney explain that while being the first to invent something can be important, “it doesn’t mean squat if you don’t define and develop a category.”

“If you are the company that changes the way people think, people will see your company as the category king, and you will win the majority of the customers,” they write.

For example, Apple didn’t invent any products, but it has come to dominate the market just as Facebook didn’t invent the social network, but has become the leader.

“They built a category that pulled in customers and made them desire the product,” they write. “They become category kings to be followed.”


How to Become a "Category King"

In a recent interview, Peterson says that leadership is critical to becoming a category king – but so are the rank-and-file employees. If a company focuses equally on product design, company design and category design, then they establish a culture where all workers feel empowered to “build ideas,” then they will be more successful, he says.

Peterson adds that it’s important that workers are encouraged to embrace category creation and not feel they are so weighed down by their everyday jobs they don’t have time to think of anything else. By encouraging them to be focused on finding solutions to their own pet peeves, companies can generate even more viable category ideas, he says.

While some may believe only start-ups can become “category kings” Peterson says that established companies also have the ability to build and expand categories over and over, such as Amazon. The company began by selling books online, pushing that category until they were ready to launch other products and push those categories.

Even Corning Inc., founded in 1865, has become a “category creation machine,” Peterson says.  It has survived and thrived because it has been involved in not just manufacturing glass, but products for television tubes, catalytic converters, flat-screen televisions and smartphones.

Further, while many established companies can get weighed down by the daily job of running the existing business, Corning has market insights that others don’t because of their long-standing and trusted relationships within the business world. Corning leaders don’t just look for “better” but “different” opportunities.

For example, when Apple began searching for a nearly unbreakable touch screen for its smartphone, Corning knew this was a need that could be met by the thinner, stronger glass they had been developing.

“Sometimes you can just step back and think: ‘What new problem can we solve?’” Peterson explains. “Corning is a good example of a company that is always creating new categories” and getting rid of those that are no longer relevant.

For those companies looking for a way to continuously develop categories, the authors suggest they need:

  1. A CEO who establishes a culture of category thinking, “where employees feel it’s not only part of their jobs, but the best part of their jobs.”
  2. Support from shareholders who understand that the focus can’t be entirely on profits and making quarterly numbers. There must be a recognition that leaders and employees need time to be innovative and develop new ideas to solve problems.
  3. A new viewpoint. Venture-backed technology start-ups have six to 10 years to become category kings or likely fail to create long-term value, they say. But big, more established companies have the time to solve deep, complex problems and can turn into categories that start-ups can’t touch. Companies can invest in R&D such as at Corning, or hire employees who can provide the knowledge and skills to jump on category creation opportunities when they become available.
  4. To look for what’s missing, not what can be improved. Steve Jobs is a great example of someone who gave people what they didn’t even know they were missing.
  5. To understand that anyone can do category design, not just technology companies. A midsize regional business or a nonprofit can do it and make a real impact.
  6. To avoid making a halfhearted effort for a new category just because you’re protecting the profits of an old category. If you don’t develop the new category, someone else will – and your old, protected category will get heaved to the side anyway.
  7. To be ready to manage the different stages of categories. Some categories will need to be developed or created, while others are ripe for being harvested right away. Open debate will ensure that the company is designing, creating, harvesting – and also on the lookout for a category that could put it out of business.

Finally, while “disruption” has become a “holy word” in the tech industry, it’s a by-product, not a goal, they say. “Legendary companies create new categories that generate gravitational pull on the market. Customers rush to a new category because it makes sense to them,” they write.

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