Momentum can be a powerful thing, especially when it’s on your brand’s side. I’ve worked on numerous brands over the years, and seen firsthand the effect of both positive and negative momentum.
Almost every Brand building article or book I’ve ever seen focuses on the fundamentals: defining your brands positioning, delivering a product or service that’s truly differentiated, communicating effectively with consumers, etc.
However, virtually none of them address the effects of your category’s dynamics on momentum. These dynamics are like the tide and can either make your brand’s growth easy or challenging depending on their direction. Momentum comes not just from your brand, but also your category.
1. Category Growth Rate – This is the most obvious metric that people focus on. Is the category growing, flat or declining ? This factor alone has a huge impact on brand growth. The E-Reader category is growing fast, so most E-Reader products benefit. On the other hand, the Travelers Cheque category is declining, making it virtually impossible for American Express or any other brand to grow volume.
2. Category Penetration – Category penetration is the percentage of consumers who use the category. The absolute level of penetration, along with the penetration trend over time, provide a snapshot into the potential for growth or decline. A low, but growing penetration rate indicates lots of growth upside–a likely situation facing the e-Reader category. A high, but stable penetration level — like paper towels or laundry detergent — suggests little growth opportunity.
3. Category Heavy User Momentum — Not all consumers are the same within a category. Understanding the status of “trend setter” and “heavy user” groups is particularly important for insight into category health. If the percentage of heavy users in the category is increasing, this signals a healthy category and suggests consumers are finding new and more useful ways of using category products. If heavy user category penetration is declining, it suggests consumers are finding preferred alternatives to your category and reducing share of requirements.
4. Category User Concerns — What are category consumers concerned about? Are there non-brand specific concerns about the category that suggest future changes in category consumption? Category specific research can identify and isolate consumer concerns that are contributing to the exodus of households or heavy users. Examples would be food categories where consumers have growing health concerns, etc.
5. Category Leakage — If the category is declining, and consumers are leaving the category, where are they going ? Every category is like a glass with a hole in the bottom; consumers are being “poured” into the category (usually as consumers age into the category), but consumers are also flowing out of the bottom thru the hole. The relative rate of pouring and leakage is a large factor in whether the category water line (e.g. volume) is rising or falling.
Understanding which categories, if any, are benefiting most from category “leakage” is an excellent diagnostic which can sometime provide insight into new product opportunities. Conversely, if your category is growing, where are consumers coming from?
Category Dynamics — An Overlay to Brand Building
Most brands spend all their time understanding their brand position and not nearly enough understanding category dynamics. Your category is like the tide; and ideally your brand is swimming with it, not against it. Understanding category growth, penetration, heavy users, category concerns and leakage provides an excellent diagnostic framework for understanding category health and your brands challenges and opportunities.