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Brand Management

Category Builders vs. Category Killers

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It can cost a fortune for a company to pioneer a new category of product or service. Digital cameras, for example. Or satellite radio. Or Internet grocery service.

Webvan, for example, lost $830 million on its two-year venture into the grocery-delivery business.

Since its so costly to establish a new category, why would any company deliberately want to kill an emerging new category?

Actually there are good reasons for putting the kibosh on a new category. In the marketing jungle, there are two kinds of companies: category builders and category killers.

A category builder is often a start-up company or a small company that hopes to compete with a bigger one by introducing a new brand that defines an emerging new category.

A small company called P.R. Mallory, for example, introduced Duracell, an alkaline battery that could last twice as long as the zinc-carbon batteries made by Eveready, the leading battery brand.

A unit of the much larger Union Carbide company, Eveready was a category killer. Six years prior to Duracell’s launch, Eveready had introduced its own alkaline battery. They called their new product, naturally, the Eveready alkaline battery.

Eveready had hoped that appliance battery would remain a single category with various choices such as zinc carbon, alkaline, etc. As the leading appliance-battery brand, Eveready would then be able to dominate the category for decades to come.

It never happened. Thanks to the marketing push behind the Duracell brand, consumers eventually perceived that there were two categories of appliance batteries: (1) inexpensive zinc-carbon batteries and (2) long-lasting alkaline batteries. As represented by two battery brands: (1) Eveready and (2) Duracell.

Eveready finally realized they couldn’t kill the category, so they launched Energizer, their own brand of alkaline battery.

Money cannot make up for lost time. In spite of massive advertising investments, today Energizer remains No. 2 to the dominant Duracell brand.

Creativity cannot make up for lost time, either. Advertising Age named the drum-playing Energizer pink bunny as one of ten best advertising icons of the 20th century (No. 5.) The second-generation campaign, which showed the bunny interrupting ads for fictional products, was cited by Ad Age as one of the 100 best advertising campaigns of the century (No. 34.)

Interestingly enough, the two big battery brands have apparently succeeded in killing the next evolution of the appliance battery: Lithium. Both Duracell and Energizer have had lithium batteries on the market for quite some time. Its probably too late for a category builder to get into the lithium game.

And so it goes. Sometimes the category builders win. Sometimes the category killers win.

Take light beer, for example. Miller Brewing actually tried to build a new category with the launch of Lite beer. They had to back off when they couldn’t protect their Lite trademark against the light beers introduced by a raft of category killers.

And so Lite beer became Miller Lite beer. And the battle to build a new category was lost.

Who wins when a potential new category gets sucked up into an existing category? The market leader of the existing category, of course. Even though Budweiser was virtually the last major brewer to introduce a light beer, Bud Light is now the No. 1 brand of light beer and the No. 1 brand of beer, period.

Today, light beer is not perceived as a new category. Light beer is perceived as regular beer, just watered down a bit.

That’s why Budweiser won the light-beer war and that’s why Duracell will win the lithium-battery war. If you want to kill an emerging new category, make sure your brand is the leading brand of the existing category.

On the other hand, take microbrew beer. This new category was built by Jim Koch (pictured above) with his launch of Samuel Adams Boston Lager. Ironically, the beer was initially brewed in Pittsburgh by the folks who produce Iron City beer.

No matter. Microbrew made it into the beer drinkers mind as the name of a new type of beer. Both Anheuser-Busch and Miller Brewing struck back with their own specialty beers. (Miller Reserve, for example.) But they were unable to kill the emerging microbrew category. Today, category-builder Samuel Adams is a big winner.

Diet cola was almost a replay of the light-beer story. The first brand of diet cola was Diet Rite, a terrible name and even worse, a generic name. (Would Microbrewed Rite have become a successful beer brand? I think not.)

Diet Rite cola is almost as generic as Lite beer. So an emerging new category was easy pickings for the category killers, Pepsi-Cola and Coca-Cola. First in the pool was Diet Pepsi followed by Diet Coke.

Today, diet cola is not perceived as a new category. Diet cola is perceived as regular cola with the sugar replaced by an artificial sweetener.

Both Coke and Pepsi seem to have forgotten they have successfully killed the diet-cola category. They both run separate advertising campaigns for their diet colas and their regular colas. That’s not only illogical, its wasteful. (The same holds true for light beer and regular beer.)

It can take an exceptionally long time to build a new category. Tylenol, for example, was introduced in 1956 as a prescription brand of acetaminophen. Four years later the brand went over-the-counter. Eight years after hitting the drugstores, Tylenol sales were still a meager $5 million a year. In 1975 (19 years after its introduction), the first Tylenol consumer advertising ran.

Today, Tylenol is the largest-selling brand in American drugstores.

Slow growth tends to tranquilize the competition. It was many years before Bayer responded with ads like: Makers of Tylenol, shame on you! The logo: Bayer aspirin.

That was a mistake for several reasons. If you want to kill an emerging category, you don’t emphasize your existing category. You need to broaden your category to encompass the new one.

Bayer pain reliever would have been much better. And leaders, of course, should never attack underdogs.

Organic is another emerging new category. So far no category builder, with the exception of Horizon organic milk, has been able to accomplish much of anything.

But there are a host of organic-category killers at work. Walk the aisles of any supermarket and you’ll see dozens of examples. Del Monte canned peas and Del Monte organic canned peas, for instance.

One mistake potential category builders make is trying to do too much. For example, trying to launch a broad line of products under a single brand name selected to define a new category. Healthy Choice made this mistake.

Its much better to start narrow and then only broaden the line after it has won the category-builder battle. (Horizon started with organic milk and then broadened the line to include other milk-based products: Butter, cheese, ice cream, yogurt, etc.)

Another mistake is waiting too long. Will premium coffee at McDonalds kill the category that Starbucks so skillfully built. I think not.

Smirnoff also waited too long to try to kill the premium vodka category built by Absolut. Smirnoff Black never went anywhere as a brand or as a category killer.

Partly as a result of the success of Absolut and the premium vodka category, all vodka makers gave up trying to kill the ultra-premium category built by Grey Goose. Instead they launched their own ultra-premium brands.

And who will win this battle? Silly question.

Once consumers are convinced a new category exists, the category builder will always win.

Sponsored By: The Brand Positioning Workshop

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1 Comment

Jeffrey Drake on September 30th, 2009 said

Thanks. Excellent discussion. Of course an enormous factor in the success and failure of category builders and their “killers” is the quality of the product itself. Unless category killers exceed the quality of the startup brand (e.g. Sam Adams verses Miller Reserve), their efforts often only accelerate market growth for builder’s products.

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