Category creation ≠ Demand generation

Category creation is not demand generation It's a hard-won skill where better customer experience wins.

Category creation ≠ Demand generation
Photo by Thought Catalog / Unsplash

Fifty percent of the marketing content created by the talking heads on LinkedIn would disappear if more marketers read Kotler. If marketers got the basics of the function down, they'd be able to better discern nonsense from great advice.

Perhaps worse, is the trend for LinkedIn authors to draw false equivalence between an event and their view of the world. More often than not, tied to something they're trying to sell.

A recent post discussed demand generation and category creation, leveraging a 2016 HBR article titled How Unicorns Grow to make the case for category creation. The author has a book on the topic.

It turns out the company that creates the category (demand) wins 76% of the category. Leaving everyone else to compete for 24%. This is peer-reviewed, published in Harvard Business Review research.

Except that's not what the article says, and it's not what the HBR authors set out to prove with their research.

The authors found that technology segments tend toward monopolies (which Peter Thiel long argued), and that the company that captures segment demand will own the category. Also, that "Unicorn Status" is a function of IPO timing, with the majority of the value being created post-IPO.

Importantly, the companies cited in the HBR article didn’t create their respective categories. Taxis existed before Uber. Social media before FB, LNKD. BI before Tableau.

All delivered better products and experiences than incumbents. They delivered better positioning and messaging. They differentiate their solution, and won.

If we define category creation as putting an app in someone’s hand rather than them standing on the sidewalk in the rain hailing a cab, then okay.

Renowned CEO Frank Slootman (Data Domain, ServiceNow, Snowflake) says as much in his book, Amp It Up:

Creating so-called new categories out of thin air is a favorite cocktail party topic among marketers, but it doesn't happen that often. When a truly new market does appear, it's usually due to a confluence of industry-wide factors and circumstances, not the innovations of just one company.

Let's be clear. Demand generation is not category creation.

Technology is not the process.

Demand generation is a hard-won (and learned) skill, developed with unrelenting focus on the market and how humans behave. It's not a tactic, not a growth hack, and definitely not category creation.