A new category name gives your buyer homework. Before they can buy from you, they have to explain to their CFO what the thing is and why nobody budgeted for it. That is the hidden cost of category creation, and you can pay it on every deal.
This post is for marketing leaders at Israeli-founded software and security companies that compete with US incumbents. It shows when a new category earns you attention and a budget line, and when it gets in the way of a buyer who was ready to spend. We would start with a middle path.
What a category is to the person buying
To a vendor, a category is positioning. To a buyer, it is a line in a spreadsheet.
Picture the buyer’s side. Their company already spends money in the incumbent’s category. A budget line carries that name, somebody owns the line, and the contract has a renewal date. When your champion says “we should look at another vendor in this category,” everyone in the room knows what is being asked.
Now give your product a name nobody in that room has heard. Your champion has three extra jobs before the purchase can even start: explain what the category is, argue that the company needs it, and find money that was never set aside. Each of those is a meeting. Some champions will do that work for you. We would not plan on it.
When naming a new category pays
We would coin a category only when three things are true at once.
- The incumbent’s category cannot describe what you do. Put yourself in the buyer’s comparison sheet. If you lose most rows and the thing you do well has no row at all, the old category is hiding you.
- Buyers feel the problem and have no word for it. You hear this on sales calls. People describe the same pain in long sentences, each in their own way. A name gives them something to type into a search box and write in a budget request.
- You can afford to teach. A new name has to be taught through content, events, analyst briefings and customer stories. Expect that work to continue for more than one budget cycle.
Even then, we would want other vendors to adopt the name. That sounds backwards. But a category with one company in it is a product name. When a rival starts using your word, their marketing teaches your buyers too.
When it stalls
We would expect a coined category to stall in four situations.
The first is the one we would check before anything else. The buyer already has a budget for the incumbent’s category, and your product fits inside it. You have asked them to learn a word in order to buy something they were already buying.
The second is a name that describes your architecture. A buyer types the problem they have into the search box. We would not expect them to type how you solved it.
Third, nobody else uses the name. Search for it. If every result is yours, buyers hear a product name with extra steps.
The fourth shows up in your own sales calls. Listen to a few recordings. If your reps drop the category name a few minutes in and fall back on the incumbent’s category to explain what you sell, take the hint.
| Signal | Points to a new category | Points to the existing one |
|---|---|---|
| How buyers describe the problem | In long sentences, with no shared word | With the incumbent’s category name |
| Budget | No line exists for it | A line exists and you fit in it |
| Comparison with the incumbent | Your main strength has no row | You can win several rows |
| Other vendors | A few could adopt the name | You would be alone |
| Time you can spend teaching | Several budget cycles | The next few quarters |
The places buyers look need more than one vendor
Your buyer may check a new vendor against analyst reports and review sites. Those places publish their rules, and the rules are worth reading before you invent a name.
Data table
| Measure | Value |
|---|---|
| products with 10+ reviews, the minimum for a live Grid | 3 |
| products with 10+ reviews, the minimum for a Grid report | 6 |
| reviews overall, also needed for a Grid report | 150+ |
Start with Gartner. Its methodology page says a Magic Quadrant positions providers “in markets where growth is high and provider differentiation is distinct.” Its page on Market Guides describes a different case. When new markets emerge and “the offerings and user requirements are in flux,” Gartner says solutions are often difficult to compare, and a Market Guide “can provide the right insight.” The same page says a Market Guide “does not rate or position vendors within the market.” Gartner also lists what a Market Guide helps a buyer do. One item on that list: “Support the argument for allowing an emerging market to further evolve before making a commitment.”
Turn that around. As we read it, the analyst document for a young category can hand your buyer a reason to wait.
Then Forrester. Its Wave methodology says the analyst “defines the scope of the evaluation and identifies the vendors in the space,” then writes the inclusion criteria “that determine which vendors to include in the evaluation.”
G2 counts products. Its documentation says live Grids appear “on category pages that have at least three products with 10+ reviews.” A Grid report asks for more. The category “must have at least six products with 10+ reviews, and 150+ reviews overall.”
We read all three the same way. Until several vendors carry the name, these reports have nothing to compare. So your competitors are part of your category plan, whether you like it or not.
Why it costs more when you are new to the US
Assume the incumbent you face already has three things in the US: a name your buyer knows, customers your buyer can call, and a line in the budget.
If your company is new to the market, you are still earning each of those. Add a category nobody has heard of, and the buyer now faces two unknowns: an unfamiliar vendor and an unfamiliar purchase. We think a champion can defend one unknown. Two is a lot to ask.
So we would spend the buyer’s patience on one of them. While the company is new to the market, let the category be familiar. Save the new name for the day US customers can vouch for you. Our post on US market entry from Israel covers what else has to be in place before that day.
The middle path: their category, your difference
You do not have to choose between a new category and disappearing into the old one.
Take the incumbent’s category as the noun. That is what the buyer budgets for, searches for and writes at the top of the comparison sheet. Then put your difference in front of it as the adjective, and make it something a buyer can check in a demo.
Three tests before you commit to a name:
- The budget request test. Can your champion describe the purchase in one line of a budget request, using only words the finance team already knows?
- The sales call test. Read the transcripts of your last ten calls. Which words did buyers use before your rep taught them yours? Our post on mapping the B2B buyer journey from real sales calls shows how to do that reading.
- The search test. Search for the name you want to coin. If the only results are your own pages, you would be teaching alone.
If you still want the new name after that, run both for a while. Lead with the category buyers know on the pages they reach from search. Introduce your own term further down, as the reason you are different. Category words carry their own costs in security, which we cover in our post on cybersecurity marketing. For how positioning fits with the channels around it, see our demand generation page.
FAQ: category creation
What is category creation?
Category creation means naming a new kind of product and teaching the market to buy it under that name. The alternative is to compete inside a category buyers already know and budget for.
When is category creation worth it?
We would do it only when three things are true: the existing category cannot describe what you do, buyers feel the problem but have no word for it, and you can fund the teaching for more than one budget cycle.
How do we know a new category name is working?
We would look for three signs. Buyers use it on calls before your rep does. Other vendors start to adopt it. It appears in budget requests. If the only place it shows up is your own marketing, it is still a product name.
When does Gartner publish a Magic Quadrant for a market?
Gartner’s methodology page says a Magic Quadrant positions providers “in markets where growth is high and provider differentiation is distinct.” For new markets where offerings and user requirements are in flux, Gartner’s page on Market Guides says a Market Guide “can provide the right insight,” and that it does not rate or position vendors.
How many products does G2 need before a category gets a Grid?
G2’s documentation says live Grids appear on category pages that have at least three products with 10+ reviews. A Grid report needs at least six products with 10+ reviews, and 150+ reviews overall.
Should a company new to the US create a category?
We would wait. A buyer who does not know you yet is already taking one risk. Use the category they know, name your difference inside it, and bring the new name once US customers can vouch for you.
COSEOM Team
COSEOM is a multilingual B2B growth agency. Since 2008 the COSEOM team has run international SEO, generative engine optimization, paid media and demand generation programs for B2B software and technology companies across their target markets. We publish our research, playbooks and product guides here. More about COSEOM
