Before introducing a new product to an emerging industry, companies should track the evolution of category labels in that industry.
"To track the trends and dynamics over time within an emerging industry, the easiest method is to use Google Trends."
So write Boston University School of Management's Fernando F. Suarez and Stine Grodal in their exploration of emerging industries and the role that product category labels often play. Category labels are words such as “snowboard” (instead of its early iteration, “snurfer”) and “smartphone” (instead of “PDA phone”).
Suarez and Grodal’s argument is that companies that jump at the right time on a trend and the language around that trend have a greater chance of becoming winners. Jump too early, and a company and its products are likely to end up in the dustbin of history — right alongside “charga-plates” (the early name for credit cards) and “velocipedes” (bicycles). “Companies that embrace and sponsor category labels that later lose appeal and/or are abandoned are seldom industry winners,” Suarez and Grodal write.
Which brings us to Google Trends. How, exactly, is a company to know that a dominant category label has emerged or taken hold in a way that will last, short of simply checking back years later?
“Technology makes it increasingly possible to collect data on how categories are used in everyday parlance” write Suarez and Grodal in “Mastering the ‘Name Your Product Category’ Game,” in the Winter 2015 issue of MIT Sloan Management Review. They point specifically to Google Trends, online at google.com/trends, which is a free feature that allows users to see what words and phrases are being searched on and how those phrases have been trending.
The example that Suarez and Grodal cite is using Google Trends to track the various labels that have been used to describe “tablet computers.” As they write: “you would search for categories such as ‘eBook,’ ‘e-reader’ and ‘iPad.’ This enables you to tap into quantitative data on how consumers search for products online. You can break searches down by region, or search through your competitors’ product press releases, annual reports and trademark and patent applications. All contain a plethora of category labels that can be collected, coded and studied. Specialized textual analysis software will help you extract the category labels used in each document.”
A simple tool like Google Trends should be a part of any innovator’s arsenal to understand the way an industry is emerging around them, the authors argue.
“Once you understand the nature of category labels and how they evolve, you can fairly easily track them,” write Suarez and Grodal. “But few companies do. We believe that if companies became serious about using data to understand how customers and others are categorizing emerging technologies, they could use that information to fine-tune their market strategy.”
For more on category labels, including strategies for how to time an entry into a new market, read the full article. Also see an earlier article co-authored by Suarez, “Dethroning an Established Platform.” This 2012 article, which also appeared in MIT Sloan Management Review, looks at how companies that entered their industries relatively late still succeeded in dethroning earlier market leaders. It was co-authored with Jacqueline Kirtley, a doctoral student at Boston University School of Management.