Mastering the ‘Name Your Product Category’ Game
If you’re launching an innovative product in a nascent industry, it’s important to understand — and take advantage of — the dynamics through which new product category labels emerge.
Have you ever bought a snurfer? Probably not, although in 1966, the snurfer was advertised as “the greatest word in downhill fun” and described as combining the “thrills of skiing” and the “skills of surfing.” It’s much more likely that you have bought a similar product under a different name — a snowboard — which was the category label introduced in the 1970s by Jake Burton Carpenter. His company, Burton Snowboards, went on to dominate the snowboard industry.
What’s in a name? Although Shakespeare claimed that a rose “by any other name would smell as sweet,” over the last five to 10 years, significant research on category labels has shown the opposite to be true.1 This research finds that a company’s labeling strategy can have important performance implications for products in nascent markets. As part of our research in this growing field, we followed the more than 200 category labels that smartphone producers used to introduce new products since roughly the beginning of the 21st century. (See “About the Research.”) We also studied the labels used in almost a dozen other industries. What we found may surprise you.
References
1. See, for instance, G. Hsu, “Jacks of All Trades and Masters of None: Audiences’ Reactions to Spanning Genres in Feature Film Production,” Administrative Science Quarterly 51, no. 3 (September 2006): 420-450; M.T. Kennedy, “Getting Counted: Markets, Media, and Reality,” American Sociological Review 73, no.2 (April 2008): 270-295; M.T. Kennedy and P.C. Fiss, “An Ontological Turn in Categories Research: From Standards of Legitimacy to Evidence of Actuality,” Journal of Management Studies 50, no. 6 (September 2013): 1138-1154; C. Navis and M.A. Glynn, “How New Market Categories Emerge: Temporal Dynamics of Legitimacy, Identity, and Entrepreneurship in Satellite Radio, 1990-2005,” Administrative Science Quarterly 55, no. 3 (September 2010): 439-471; and E.G. Pontikes, “Two Sides of the Same Coin: How Ambiguous Classification Affects Multiple Audiences’ Evaluations,” Administrative Science Quarterly 57, no. 1 (March 2012): 81-118.
2. G.C. Bowker and S.L. Star, “Sorting Things Out: Classification and Its Consequences” (Cambridge, Massachusetts: MIT Press, 2000).
3. E.W. Zuckerman, “The Categorical Imperative: Securities Analysts and the Illegitimacy Discount,” American Journal of Sociology 104, no. 5 (March 1999): 1398-1438.
4. See D.J. Teece, “Profiting From Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy,” Research Policy 15, no. 6 (December 1986): 285-305.
5. H. Rao, “The Social Construction of Reputation: Certification Contests, Legitimation, and the Survival of Organizations in the American Automobile Industry: 1895-1912,” Strategic Management Journal 15, no. S1 (winter 1994): 29-44.
6. F.F. Suarez, S. Grodal and A. Gotsopoulos, “Perfect Timing? Dominant Category, Dominant Design, and the Window of Opportunity for Firm Entry,” Strategic Management Journal, published online February 2014.
7. S. Grodal, A. Gotsopoulos and F.F. Suarez, “The Co-Evolution of Technologies and Categories During Industry Emergence,” Academy of Management Review, published online October 2014.
8. See, for instance, R.N. Foster, “Innovation: The Attacker’s Advantage” (Melbourne, Australia: Summit Books, 1986).
9. See, for instance, M.B. Lieberman and D.B. Montgomery, “First-Mover (Dis)Advantages: Retrospective and Link With the Resource-Based View,” Strategic Management Journal 19, no. 12 (December 1998): 1111-1125.
10. R. Agarwal, M.B. Sarkar and R. Echambadi, “The Conditioning Effect of Time on Firm Survival: An Industry Life Cycle Approach,” Academy of Management Journal 45, no. 5 (October 2002): 971-994.
11. This figure is adapted from Suarez, Grodal and Gotsopoulos, “Perfect Timing.”
12. See C.B Bingham and S.J. Kahl, “The Process of Schema Emergence: Assimilation, Deconstruction, Unitization and the Plurality of Analogies,” Academy of Management Journal 56, no. 1 (February 2013): 14-34.
13. N. Granqvist, S. Grodal and J.L. Woolley, “Hedging Your Bets: Explaining Executives’ Market Labeling Strategies in Nanotechnology,” Organization Science 24, no. 2 (March-April 2013): 395-413
14. See Zuckerman, “The Categorical Imperative.”
15. See, for instance, M.T. Kennedy, J.I. Chok and J. Liu, “What Does it Mean to Be Green? The Emergence of New Criteria for Assessing Corporate Reputation,” in T.G. Pollock and M. L. Barnett, eds., “The Oxford Handbook of Corporate Reputation” (London: Oxford University Press, 2012), 69-93.
i. S. Grodal, F. Suarez and D. Zunino, “Why Do Category Labels Stick? Industry Evolution and the Battle for Categorical Dominance,” working paper, Boston University, 2014.