While checking out random clips by Tim Ferriss on YouTube, I heard him speak about a book I hadn’t encountered before, The 22 Immutable Laws of Marketing, by Al Ries and Jack Trout. It was in the context of “how to start a business from scratch” and Ferriss reiterated some of the tips he typically gives people on the topic.
Ferriss points out that “it’s easiest and much more fun to create a category and own it, as opposed to trying to dominate an existing category”. He then recommended checking out chapter two of the book, which is titled The Law of the Category.
Quotes from the book
Below you’ll find my favourite quotes from chapter two of the book, accompanied by some of my own thoughts.
What’s the name of the third person to fly the Atlantic Ocean solo?
If you didn’t know that Bert Hinkler was the second person to fly the Atlantic, you might figure you had no chance at all to know the name of the third person. But you do. It’s Amelia Earhart.
Now, is Amelia known as the third person to fly the Atlantic Ocean solo, or as the first woman to do so?
That’s how the chapter begins and I think it immediately illustrates what the Law of the Category is about. When you create and establish a completely new category, you have a much greater chance of being noticed and remembered. You are in a natural way positioned to dominate the category because, after all, nobody else is yet there.
There are many different ways to be first. Dell got into the crowded personal computer field by being the first to sell computers by phone. […]
When you launch a new product, the first question to ask yourself is not “How is this new product better than the competition?” but “First what?” In other words, what category is this new product first in?
Charles Schwab didn’t open a better brokerage firm. He opened the first discount broker.
So, you need to ask the right questions. In classical marketing, which is brand oriented, the question used to be “How do I get people to prefer my brand?” Here Ries and Trout are saying that we should forget the brand and think of categories instead.
Everyone is interested in what’s new. Few people are interested in what’s better.
When you’re the first in a new category, promote the category. In essence, you have no competition.
This is absolutely true and the key question is why human beings are always drawn to new things?
The answer is probably multifaceted, but I believe that largely this due to the empirical fact that people get used to what they have and begin to appreciate it less.
The psychologists Shane Frederick and George Loewenstein have given this phenomenon a name: hedonic adaptation. They’ve illustrated this by studying lottery winners and, unsurprisingly, it turns out that after an initial period of exhilaration, lottery winners end up about as happy as they previously were.
Another example of hedonic adaptation can be seen when we make consumer purchases. Initially, we delight in the new gadget or handbag we bought, but after a time we come to despise them and find ourselves longing for a new gadget or an even more extravagant handbag.
Conclusion
The Law of the Category makes a lot of sense and there are many similarities to The Blue Ocean Strategy, which essentially states that you should “create an uncontested market space, make the competition irrelevant, and create and capture new demand”.
All of that is of course easier said than done, but still worth thinking about carefully before setting up a new venture.
There’s nothing wrong per se in the alternative, i.e. starting to compete in an existing category, but it seems obvious that it’s much harder and might ultimately become a race to the bottom. And as Seth Godin likes to point out, the problem with a race to the bottom is that you might actually win.