The law of the category

In the latest instalment of his 24-part series on marketing, Nick Garner explains why if you can't be first in a category, you should create a category of your own.

Last time we talked about the law of leadership, where it’s better to be first in a market category than to arrive late.

The catch with the law of leadership is there’s only space for one ‘first winner’. If you are ‘everybody else’, the only thing you can do is follow the law of category.

Most people think in terms of brands.  Marketing strategists will ask ‘how can I persuade consumers to move to my [generic online gaming brand]?’.

The reality is once a category leader has emerged it’s very difficult to displace them unless they make a huge mistake. Instead, it’s better to look at other new market categories where you can become the ‘first winner’, for example the first breakthrough brand within that category.

You could describe a market category as a market with unique characteristics driven by the behaviour of consumers or technology. Or in other words, you could say ‘exchange betting: Betfair’, ‘high street betting: William Hill’, ‘casino game developers: Netent’.

Sun Bets’ story

I mentioned Sun Bets previously where Tabcorp, the main investors, had to pay £40m to extract themselves from this failed brand.

Some high-level decision-makers probably once thought ‘The Sun newspaper is a big trusted brand, those readers like sports betting, let’s do a Sun branded igaming operation.’

Sun Bets tried to innovate by running novelty bets. This idea came to an abrupt halt when the UK fined them £84,000 for the notorious Piegate novelty bet incident.

Bets were on whether Sutton United FC goalkeeper Wayne Shaw would eat a pie on the sidelines of a February 2017 football match against Arsenal.

It seems Sun Bets tried to take on a huge market category; mainstream sports betting and attempted to innovate by developing a subcategory around novelty bets to resonate with The Sun newspaper’s readership but ultimately it was a fail. 

The question is… had the decision-makers at Sun Bets followed the law of category, what would they have done?

They could have developed a hybrid off-line/online strategy for that market segment who still enjoys physical newspapers, coupons and so on.

A confluence between a huge, but declining tabloid newspaper and some kind of online sports betting concept could have created its own category which they could have dominated in.

Confusion with USP

We often hear the term unique selling proposition, or USP. On one level a USP is simply a feature or benefit of a product or service. USP isn’t necessarily a big enough ‘thing’ to denote a whole market category.

For example, I previously talked about smart phones and mobile igaming. At the beginning of our journey with smart phones back in 2006, a USP for brand might be ‘we have a mobile friendly website’.

However, smart phones ended up getting huge traction and the marketplace grew to the point that ‘mobile igaming’ is not a unique selling proposition, it’s a whole market category that’s critical to the future of igaming.

As with every market category, there are winners and with mobile-first betting the winner was Leo Vegas. 

If you’re late to the party and you’re not a ‘first winner’, then ideally you create your own market category. If you can’t create your own category, at least enter a category that’s immature where you have a competitive advantage.

The critical thing is to get in early enough that you have a competitive advantage. If you can’t get in early enough, you could buy the early category leader business out or just not try to hit that market.

For me a good market subcategory is one where you have the knowledge to know a trend is sustainable and you have the resources to get in early without killing your business if the bet doesn’t pay off.

Previously I talked about market turbulence caused by technology innovation and legislative change. Wherever there is market turbulence, there will be opportunity.

When I think about turbulence in the marketplace, increasing gambling legislation is a huge driver for change. Old incumbent winner brands thrive off legal complexity, and a lack of innovation because they have the money to handle complex licensing issues for multiple country territories and they know how slow consumers are to change behaviour. If you’re not a big player, the new era of licensed igaming is going to be very challenging.

But, there are other markets. The world is getting richer and smartphone adoption keeps rising in developing countries. Gambling is an innate desire in all of us, whether it’s a lottery ticket, a bet or a spin on a slots game. With that backdrop there are a huge number of emerging market categories.

It’s just a case of looking at the marketplace you know, reading up on what related innovations are coming through and sooner or later, something very interesting will come your way.

My main point is when you start looking at any marketplace and you see a market need that isn’t dominated by some other brand, that’s when you’ve got an opportunity. In effect you’re creating your own subcategory.

Being the first winner is a huge competitive advantage. If you can’t be the first winner in a category, tackle a smaller market segment and go for that.

In the next instalment I’m going to talk about the law of mind, where it is often better to be first in the mind than to be very first in the marketplace.

Nick Garner is founder of Bitcoin casino Oshi.io and has a background in online marketing and marketing strategy. He occasionally consults with igaming brands on marketing strategy and best practice planning for marketing operations.