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The Law of Division – Over Time a Category Will Divide Into Two Or More Categories
Like an amoeba dividing in a Petri dish, the market can be seen as an ever-expanding sea of categories. During my career as a management consultant at Deloitte, I have experienced this law of division many times.
I joined Deloitte when the consulting profession, within the Big 4 (Big 8 at the time) accounting and consulting firms, was in the formulation phase. At that time, the consulting business was a single entity.
Over time, we split into Consulting Services, Implementation Services, and Quality Review Services. These different service categories are further divided into Strategy, Operations, Organization and Technology specialties. These categories were again divided according to industry specialties such as telecommunications, technology, financial services, healthcare, consumer goods, etc.
Another split occurred by geography in terms of emerging markets and industrialized regions; and then there was another layer of specialty in terms of Americas, EMEA (Europe, Middle East and Americas) regions, as well as APAC (Asia-Pacific countries).
While sometimes these layers of granularity and focus were done for internal purposes, most of the time it was the market that valued expertise based on these categories. At each stage, we had to face new competitors and had to learn to adapt to these newcomers to the consulting business.
Like the consulting business, the automotive industry started out as a single category. Three brands (Chevrolet, Ford and Plymouth) dominated the market. The category then split and today we have luxury cars, moderately priced cars and budget cars. We also have full-size, midsize and compact cars. And we have sports cars, four-wheel drive vehicles, motorhomes, SUVs and minivans; another example of the ever-growing sea of categories.
In the television industry, ABC, CBS and NBC once accounted for 90% of viewership. Now we have network, independent, cable, pay and public television with in-store, interactive and even IPTV (niche-oriented programming streaming over the Internet) networks…have you ever watched CNBC online? This programming is available on both my cable television network and my PC or laptop (free of charge).
Beer started the same way. Today we have imported and domestic beer; premium and popularly priced beers; light, draft and dry beers; we even have non-alcoholic beer.
Each segment is a separate and distinct entity. Each segment has its own purpose. And each segment has its own leader who is rarely the same as the original category leader.
In the computer world, IBM is the leader in mainframes; HP in midrange computers; Dell and Apple in laptops; and Sun, now part of Oracle, is the leader in desktops.
Instead of understanding this concept of division, many business leaders have the naïve belief that categories overlap. Synergy and its kissing cousin, corporate alliance, are the buzzwords in boardrooms around the world.
We’ve seen AOL and Time Warner team up to take advantage of the convergence of television, music, publishing and computing. How did it work?
The benefits of synergy and mega-mergers are rarely realized. Categories divide, not combine, into a sea of niche categories (and this is well described by Chris Anderson in his book The Long Tail: Why the Future of Business is to Sell Less of More).
The riches are in the niches.
The way for the leader to maintain its dominance is to approach each emerging category with a different brand name like General Motors did with Chevrolet, Pontiac, Oldsmobile and Cadillac.
What keeps leaders from launching a different brand to cover a new category is fear of what will happen to their existing brands. General Motors has been slow to react to the super-premium category established by Mercedes-Benz and BMW. One reason was that a new marque on top of Cadillac would enrage GM’s Cadillac dealers.
Contrast that with a working principle of Andy Grove, former CEO and Chairman of the Board of Intel, the world’s largest semiconductor chip maker and one of the world’s most admired companies, where “Only the paranoid survive”. Essentially, this principle has driven Intel into cycles of survival and leadership based on an ability to cannibalize itself and leapfrog to cross the chasm into the next product area. They continually split prosperous product areas into new categories generating new extremely prosperous and profitable markets and avoided joining others at the bottom of the high-tech abyss.
As an internet marketer, you must understand the law of division. As a product category splits, there are leadership opportunities to rush in and become #1 in one or more of the new categories.
Timing is also important but you have to have the courage or the money to hang on long enough for the category to grow.
It’s better to be early than late. You can’t get into the mind of the prospect first (as described in Law of Leadership #1) for a category unless you’re willing to spend time waiting for things to develop.
Many internet marketing entrepreneurs use techniques and tools such as mind mapping, keyword research, attraction marketing formula, magnetic referral and MindMeister to conduct market research and plan a successful marketing campaign. . They then use the power of MyStory marketing, the You Inc brand and hypnotic writing skills, in their marketing campaigns, to realistically address their brand’s position and the strategy they wish to pursue in the world which includes the law of division.
The objective is not to highlight why their offer is better, in terms of features and functionality, compared to that of a competitor, but to develop a message that is recognized, accepted and accepted so that it is attractive and persuades a customer, in the new category, that what is being offered to the target market is real and will work for them.
Marketing is not a product battle. It all depends on the strategy you use to benefit from the law of the split and if you’re not the leader you need to watch the market and as a category splits be prepared to rush to be n ° 1 in one or more of the new categories.
You can learn more about internet marketing and home business by reading the updates that will be posted on my blog over the next few weeks.
Finally, a great book to read is “The 22 Immutable Laws of Marketing” by Ries & Trout. This is the source for some of the material provided in this article.
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