Category Strategy: How to Win the Market You’re In

Category strategy development is the process of defining which market category your brand competes in, how that category is structured, and where you can realistically win within it. Done well, it shapes every downstream marketing and commercial decision. Done poorly, it leaves you spending money competing in a category that was never going to reward you.

Most brands skip this step entirely. They inherit a category definition from a product launch brief written five years ago, or they default to how competitors describe themselves, and then wonder why growth stalls despite competent execution. The problem is rarely the tactics. It is usually the frame.

I have spent 20 years watching brands fight hard for position in categories that were structurally hostile to them. The effort was real. The results were not. Category strategy is the discipline that prevents that waste, and it belongs much earlier in the planning process than most organisations put it.

What Is Category Strategy and Why Does It Matter?

A category is the mental bucket buyers use to organise their choices. When someone needs a project management tool, a running shoe, or a business bank account, they are operating within a category. That category determines who they consider, how they compare options, what they are willing to pay, and how loyal they are likely to be once they have chosen.

Category strategy is the deliberate process of deciding which bucket you want to be in, how you want buyers to think about that bucket, and what your role within it should be. It is not positioning, though positioning follows from it. It is not segmentation, though segmentation informs it. It is the upstream decision that makes those downstream tools coherent.

The reason it matters commercially is straightforward. Category membership sets the ceiling on your addressable market. It defines who your competitors are in the buyer’s mind, which may be very different from who you think they are. And it shapes the buying criteria that buyers apply, which determines whether your strengths are even visible to them.

If you are building out your broader go-to-market approach alongside category thinking, the Go-To-Market and Growth Strategy hub covers the full landscape of decisions that sit around and below category strategy, from audience architecture to channel sequencing.

How Do You Define the Category You Are Actually In?

This sounds obvious until you try to do it with rigour. The honest answer is that your category is defined by buyers, not by you. You can influence it. You cannot dictate it. The starting point is understanding how buyers currently organise their choices in the space you operate in.

Early in my career I was working on a pitch for a financial services client who was convinced they competed with the three or four brands they tracked in their internal reporting. When we did the actual buyer research, the competitive set was completely different. Buyers were comparing them to brands they had never even considered rivals. The category they thought they were in and the category buyers placed them in were two different things. Their strategy had been optimised for the wrong fight.

Defining your category with any accuracy requires three things. First, you need to understand the job the buyer is trying to do, not the product they are buying. Second, you need to know which alternatives buyers genuinely consider, including indirect competitors and non-consumption. Third, you need to understand the criteria they use to choose, because those criteria are the category’s rules, and you either play by them or you change them.

Qualitative research is essential here. Surveys will tell you what buyers say they think. Depth interviews and observed decision-making will tell you what they actually do. The gap between the two is where most category strategy work gets interesting.

Should You Compete in an Existing Category or Create a New One?

This is the central strategic question in category development, and it has a real commercial answer rather than a philosophical one. Competing in an existing category is lower risk and lower reward. Creating a new category is higher risk and, if it works, disproportionately rewarding. The choice depends on your competitive position, your resources, and your time horizon.

Existing categories have established demand. Buyers already know they have the problem and are already looking for solutions. That makes acquisition more efficient in the short term. But established categories also have entrenched competitors with brand equity, distribution advantages, and switching cost moats. If you are number four or five in an established category and you do not have a structural advantage, you are probably fighting for scraps.

Creating or redefining a category is harder and takes longer. There is no existing demand to capture. You have to create the problem in the buyer’s mind before you can offer the solution. That requires sustained investment in brand and content, not just performance channels. GTM execution has become measurably harder as markets get noisier, and category creation compounds that difficulty in the short term.

The brands I have seen win at category creation share one characteristic: they had a genuine point of difference that the existing category structure made invisible. The category redefinition was not a marketing trick. It was a way of making a real advantage legible to buyers. That distinction matters. Category creation as a positioning exercise without underlying substance tends to collapse when buyers actually use the product.

A third option, which is underused, is subcategory creation. Rather than competing head-on in a broad category or attempting to define an entirely new one, you identify a segment of the existing category where the current rules of competition disadvantage the incumbents and you build a new set of buying criteria that favour your strengths. This is lower risk than full category creation and more defensible than undifferentiated category competition.

How Does Category Strategy Connect to Commercial Performance?

This is where a lot of category strategy work falls down. It gets done at a brand level and never gets connected to the revenue model. The result is a beautifully articulated category position that has no bearing on how the sales team qualifies leads or how the pricing team sets margins.

When I was running an agency and we were doing turnaround work on a loss-making business, one of the first things I looked at was whether the commercial model was aligned with the category position. In one case, the agency was positioned as a premium strategic partner but was pricing and pitching like a production house. The category they claimed to occupy and the one buyers placed them in were different, and the commercial model was built for the wrong one. No amount of tactical improvement was going to fix that.

Category strategy has to be stress-tested against the revenue model. If you are claiming to compete in the premium tier of a category, your pricing, your sales process, your client service model, and your talent acquisition all need to be consistent with that. If they are not, buyers will place you in a different category regardless of what your brand says.

BCG’s work on go-to-market coalition building makes a related point: brand strategy and commercial strategy need to be developed together rather than sequentially. The category you choose to compete in has direct implications for channel strategy, sales motion, and partnership structure. Treating it as a purely marketing decision is a category error in itself.

What Role Does Demand Creation Play in Category Strategy?

Earlier in my career I overvalued lower-funnel performance activity. It was measurable, it was attributable, and it felt like it was working. What I came to understand, over time, is that a significant portion of what performance marketing gets credited for was going to happen regardless. You are often capturing intent that already existed, not creating new demand. That is useful, but it is not growth in any meaningful sense.

Real category growth requires reaching buyers before they have formed intent. Think about how a clothes shop works. Someone who tries something on is far more likely to buy than someone browsing online with no prior exposure. The physical act of trying creates a preference that was not there before. Category strategy, done well, does the same thing at scale. It creates mental availability and preference before the buying trigger occurs.

This is why category strategy cannot be executed through performance channels alone. Performance channels are built to capture existing demand efficiently. They are not built to create new demand or shift category membership in the buyer’s mind. That work requires brand investment, content, earned media, and time. The return is harder to measure in the short term, which is why most organisations underinvest in it.

I have judged the Effie Awards, which are specifically designed to recognise marketing effectiveness rather than creative craft. The campaigns that consistently perform at the highest level are not the ones with the best performance media mix. They are the ones where brand and demand creation are working together, and where the category frame is doing commercial work rather than just providing a backdrop for tactical activity.

How Do You Build a Category Strategy That Scales?

Category strategy is not a document you write once. It is a set of choices you make, operationalise, and then revisit as the market evolves. The brands that scale well within a category are the ones that have clarity on a small number of things and maintain that clarity under pressure.

The first is category definition: which market you are competing in and why that is the right market for your commercial model. This needs to be specific enough to guide real decisions, not so broad that it encompasses everything.

The second is your role within that category. Are you the category leader, the specialist, the challenger, or the disruptor? Each role requires a different strategy, a different investment profile, and a different set of success metrics. Trying to play multiple roles simultaneously is a common mistake, particularly in organisations where different teams have different views on where the brand sits.

The third is the buying criteria you are optimising for. Every category has a set of criteria buyers use to evaluate options. Some of these are table stakes, and failing them disqualifies you. Others are differentiators, and winning on them creates preference. Understanding which is which, and investing accordingly, is the practical heart of category strategy execution.

BCG’s research on scaling agile organisations is relevant here, not because category strategy is an agile process, but because the organisational capability to test, learn, and adapt is what allows category strategy to evolve without losing coherence. The strategic frame stays stable. The tactical execution adapts.

Scaling also requires that category strategy is embedded in the organisation, not just held by the marketing team. Sales, product, pricing, and customer success all make decisions that either reinforce or undermine the category position. If they are not working from the same frame, the strategy will fracture at the point of customer contact.

What Are the Most Common Category Strategy Mistakes?

The first and most common is competing in the category you wish you were in rather than the one you are actually in. This is a comfort problem as much as a strategic one. It is easier to define yourself against aspirational competitors than to do the work of understanding how buyers actually see you. The result is strategy built on a false premise.

The second is conflating category strategy with brand positioning. Positioning is about how you are perceived within a category. Category strategy is about which category you compete in and how that category is structured. Doing positioning work without first resolving the category question is like decorating a house before you have decided which street it is on.

The third is treating category strategy as a one-time exercise. Categories evolve. New entrants change the competitive set. Technology shifts the buying criteria. Customer expectations move. A category strategy that was accurate three years ago may be actively misleading today. The organisations that get hurt by this are usually the ones that did the work well initially and then assumed it would hold indefinitely.

The fourth is building category strategy in isolation from the commercial model. I have seen this repeatedly in agencies and in client-side organisations. The marketing team develops a category position that makes sense from a brand perspective but is disconnected from how the business actually makes money. The strategy cannot be executed because the commercial model does not support it.

The fifth is underestimating the investment required to shift category membership. If buyers currently place you in a category you do not want to be in, moving them requires sustained effort over time. It is not a campaign. It is not a rebrand. It is a consistent pattern of evidence, communicated repeatedly, that changes the mental model. Most organisations underestimate both the time and the investment that requires.

How Do You Measure Whether Your Category Strategy Is Working?

This is genuinely difficult, and anyone who tells you otherwise is probably selling you something. Category strategy operates over a longer time horizon than most marketing measurement frameworks are built for. The signals are real but they are not always clean.

The most direct measure is category membership in the buyer’s mind: when buyers in your target market think about the category you want to own, do they think of you? This requires primary research. Brand tracking studies, unaided awareness measures, and competitive consideration set analysis are the tools. They are not cheap, and they are not instant, but they are the only honest way to know whether the strategy is working at the level it is supposed to work at.

Secondary measures include share of category search, share of category conversation in earned and social media, and win rate analysis from sales data. These are proxies, not direct measures, but they triangulate usefully. Tools that track search share and category-level visibility can give you a directional read on whether your category presence is growing or eroding.

Commercial measures matter too. Average selling price relative to category, customer lifetime value relative to category benchmarks, and churn rate are all influenced by category position. A brand that has successfully moved into a premium category tier will typically see these metrics improve over time, though the causal chain is long and attribution is imprecise.

What I would caution against is trying to measure category strategy through the same lens you use for performance marketing. The measurement frameworks are different because the mechanism of action is different. Applying short-term attribution logic to a long-term brand and category play will consistently undervalue the strategy and create pressure to abandon it before it has had time to work.

If you are building out the measurement architecture for a broader growth programme, the Go-To-Market and Growth Strategy hub covers how to think about measurement across the full funnel, from category awareness through to commercial conversion.

About the Author

Keith Lacy is a marketing strategist and former agency CEO with 20+ years of experience across agency leadership, performance marketing, and commercial strategy. He writes The Marketing Juice to cut through the noise and share what works.

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