Category Expansion Best Practices: Unlocking Growth in Stigmatized Industries

Category or market expansion is a crucial aspect of business growth, particularly in stigmatized industries. These industries face unique challenges, including social taboos, lack of awareness, and barriers preventing consumers from purchasing certain categories. In this post, we will delve into the importance of category expansion, explore the reasons behind underdeveloped categories, and outline best practices for brands to drive growth. Furthermore, we will provide examples of both successful and unsuccessful brands in driving category expansion, specifically focusing on the CPG and medical devices categories. Finally, we will conclude with a call to action for brands to consider while planning for 2024.

The Rationale to Drive Category Expansion

Most stigmatized industries have a higher Total Addressable Market than the actual size of the market. For example, in the hearing aids market in the US, there are ca. 50 million consumers with hearing loss, and roughly 25-30% of these consumers actually wear hearing aids. This means that there is a significant upside in this market for growth. In fact, this happens across multiple industries, like FemTech, Adult Incontinence, Cannabis, and Weight Loss to name a few. To attract non-users, there needs to be a systematic approach to diagnosing and solving their reasons for not purchasing the category. Here are some of the reasons why categories are underdeveloped.

Understanding Under-Developed Categories

1. Stigma and Social Taboos: Stigmatized industries often face consumer reluctance due to cultural norms or perceived embarrassment associated with the category. This stigma can hinder consumer acceptance and limit market growth. Ensure there is a deeper understanding and assessment of the different dimensions of stigma and which ones to address. We have found that knowing how to unpack this is critical for shaping your strategic growth plans.
2. Lack of Awareness: Categories may remain underdeveloped due to insufficient consumer knowledge or limited understanding of the benefits and value they provide. Typically, the assumption is that its insufficient sales and marketing investments. While this is true, there is also a need to ensure brands are clearly leveraging their distinctive brand assets to stand out especially if the category is crowded with multiple brands.
3. Barriers to Adoption: Some categories face barriers such as high costs, limited availability, complex usage, or regulatory challenges, making it difficult for consumers to embrace the category. These barriers are typical for most underdeveloped categories. The one that doesn't get talked about enough is emotional barriers. Figuring this out in the context of the category, and brand's path to purchase is critical for success.

The Role of Brands in Category Expansion

There is an implicit assumption that market leaders are best positioned to grow the category. This doesn't have to be the case. There are multiple instances where challenger brands have also been able to expand the category. Here's what are the typical reasons for what market leaders vs. challenger brands have to their advantage.

Market Leaders: Established brands in a category can leverage their market position, brand equity, and resources to drive category expansion. They have the ability to shape consumer perceptions, invest in innovation, and lead the market with new product offerings.

Challenger Brands: Smaller or newer brands can disrupt the market by addressing unmet consumer needs, challenging existing norms, and offering unique value propositions. These brands often introduce innovations and target niche consumer segments.

Best Practices for Category Expansion

How should brands frame their growth plans? Oftentimes, brands leverage the first two practices of Education & Awareness building, and Innovation & Differentiation. Brands oftentimes prioritize Education & Awareness because this is the easiest to measure and prove to the organization that the Marketing Programs are working. Similarly, introducing new innovations and driving differentiation allows them to keep their brand competitive. At best, this attracts those non-users who are already considering the purchase of the category, and its supporting retention of existing brand users.

However, that's insufficient for driving category or market expansion. All 4 strategies should be adopted to drive market expansion.

1. Education and Awareness: Brands should invest in consumer education campaigns to demystify stigmatized categories, raise awareness about their benefits, and dispel misconceptions.
2. Innovation and Differentiation: Developing innovative products, services, or experiences that address specific barriers or provide added value can attract consumers and differentiate brands within the category.
3. Collaboration and Partnerships: Brands can collaborate with influencers, organizations, or advocacy groups to enhance credibility, reach target audiences, and drive trust and acceptance of the category.
4. Emotional Branding: By leveraging emotional storytelling, brands can humanize the category and create psychological safety for consumers to overcome stigmas and increase acceptance. This is where meaningful insights that drive distinct creativity are critical.

These best practices brands should be integrated into marketing plans and supported on an ongoing basis. These programs need to be an ongoing investment that has the ability to break through the advertising clutter of multiple and the messaging should be persuasive to convince consumers to assess your brand over other options.

Successful and Unsuccessful Examples

Beyond Meat: Beyond Meat is a notable example of a brand that has expanded the market for plant-based meat alternatives. By creating products that closely mimic the taste, texture, and appearance of traditional meat, Beyond Meat has attracted consumers seeking sustainable and healthier alternatives. The brand's strategic partnerships with major food service and retail chains, along with its effective marketing campaigns, have contributed to its rapid market expansion and the growth of the plant-based protein category.

Diet Candy: Various brands have attempted to introduce "diet" or "weight loss" candies, targeting individuals seeking to manage their weight. These products often promise appetite suppression or weight control benefits. However, they have generally faced challenges and limited success. Consumers may perceive such products as ineffective or contradictory to healthy eating habits, leading to skepticism and low market acceptance.

As brands prepare for 2024, it is crucial to prioritize category expansion strategies, particularly in stigmatized industries. By understanding the reasons behind under-developed categories, brands can overcome these barriers and drive growth. Leveraging best practices such as education, innovation, collaboration, and emotional branding, brands can effectively expand their categories and capture market share.

In the journey of category expansion, brands have the power to reshape perceptions, drive societal change, and meet the needs of consumers in previously neglected areas. Embrace the opportunity to be a catalyst for growth, enhance lives, and create meaningful connections with your target audience. Start planning for 2024 today and make a lasting impact on your industry and consumers alike.

Do you think this rings true for your category and brand?