You explain your startup, and someone says: “Got it. So you’re like that other company, but better?”
Except that’s not quite right. They’ve recognised a few features but missed the main problem you solve.
If this keeps happening, it may be worth looking at how you categorise your business.
A category tells customers what kind of product or service you offer. Familiar categories, such as accounting software or meal delivery, help people quickly understand what you do. But when your product takes a different approach, an existing category can give people the wrong idea.
Category design means defining and building recognition for a different type of product or service. It involves explaining the problem it solves, why a different approach is needed and what customers should expect from it.
Here are four signs it could be worth exploring for your startup.
1. People struggle to understand what you do
You’ve practised your pitch. You’ve simplified the language. But explaining your business still takes longer than it should.
Perhaps people ask more and more questions without getting closer to understanding it. Perhaps they latch onto one feature and miss the bigger picture. Or they nod politely, but can’t explain your product back to you.
A clear category can give them a starting point. It helps them understand the type of solution you offer before you explain the details.
However, confusion alone doesn’t mean you need a new category. Your explanation might be too technical, too broad or aimed at the wrong audience.
What to check first
Try describing your product in one sentence:
We help [specific customer] solve [specific problem] by [what your product does].
Test it with potential customers. Ask them what they think the product does and when they would use it.
If simpler language clears things up, you may have a messaging problem. If familiar category names consistently create the wrong expectations, a different category could help.
2. Customers keep comparing you with the wrong products
Your product shares a feature with another tool, so people assume you do the same thing.
Imagine you’ve built software that helps manufacturers predict equipment failures. Because it includes a maintenance calendar, buyers keep comparing it with scheduling tools.
They ask about reminders and booking features. You want to discuss preventing breakdowns.
That comparison matters because it shapes the features, benefits and price customers expect.
A more suitable category could help buyers understand the main job your product does and assess it on that basis.
What to check first
Ask customers why they make the comparison.
They may have misunderstood your product. But they may also see an alternative you’ve overlooked. A spreadsheet, an employee or a simpler tool can be a competitor if customers use it to handle the same problem.
The test is whether the comparison misrepresents your value to the customer. Your own view of who counts as a competitor is only part of the picture.
3. Existing categories don’t describe your approach
You can name the problem you solve, but none of the available category labels feels accurate.
Perhaps several companies are tackling an emerging need, yet everyone describes their offer differently. Or perhaps your product sits within an established market, but changes how customers do the work so substantially that the usual label becomes misleading.
In either case, a new category could give customers useful language for understanding that approach.
Simply having fewer competitors, however, doesn’t prove you need one. It could also mean demand is limited or customers are satisfied with how they handle the problem today.
What to check first
Look for evidence that your approach matters to buyers:
- Customers recognise the problem and want to address it.
- Your product changes how they solve it in a meaningful way.
- Existing category labels repeatedly create confusion.
- A more specific description helps customers understand the value.
Try narrowing an existing category before inventing a new one. Adding an audience or purpose may give you enough clarity.
You don’t need a category of your own just because an established competitor leads the market.
4. Customers accept the problem as unavoidable
Sometimes, customers experience a problem without thinking of it as something they can fix.
A team might spend every Friday copying information between systems. Everyone finds it frustrating, but they treat it as part of the job.
If your product removes that work, your first challenge may be helping them recognise that a different approach is possible.
Category design can help give a name to an overlooked problem and explain a new way of solving it. But the need must be real.
What to check first
Ask customers about what happens today:
- What work do they repeat?
- Where do delays or mistakes occur?
- What have they tried to improve?
- What does the problem cost them in time, money or missed opportunities?
Use their experiences to explain the need. Concrete examples will help more than a new term on its own.
If customers understand the problem but don’t consider it worth solving, changing the category name is unlikely to change their priorities.
Before you create a category, test the idea
These four signs are reasons to investigate category design. They aren’t proof that it’s the right strategy.
Creating a category adds work to your go-to-market plan. You need to build understanding of the category while also convincing customers to choose your product.
Before committing, test a few descriptions in customer conversations. See whether people understand your offer faster, compare it with more relevant alternatives and ask questions about using it.
The most useful category is one that helps customers recognise the value of what you’ve built. Sometimes that means creating something new. Sometimes it means finding clearer words for a category they already understand.
