Analyzing strategies for new category development in the Indian context: How can first movers ensure category growth along with brand success?

Abstract

Markets world-over today are saturated with multiple brands in any category, and the extent of advertising clutter in marketing communications has also made it increasingly difficult for a new entrant to capture market share. In this scenario, developing a new category altogether is the best bet or an entrepreneur, and hence managing synergies between category and brand development has become an engaging topic of interest in consumer channels today. The objective of our research was to come up with generic strategies for achieving the balance between category and brand development, which first-movers and second-movers across industries could follow, while launching products in a new category. The methodology pursued by us is as follows: an initial literature survey of first movers & second movers – scenarios most conducive for each, advantages and disadvantages of being one, factors which affect their success. This, coupled with an analysis of real-world examples of five Indian brands who have delved into new categories, either as first movers or second movers - helps us recommend a set of broad methods, of how to gain market share and continually expand new categories, which we then applied to a hypothetical product launch by Parle in the untapped category of sparkling water, a growing sup-category of the highly successful bottled water segment in India. The study revealed following brand and category development strategies for a first mover: educate customers about benefits of a new product, win their trust and engage them in first trials, along with perceptible brand differentiation; and those for a second mover: focus on product differentiation vis-a-vis the first mover, identify the comparative value proposition preferred by consumers, identify the unaddressed market gap and in ensure an effective reach to the identified target segment to induce trial and win trust. On a concluding note, it is however necessary to mention that generic strategies must still be adapted to markets and industries, for the pace of technological and market development is what decides the success of these strategies for any new entrant.