Introduction
Choosing the right business category is an essential step in starting a new business. It helps define the nature of your business and the industry in which it operates. T In this blog post, we will provide you with some tips on how to choose the right business category from a marketing construct. Here are the few aspects you might want to look at.
1.Consider Your Business Model
The first step in choosing a business category is to consider your business model. Are you selling products or services? Will you be manufacturing products or reselling them? Will you be providing services directly to customers or through a third-party platform? These questions will help you determine the right business category for your business.
2.Research Your Industry
Researching your industry is another essential step in choosing the right business category. You need to understand the industry trends, competition, and regulations. This information will help you determine the right business category that fits your business’s needs and goals.
Consumers these days want it simple. They like to look at issues with two clear distinctions either black or white. Wherein black represents “the bad”, so as it is claimed and white “the good”. However, when there are shades of grey as in a mix of both, that’s when the confusion starts. Hence you would need to educate the consumers a lot more in areas of grey and wait for the consumers to respond.
Let me explain this using a few examples, consider the categories of Hair oils, hair creams, and hair gels. While hair oil (white) is one of the biggest categories in the FMCG space, having almost 90% category penetration, Hair gel (black) on the other extreme has around 2-3% penetration. But the point to note is that while both the categories continue to grow or are stable, the category of hair creams (grey) which lies in between these two has hardly a 0.1% penetration.
While one can attribute the same probably to confusion in the minds of the consumer, who is unsure as to what to expect out of grey categories like these. To call it something extreme, or in other words, an extreme reference could be uncertainty in the minds of the consumer. Thus, it becomes the brands’ responsibility to educate the consumer about the pros and the cons of the product or category in question, albeit through the advertising medium or some other medium as deemed fit for the category in question. Also, the other point to note here is that this education may need to be sustained for a substantial period of time.
Now, this is at the mass level, let’s look and examine the same at the premium end of the spectrum. Can we say that this is a story that holds true when we look at mainstream brands who do not play in the premium end of the category?
While brands like L’Oreal, TiGi, etc in the grey categories, have made inroads through the salon route, it is still through the route of advocacy. And this is at the premium end of the spectrum. Perhaps these set of consumers are easier to convince, may be more open to experiment or get convinced as they believe they are seeking the advice of experts while using such products.
Conclusion
Choosing the right business category is an essential step in starting a new business. It helps define the nature of your business and the industry in which it operates. Apart from the above points, you might also want to take into consideration your legal structure, tax obligations, and financial reporting requirements. Consulting with a professional can also help you make the right decision. By following these tips, you can choose the right business category that fits your business’s needs and goals. But do keep in mind the black, white and grey framework, as they last thing you want is to spend most of your marketing to convince customers, not just about your brand but the category you operate in.