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Category insight, what is it and why is it important?

Published 18 Nov 2021 5 minute read

Consumer insight

What is a brand category?

While entrepreneurs think of their business as one-of-a-kind, consumers need a way to quickly identify a product and its uses. A brand category is how shoppers essentially define and label a product. The first thing a consumer does when encountering a brand for the first time is to ask themselves “What is it?”

There are numerous categories and sub-categories for every type of product.  Rarely is a category created - more often a category is identified, although when a new category is created, it typically marks a fundamental shift in consumer behaviour - think 'music on the move' and Sony,.

To illustrate the category conundrum - hair shampoo products would fall under both the health and beauty and hair care categories. The key to category selection is to create a category hypothesis in other words, select the category you believe you compete in. 

Whatever category you choose, keep in mind that prospects will have expectations of your product that must be met in order to be capable of competing in the category. These are known as hygiene factors. These are the features and benefits that make a product suitable for inclusion in the category. If your product does not satisfy these hygiene factors, your chances of competing drop significantly.

Using the hair care category as an example, if you believe your hair care product competes in the anti-dandruff sub-category - then a defining characteristic must be the ability to combat dandruff. Failure to do so will knock your product out of contention

What types of brand categories are there?

A common mistake in category selection is to believe a product sits in just one category, however, consumers identify brands based on a wide variety of characteristics.

Let's run with the shampoo example. There are multiple ways in which a shampoo brand may be categorised including:

  • Parent categories (health and beauty);
  • Subcategories (liquid, dry);
  • Related categories (conditioner, mousse, gel);
  • Key features (frizzy, dandruff control); and
  • Category competitors (Pantene, Garnier, L'oreal).

Defining a brand's category is not always clear, and consumers may place a product in multiple categories. Therefore it's vital for brands to understand the needs of their target audience which in turn determines the defining features and characteristics of the product or service which helps consumers label and categorise the brand in their minds. 

What are category insights?

Category insights give businesses knowledge that their competitors may not have access to. They provide a deeper understanding of the market trends, and how products are performing in their respective categories.

Any business that markets a product uses category insight naturally when paying close attention to their competitors. What are competitors doing that your business is not? Do they focus on other areas that your product might have missed? Is their brand frequently used as an example when thinking about a certain market? Can consumers easily identify

Category insights are gained by paying close attention to the market trends and other key pieces of customer data. This data can reveal category trends, such as the rates of consumer activity in a certain category, and whether a product may be more successful if it were categorised differently. These category insights can create actionable insights for researchers and can help them determine what changes potentially need to be made.

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Why use category insights?

Category insight is instrumental in helping to avoid tunnel vision. When you are focused on product research and development, your data is usually so specific that you can easily fail to explore other facets of your industry. Have you gained a deep understanding of adjacent categories, do you have competitors in these categories, whose products may be equally or more attractive to a consumer?

Are you aware of new products entering the market, and thoroughly studied their attributes and benefits? Have you researched what consumers think of them? Have you paid attention to a new product's digital marketing campaign, and studied why customers may be gravitating towards a competitor's product and away from yours? Have you looked at what other categories are performing well, and what categories might offer significant growth potential?

Why are category insights important?

The data that you collect from a comprehensive analysis of your category will be instrumental in your marketing strategy. It should cover consumer demand, developing trends, and should provide you with clear direction on how you can grow your business. 

But it will only be through talking to your consumers that you can get a more in-depth understanding of how they feel about the world around them and how specific products fit into their lives. These insights will allow you to identify where growth and disruption can come from and allow you to steer your brand's future success. 

Businesses fail far too often in their marketing because they refuse to hear what their customers are clearly saying about what they want, how they choose, use and buy. Shopper insights clearly identify customers behaviour and attitudes, and using this information along with sales data can help make any necessary pivots in order to stay competitive.

The importance of consumer insights in category planning

Revisiting our shampoo example, customer or consumer insights will help you understand what draws people to your product on a crowded shelf, and what draws them away.

Is your packaging an attractive colour? Are the benefits of the product clearly indicated on the label? What position does it occupy on the display and how does it compare to your competitors'? Does it stand out from other available brands? What sets your product apart? Do customers discover your brand organically? Do they search your product out, or do they only have an interest after hearing about you from someone else?

Poor insight, poor placement

When building out a new (or even an existing) brand, insight into consumer behaviour is going to help you plan your sales, product pricing, lead sources, and what segment of the market you plan on targeting. Consumer understanding is crucial to all of those strategic commercial decisions and is a good benchmark for tracking your progress and ultimately your success. 

And remember, if you rely on incomplete or unreliable insight then your product will miss its mark. Often it is customers themselves who determine the category your product ends up in. Having this insight before you bring your product to market will avoid wasting valuable time and resources.

To use the earlier example, if you have designed an all-natural, organic hair care product that will revitalise and rejuvenate your scalp using the finest natural herbs and oils, but your customers view you as a shampoo brand, you may be successful in highlighting your key features but mentally your customers will continue to identify your product as a run of the mill shampoo.

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Be curious

As you learn more about trends in your space, look at the insights that your consumers provide when shopping, and ask yourself some important questions about how their patterns may be defining your brand categories:

How are consumer needs changing and developing?

  • Is there a specific need in the market that we can address next?
  • Are there external trends that are driving category demand?
  • What are our competitors doing that we are not?
  • Where have we gone wrong, and where have we gone right?

These insights will help identify gaps that you may have missed, unmet needs and opportunities for future product improvements.

How are category insights beneficial for business growth?

If you are looking to disrupt the market, find examples of brands that have already done so and study where they have found their success. Look at the category trends that they relied on to be successful. From understanding the past, you are better able to predict the future and will have a better idea of what your customers will be searching for next.

Category insights help you use data to make focused decisions about your business growth. Use these insights to help improve sales, edge out the competition, and develop a serious lead in the market. Utilising category insights can help strengthen your brand's position in the market, and broaden your overall customer appeal.


Understanding how your customers think and what they really want is a key component of any successful marketing strategy. It’s also the only way to categorise your products correctly, as well as meet customer expectations at every stage in the buying process.

If you don’t have access to reliable consumer insight that will support these efforts, then it doesn’t matter if you spend hours trying out all sorts of new strategies because nothing will work without accurate information about who your consumers are and what they need from their purchases.

That's where we come in! We can help you get deep insights into your consumers so that product categories make sense for them, meeting their needs at each stage in the purchase journey. Contact us now or request a demo of our online research platform.

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