AMA: Google Marketing Head for YouTube Shorts Mexico & Spanish LATAM, Martin Raygoza on Category Creation

Creating a category could be one of the most complicated process for any organization. It is very important that you make sure your company has the resources necessary for this. Here are 3 questions I would ask my business before thinking on expanding to new categories: 1. Will my core business be protected?: The biggest mistake you could make is to unprioritized the part of your business that brings the most value to the company. Unless you can be certain your main revenue stream is safe, I wouldn't suggest start exploring for new categories. Of course there could be situations where you need to create a new category because your core business is dying or competition is catching up, in this case this will be part of your strategy, but you still need to make sure you don't kill the cash cow before time. 2. Do you have enough resources? : Think of a new category almost as a new business. Of course you'll be able to find efficiencies with your current operation. But mostly a new category means going for new customers and this requieres a whole set of different skills, people and go to market strategies. 3. How connected is this new category with your core business? : Creating a new category is challenging by itself but you can make it easier by avoiding going to far from you main activity, for example: if you are in the soda business you could move to alcoholic beverages before thinking on moving to chips or sweets. The same if you are a clothing company, you will have a better chance to succeed if you move to footwear than going to the tech industry.

It is relatively easy to get it wrong when creating a new category, the complication is in the word "new". So it is very important to make sure you understand all the implications for your business to reduce the possibility of failure. Here is in my opinion some of the most common mistake done by organizations trying to expand to new categories. 1. Bad resource management: You must make sure you understand the economics of this decision for your business in every way: People, money, know-how and time. 2. It work once it will work again: You need to treat this almost as a new business and no a new product line. What help you succeed before could be a good north star, but bear in mind you are entering unexplored waters and you must be smart and humble to learn before going all in. 3. We don't need new expertise: Depending on the situation of your business, you might need to think on recruiting new people to help you understand this new process. It might seem something you would want to safe money at the beginning but not having the right expertise could be the difference of succeeding or not when creating a new category. 4. Too big too far: If possible try to stay within a sensible range of your main activity. If you want to be over disruptive you need to understand that you will need to consider more of everything (more resources, more knowledge, more variables to fail) to make it happen.

Some of the most important decisions you need to consider as a product manager are: 1. How competed is the new category?: There is no right answer. More competition means more barrier to enter but less means fewer information at your disposal. Just make sure your strategy consider the external factors as-well. 2. Champion products: Could sound obvious but there are products that with minimal adjustments could serve more than one category. Example Soda and Soda with alcohol. Staying close to your core expertise could facilitate things for you when entering new spaces. 3. Test and learn fast: get into the start-up spirit of fail, learn and upgrade as fast as you can. Pilot projects could be a great a idea for minimizing risk. 4. Have a good user feedback process in place: Probably the most important of all is to understand how your brand or new product will be perceived. So make sure you have a robust feedback process in place at different stages when creating the new category

The great thing about being the underdog is that you can also be the disruptor. The category's leader role is to maintain its position, this limits how many risk they can take and usually makes them over confident. So if you find your company in this position my suggestion would be to follow the path of the disruptor. There have been many companies in the past that enter a category in a second place or even in a later stage and now they lead that category. In this situation it will all come back to your business strategy and capabilities. One important watch out when trying to disrupt a category is make sure you are doing it for the right reasons. Disruption just for the sake of doing things different doesn't normally work in long term, you have to make sure what you are offering brings actual value to the category and the consumer

I would suggest to think of entering or creating new categories with the same complexities of creating a new business. So definitely it is easier to promote products. Depending on how far form you core business will be the level of difficulty of creating a new category, so I would suggest to try to stake within your industry and your sector. When deciding to start on this journey make sure you are taking into consideration both internal and external factors: Internal: Resources available; expertise of your team; time available. External: Saturation in the new category; entry barriers; policies and legal considerations. But the most important thing to consider before you decide to create a new category is to make sure your core business is protected and prioritized.