Understanding Categorisation as a Guide to Marketing Strategy

Joseph Lajos, Professor of Marketing - July 15th, 2010
catégorisation pour orienter sa stratégie marketing

Mobile phones for taking pictures and listening to music, touch pads for surfing the Web and watching videos ... for several years, consumers have been bombarded by a range of hybrid products that are difficult to categorize. This is something that businesses need to take into account, says Joseph Lajos, to minimize the likelihood of failure when launching this type of product! 

Joesph Lajos ©HEC Paris

Joseph Lajos was professor of marketing at HEC Paris from 2009 and 2012, teaching marketing and consumer behavior. His research interests include consumer behavior, electronic (...)

Joseph Lajos and his co-authors are interested in how consumers categorize hybrid products such as smart phones— products that combine such different features that it becomes difficult to define whether they are phones, MP3 players, cameras or PDAs. But why study this process of categorization? Because it directly affects consumer purchasing behaviour. For example, Joseph Lajos cites the commercial failure of the first personal digital assistant (PDA), Motorola Envoy, in themid-1990s, which can be attributed in large part to Motorola's inability to understand consumer perception of this hybrid product.


WHY CLASSIFY A PRODUCT?

From the early 1990s, it has been recognized that categorization is a fundamental cognitive phenomenon in the consumption process because it enables consumers to differentiate between products. Joseph Lajos explains that this categorization consists of “maximizing the similarities inside a class while minimizing those between classes to enable individuals to store and use better the information encountered in their consumption experience.” And while it is known that consumers tend to create sub-categories when faced with hybrid products (e.g. this is what leads a consumer  to consider a smart phone as a phone or a computer ), few studies have so far helped to explain how these sub-categories are integrated into the main categories. A process that companies should have an interest in understanding, observes Joseph Lajos, because they will need to adapt their distribution, pricing and advertising strategies according to the ways consumers categorise products. 


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If a hybrid products has only two features related to entertainment as against six for health, consumers will tend to perceive it as part of the health aids market. 


UNDERSTANDING THE PROCESS OF CATEGORIZATION

Researchers are therefore trying to understand why, when faced with a product which could belong to several categories, an individual will choose one of them rather than the others. To answer this question, they presented a sample of 96 students at the EötvösLörand University in Budapest, and then 371 students at the Sorbonne University in Paris, with a hybrid product called “exercise buddy.” Designed to be used by athletes, it is both a music player and a physical activity monitoring device (heart rate, blood pressure, temperature ). It is a product which thus combines the features of two categories: health and entertainment. The exercise for students is to create a sub-category for the device, and then specify which main category (entertainment or health) it should be assigned to.


ACCESSIBILITY: THE DECISIVE ROLE OF THE NUMBER OF SUBCATEGORIES

The study shows that the more subcategories there are (e.g. medical equipment, sports equipment, nutrition aids, massage services ...) in a single category (in this case, the health category), the more likely it is that students will choose this category. The researchers explain that, in fact, a category is considered more “accessible” when the consumer has greater visibility of the subcategories assigned to it. This phenomenon can also be interpreted in terms of product features: if a hybrid has only two features related to entertainment as against six for health, consumers will tend to perceive it as part of the health aids market. Conversely, when there are more leisure related features (MP3 player, camera ...), then consumers place it spontaneously in the entertainment category. 


Based on Joseph Lajos’s article “Category Activation Model: A Spreading Activation Network Model of Sub category Positioning When Categorization Uncertainty Is High” cowritten with Zsolt Katona, Amitava Chattopadhèyay and Miklos Sarvary, Journal of Consumer Research , June 2009. This article won the Syntec-Conseil management prize for best research publication in marketing/ decision sciences. 

APPLICATIONS POUR LES DÉPARTEMENTS DEMARKETING
APPLICATIONS POUR LES DÉPARTEMENTS DEMARKETING

• This model provides companies with a tool to assess how likely consumers are to categorise ambiguous products. It may be particularly useful in the early stages of a product launch for estimating the level of marketing effort required to influence consumers in their choice of a category.

• Research also suggests ways to guide consumer categorsation through marketing mixes (product policy, pricing, distribution and communication). The authors explain that it is indeed possible to increase the likelihood that consumers will place a product in a desired category by strengthening the communication effort around this category. For example, if Motorola had known that consumers would associate the Envoy PDA with various categories (laptops, pocket diaries ...), the company could have asked them to list all the sub-categories that could be associated with the product. Motorola would then have been able to discover what were the strongest connections between categories and subcategories and strengthen these links to guide consumers to choose the laptop category.

METHODOLOGY
METHODOLOGY

The researchers invent a fictional product that has the characteristics of two different categories: health and entertainment. They then ask a sample of 96 students, then 371 students, to assign this product to a subcategory created by the researchers and which must fit into one of the two main categories. The model developed by the researchers then seeks to anticipate the choices of these students.