Redefining Markets Through Category Strategy —Customer-centric market and category redefinition define positioning and growth areas | Insights

As companies pursue business growth, many focus on expanding market share and acquiring new customers. Differentiating within existing markets and refining the value delivered to customers are sound approaches and indispensable efforts.
However, even with sustained effort, are there not times when it feels difficult to envision growth beyond a certain level? Despite improving initiatives and increasing their precision, the ceiling on acquisition does not move. When confronted with such barriers, the issue often lies not in the quality of execution, but in the underlying premise of “which market you are competing in, and how.”
In this insight, we revisit this structural challenge from the perspective of “category strategy” and explain ways of translating the growth opportunities it reveals into customer touchpoints and marketing implementation.

About the Author

Yoshinao Shimizu

Principal

How Users Move Through Markets

In today’s increasingly digital environment, users searching for products or services are more frequently starting not only with search engines, but with specific portal sites or dedicated applications. As a result, user exploration behavior has come to take on a structure that, in many cases, is completed within some form of “category.” For example, people searching for housing open rental property portals; those looking to buy home appliances browse the relevant categories on electronics retailers’ sites or electronic commerce platforms. Those comparing telecommunications services often begin with price comparison sites or carrier-specific information pages. In many cases, users search, explore, and choose in accordance with an internalized understanding of “this belongs to this kind of genre.”

What requires attention here is that users are not necessarily “consciously choosing” a category. Because service providers have built portals and platforms organized by category, users naturally begin their exploration within those frameworks. Adjacent category options are rarely presented in a cross-cutting manner, and as a result, user consideration behavior tends to remain closed within a single category.

As users’ literacy increases, this structure gradually begins to erode. Individuals who initially start searching within one category may, through repeated comparison, become aware of other categories and begin to explore them as well. However, only a very small number of users compare options by surveying the entire market from the outset. Most people are simply seeking the best option within the range that is visible to them.

On the seller side as well, there is a tendency to optimize for this structure. Companies assume categories defined by industry conventions and distribution structures and focus on differentiation and share acquisition within them. The size of the category is often implicitly regarded as the upper limit of the company’s addressable market.

Users search for products and information within categories, and companies compete within categories. When this structure becomes fixed, no matter how much marketing precision is increased, growth potential does not extend beyond the boundaries of that category. This is where there is room to rethink strategy from a higher-level perspective.

The Limits of Intra-Category Competition as Seen in the Rental Housing Market

From here, we will use the rental housing market as an example to concretely examine the structure and limitations of intra-category competition.

Within the rental housing market, there are multiple categories, including standard private rentals, public housing, weekly and monthly apartments, and private lodging. There are significant differences in market size: while standard private rentals occupy the core volume of the market, other categories are relatively small. For users searching for housing, all of these represent options for addressing the same issue of “securing a place to live.” However, because portals and application channels are separated by category, cross-category comparison is not easy.

The category with the largest volume in this market is standard private rentals, and many people searching for housing begin their journey with major rental portals or property search applications. They narrow down conditions, conduct property viewings, and sign contracts. This path is highly established, and many users complete their consideration entirely within the category of standard private rentals.

Meanwhile, categories such as UR rentals, public housing, and weekly or monthly apartments each have their own application routes and portals. Even when searching on standard rental portals, properties from all of these categories are not necessarily displayed. In other words, from the user’s perspective, although housing options should in principle extend across categories, in practice they are confined within fragmented, category-specific exploration experiences.

Under this structure, operators in each category optimize for competition within their respective categories. They differentiate on facilities, pricing, and services, and compete for share within a limited pie. However, when the category itself is relatively small, no matter how sophisticated the marketing efforts, the ceiling for acquisition is constrained by the size of the category.

This structure is not unique to the rental housing market. In many markets, category definitions are determined by distribution structures and provider-side classifications, and companies repeatedly optimize within them. Yet users’ “problems” often transcend category boundaries.

Game-Changing Begins with “Redefining the Market”

So what is required to move beyond competition within a category and change the structure of the market as a whole? The key lies in the idea of “changing the definition of the market itself.” This is not merely a review of marketing initiatives; it is also a management-level decision about which growth opportunities to reinterpret as the company’s own business opportunities.

Users are not necessarily thinking, “I want to choose the best option within this category.” Rather, the essence of their decision-making lies in solving problems such as wanting to reduce upfront costs, seeking options with low barriers to entry, or finding housing that matches their specific conditions. The options that can address these issues do not necessarily exist within the category the user is currently exploring.

From this perspective, at least three layers of marketing strategy become visible.

The first is competition within the existing category. How to position the company and acquire share within the category to which it belongs. This is the foundation of traditional marketing and is, of course, indispensable.

The second is creating inflow from other categories. This involves anticipating the possibility that users in other categories may move into the company’s category and strategically generating that inflow.

The third is becoming the most chosen option for users who have flowed in. Users entering from other categories do not yet have sufficient knowledge about the new category. Therefore, if the company can create a state in which its distinctive features are most strongly recalled as the motivation for that move, it can build overwhelming advantage within the newly entered market.

By adding the second and third layers, the game shifts from competing over shares of an existing category pie to expanding the market itself. This is the core of “category strategy” (Figure 1).

From Which Categories, and for What Reasons, Should Inflow Be Created?

To design a category strategy in concrete terms, it is necessary to clarify “from which categories” and “for what reasons” inflow should be created. Let us once again consider the rental housing market as an example.

Each category within rental housing has different characteristics. Upfront cost levels, contract period flexibility, the degree of furnished amenities, and conditions required at application differ by category, resulting in different barrier structures.

These differences in characteristics, when viewed from another angle, represent candidates for the “reasons why users move to another category.”
For example, among users searching for properties in standard private rentals, there are segments with needs such as “wanting to reduce the burden of upfront costs,” “wanting housing with furniture and equipment provided,” or “wanting to rent flexibly for a short period.” Because standard private rentals have a large overall category volume, the absolute number of users with such needs is also large. However, the standard contract structure of private rentals does not always sufficiently satisfy these needs (Figure 2).

On the other hand, when looking at other categories, there are options with characteristics different from standard private rentals, such as relatively low upfront costs, a high proportion of furnished properties, and flexible support for short-term contracts. In other words, there are cases where the characteristics of another category satisfy the conditions that standard private rental users value. Similarly, among users in other categories, there may exist segments that harbor latent needs not fully satisfied by the category they are currently using.

What is important here is that users themselves are not comparing categories in a cross-cutting manner. As noted earlier, most users begin their exploration within the category that is visible to them. Therefore, cross-category movement should not be left to users’ spontaneous behavior, but should be intentionally designed by businesses.

Specifically, the starting point is to pose questions such as the following: among the majority who begin their search with standard private rentals, which segments with what kinds of needs or constraints can have their issues resolved by the characteristics of the company’s category? Clearly defining that “reason for movement” and designing it as the axis of messaging constitutes the core targeting of category strategy.

It is worth adding that such category fragmentation may change in the future with the spread of generative artificial intelligence. If natural-language exploration such as “what kind of lifestyle I want, where, and how” becomes commonplace, cross-category information acquisition that transcends category walls may become part of everyday behavior. However, at present, the reality is that fragmentation by portals and applications defines market structure, and cross-category movement is left to the strategic design of businesses.

Lead Generation Is Determined by How Cross-Category Movement Is Implemented

Even if a category strategy defines the target and the “reason for movement,” that alone does not lead to business growth. This is because “theoretically, the target exists there” and “being able to actually approach that target” are entirely different issues.

From here, we move into the implementation phase of translating strategy into initiatives. What is important here is that the value of category strategy is not determined solely by the idea of “how to rethink the market.” Even if it is decided from which category and for what reason users should be moved, the strategy does not translate into results unless there are touchpoints through which those users can actually be reached. In other words, category strategy becomes an implementation theory for business growth only when it is concretely translated into how to design digital inflow from other categories and convert that inflow into acquisition.

In the rental housing market, the consideration segment for standard private rentals, which has the largest volume, often completes its behavior within major portal sites and property search applications. This segment tends to access dedicated applications and services directly, rather than researching property information via search engines each time. As a result, it is difficult to sufficiently reach this segment through search-engine-based listing advertisements or search engine optimization initiatives alone.

That is, even if a category strategy is designed to “create inflow from the standard private rental consideration segment,” there is a structural issue in that this segment cannot be contacted through ordinary search-based initiatives as long as it is enclosed within portals and applications (Figure 3).

However, if the target is clearly defined, there are ways to design touchpoints that can reach them.

Even for audiences that are difficult to reach through general search-based initiatives, it is possible to design mechanisms that create awareness and comparison triggers through alternative touchpoints. What matters is not a particular medium or method itself, but rather assembling touchpoints after assessing the context in which the target encounters information and the stage at which they are most receptive to accepting another category as an option.

The key point here is not to deeply understand the mechanisms of individual tactics themselves. What matters is adopting the mindset of “designing touchpoints for delivery in accordance with the target category and audience.” Clearly defining the target and selecting touchpoints aligned with the customer journey form the foundation of implementation design.

However, even if contact is achieved through advertising, that alone does not complete cross-category movement. Users entering from other categories have limited knowledge about the new category. When someone searching within standard private rentals first encounters an option from another category, they will not develop interest unless they can immediately understand “why this category suits them.”

Therefore, post-inflow journey design is essential. This includes preparing landing pages consistent with advertising messages and designing information that connects user needs with category characteristics, such as “this option exists for those who want to reduce upfront costs” or “this category suits those who want furnished housing for short-term stays.” Whether users can feel, immediately after inflow, that “what I was looking for is here” determines the success or failure of cross-category movement.

Designs that simply route users to the top page and expect them to search on their own are highly likely to squander valuable inflow. It is necessary to design advertising delivery, messaging, landing page structure, and condition-based information presentation as a unified process.

In this way, implementing a category strategy means consistently designing “from which market, for what reason, and how to bring users.” Simply drawing up a strategy is insufficient; only when it is translated into concrete approaches to targets and into the design of touchpoints and pathways that actually encourage cross-category movement does the strategy produce results. The ability to integratively design this entire sequence—strategy formulation, data utilization, and media implementation—becomes a critical factor that differentiates execution capability.

ABeam Consulting supports these elements as an integrated whole, without fragmentation, from design through implementation.

Conclusion

In this insight, we have organized the concept of category strategy and its implementation process, using the rental housing market as an example.

Revisiting the key points, users research, explore, and decide within categories more than they themselves may realize. Companies likewise tend to optimize for competition within categories. To break through this structure, it is necessary not only to compete within categories, but also to revisit the definition of the market itself and intentionally design cross-category competition.

After drawing up a strategy, implementation design—how to approach targets and how to encourage cross-category movement—is indispensable. The moment strategy and initiatives become disconnected, category strategy reverts to a purely theoretical exercise. Looking beyond discussions of category strategy to include the concrete design of how to attract users from other categories is essential for driving the next phase of growth.

If there is a challenge in that continuing to compete within an existing market does not readily reveal growth levers, it is worth first asking the question, “Is the definition of the market we are competing in truly correct?” Reexamining market boundaries should serve as the starting point for discovering new growth potential. Rather than remaining confined to optimization within a limited market, where growth potential exists and how to translate it into implementation—category strategy provides an effective perspective for confronting these questions.
At ABeam Consulting, we provide end-to-end support, from building category strategies to designing target categories and audiences, marketing initiatives, and lead generation using digital advertising.

In addition, in persona development that delineates customer needs and usage occasions, an approach that leverages “AI personas” to conduct market analysis and evaluate the effectiveness of initiatives is also effective. This method uses not only internal data but also large-scale, high-freshness external data to construct cluster-based personas through generative artificial intelligence. This makes it possible to dramatically increase the resolution of understanding customer needs and demand levels for products and services. For further details, we encourage you to contact us.

Furthermore, an effective means when creating new categories or presenting competitive and comparative axes against existing categories to carve out new categories is strategic public relations. While it is possible to use advertising to promote awareness of the category itself or the company’s number one position within a new category, achieving this requires substantial cost.
By contrast, strategic public relations is an approach that seeks to shape public opinion by linking social issues and challenges with the value provided by the company through collaboration with third-party organizations, government entities, and media. In other words, it can be described as a means of strategically creating “trends” within a social context.

At ABeam Consulting, we also support communications strategies that “create entirely new market categories” by integrating everything from data-driven social issue framing to collaboration with third-party organizations and media partners. We would like to introduce specific methods on another occasion.

Insights TOP