In this age of diversifying and branching out into new markets, sometimes it pays to stick with what you know, according to new research.
Published in the American Sociological Review, “Multiple Category Memberships in Markets” reports that consumers believe producers with narrow focuses are more knowledgeable, and they tend to buy more from these producers. The research was conducted by Michael T. Hannan, a management professor in the Stanford Graduate School of Business, Greta Hsu of the University of California Davis and Özgecan Koçak of Sabanci University in Turkey.
Whether your company spans one or one hundred product categories, you can take some tips from the research to help increase your reputation as a specialist:
- 1. Don’t confuse your audience: Consumers like predictable categories, so make sure your offerings fit neatly into one or two. Citing Hollywood films, the researchers found that movies clearly belonging to a specific genre such as comedy or science fiction did better than films trying to span multiple genres.
- 2. Appeal to those in the know: Adopting the language of experts in your product area will increase your reputation as a specialist. Using the example of eBay sellers, Hannan explained, “Acronyms like CPK for Cabbage Patch Kids dolls and quality markers like Certified MS63 … were important signals to bidders that the seller was knowledgeable about the doll or coin categories.”
- 3. Hire experts for all product areas: If you’re going to expand into new markets, don’t assume your existing staff can handle the work. The researchers found that large organizations successful in multiple product categories maintain “proper resources to solve problems by making sure they hire an adequate number of specialists in each area.”
Soda image courtesy of Flickr use ginnerobot, CC 2.0
