When tech giant SAP acquired Qualtrics, which is a research and business analytics firm, for a few many times higher than the latter’s sales figures, many question marks were raised. SAP though justified the acquisition by claiming that new category creators, typically take up about 76% of the market capitalization from the total market. There is a subtle difference between a category creator versus a first mover. While often there may be an overlap, a category creator need not always be the one to first move in the market. It involves educating the public about a problem that is not always on top of their mind, but one which they ought to be concerned about. The first high functioning flywheel would be created by this player, through a radical service or product innovation, a break business model and big data on the future of the segment. Data is today, a currency for power, as Netflix has taken advantage of, knowing its customers more intimately, than Disney would. Tesla, Axon and Hydra facial are three more such companies that are the category creators.

Source: https://hbr.org/2019/11/the-difference-between-a-first-mover-and-a-category-creator

Uploaded Date: 16th December 2019