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Question:Is it a good idea to position a new product in a brand new category.

Answer:Your main concern can be best explained by refering to what is known as primary and secondary demand.Primary demand for a product is the total demand for all brands in a product category. For example, the category may be specialty coffees or personal digital assistants or customer relationship management software.

Primary demand would sum up all the brands competing in each of these categories. Continuing our examples, this would include Starbucks and Peets (for specialty coffee), Palm Pilots and Handspring (PDAs), and Siebel and Oracle (CRM).

Secondary demand is the demand for a given brand in a category. If you’re, say, Handspring, your secondary demand is the demand for the Handspring PDA. Creating secondary demand is what we talk about when we say "brand competition" – competition for one brand over another.

Now, having said this, launching a product in a brand new category is equivalent to facing primary demand. Now, you will need to do a bunch of education to the market, far more than your competitors will need to do. To see this more in depth, read our tutorial called Is competition a good thing?


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