Category dynamics recognizes that market categories are both influential and malleable. This presents the opportunity for category strategy. Strategy is not limited to choosing positions in an external market, or changing the firm to fit the market. It should also include shaping the market to align with the firm. Category strategy is especially important for entrepreneurs who need to carve out a space for a new idea, product, or technology. Then, a firm’s position within (evolving) market categories affects how it is evaluated.
The positions firms take on the market influence the changing social meaning of market categories, so category strategy is one basis for the category dynamics that underlie market evolution. A key idea is that organizations are positioned within multiple “spaces” in a market: for example a “knowledge space” of technologies and a “market space” of product features. Firms that develop technological inventions create in knowledge space, and ones that pioneer a new market category act in market space. The link between these two spaces is socially constructed by how firms strategically position their products and technologies within market categories.
Not all market categories are positive, or even neutral. Stigmatized categories are potent and operate in unique ways. In this research stream I show that stigma readily travels through mere associations in markets, based on automatic associations rather than deliberate cognition. This means stigma can harm “innocents” who are connected to the category just by happenstance, and these effects do not readily reverse when stigmas recede.