Mysteries Of Categorization: How Consumers Think About New Products

Authors Joseph Lajos (INSEAD, Europe Campus), Zsolt Katona (University of California, Berkeley), Amitava Chattopadhyay (INSEAD, Asia Campus), and Miklos Sarvary (INSEAD, Europe Campus) developed a model that explains how consumers categorize new hybrid products.

"We developed a mathematical model we call the Category Activation Model (CAM), which describes how activation flows through consumers' category structures. The model predicts that consumers are more likely to position a new subcategory under a relevant parent category to which relatively many subcategories are already connected than under a relevant parent category to which relatively few subcategories are connected," write the authors.

For the purposes of the study, the researchers presented participants with a product called the "Exercise Buddy," a combination MP3 player and heart-rate monitor. When study participants saw an organizational tree that had five entertainment electronic subcategories and two health electronic subcategories, they were more likely to place the Exercise Buddy in a new subcategory within entertainment electronics than health electronics. When researchers attempted to subconsciously activate the category with fewer items in it by having people proofread paragraphs containing the words "entertainment" or "health," the effect was reduced.

"Marketing managers could potentially use the Category Activation Model to estimate the amount of marketing effort that would be needed either to reinforce the manner in which consumers naturally categorize a new hybrid product, or to alter their categorization decisions," write the authors. "Managers might also be able to use the model to influence the way in which consumers categorize a new hybrid product through advertising."