Creating a new market category means opening up a new space in your audience’s brains.

The New York Times recently published a story about how electric cars are finally going fully mainstream. In the story, Randy Parker, CEO of Hyundai Motor America, which is about to start making electric cars in Georgia, said: “The E.V. market has hit an inflection point. The early adopters have come. They’ve got their cars. Now you’re starting to see us transition to a mass market.”

That’s remarkable, because as little as five years ago, when most people thought about buying a new car, they rarely considered whether to buy a gas or electric car. It was usually about which gas-powered car to buy. The category of electric car did not really have a place in most people’s minds. They likely knew about electric cars, but more as a curiosity, not a practicality. And so, in 2020, the share of new cars purchased that were electric was just 2%. In years prior to that, it was near zero.

In 2023, the share of new cars purchased that were electric jumped to 10%, and it’s rising fast. This tells us that there is now a viable space in many people’s minds for the category of electric cars. How did that happen?

Electric cars have been around for almost the entire history of automobiles. From time to time, a major automaker would put out an electric model that would ultimately flop. The category of electric car was something rabid environmentalists considered a real category, but for everyone else, it was an oddity. The range of those early electric cars sucked. Most of them looked geeky.

Seeding a New Market Category

Tesla changed all that in 2008, when it introduced its Roadster, which instantly created what I’d call a new category of “electric car you’d love to own.” I don’t know how much of Tesla’s category-creation strategy was intentional, but starting with the Roadster was brilliant. That model was super cool and rocket fast. Car reviewers slobbered over it. A Roadster’s pricetag started at $109,000, and rich people lined up to buy.

The Roadster planted the seed of a desirable electric car category. Yet that wasn’t enough to create a new space in the public’s minds that said electric cars are a good alternative to gas cars.

Over the next decade, Tesla continued to define the new category. It built more affordable sedans. It built out charging stations. We all started seeing more Teslas on the streets. The head space to consider electric cars became more real.

Expanding the Category Beyond One Brand

But category-creation magic only really happens when a new space becomes bigger than its creator – bigger than one brand. That happened around 2017, which is when General Motors made a radical announcement that it was aiming to make its entire fleet electric by 2035. Ford, Hyundai, Mercedes-Benz and others announced that they, too, would make mainstream electric vehicles. Newcomers like Rivian dove into the space.

All those competitors helped validate what Tesla started. The category became real. An ecosystem was developing to support it. What the Times and the Hyundai executive recognize is that by now, in 2024, the category of electric cars – viable, practical electric cars – has been implanted in most buyers’ brains as a worthy alternative to gas cars.

And now that the category has been established, Tesla and all its competitors have a market to sell into. Without that space in people’s minds, there would be no market.

Five Tactics for Successful Category Creation

What does this tell you if you are launching a product or service that you believe creates a new market category?

CONDITION THE MARKET: It is as important to open up the category space in your audience’s minds as it is to market your brand and features. In our book Play Bigger, we call this conditioning the market to desire your product. If the space in people’s brains doesn’t exist, your offering has no place to go. Your audience doesn’t understand how it fits into their lives. All of your marketing will be like throwing a ball at a brick wall. It won’t penetrate.

MAKE IT BIGGER THAN YOU: Think of the category as bigger than your company. The category should be something that must exist, whether you do it or not. The electric car category caught on once it opened a space in people’s minds that said: “Electric cars should exist, and I can see how they would fit into my life.”

PULL IN COMPETITORS: You should hope competitors come into the category. That validates and strengthens the category, helping establish the space in people’s minds. If competitors don’t come in, you may be trying to create a category that doesn’t matter that much. If it mattered, others would see it, too.

BE THE RULE SETTER: While you want the category to be bigger than your company, you also want to set the rules and expectations for the category so others have to follow them. As Tesla opened up the “desirable electric car” category, its design led the way – from the fact that the cars look as stylish as gas-powered counterparts, to the screens inside and the way charging works. Now GM and the others have to match those design choices because consumers expect that of an electric car. That, in turn, puts Tesla in the driver’s seat (so to speak) of the category.

WIN THE DOMINANT DESIGN: Ultimately, your goal is to develop the category so that your audience always thinks of your brand first – they believe you are the leader driving the category’s advancement. As economist Paul Geroski would put it, over the long haul you want to be the category’s dominant design. The company that achieves that typically holds onto the greatest market share of the category.

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