4 Strategies for Product Categorization

strategies-for-product-categorization
SUMMARY

Product categorization is a simple exercise that, when done well, can improve brand loyalty and the customer experience as a whole. 

Consumer psychology is complex and non-predictive. In order to predict the behavior of consumers, it is necessary to understand customer beliefs and the reasons behind these beliefs in the first place. By tapping into the voice of the consumer, you can develop strategies for product categorization that meet needs by allowing them to access products easily. 

This article will discuss four main product categorization strategies, proven to enhance consumer-product find-ability:

-Easy-to-use taxonomic structure

-Multiple pathways for customers to navigate products

-Landing pages for main categories

-Categories that include attributes that apply to a specific category

When you begin working through the process of product categorization, it’s important to remember what your main focus when categorizing products is; that is the ultimate goal in adding categorization should make it easier for your customers to find and subsequently buy your products.

When consumers need to purchase something, what is the first step they take? In a global survey, Google found that regardless of whether a consumer plans to buy in-store or online, 59% of shoppers hop on the search engine to research the item before making a purchase.

But how can you help your product show up when a customer searches for it? In addition to updating your product title and preparing your product listing to meet all of the channel’s requirements, a merchant should also categorize their products correctly according to the channel’s requirements.

What is product categorization?

In a nutshell, product categorization is how a marketplace groups your products into distinct, hierarchical categories. Similar to classification within the animal kingdom, channels have broad categories (or taxonomies) that branch into more and more specific groups.

Product categorization can also build brand loyalty; when a customer enjoys their shopping experience and knows that they will be able to find what they need quickly, they will come back. 

Time and time again.

When shopping on an eCommerce site, one of the frustrations we can all relate to is not having a clear path to finding what we are looking for. Listing your categories in an easy-to-find place and a clear organizational structure makes it easy for customers to find your products and put them in their shopping cart. Using a tool like PIM software makes it easy to maintain these categories.

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What types of product categories exist in brand marketing?

According to Indeed.com, Marketers often divide consumer products into different categories based on buyer purchasing decisions. Since the purchase process for items varies, marketers take different approaches to appeal to consumers. The four main product categories in marketing include:

Convenience goods

Convenience goods are products consumers purchase regularly. These are often low-priced items with limited differentiation between brands, such as mouthwash. Because the costs are similar, buyers select one brand initially and stick with it. They also limit their research for these items since the price and quality of similar items are relatively the same.

Since customers tend to remain loyal to convenience goods after choosing a brand, building brand recognition is crucial. One way to do this is by having wide-scale promotions. Strategic placement can also help encourage purchases of your items. For instance, placing your product on the end cap at a grocery store or by the checkout line can facilitate impulsive purchases.

Shopping goods

Shopping goods are purchases that require more research than convenience goods. This is because consumers tend to purchase these items less frequently. They are often higher-priced items, such as houses or electronic devices.

Since shopping for goods has a more significant impact on a person’s life, they spend more time deciding and comparing companies and prices to find one that best meets their needs.

For example, someone buying a house may look online regularly at the homes available and go to multiple open houses before deciding which one to purchase.

To help consumers choose your shopping goods, offer ones with an attractive value. This may include higher quality than competitors or similar quality with a better price. When promoting your products, focus on separating your items from your competitors.

Specialty goods

Specialty goods are unique products that have a loyal customer base. These followers focus on finding the specific product they are looking for rather than comparing brands.

An example of a specialty good would be a particular make of a car. Specialty goods are often exclusive, and consumers can only purchase them in a few outlets.

To attract consumers with your specialty goods, develop innovative creations. During the promotion, highlight what your product can do. Also, include what sort of status a buyer would obtain.

For instance, buying a sports car may portray a consumer as an adventurous person who likes to move fast. Specialty goods require targeted promotion to reach your loyal followers.

Unsought goods

Unsought goods are items buyers either have little knowledge about or wouldn’t have thought about buying. For instance, consumers rarely buy light bulbs until they notice the light bulb in their lamp no longer works.

People purchase other unsought goods in response to fear or danger, such as a carbon monoxide detector or life insurance.

When marketing your unsought goods, focus on reminding consumers that your product exists. Also, remind them to purchase your items to prepare for future instances.

Here, you can prompt customers by showing them what challenges they may face if they don’t buy your items or the benefits of having your product in case of emergencies, such as having a generator when the power goes out.

strategies-for-product-categorization

Understanding the psychology of a consumer.

As I write this article, I am at a car dealership where my car receives a regularly scheduled service. I recently moved to a new city, and this car dealership is unique, so I wasn’t sure where to find the help I needed.

All of the employees told me to go in a specific direction to find the service department, but I am a little directionally challenged, and it was hard to go down all the hallways they mentioned. Finally, I found signage indicating which way I should go and quickly found what I was looking for.

This is a similar experience that many shoppers have had. You enter a new store looking for a particular item or category of products.

Depending on the level of signage, you may have to ask someone to help you, or it may be easy enough to find on your own. 

One of the main differences between finding a product in a brick and mortar store versus an eCommerce store is that there isn’t always an easy-to-find human to interact with to give directions on where to find a particular product.

This is why categorization can replace the necessity for a physical employee and allow your customers to discover products where they are expecting them.

To begin creating a categorization system that allows your customers to find things quickly, you may want to start with a Category Analysis.

strategies-for-product-categorization

How to construct a category analysis.

A category analysis helps marketers create a plan that synergizes categorization and the customer experience. The following should be used as objectives to complete your analysis:

Let’s dive a little deeper into each of the objectives:

1. Identify product category drivers.

The objective of performing category analysis is to thoroughly understand what prompts consumers to use your products (drivers) and the crucial barriers preventing them from embracing your offerings further. 

For example, consumers buy laundry detergents to clean clothes.

One of the essential prerequisites for a successful brand positioning is fully understanding category drivers. This has the power to make or break a brand –  and unfortunately not well understood. 

Category analysis identifies the category drivers by using customer experience – to uncover issues and opportunities that cannot be identified through traditional customer satisfaction research.

Map the journey.

Using highly effective customer journey mapping, brands can identify the category drivers that drive a customer to choose a product over another.

By looking at the end-to-end customer journey, marketers understand all the key drivers that considerably impact the customers’ choice of products. 

Customer journey mapping can also reveal inconsistencies across touchpoints that limit a driver from exciting or delighting a customer. 

Knowing what drives customers to buy a product and what makes them reject a particular product can be attained by category analysis.

For instance, when Clootrack performed category analysis on Men’s Apparel in the USA, the top category driver emerged as ‘fitting of the shirt’ and not the range of shirts or the quality of the fabric. 

This emerged as a unique insight for apparel companies as they would have expected the quality of the fabric or range of the shirts to occupy the top position.

2. Understand customer beliefs that influence consumer behavior

When it comes to convincing consumers, the secret is to understand the consumer’s beliefs and behavior.

This will eventually let you know what a buyer wants from your business. The customer has a deep understanding of what they want from a product.

Consumer psychology is way too complex and non-predictive. But it is of the most significant importance for marketers to decode the consumer mindset to anticipate their needs before making the purchase decision. 

In order to predict the behavior of consumers, it is necessary to understand customer beliefs and the reasons behind these beliefs in the first place.

The category analysis report is incomplete without analyzing the customer beliefs. 

A practical example:

Here is an example of a category analysis report of US Telecom that Clootrack analyzed.

While marketers think it could be related to data speed – what customers believe is different. Their beliefs are around radiation, billing issues, and overcharging. 

Isn’t it quite surprising? Do you think these insights could have been captured without conducting a category analysis?

3. Discover Category Trends

Customer intelligence – driven by category analytics – provides companies with rich data on buyer behavior, emerging trends, and customer expectations – which can be used to deliver better interactions. 

Customers crave new, customized, personalized, and pleasant experiences, and companies want to deliver them at any cost.  

But how do companies read the minds of the customers? 

When customers express themselves on forums about the new experiences they would like to see in a particular product – is the brand listening to them? Probably not. 

Product category analysis captures the emerging trends – upcoming features that customers wish to see in a product. 

Product category analysis captures the emerging trends – upcoming features that customers wish to see in a product. 

For example, one of the significant emerging trends in the washing machine industry is that customers ask for personalized wash programs with App. Also, customers are asking for functions that will enable them to manage the amount of water and electricity consumed per wash.

They also ask for auto optimal wash technology, automatic detergent dispenser, power wash system, cap dosing system, and steam care functions. 

Hence significant players in the industry, such as Samsung Electronics Co., Ltd and Miele, who have considered emerging trends pretty seriously, are transforming the washing machine industry.

These companies have introduced smart control washing machines that can be remotely monitored by using a smartphone application. 

These are just a few insights into the emerging trends obtained by performing category analysis.

4. Measure Brand Equity

Brand equity is an indicator of the company’s strength and performance, specifically in the public markets.

A product’s additional value is its ‘well-known’ status or brand awareness. Brand equity eventually leads to a competitive advantage that results in higher sales, higher revenues, and lower costs.

A strong brand positioning weaves an emotional connection with your customers. It provides you a sustainable competitive advantage irrespective of whether your brand is in the start-up phase or an established business in the industry.

This is called brand equity.  

Learning about a competitor’s products and services through category analysis can provide insights into their value. This helps reveal how businesses can differentiate their products from their competitors.

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4 essential product categorization strategies.

Now that you have completed your category analysis, you can begin applying the strategies outlined at the beginning of this article to create your categorization structure:

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Easy-to-use taxonomic structure.

Is there a difference between product hierarchy and taxonomy?

For the most part, product hierarchy and taxonomy are used interchangeably. 

Think of product hierarchy as the system, while taxonomy is the method of ordering or grouping products. Product hierarchy forms the “data model” behind the categorizations – it automatically nests products underneath their groups based on level.

Taxonomy is how those groups are determined and how those products are logically classified. What attributes put products in a particular class? Product hierarchy denotes a ranking of products – first by brand, then under each brand, the product class, etc.

Now that we have established that difference let’s discuss how to create an easy-to-use taxonomic structure. The first critical step in making an easy-to-use taxonomic structure is identifying key, top-level categories for your products.

You will know your products best but think of the most accessible, most concise top level to get your customers off to the right start. This could be something like Tents, Backpacks, Sleeping Bags for an outdoors company, or Anthropologie, which has my favorites in categories like Accessories and Home and Decor.

Next, for my favorites at Anthropologie, I would navigate first to Home and Decor and then to Candles. My borderline obsession with candles is satisfied in this category, for others with candle obsessions could follow a simple and easy-to-use structure to find what they are looking for. It may make sense to have a third or even fourth level of structure, but three should be plenty in most cases.

strategies-for-product-categorization

Provide multiple pathways for customers to navigate to products.

Similar to the story I mentioned at the beginning of this article about visiting a dealership for the first time and trying to find the service department, you want to make finding products an easy experience.

When considering website or marketplace design, providing multiple paths for customers to find your products makes it easy for customers to find your products and, in turn, to place them in their carts.

Pathways can come in multiple ways to access categories, place links to products or categories on blog posts for your company, and make separate areas for categories, for instance, having an adult clothing section, teen clothing section, and children’s clothing section.

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Landing pages for main categories.

Once you have gotten customers to the specific category, build brand loyalty further by creating eye-catching landing pages for your categories. This will assist in reinforcing that the customer has ended up in the right spot and allow building upon your brand identity. 

It is also important to mention that in addition to customers finding your landing pages, bots can also find these landing pages and help drive traffic to your website.

Using landing pages for categories ultimately serves as an anchor point for the categories. It can also improve buyers’ confidence in being able to find what they are looking for.

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Use category attributes to your advantage.

The last key piece of having an efficient categorization system is using categorized products to include only the attributes that apply to those products.

When browsing through products, it can show that care was placed in the product selection and marketing efforts when relevant information is provided along with products within the same category.

Using these categories can also save you time in managing products because you will no longer need to look through attributes irrelevant to a particular product category.

Conclusion

In conclusion, eCommerce brings a lot of great flexibility and convenience to your customers, making it easier than ever to shop for products they are looking for. Categorization, especially from the outset of building a product base, is a simple way to build relationships with customers that will have them coming back for more.

FAQs

Yes. Product categorization is essential for any size eCommerce business. Whether you are a small or big business, proper categorization of products directs your customers in the right direction. It also drives your website's search function. Remember that when a customer is looking for an item in your store, they have already determined that they're looking for a specific brand or model. By categorizing these products, you make it easier for them to find them, regardless of the size of your business or the number of SKUs in your catalog. In addition, categorizing your products can set you up for success when adding new developments in the future. Your small business won't be small forever if you pay attention to details, like product categorization.

Yes. Catsy's PIM and DAM solutions contain features that can achieve high-level product categorization. Catsy tools enable intuitive hierarchical product categorization.

No. Product categorization should not be expensive if you use solutions like Catsy PIM, with features that you can utilize to achieve high-quality product categorization on top of additional tools that can drive ROI for your business. Product categorization can get expensive if you opt for complex standalone solutions with no real value outside of taxonomy.

Yes. There are many reasons for product categorization in eCommerce, but one of the most important is to improve your search engine ranking. 99% of users won't purchase a single item on their first visit to a website or partner channel. Instead, they will browse your site, compare prices, and choose the one with the smoothest experience. Using categorization to display products on your site will increase your visitors' chance of a purchase.

The more categories your eCommerce store has, the more keywords you will have indexed in search results and more visitors to your website.

Yes. Product categories are divided into different types, so it's helpful to include the product's keywords in the form of attributes. Attributes can be anything related to a product, from the title to the color. These terms will allow consumers to find the products they search for within your website quickly. The faster buyers can get to the product they're looking for, the more likely they will complete a purchase.

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