Category killers are brands or products that dominate a market, leaving little room for competitors. They can be retail stores or individual products, and while they offer lower prices, they limit consumer options and often force smaller businesses out of the market.
Category killers are brands that enjoy such high demand from consumers that they leave little or no room for competitors to secure market share. A category killer can be a business such as a retail store, a brand name, or even an individual product or service. In some industries, regulations help to minimize the chances of this type of monopoly situation, while others have no such regulations; this paves the way for the emergence of a single entity that easily drives the competition out of business.
An example of a category killer is a retail chain that becomes so popular that other local chains and businesses fail to attract a sizable portion of the buying public. Sometimes referred to as a big box store, these retailers are able to offer lower prices for the goods and services they sell, simply because they can buy much larger bulk lots than smaller competitors can manage. The bottom line is that locally owned businesses are often uncomfortable when a large box store is built somewhere nearby, as it means local businesses will be reduced to catering to niche markets or go out of business altogether.
A category killer can also be a product that becomes so popular that the brand name itself becomes synonymous with the product itself. As a result, many consumers pay little or no attention to any competing products, almost automatically reaching for the branded product. Such a phenomenon usually takes years to create, but once the brand name is firmly lodged in the minds of consumers, it is nearly impossible to undermine that product’s grip on the market.
There are some benefits to developing a category killer. Applied to businesses, the category killer can often provide products and services at significantly lower prices than the competition. For consumers working with limited household budgets, this means they can buy more than they need without actually spending more money. Many households from different income levels go to the big box stores, due to the need to further increase their available financial resources.
The downside of a category killer is that it minimizes options for consumers in terms of where they can shop. As a category killer emerges in a given market, the first competitors to suffer are often locally owned businesses. Unable to compete, many simply tune out. This type of situation has led some communities to actively oppose the construction of large boxes in their cities and towns, as a way of preserving the idea of choice for consumers and free enterprise for entrepreneurs.
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