🧠 Psychology of Categorisation

Categorisation is a critical component of positioning.

If a brand or product isn’t categorised fittingly in the mind, people either don’t know what to make of it or misvalue it.

How so?

People care more about the outcomes of categories (ideas) than the brands that represent them.

• Uber is a brand, but people care more about getting a cab booked and instantly en route in a few taps (ride-hailing app).

• Salesforce is a brand, but people care more about leveraging customer data to increase revenue (cloud CRM).

Categories are organised perceptions of useful things in the world.

Brands are heuristic shortcuts to access usefulness within a category.

Therefore, strong anchoring between category and brand is critical.

But… this often doesn't happen.

There’s no anchoring.

Which is disastrous.

Mental Categories, Not Market Categories

To anchor a brand to a category, an important component is understanding how the mind of the prospect categorises usefulness (i.e. ideas presented as propositions).

However, this step is commonly executed in reverse. Companies start with market analysis (business logic) and affect the outcome of these conclusions on prospects.

It’s the difference between outside-in thinking vs. inside-out thinking.

Mental categories vs. market categories.

Why does this matter?

First of all, a brands can be assigned to a category that undervalues it or it doesn’t make sense.

Secondly, there are entire market categories, defined by companies and industries utilising market analysis, that have no reality in the prospect’s mind.

They never will — either — because they don’t correlate with how people think.

If they don’t exist in the mind, it’s not possible to anchor a brand to them.

However… the reverse is also true (opportunity!).

Cognitive Mechanics

Focus inside your prospect’s head. This is where the categorisation that really matters happens.

You don’t win in the market. You win in the mind.

But, how do minds categorise things?

That’s kind of critical to know, right?

Fortunately, there’s a 100 years’ worth of peer-reviewed scientific theories and research across psychology and cognitive science to utilise.

I’m delving into them, to match what is relevent to positioning.

Why?

By highlighting the categorisation mechanics of the mind we can calibrate positioning strategy, hypotheses testing, and execution in a more deliberate and focussed way.

Below are my initial notes (I’ll be fleshing this out over time!).

FYI: I use the word “concept” below to mean the holistic “idea” of a company, brand, product, value etc, together. For example, the concept for Uber would be a ride-hailing app.

Let’s jump in. 👇

🤖 Computer Effect

🎓 From: Psychologist Jean Piaget’s Theory of Cognitive Development.

💡 What: Our minds build a cognitive framework that helps us process and organise information, consisting of ‘schema’ (units of knowledge). These schemas can be thought of as mental "folders" or "categories" that contain related information. Schemas can be hierarchically categorised as well as webbed into complex relationships with one another. Similar to how you might organise files on a computer.

➡️ Example: You might have a schema for "soft drinks," and within that schema are sub-schemas for "cola," "root beer," etc. And within those sub-schemas are schemas for individual brands like “Cola-Cola” or "Pepsi”.

🦾 Action: To position a concept, you connect to the mind’s existing schema. You do that by adding your concept to an existing schema or creating a new schema logically adjacent or connected to an existing schema. For example, I could create a sub-schema for “cola”, which could be “aspartame-free cola”.

🟦 Lego Effect

🎓 From: Psychologist Jean Piaget’s Theory of Cognitive Development.

💡 What: Concepts that fit a person’s existing schema are more likely to be added or attached to their schema. Concepts that don’t fit their schema are more likely to be rejected. Like building a Lego set, a newly introduced brick has to be compatible with the existing structure in order to connect somewhere that looks and feels logical.

➡️ Example: Imagine you have a "healthy foods" schema that includes "fruits," "vegetables," and "whole grains," but not "chocolate." “Chocolate” is stored in a separate schema for “unhealthy foods”. If a concept is introduced as a "healthy chocolate bar," your existing schemas may reject it, like a mismatched Lego piece. Why? The cognitive dissonance is too severe (it doesn’t make sense). The mind likes harmony.

🦾 Action: When introducing a new concept, align it with existing schemas. This could involve adding your concept to a related schema or tweaking the concept's perception to better fit a current schema.

🏷️ Label Effect

🎓 From: Peracchio and Tybout’s The Moderating Role of Prior Knowledge in Schema-Based Product Evaluation.

💡 What: People often perceive a concept more favourably when it is associated with a well-defined or preferred schema label, using their existing perceptions about the schema to categorise and inform their perception of the concept.

➡️ Example: An electric bike could be positioned as part of the broader "transportation" schema or the narrower "eco-friendly transportation" schema.

🦾 Action: To effectively position a new concept, identifying the most favourable schema for it (or creating it) is critical.

🔥 Fusion Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget.

💡 What: People can perceive a new concept more favourably when they perceive it to fit multiple schemas, creating a fusion schema.

➡️ Example: Consider Figs, a brand of premium medical apparel. It can be positioned as part of both the "fashion" and "medical" schemas. The clothing is designed for medical professionals, fitting the medical schema, but with a strong emphasis on style and comfort, which also allows it be in the fashion schema. The mind is willing to accept a ‘designer medical apparel’ category name.

🦾 Action: To position a new concept, it may be favourable to fuse two schemas together (particularly if it has not been done before). In order to be adopted by the mind (connect with existing schemas), it cannot violate the Lego Effect. It has to be logical. For example, fusing the schemas “insects” and “street food” together would likely create too much cognitive dissonance (be rejected).

👀 Focal Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget.

💡 What: People’s schemas act as mental amplification lenses, making them more likely to notice and remember information that aligns with their existing schemas. This is similar to a camera focusing on a subject in its viewfinder, while the background gets blurred out.

➡️ Example: Think of a new mobile application for learning the Klingon language. If a person already has active "self-improvement" and "learning Klingon" schemas, they're more likely to notice and remember this app among other apps.

🦾 Action: To position a new concept, it is advantageous to identify and leverage the most important and underutilised schemas in the mind of your prospect. By doing this, you shine a spotlight on your concept because the prospect is ‘programmed’ to notice it.

🤿 Distortion Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget.

💡 What: Schemas can sometimes bend to accommodate information that doesn't perfectly fit. This process can be likened to a flexible mould that adjusts its shape to fit a slightly different object, rather than rejecting it outright.

➡️ Example: Consider a food concept positioned as “plant-based meat”. For people with a strong "meat equals animals" schema, their mind might initially consider “plant-based meat” as a contradiction. However, under the right conditions (see Involvement Effect), the mind may adapt its schema to accommodate this concept as an exception by creating a sub-schema for “plant-based meat”, or, by altering their existing schema to accommodate a broader perception ("plant-based products can also be meat").

🦾 Action: To position a new concept, it may be favourable to leverage powerful schemas (like “meat” in “plant-based meat”) over less powerful schemas (like “protein” in “plant-based protein”) even though it creates a level of cognitive dissonance that the prospect has to distort into their existing schema. The trade-off can be worth it, since the additional Focal Effect amplification you get from the “meat” schema outweighs the negative cognitive dissonance effects. But, this can backfire depending on the context (see Stubborn Effect below).

⛔ Stubborn Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget.

💡 What: Schema often remain unaltered, even when they are confronted with legitimate information that contradicts them.

➡️ Example: Consider a SaaS product positioned as a 'user-friendly data analytics tool'. People who hold a firmly ingrained "data analytics tools are complex" schema might dismiss this assertion as contradictory. The schema remains unaltered, the tool goes unused.

🦾 Action: Avoid positioning that activates the Stubborn Effect. That is, unless, you can find early adopters who don’t possess contradictory schema. Early adopters can help validate the concept and provide compounding cognitive leverage to help revise the schema for latter prospects on the adoption curve.

⚠️ Involvement Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget.

💡 What: The personal relevance or importance of a concept can act as a catalyst for schema adaptation and adoption. If the individual perceives the concept as highly useful or beneficial, they are more likely to modify their schema to accommodate it, or, adopt a new schema.

➡️ Example: Consider a person who values environmental sustainability and encounters the concept of an “electric plane”. This doesn’t fit with their existing schema of “how a plane propels itself in the air” (creating cognitive dissonance). But, the concept could still be adopted into their existing schema for “environmentally-friendly transport”. The strength of a “reduced carbon emissions” perception in this schema can provide enough motivation for the individual to alleviate their cognitive dissonance by seeking a reason why they should update their schema.

🦾 Action: When positioning a new concept, connecting it with the most important (and relevant) schema in the mind of your prospect increases the likelihood it will be adopted.

🏝️ Illusory Effect

🎓 From: Cognitive Psychology, the illusory correlation theories of David Hamilton and Robert Gifford.

💡 What: People sometimes form illusory correlations, creating unfounded or inaccurate associations between categories, particularly when the information is distinctive or striking. This can be likened to placing unrelated objects in the same box due to a perceived, though mistaken, connection.

➡️ Example: Consider a software product for robotics labelled as 'AI-powered.' For those with a strong schema of "AI equals highly complex” and “robots equals expensive," they might associate 'AI-powered' in this context with high cost and difficulty in use. Even if the software product is affordable and user-friendly, the distinctiveness of 'AI' and its association with robotics might lead them to develop this illusory correlation.

🦾 Action: To successfully position a concept, it's important to understand potential illusory correlations that your prospect may form. These misconceptions could hinder your concept from being adopted in the mind.

🥖 Stereotype Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget, and Elizabeth Loftus' research on memory distortion.

💡 What: Schemas can influence and even distort the perception and memory of events, particularly when existing stereotypes come into play.

➡️ Example: Consider an augmented reality (AR) gaming app. For users with a strong schema of "gaming leads to isolation", they might believe this AR game also promotes solitude, even though it encourages real-world interaction and exploration. Their pre-existing schema may cause them to overlook or misinterpret the collaborative aspects of the game, sticking instead to their stereotype.

🦾 Action: Use the Stereotype Effect to your advantage, not disadvantage. Align your concept with a strongly held stereotypical perception. For example, create an AR game that’s based around solitude and “me time”.

 🥽 Selective Memory Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget.

💡 What: Schemas can influence the formation of episodic memory, as we are more likely to remember details that fit our existing schemas. This can be compared to a computer selectively saving files that match its existing organisation, while ignoring others.

➡️ Example: Consider a new productivity app that incorporates social networking features. For users with a strong "productivity equals work" schema, they might primarily notice and remember the work-related features, while overlooking the social elements, even if both are present and prominent in the app. Their existing schema guides their memory, leading them to recall the app as being more work-centric than it actually is.

🦾 Action: When introducing a new concept, consider the existing schemas that might guide how people perceive and remember it. The concept is more likely to attach itself to existing schemas in the prospect’s mind if it is not diluted by other associated schemas. Heavily position the concept around one strong schema vs. one strong schema and a few weak schemas.

⚡ Activation Effect

🎓 From: Cognitive Psychology, the schema theories of Frederic Bartlett and Jean Piaget.

💡 What: Schemas are not isolated. They have a level of activation that can spread among related schemas. This can be compared to the hyperlink feature on the Internet, where clicking on one link (activating a schema) can lead you to related links (related schemas), opening several tabs connected by a core theme.

➡️ Example: Consider an application positioned as a "collaborative tool for remote work". For people with a strong "remote work equals isolation" schema, they might initially perceive this software as contradicting their existing concepts. However, the "collaboration" schema can activate related schemas such as "communication", "teamwork" and "productivity", thus spreading the activation and allowing the individual to accommodate the new concept as part of a "collaborative remote work" schema.

🦾 Action: When positioning a new concept, map the schemas in your prospect’s mind and consider which are likely to be activated. Plus, how they work together holistically. Depending on the context, this can work both unfavourably or favourably.

🆕 Name It Effect

🎓 From: Cognitive Psychology: naming and cognitive categorisation theories of Eleanor Rosch and George Lakoff. Linguistics: Generative Grammar theory of Noam Chomsky.

💡 What: Our minds construct schema for both physical real-world concepts and abstract concepts before they have been assigned a name or even consciously realised. For example, the concept of a table can exist in the mind before we know to call it a ‘table’. By calling it a table, it’s branded as a table.

➡️ Example: The trend of athletic wear worn in casual settings was conceived as a schema in the mind before it had a name. Marketers identified this concept and named it "Athleisure", creating a new, recognised category in the fashion industry.

🦾 Action: Naming a concept already existing as a consciously undetected schema in the mind is a powerful positioning strategy because the mind is likely to accept it. It fits with what is already there. There are two tricky elements to navigate: 1) Identifying an unnamed yet existing commercially valuable schema, and 2) choosing language (a name) the mind accepts and matches to the schema (e.g. “Athleusire”).

🖇️ Inferential Effect

🎓 From: Cognitive Psychology, related to inferential reasoning and associative learning theories of Jean Piaget, Edward L. Thorndike, and Robert G. Crowder.

💡 What: This is the opposite of the Naming Effect, above. Language and sensory cues can activate the mind to conceive of new schema, using existing schema as a reference point and structure. This can be purely abstract, with no direct exposure to the underlying physical real-world manifestation of the schema concept.

➡️ Example: The mind has an existing schema for both "West Coast IPA" and “East Coast IPA” – populated with relevent information such as flavour profile, alcohol content, origin, brands, etc. If the concept of a "South Coast IPA" is introduced purely through language, the mind creates a schema for it by referencing the “West Coast IPA” and “East Coast IPA” schemas. It populates the new “South Coast IPA” schema by inferring that it's a similar kind of product but perhaps with some differences that are meaningful in the context of the South Coast.

 🦾 Action: If your concept does not already exist in your prospect’s mind, you can use language and sensory cues from existing schemas to artificially create a concept and position it. You can also use this technique to reposition your concept if the existing positioning is weak.

 🔮 Expectation Effect

🎓 From: Cognitive Psychology, Priming Theory (John Bargh, 1982), Schema Theory (Frederic Bartlett and Jean Piaget), and Confirmation Bias (Peter Wason, 1960).

💡 What: If you use language or sensory cues to activate schema and associate your concept with that particular schema, it predisposes prospects to assign specific attributes and expectations to your concept. The expectations can be so powerful that the prospect draws conclusions about your concept that may not be objectively true.

➡️ Example: If a company positions a product as "SaaS", this may trigger certain schemas related to the term "SaaS", which might be associated with negative attributes such as “time intensive” or “expensive multi-seat recurring subscription”. These negative perceptions can be attributed to the product as fact, even though they may not be objectively true. The reverse is also possible — the prospect assigns positive attributes that may not be true.

🦾 Action: When positioning a concept, it’s essential to consider what expectations are created in the mind of your prospect by the language you use, and how these might negatively create false assumptions.

🎯 Prototype Effect

🎓 From: Cognitive Psychology, the prototype theory of Eleanor Rosch.

💡 What: Prototypes are mental concepts that represent the perceived typical example within a category. For example, when you think of a ‘dog’ you may imagine a Golden Retriever or German Sheppard vs. the hundreds of other breeds that exist. Prototypes function as mental benchmarks. New information is categorised based on how closely it matches these prototypes.

➡️ Example: Suppose a new car brand aimed to create a 'safe electric cars' schema. They could relate their cars to the attributes and perceptions of both Tesla, the prototype of the ‘electric car’ schema, and Volvo, the prototype of the ‘safe cars’ schema. Simultaneously, they highlight their unique ‘electric safety’ features, thereby distinguishing their brand in a new fusion schema.

🦾 Action: When positioning a concept, it is important to consider what the prototype brands of the existing categories you are positioning against or within are. This is a key benchmark the prospect will use to categorise your concept. As a rule of thumb, the prototype for a category is usually the perceived market leader. For example, McDonald’s for quick-service hamburgers.

🔎 Exemplar Effect

🎓 From: Cognitive Psychology, the exemplar theory of Eleanor Rosch.

💡 What: People categorise new information based on how closely it resembles specific, remembered personal instances (exemplars) within a category. When you think of a ‘dog’ you may cognitively reference a Golden Retriever as the prototype (the Prototype Effect). But, you may also reference a Toy Poodle if it happened to be a childhood or recent family pet (the Exemplar Effect). The schema for Toy Poodle will therefore be very strong for you, but weak to non-existent for the majority of others.

➡️ Example: Consider a software company that wants to release a new ride-hailing app in London. Uber would be the prototype most prospects benchmark against for category interpretation. Addison Lee, a local legacy operator, would be an exemplar that a smaller % of prospects would also benchmark against (because they’ve used their app more, for whatever reason).

🦾 Action: Mapping and identifying common exemplars in your target customer’s mind is critical to identifying powerful and closely related category frames of reference from which to anchor and position your concept from. For example, whilst McDonald’s may be the prototype for quick-service hamburgers, the target customer may have chowed down on more In-N-Out Burgers in their time.

That’s it for today! I’ll be back in your inbox soon.

Martin 👋

P.S. This is not an exhaustive list. I’ll be updating it over time… so hit that browser bookmark button! (webpage here).

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