Picking A Product Category

What Is A Product Category

A product category is a way for businesses to group and organize similar products or services they sell. It helps structure product lines and makes it easier for customers to find what they're looking for, whether in a physical store or on a website.

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Common Product Categories Structures

Product categories typically follow a hierarchical structure, to make things easier to understand, the examples will be in the clothing industry:

• Top-level Categories: These are broad groupings that encompass multiple product types. For example, in a clothing store, top-level categories might include "Men's Clothing," "Women's Clothing," and "Accessories"
• Subcategories: These are more specific groupings within the top-level categories. For instance, under "Women's Clothing," you might find subcategories like "Dresses," "Tops," and "Pants"
• Further Subdivisions: Categories can be broken down even further if necessary. For example, "Dresses" could be divided into "Casual Dresses," "Formal Dresses," and "Cocktail Dresses"

Why Product Categories Exist

The main purposes of product categories include:

• Improving User Experience: Well-organized categories help customers navigate websites or stores more easily, saving time and reducing frustration
• Enhancing Internal Processes: Categories streamline inventory management, stock control, and help internal teams understand product organization
• Facilitating Data Analysis: Proper categorization allows businesses to track sales performance by category, enabling data-driven decision-making
• Supporting Marketing Efforts: Categories can be used to create targeted marketing campaigns and promote related products

When creating product categories, businesses should consider factors such as product type, features, customer needs, and how customers typically search for items. The goal is to create a logical, intuitive structure that aligns with customer expectations and shopping behaviors.

How To Choose The Right Product Category

To determine the most relevant category for your business, you can first take a look at common business categories on G2 but also follow these steps:

Identify Your Core Business

Choose a primary category that best describes your overall business. Be specific; for example, select "Nail salon" instead of just "Salon".

Consider Category Relevance

Ensure the category accurately reflects what your business is. If you can't find an exact match, choose the closest possible category.

Analyze Search Volume

Use keyword research tools to find categories with high search volume. This helps in selecting categories that potential customers are actively searching for.

Evaluate Profitability

Select categories that align with your most profitable services. This ensures that your business is visible for the services that generate the most revenue.

Research Competitors

Investigate the categories used by your competitors. Unless you are creating something truly unique, there most likely is a brand already existing in people's minds for the category you want to compete in.

By following these steps, you can choose the most relevant and effective categories for your business, enhancing your visibility and attracting the right customers.

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