Why Category Design Works: The 12 Cognitive Biases That Shape Markets

The best companies don’t just sell products—they shape how people think.

“I very frequently get the question: 'What's going to change in the next 10 years?' And that is a very interesting question; it's a very common one. I almost never get the question: 'What's not going to change in the next 10 years?' And I submit to you that that second question is actually the more important of the two.”

- Jeff Bezos

More than a century ago, Claude Hopkins wrote in Scientific Advertising:

“The competent advertising man must understand psychology.”

Because human nature is perpetual. The same instincts that guided merchants of Venice still drive modern buyers. “In most respects,” Hopkins wrote, “it [human psychology] is the same today as in the time of Caesar.”

Sixty years later, in the long boom of the 1980s, Al Ries and Jack Trout expanded on this with Positioning: The Battle for Your Mind, arguing that marketing wasn’t about shouting louder—it was about claiming real estate in the customer’s brain. About shaping perception.

At the same time, Robert Cialdini wrote Influence: The Psychology of Persuasion, revealing that decisions aren’t governed by logic or spreadsheets but by biases, heuristics, and mental shortcuts—the same ones humans relied on when bartering shells for fish.

Then, nearly a decade ago, Al Ramadan, Dave Peterson, Christopher Lochhead, and Kevin Maney connected these ideas to a discipline that had always existed but never had a name: category design.

They argued that people don’t process endless lists of features, specs, or options. Our brains don’t work that way. Instead, we organize the world into categories. We put things into mental boxes—subconsciously, automatically. And the company that defines the box, defines the market.

This is why Tesla isn’t just a car company. Why Apple isn’t just a tech brand. Why Red Bull isn’t just an energy drink.

They don’t compete inside someone else’s box. They create their own—and make sure your brain does the rest.

We like to think we make rational choices. That we evaluate every purchase, weigh the pros and cons, and select the best option.

But that’s a lie.

Our brains don’t work like that. They’re built to shortcut decision-making—to save energy, avoid uncertainty, and latch onto patterns. The companies that shape those patterns? They win.

Want to see how this plays out in the real world? Here’s how these biases shape the market—and how you can use them to your advantage:

1. Anchoring Bias – The first widely known product in a category sets the benchmark. Everything else gets judged against it.
   John Deere has anchored the precision spray market with “See and Spray.” Now, every new precision spray solution is compared to Deere—not the other way around.
   

2. Choice-Supportive Bias – Once we pick something, we convince ourselves it was the best choice—even if something better comes along.
   A farmer who’s been planting Pioneer for years isn’t just buying a product—they’re reinforcing a decision made seasons ago, maybe even generations ago. Even if a competitor releases a hybrid with “better” yield and disease resistance, it might be invisible to them, because switching would mean admitting that Grandpa might have been wrong—and that’s often a harder pill to swallow than a few extra bushels per acre.
   

3. Groupthink Bias & Pack Mentality Bias – If the crowd believes it, so do we.
   The success of Roundup Ready soybeans wasn’t just about pure performance—it was about becoming the default. When every neighbor planted them and had clean fields, switching felt like a gamble, so most farmers stuck with what everyone else was using.
   

4. Conformity Bias and Social Proof – People don’t like to go first.
   The success of hybridized corn seed trials in Iowa in the 1920s and 1930s was initially met with skepticism. However, as early adopters saw increased yields, their neighbors took notice. By the late 1930s, hybrid corn was no longer a novelty—it was the norm.