Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Category Killer

What it is:

A category killer is a large company that is more efficient but less specialized than other merchants in the niche or industry.

How it works (Example):

Wal-Mart is a classic example of a category killer. By being cheaper, bigger, more convenient, and more well-known, it has an advantage over smaller stores and specialty stores. A wide selection of merchandise is a common characteristic of a category killer (which in this context is often referred to as a "big box" store).

Why it Matters:

Category killers are controversial. On one hand, they are champions of capitalism -- their ability to be more efficient often leads to lower prices for consumers. On the other hand, their low prices sometimes come at the expense of product quality, customer service and more modestly capitalized competitors.