Research Summary New entrants often face uncertainty regarding how to optimally position themselves within product markets. We suggest that new entrants can use two important schemas to strategically categorize themselves to gain a competitive advantage in platform markets: category exemplars and category prototypes. Using a unique dataset of more than 83,000 new Google Play developers and more than 139,000 apps, we find that the optimally distinct entry point is at a high level of exemplar similarity and a low level of prototype similarity. We find that greater alignment of an entrant with the prototype corresponds to a weaker benefit of exemplar similarity. These findings have important implications for understanding competitive dynamics within product markets, strategic positioning at entry, and the interdependence of strategic categorization decisions. Managerial Summary Entrepreneurial startups often find it difficult to know how to optimally position their products among a large number of rivals in highly competitive platform markets. Our study suggests that these startups can draw on two reference points to help determine the optimal positioning for their products: category exemplars and category prototypes. Exemplars include the most successful products in a market category while prototypes represent the most common products in a category. Drawing on a large dataset obtained from the Google Play app store, we find that developers can substantially increase the installs of their first app by crafting an app text description that is as similar as possible to the description of a category exemplar and as different as possible from the category's prototypical description.

While researchers have been increasingly interested in the notion of category stigma, they have largely focused on stigmatized industry categories. Because products serve as a key interface between producers and consumers, we suggest that product categories should play a prominent role in the stigmatization process. Product category stigma occurs when a product category is seen as violating the expectations of its audience members. We argue that when an organization offers a product from a stigmatized category, it is subject to lower evaluations and higher penalties from the stigmatizing audience, regardless of its true underlying quality. Further, when an organization is perceived as increasing its engagement in a stigmatized category, the lower evaluations transfer to the organization’s other products. Finally, we argue that an organization’s reputation for quality actually amplifies this stigma penalty. We find support for our hypotheses in a sample of online reviews for the U.S. craft brewing industry.

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