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The information you put on your site- the content- can probably be arranged in more than one way. It's important to work out what the primary way will be before you build a navigation structure, because otherwise, you will end up adding more and more menu items as you go along until the whole navigation is a real mess. Most often content is either category, audience, or task-based. If the content on your site can be summed up as verbs-that's doing words-then you have a task-based navigation structure. Here we are looking at a Financial Product site and navigation is verb based: Balance, Save, Invest, Plan. That creates a task-based navigation.
Just be sure to use the words that your visitors would normally use when you create the navigation labels. People have to understand which section is most likely to be right for them. If your site's content is nouns-that's describing words-then it's likely your main navigation will be by category splitting up the different types of content on a site for instance, by genre for music or by occasion for florist. Here we have Weddings, Someone Special, Funerals, Apologies, and Special offers. If instead you have distinct user types, that is different audiences, you might be designing your navigations to split the content that it is relevant for each type of visitor.
Computer manufactures often do this, asking you whether you're a Home user, a Small Business, Medium or Large Business or Public Sector, all because their products different for these groups. Be careful if you choose to do this. Your visitors must be able to tell which category they are in and they may even be suspicious of your categories. For instance, wondering why small business computers are cheaper than consumer ones. Of course you don't have to rely on just one type of navigation structure. You might decide that your content will benefit from both the category and a task-based menu with audience related content on the homepage or you might find that you have information that is better suited to specific form of categorization.
For instance, by popularity or for promoted content, YouTube does this. By Location, for news or local interest sites, by the time for news or historical sites or for instance by alphabetical arrangement on a library site. Typically, however these specialist navigation structures tend to be the secondary navigation on the page or used deeper within the site. You would still use category, audience, or task-based navigation as your primary menu structure. So take the time to think about the best way of categorizing your content. Even if you're working on an existing site, the sooner you create a good content model, sometimes called the information architecture, the sooner you can arrange your content in a way that makes sense to your users.
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