When it comes to customer acquisition, brands typically consider two types of audiences: those who already purchase within your category, meaning your competitors’ customers, and those who don’t, representing potential new consumers.
Deciding which group to target often depends on your category penetration—in other words, how many people in your market are already buying from your category versus those who haven’t yet.
While many brands blindly accept whichever audience comes their way, intentionally deciding who to target can significantly impact your campaign’s messaging and overall strategy.
In this article, I’ve outlined a simple, step-by-step approach, complete with tips and examples, so you can easily decide on the best acquisition strategy for your brand.
Step 1: Understand Your Market
This might sound basic, but the details here really matter. There are two main things you need to know:
Category penetration:
The percentage of your target audience who already buy from your product category.
Market size (TAM/SAM):
This is the total number of people who could potentially buy from you.
Getting a handle on these numbers helps you avoid wasted effort and target the highest-potential growth opportunities—whether that means finding new buyers or fighting for share. Strong category penetration won’t matter if your total addressable market (TAM) is too small. Ensure your market is large and valuable enough before proceeding.
Note: Penetration can vary dramatically by region. Legal restrictions or infrastructure (think cannabis or electric vehicles) can make a big difference from one market to another.
How to Measure Category Penetration
1. Secondary Research
Look up industry reports, syndicated research, or run quick AI searches (using tools like Perplexity or ChatGPT). The goal is to find the most recent data about your category.
- Formula:
Category Penetration (%)= (Number of category buyers or users ÷ Total relevant population) × 100
2. Survey Your Audience
Run a survey with a sample that represents your target market. Ask people if they’ve actually bought from your category.
- Formula:
(Number of respondents who bought from the category ÷ Total number of respondents) × 100
You don’t need perfect data, just do your best. A solid estimate is good enough to make decisions and move forward.
Don’t know how? Check our 11 ways to find survey respondents with free and paid options.
Step 2: How to Decide Whether to Expand or Compete
Let’s look at your category penetration, it’s the key to deciding your next move.
Low Category Penetration → Expand
If your category penetration is low (usually under 50%, and especially under 20%), your category is probably still in its early or growth stage. This means there’s lots of room to bring in new buyers. You’ll see this with new product types or niches—think enhanced coffee, plant-based meat and seafood, non-alcoholic spirits, functional cocktails, sleep tech, or wearables.
In these cases, expanding the category and targeting new consumers is often easier (and more effective) than fighting for the same existing buyers.
How to Expand in a Low-Penetration Category
Understand Buyers and Prospective Buyers
- Understand Motivations: Find out why people might (or might not) consider your brand or category. Use those insights to create messages that turn non-users into buyers.
👉 Learn more about Consumer Profiling - Profile Your Audience: If your product is niche, focus on your most profitable segments and understand what makes them buy. Trying to target everyone rarely works.
👉 Run a Usage & Attitude Study
Take actions
- Build Awareness: Run campaigns and create content to get your brand noticed.
- Educate: Show people how and why to use your product. For example, “Boxed Water Is Better” focuses on the environmental benefits of boxed water, not just the product itself.
- Encourage Trial: Offer first-order discounts, samples, events, or tastings to remove barriers for first-timers.
- Widen Distribution: Make sure your product is available wherever your target audience shops.
Example:
There are always creative ways to expand a category. Take Facebook: in the late 2010s, they were running out of new users in Western markets. To grow, they went international with more languages—but soon hit another ceiling. So, they partnered with telecom and invested in infrastructure in developing countries, offering free Facebook access and even creating “Facebook Lite” for slower networks. In some places, people got on Facebook before they even used Google!
The lesson here isn’t “go abroad”—it’s look for extra steps, like partnerships or new formats, to reach untapped audiences.
Expanding a category doesn’t just grow your customer base—it also creates opportunities for competitors. Sometimes it feels like you’re doing the hard work for everyone else. That’s why some brands hesitate to be first movers. But if you do expand the category, you’re in a great position to become the leader.
High Penetration → Compete in the Category
If your category has high penetration, you’re in a mature or saturated market—think staples like toothpaste, soda, or laundry detergent. Almost everyone who can buy is already buying.
How to Grow in a High-Penetration Category
You’ve got two main strategies:
- Win customers from competitors:
- Run comparison ads or targeted promos
- Launch something new or better (innovation)
- Focus on buyers who aren’t loyal to a specific brand
- Get More from Current Customers:
- Upsell with premium or new product variants
- Expand usage (think new pack sizes, formats, or ways to use your product)
- Drive loyalty and repeat purchases with subscriptions or rewards programs
- Create excitement with limited editions or brand partnerships
High Penetration Alternative: Go Blue Ocean
What if you want to avoid the head-to-head fight?
There’s another play: the Blue Ocean strategy. (Honestly, this could be a whole article on its own.)
This means making a big shift in your positioning, maybe even changing your product or branding—to compete in a space with little or no competition. In other words, you’re creating your own category, putting yourself back in that low-penetration world.
Here, you’re not battling over features or price. You’re offering new value, and the potential pay-off can be huge—but it takes guts and creativity.
Example:
Nintendo’s Wii. Instead of fighting Sony and Microsoft for hardcore gamers, Nintendo targeted casual gamers and families—creating a new market segment and bringing in buyers who never would have purchased a console otherwise.
In any scenario, just having a good product isn’t enough. You need bold differentiation and a brand experience people actually remember.
To make your message stick and get your product chosen, you have to get inside your buyers’ heads:
- Which brands do they know, consider, and buy? Is your issue awareness or conversion?
- What comes to mind when they think of you (and your competitors)? Are you building strong, memorable associations?
- What really drives their decisions—price, convenience, packaging, claims, or something else?
- Which customer segments bring you the most value? Where should you focus for the best returns?
Getting these insights means actually talking to your audience—surveying and interviewing both current and potential customers. Brands that skip this research usually hit a ceiling. In mature markets, being “good enough” just doesn’t cut it. You have to stand out.
It’s why Poppi got acquired for $1.6B in 2025 while many other soda brands are still stuck on shelves.
If you want to know everything about your consumer, brand, competition, and product category, check out our brand tracking solution—it covers all those metrics and plenty more.
Can You Do Both? (A Mixed Strategy)
Can you reach new buyers and steal share from competitors at the same time? Technically, yes—but it’s usually not the best idea. Trying to go after both groups at once can slow you down and muddle your message. Focus is key. Pick one main approach and do it really well—often, you’ll see a natural spillover into the other segment anyway (think of it like the 80/20 rule).
What to Remember
It’s easy to feel stuck between offense and defense. The important thing: start somewhere, measure your results, and adapt as you learn.
Market penetration is a great indicator, but there’s no absolute right or wrong answer. You should focus on where you’re best equipped to compete.
If your brand sits in that 30–70% penetration range, your judgment and strategy matter most. If you’re way below or above that, your options are usually more obvious.
Penetration isn’t static—it changes over time, and your brand can (and should) help shift it.
Want to track your market penetration—plus 20+ other essential marketing metrics for your brand and competitors, updated regularly? Have a look at our brand tracking solution.
