How Categories Grow: Practical Guidelines for Predictable Category Growth

Byron Sharp has shattered many brand growth myths with his books How Brands Grow part 1 and 2. He provided clear empirical data that showed brand choice is rarely driven by passion, but rather by our lazy brains. Brand growth is consistently driven by

• Physical availability: the ease with which we can buy that brands (channels; shelf position; number of facings; etc)
• Mental availability: the ease with which the brand comes to mind in buying situations (driven by how rich the brand is forged in memory pathways with category entry points and ease of recognition by brand assets).

Thanks to Byron Sharp, brands know what they need to build, nurture and measure to ignite consistent brand growth.

But what does this mean for category growth? How did categories such as craft beer, electric vehicles and plant-based milk grow outside their niches and achieve mass appeal? As with brand growth, it’s not some unkowable magical force, but rather there exist consistent growth factors that can be measured and actively reinforced.

Which empirical laws fuel the growth dynamics of entire categories? Last month, a team of researchers from the Ehrenberg-Bass Institute have widened their scope with ‘How Categories Grow’.

The Largest Emprical study on Category Growth Dynamics ever

This landmark study by the Ehrenberg-Bass Institute is the most comprehensive empirical investigation into category growth ever conducted. The research team analyzed:

• 13 consecutive years of US household panel data (2007–2019)
• A massive sample of 474 consumer packaged goods (CPG) categories
• Over 5,500 annual revenue datapoints across a wide variety of products, from toilet tissue to frozen bagels
• Four core behavioural components of revenue — not just total sales. These are:
  • Penetration (how many households buy the category)
  • Purchase frequency (how often they buy)
  • Volume per trip (how much they buy each time)
  • Price per volume (what they pay per unit)

Unlike previous studies that focused narrowly on market share or treated category demand as a backdrop, this study breaks new ground by dissecting category growth into its behavioural building blocks. It offers—for the first time—robust, evidence-based insights into which behaviors actually drive category growth and decline, depending on category size. And above all, it provides practical direction for stores and brands that wish to facilitate total category growth.

The 4 Sources of Category Growth – And the 2 That Work Most Consistently

Let’s define category growth as the total amount of dollars that are spent on a particular category each year. Which forces drive this growth and which of these are consistently within the control of brands and retailers? There are a total of 4 ways to increase total category revenue:

• Category penetration: How many households buy the category
• Purchase frequency: How often they buy
• Volume per trip: How much they buy each time)
• Price per volume: What they pay per unit)

What’s the primary driver of growth? It turns out that two in particular drive growth: penetration during the first stages of category existance, and price per volume later on. The other two components (how often and how much current customers buy) rarely budges through marketing.

Component	Role in Growth	Notes
Penetration	Most important overall	Especially critical in small categories
Price per Volume	Key driver in large categories	Associated with premiumisation
Purchase Frequency	Minimal impact overall	Low year-to-year variability
Volume per Trip	No consistent effect	Often unaffected by marketing

The biggest mistake in marketing: trying to make current buyers buy more, and more often

Buyer loyalty is one of the largest unicorns in marketing. However, the empirical data is painfully clear on this: purchase frequency and volume per trip remain largely unaffected by marketing efforts. For brands and retailers, marketing efforts should therefore be aimed at adding new buyers to the category, instead of wasting dollars on making current customers buy more. What this means in terms of product portfolio, marketing messaging and price strategy is very different for new categories and long-standing categories that are widely used.

4 Practical Tips for Low Penetration Categories (<20% quarterly penetration)

According to the Category Growth Framework, small categories (defined as categories that are bought by <20% of households on a quarterly basis) should focus on attracting more buyers. Penetration is king.

Here’s how to convert more non-buyers into buyers during the initial stages of category growth:

1. Maximize physical availability
   • Ensure the product is stocked across a wide range of retailers and formats.
   • Fill gaps in pack sizes or variants that may be limiting trial.
2. Create low-risk trial opportunities
   • Offer smaller or cheaper pack formats to reduce the barrier to entry.
   • Promote introductory or sampler packs for new users.
3. Focus messaging on relevance and discovery
   • Communicate the product’s relevance to more consumers, not just core users.
   • Use mass media or shopper marketing to reach light/non-buyers.
4. Avoid over-investing in loyalty tactics
   • Programmes aimed at increasing frequency or volume per trip won’t move the needle—buyer growth is what matters.

4 Practical Tips for High Penetration Categories (>40% quarterly penetration)

Here, your goals becomes growth by increasing price per volume (without losing buyers). Brands and retailers will benefit from the following strategies:

1. Pursue premiumization carefully
   • Launch or support higher-priced options with added value (e.g. better ingredients, new features, sustainable packaging).
   • Ensure these don’t cannibalise core SKUs or alienate price-sensitive buyers.
2. Protect penetration at all costs
   • Even modest losses in buyers significantly hurt revenue.
   • Maintain mass appeal in core products while premiumizing selectively.
3. Use pricing strategically
   • Avoid discounting that erodes price per volume unless it drives genuine buyer expansion.
   • Consider pack architecture strategies (e.g. smaller packs with higher unit price).
4. Broaden usage occasions
   • While frequency rarely drives growth alone, finding new relevant occasions (e.g. time of day, season) can support both volume and value.

So thanks to this empirically grounded framework, brands and retailers now finally know where there next marketing efforts are must well spent to benefit overall category size.