How to Compete in a Crowded Category

The Saturation Problem

There have never been more B2B products than there are today. Technology is cheaper to build, talent pools are global, knowledge is freely available, and venture capital has been plentiful. The result is an explosion of competition in virtually every category.

Consider the martech landscape: the number of tools grew roughly 53x in a single decade. CRM alone has over 500 entrants. Email marketing has 450+. Even seemingly niche categories like A/B testing or survey tools have dozens of players, most of whom you’ve never heard of.

If you zoom into any of these categories, the picture looks the same. A handful of leaders at the top capturing most of the revenue, a long tail of companies making money but nowhere near enough, and a graveyard of products that never broke through. The question isn’t whether your category is crowded. It almost certainly is. The question is: what do you do about it?

The Law of Double Jeopardy

Before we get to strategy, you need to understand a market pattern that governs competitive dynamics in every category. It’s called the Law of Double Jeopardy, and it explains why market positions are so astonishingly stable.

The pattern is simple: larger brands have more customers, and those customers are also more loyal. They buy more frequently, renew at higher rates, and recommend the product more often. Smaller brands have fewer customers who are also less loyal. Small brands lose twice — hence “double jeopardy.”

This isn’t a theory. It’s an empirical regularity observed across consumer goods, financial services, media, and B2B software. Loyalty is predictable from market share. If you’re a small brand banking on retention to grow, the data says you’re fighting against a law of market behavior.

The implication is profound: you cannot retain your way to growth as a small brand. You need new customer acquisition. And acquisition requires one thing above all else: being known.

Look at how stable market positions actually are. Heinz has been the leading ketchup brand since the 1950s. Salesforce is still the dominant CRM despite 500 competitors. The social media platforms that were big in 2007 are still the kings today. The only meaningful new entrant in social media in nearly two decades was TikTok. In B2B, the usual suspects — SAP, Oracle, Microsoft, Adobe, HubSpot — have slightly changed places, but the top of the market is remarkably static.

When a category is just emerging, all the pieces are up in the air. But once it matures, it becomes a land grab: whoever gets biggest first tends to stay there. If you’re launching a new CRM to compete head-on with Salesforce and HubSpot, the odds are heavily against you — not because your product is worse, but because they already own most of the mind share.

Mental Availability: The Real Game

The concept that ties all of this together is mental availability — the likelihood that your brand comes to mind when a buyer thinks of your category. When someone says “CRM,” the brands that come to mind first are Salesforce, HubSpot, maybe Pipedrive. That’s mental availability. Whoever controls the most mind share controls the most market share.

This matters for purchases, but it matters just as much for referrals. People recommend tools they have never used. They do it constantly. When a peer asks on LinkedIn which A/B testing tool to use, people recommend Optimizely — even if they’ve never touched it, even if it costs $150K a year and the person asking is a solo blogger with zero traffic. They recommend it because they’ve heard of it. That’s how powerful mental availability is.

The myth of the rational B2B buyer. There’s a persistent belief that B2B purchasing is a rational, methodical process. Buyers evaluate every option, build feature comparison matrices, run structured demos, and make an evidence-based decision about which tool is objectively best. Nobody does this. Buyers satisfice — they choose “good enough” from the three to five options they already know. Whether you’re hiring a contractor for your kitchen or buying enterprise software, the process is the same: who comes to mind? Let’s look at those three to five tools.

Think of this as a jobs-to-be-done box. Every buyer carries a mental shortlist for each job they might need to hire for. “Heat maps for small businesses” — they think of Hotjar. “CRM for scaling companies” — HubSpot. “Marketing training for digital teams” — CXL. That box holds three to five options. If you’re not in the box, you’re not in the running. And if the box is already full with established players, getting in is extraordinarily difficult. You need a different approach.

The 95/5 rule. Here’s another piece of the puzzle: roughly 95% of your category’s buyers are not actively looking for a solution right now. Only about 5% are in-market at any given time. The other 95% may need your product in a year, two years, three years. But until that moment, they’re being asked for recommendations, forming opinions, building mental models of who the players are. Advertising and awareness-building are like insurance: you pay for them when there’s no immediate return, and you cash in when the buyer finally enters the market. That’s why the biggest brands keep advertising even when it seems unnecessary. They’re building the mental availability that pays off over years, not weeks.

Three Strategies to Break Through

So how do you get inside a buyer’s consideration set when the category leaders already dominate mind share? There are three fundamental strategies. Each has different requirements, different odds of success, and different resource demands.

For the 99% of companies that can’t win on pure innovation or outspend the incumbents, positioning is the game. You need a good product — but a good product alone isn’t enough to win. You need narrative, positioning, and messaging on top. That’s how you carve out a place in a market that already has hundreds of players.

Protecting Your Position

Carving out a differentiated position is step one. Step two is protecting it. If you’re making money in your niche, competitors will follow — direct competition always follows revenue. You need moats.

What This Means for Your Company

The market science is clear. In any established category, you compete on either innovation or brand. Very few can compete on innovation — it’s the best path if you can pull it off, but the honest answer is that less than 1% of companies can sustain a true innovation advantage.

For the rest of us, the game is narrative, positioning, and messaging. You need a good product, but that’s the price of entry. It’s not what makes you win. What makes you win is choosing a differentiated position in the market, building mental availability within that position, and protecting it with moats that competitors can’t easily replicate.

If you haven’t deliberately chosen your position — who you’re for, what you replace, why you’re different, and why it matters now — you’re leaving it to the buyer to figure out. And when the buyer figures it out themselves, they’ll almost always put you in the wrong box: the crowded one, where you look like everyone else.

Start with the fundamentals. We’ve built a complete guide to what positioning is, how to tell if yours is broken, and a framework for getting it right. If you’d rather see where your specific positioning breaks down, request a free positioning audit — we’ll score your homepage against competitors and show you the gaps.