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Infants learn the sound categories of their language and adults successfully process the sounds they hear, even though sound categories often overlap in their acoustics. Most researchers agree that listeners use context to disambiguate overlapping categories. However, they differ in their ideas about how context is used. One idea is that listeners normalize out the systematic effects of context from the acoustics of a sound. Another idea is that contextual information may itself be an informative cue to category membership, due to patterns in the types of contexts that particular sounds occur in. We directly contrast these two ways of using context by applying each one to the test case of Japanese vowel length. We find that normalizing out contextual variability from the acoustics does not improve categorization, but using context in a top-down fashion does so substantially. This reveals a limitation of normalization in phonetic acquisition and processing and suggests that approaches that make use of top-down contextual information are promising to pursue.