Market Penetration Strategy

Market Penetration Strategy

Start Your Business
Fund Your Business
Perfect Your Pitch
Grow & Manage
Industry Guides

Videos
Tools
Pitch Decks
Tim Berry Blog
Write for Bplans
About Us

Start Your Business
Fund Your Business
Perfect Your Pitch
Grow & Manage
Industry Guides

Videos
Tools
Pitch Decks
Tim Berry Blog
Write for Bplans
About Us

Bplans' Top Picks
How to write a business plan
Get a sample business plan
Why you need a business plan
How to start a business
How to get startup funding
Tools to help you get started

Top Sections
Business Planning
Funding
Starting
Pitching
Managing
Small Business Loans
Angel Investment
Branding

Planning Resources

Business Plan Software
Business Planning Videos
Business Planning Calculators
Business Plan Writers
Industry Guides
Pitch Deck Gallery

Software

LivePlan
Business Plan Pro
Business Tools

Marketing Resources

Sales and Marketing
Software
Sample Marketing Plans
Market Research

About Bplans

About Us
Contact Us
Write for Us
Advertise with Us
Sitemap
Privacy and Legal

© 1996 - 2022 Palo Alto Software. All Rights Reserved | We’re Hiring!

Plan, fund, and grow your business
Achieve your business funding goals with a proven plan format.

Start your plan
Easily write a business plan, secure funding, and gain insights.

If you’re looking to start or expand your business, you need to have a firm understanding of how to enter and grow within your chosen market. This requires you to take what you’ve learned during your market analysis to develop a market penetration strategy for your business. So, what exactly is a market penetration strategy and how do you develop one?
Market penetration is the amount that your business is able to sell a product or service to customers compared to the estimated total available market (TAM). This is a measurement that can help you define the serviceable available market (SAM), which is the portion you estimate that you can acquire. Additionally, it can serve as a baseline for developing a strategy to increase your service obtainable market (SOM), or the subset of customers that you can realistically acquire.
Market penetration is both a measurement and an activity. You can actively engage in market penetration, which is your attempt to enter or expand into a given market. The actual measurement is a specific assessment regarding how much you anticipate selling or actually do sell as a percentage of the total available market. You can find this measurement using the following equation:
Market penetration rate = (Number of customers / target market size) x 100
While the action and measurement may seem like two separate activities, you can actually leverage your market penetration measurement to develop a market penetration strategy. While it may not be exact, since it’s based on market size estimations, it can still provide you with a legitimate number to measure your actual results.
Think of it as a baseline for what’s feasible and what your penetration rate needs to be for your business to be viable long-term. Keeping track of this measurement and noting any positive or negative changes can help inform your return on investment for any marketing or sales campaigns. To stay up-to-date, it’s best to review this measurement before and after a campaign to gauge performance. You can also add it into your monthly plan review sessions if you’re actively running campaigns without a distinct end date.
To truly take advantage of knowing your market penetration rate, you need to understand what that rate means for your business within the market. How does your current standing affect brand perception? How do you compare to your competitors ? Is there any room for growth? Any threat of new entrants?
In general, you want your market penetration to be high. The higher your market penetration the more likely that you have some or all of the following market advantages:
You don’t necessarily need to have the greatest market penetration for your business to be viable. In fact, when you’re just starting out you’ll likely be starting with a minor portion of the market. So how do you grow your business and achieve greater market penetration? By using your research to develop a market penetration strategy.
A market penetration strategy is a product market strategy whereby an organization seeks to gain greater dominance in a market in which it already has an offering. A subset of this strategy often focuses on capturing a larger share of an existing market through a process known as market development.
Market development involves the actionable steps you intend to take to expand your attainable market. However, instead of working with customers in your current market, you instead focus on obtaining an underserved, non-buying, or new portion of the market.
For example, let’s say that you’re a SaaS company focused on enterprise-level business email management. It’s a highly competitive space, with well-established brands and similar feature sets, where customer service, pricing, and ease of use are primary advantages. As a new entrant, or established business looking to grow, instead of attempting to claim current enterprise customers from your competitors, you can develop another market segment.
You may see an opportunity to provide a lighter version of your software to smaller businesses. Or by focusing on your collaboration toolset, you can pitch the software to single accounting firms with the intent of rolling it out to the broader chain. Doing this grows your current customer base, expands the available market, and simultaneously improves your brand equity within the enterprise email management market.
Now, market development isn’t always possible, meaning that you’ll need to still focus on growing your business by acquiring customers already served in a given market. One of the best ways to start developing your market penetration strategy is using the Ansoff Matrix. This tool highlights the possible paths you can take to pursue growth.
Typically, product development and diversification are the more costly and riskier options, while market development and market penetration are considered to be lighter risk strategies. More than likely, you’ll be leveraging multiple growth strategies within your broader market penetration strategy. But, the path you take does again depend on your current market penetration, competitor positioning, as well as market expectations.
To make sure you’re prepared to evaluate and execute different strategies, start with a market analysis and your penetration rate before working with the Ansoff Matrix. Then start to explore the different market penetration strategies available to you.
As you conduct your market analysis and begin to map out specific steps, here are a few market penetration strategy examples you can try to implement.
If you’re struggling to move products or services, it may be wise to lower or increase your pricing. This can set your business apart from competitors by either presenting yourself as a low-cost alternative or premium option. You can also explore expanding your pricing options , creating different levels for specific customer needs that lock unique features or support behind higher tiers.
Keep in mind that any pricing adjustments may also require a certain level of product development, especially if you pursue the premium route.
If you’re considering launching a new product or service, be sure that there is a need for it. Treat this new launch like you’re restarting your business. Interview customers, conduct market research , forecast sales and expenses, and be sure that a new product is viable for your business.
As said before, this may stem from your pricing adjustment strategy. If this product or service is similar to your current offerings, be sure that you cleanly separate it with pricing and messaging. If it’s a complimentary product, try to find ways to cross-promote, and improve the lifetime value of current customers.
Another option is to simply change or update your current products or services. Start by defining specific niche segments within your target market to help define what changes are necessary. This can be a new feature, less expensive components, or unique variants, among other things.
The key here is to focus on improving economies of scale by leveraging the core components of something that you already sell.
Sometimes the market is too competitive to make any real traction. Maybe one business is so large and well-established, that minor or emerging competitors simply cannot strengthen their foothold due to current resources and the smaller customer pool available to them. In this case, it may be wise to partner up or acquire a competitor to unify your customer base and resources.
This is also an effective strategy when entering a new market. Instead of working from the ground up, your brand will immediately become associated with a business that has a well-established presence.
In some cases, you may not need to make such drastic changes to your strategy. Instead, you can always focus on optimizing your current marketing spend. This may be as light as adjusting your messaging within advertisements or offering different incentives. Or something as large as relaunching marketing campaigns or creating a loyalty program.
In any case, this requires you to look closely at your target audience and how your competitors position themselves. Is there a pain point no one is addressing? Is your copy and imagery not presenting your mission or value proposition effectively? Or maybe you just aren’t spending enough on the right marketing channels.
In any case, look at your current return on investment for marketing activities and identify any areas that require optimization. From there, begin to test and layout different strategies, potentially around some of the pricing or feature adjustments we already covered. Continue to look at performance over time and be ready to make gradual adjustments if something isn’t working.
Keep in mind that market penetration should not be conducted in a bubble. Any strategies you develop or steps you take should connect to your broader business strategy and help you reach specific milestones . One way to keep this top of mind is to incorporate a review of your market penetration rate and any ongoing strategies into your monthly plan review.
This will encourage you to look at financial forecasts , milestones, and current tactics all at once. If you find that a current penetration strategy doesn’t support your larger goals, it may be wise to back off or reallocate resources until it becomes relevant. Or, it may present an opportunity to adjust your business plan to fit the opportunity you’ve found. But without reviewing it alongside your plan and financials, you’d never know for sure.
Kody currently works as the Inbound and Content Marketing Specialist at Palo Alto Software and runs editorial for both LivePlan and Bplans, working with various freelance specialists and in-house writers. A graduate of the University of Oregon, he specializes in SEO research, content writing, and branding.
Starting or Growing a Business? Check out these Offerings.
Investor-Ready Business Plans Written In No Time
Full Business Plan in Half the Time— and Double the Impact
Exclusive Offers on Must-Haves for New and Growing Businesses
All the Insights You Need to Help Your Business Succeed
Expert business tips and advice delivered weekly.
Bplans is owned and operated by Palo Alto Software , Inc., as a free resource to help entrepreneurs start and run better businesses.
Easily write a business plan, secure funding, and gain insights.

www.indeed.com needs to review the security of your connection before proceeding.

Did you know keeping your browser up to date will help protect you from malware and other digital attacks?
Requests from malicious bots can pose as legitimate traffic. Occasionally, you may see this page while the site ensures that the connection is secure.
Performance & security by Cloudflare

*Please provide your correct email id. Login details for this Free course will be emailed to you
*Please provide your correct email id. Login details for this Free course will be emailed to you
*Please provide your correct email id. Login details for this Free course will be emailed to you
As soon as a company enters a new market, it strives for market penetration . The main objective behind the market penetration strategy is to launch a product , enter the market as swiftly as possible and finally, capture a sizeable market share. Market penetration is also, sometimes used as a measure to know whether a product is doing well in the market or not.
The technique of Market Penetration usually does not affect the overall marketing strategy of a company, but invariably brings a solid growth potential and an increase in revenue generation. A company trying to adopt the concepts of market penetration must remember to also implement specific plans and tactics to challenge the competitors and boost sales figures. However, it must also be considered that market penetration can be a risky affair and has some disadvantages also.
Digital marketing, conversion rate optimization, customer relationship management & others
More commonly, this technique is useful whenever a business is selling prevailing products in an ongoing market . Marketers must take into consideration the relevant market development or expansion grid data to decide actually, which penetration tactic to adopt? In other words, the market may be saturated or it may be in an intense competition scenario or the products may have low turnaround time. Now, what should be the best tactic for all of these different scenarios? Well, the answer to this question lies in the type of strategy you adopt. And yes, there are quite a few different penetration tactics to choose from. So without further ado, let’s know about a few of them.
Following are the different market penetration tactics:
The strategy of Price Adjustment is one of the most widely used market penetration tactics. A example could be lowering the price of a product or service with the aim of increasing sales is a price adjustment tactic. Furthermore, the alteration (increase or decrease) in the price of a product after analyzing the competitors’ products is also a scenario of price adjustment. But, in the real sense, this marketing strategy should be used very judiciously as overdoing it can lead to adverse results. Like, increasing your price consistently may make the customers believe that you are a company of high-profit motive. Decreasing the price too often would make them to believe that your products are of sub-standard quality.
The drastic increase in promotion of a product (or service) can lead to dramatic results. For example, advertising can be a wonderful tool for increasing brand awareness. Companies do have a choice of making their campaigns long-term or short-term which depends upon their needs and budget. However, the thing to be considered is that whatever be the size of the campaign, it must be well-planned and thought-out. An easy to counter promotional campaign would be simply ruined by competitors in this age of cut-throat competition.
The strategy of Distribution Channels is one of the most constructive market penetration strategies. This strategy typically involves opening of new distribution channels by focusing on a particular distribution channel. For example, if selling through retail outlets is your primary channel, then you can learn to gain new channels like telemarketing , e-mail marketing, online marketing , etc. Such opening of new distribution channels pave the way for more new channels and thus lead to increased market space and overall profitability.
It is true that to really appeal to your customers, you must improve your product quality . However, sometimes by communicating to them about the better standard of the product itself can do the trick and no major improvement in the product may be needed. This is because most consumers are encouraged to buy a product just by its appeal and do not necessarily check whether it proves itself or not. Thus, only by doing sl
Big Ass Face
Outdoor By Ispo 2022
Ass Smother

Market Penetration Strategy

Report Page