Market Penetration Meaning, Strategy, Formula, Examples

Six Tactics For Market Penetration Strategy

Kate Collinson, managing director of Kate Collinson Digital Consulting, says, “The opportunity for brands in 2022 is really being able to focus on customer attention and brand identity. There comes a time in any retail store owner’s life where plans for expansion feel more like an exciting necessity than merely a potential option. Knowing the size of the market is integral to understanding market penetration. The change of the organization name was also the result of the change in the menu of the company including the addition of healthier options such as non-dairy and vegan food to the customers. Six months after the launch, the company decides to calculate its penetration rate. Customer education helps inspire the customer to build brand loyalty and trust and they don’t feel uneasy when you ask them to choose your product over others they were using previously. You need to give your customers the best online shopping experience, so they wish to come back again later.

What are the strategies of market penetration?

  • Change your pricing.
  • Revamp your marketing.
  • Identify the need for a new product and launch it.
  • Update or change your product (or a specific feature of your product).
  • Grow business in new territories and offer franchise opportunities.
  • Identify a business partner to work with.

These strategies have helped the company to attract a large number of customers in the market. Furthermore, Dunkin’ also installed espresso machines at all the locations to further increase its brand image and market presence. To exemplify, Starbucks is continually opening up new stores in its existing market to increase its market share and brand image. Starbucks also plans to increase its total store count to 55,000 stores by the end of 2031 with the aim to establish new types of stores including drive-thru and curbside pickup. The following image explains another example of how penetration pricing is adopted by businesses to attract new customers and build a community of loyal customers for capturing a larger market share.

Thus, it becomes necessary that the process of making a purchase is simple and hassle-free. Another way to win customer trust is by getting your product tested and verified by a certified organisation. It gives them a sense of belief and urges them to be loyal to your brand. If you want your customers to buy your product you need to give them exactly what they need. Dunkin’ knows where their customers are and that those customers want a Dunkin’ store every… well, city block. Partner or merge with another business in a mutually beneficial way (e.g. run a co-marketing campaign). You have a high sales volume which means you have leverage among suppliers and sellers.

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For example, advertising is one of the most effective ways to increase brand awareness. Moreover, companies can create either short or long-term campaigns and structure them according to their budget and needs. Nike uses its popularity to take most of the market shares by selling its shoes to as many people as possible. Companies would improve their product significantly than their competitors for the other consumers to purchase their products.

Market Penetration Strategy refers to calculating the total percentage of how much the consumer is using a product/service compared to the total market share of that product. If the market for a particular product or service is large, the chances for any new product to get the market share are more. By using the market penetration strategy, the companies get an idea about the percentage of the customers of a product. Bringing modifications and refinements to existing products and services of an organization also helps to improve the market share and gain new customers. 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.

– Use Dynamic Pricing

Penetration pricing strategy is used at the time of introduction of a new product in the market. Furthermore its objective is to attract the customers from the competitors. In this strategy the new product is sold at a price that is ominously lower than the price offered by competitors.

Six Tactics For Market Penetration Strategy

When expressed in the form of a percentage, wristwatches have a market penetration of 10%. It doesn’t matter what line of business you are in – whether you run a large technology firm or you are a Six Tactics For Market Penetration Strategy solopreneuer, you need a game plan. Your game plan must be tailor-made to your objectives, industry, and opportunities. An integral aspect of the aforementioned strategic plan is a marketing plan.

The company can patent this innovation to secure its innovation for a set number of years. Let’s discuss extensively these strategies and provide concrete applications for each. Sometimes, a company’s normal penetration range is not sufficient to breakeven. Consider becoming more precise with the demographic data to make your target more vivid and tangible.

Similarities between Market Penetration and Market Development

Although BBB Kids leggings aren’t a major source of revenue for the company, they’re complementary to its existing product line and bring in new customers. BBB was able to identify an existing market they hadn’t taken advantage of yet and determine clear steps to successfully enter that market.

The market penetration strategy grows more intense and complicated given online prices rise and drop throughout any given day. By using some or all of these six steps, you can quickly accelerate your small business growth in the months ahead. Price Adjustment is considered as the most heavily deployed marketing strategy. When a company pursues this strategy the prices of products undergo reduction. So this strategy enables the company to attract price sensitive consumers and aims at gaining penetration through large sales volume of a product. Hence the goal is to divert the attention of customers from competitor’s products to company’s products.

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The Market penetration strategies make benefit of reduced prices to upsurge product demand and increase your market share. As the demand for your product increases, your business saves money on product manufacturing costs due to the larger volume of produce. This strategy isn’t going to work for all products and all types of businesses. So, some companies utilize different marketing strategies than the normal to be more effective. Typically, market penetration strategy comes in the picture when you are marketing and selling products in a saturated and highly competitive market.

  • The penetration rate is the percentage of the relevant population that has purchased a given brand or category at least once in the time period under study.
  • Another method of accomplishing this is penetration pricing, which is the strategy of setting the initial product price beneath competitor pricing to attract new customers.
  • It is about finding new ways to boost sales and keep customers loyal and increase market share.
  • It may be a bit of a trial and error process but you need to experiment with direct and indirect channels, email and online marketing, e-commerce, etc.
  • A marketing plan serves as a guide towards the ultimate marketing objective of a company.

Global markets are composed of a complex mix of economic factors relating to transportation, sourcing, labor, and various regulations. These factors and overall global market conditions can change rapidly, so companies need to be prepared to adjust their strategies as needed.

You need your customers to understand how you are solving their problems so they see that you feel their pain. Help them get to know you by using marketing tools like pay-per-click advertising and promotion gigs on well-doing websites. Sometimes, product appeal can be established just by communicating the product’s value. By making minor product and packaging adjustments, you can appeal to the customers more powerfully and increase your sales overall. They are also known as “in-market strategies” because they focus on stimulating growth within the existing market rather than targeting new ones.

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An acquisition strategy has many contributing factors and can help your business penetrate new markets or dive deeper into your current one. With a little research, this marketing growth strategy can take a business far. It’s a prime strategy for SMBs and requires you to pull data from your audience insights. Here modifying your existing product means that you announce to improve the quality of the product by adopting better standards.

  • There should be no glitches in the payment gateway or any of the previous steps.
  • It’s understandable that many of us think the way to revenue growth is by acquisition of new customers – that’s certainly one way to do it.
  • These can include questions surrounding market share increases or decreases.
  • The price adjustment of the existing product means that you offer the product at a lower price than competitors.
  • When a company pursues this strategy the prices of products undergo reduction.

You may have heard of the term market development used in relation to market penetration before. A company can use market penetration at the industry level to review the potential for specific products or services or on a smaller scale as a way to gauge the market share of a product or service. It offers insight into how the market and your customers view your product or service. 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.

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Partners and dealers have an extensive geographical presence and can appeal to newer users for an existing product. An ideal example is how consumer electronics manufacturers rely on retailers and distributors to sell their products. Once you have done the market analysis and know the current market and what the competitors are doing to lead the market, the next step is applying different strategies to your product. Try to add something new to your product that the existing products do not have. This way, your product will be able to stand out in your customer’s eyes and will get the estimated market share. If you have an idea of the total market share or sales of a product or service you can calculate the market penetration rate with the following formula below.

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This massive increase in digital marketing budgets speaks for the paradigm changes in marketing approaches. To add more value to their penetration strategies, businesses need to leverage all the possible channels of digital marketing and keep pace with the latest trends in digital marketing. Market penetration pricing is among the crucial tactics to acquire market share and flourish the earnings, for example lowering the product amount initially to broaden audience engagement. So, the corporation must assess the impact of market share from the shifts in the product pricing schedule. It must also inspect the total recent customers received after the latest pricing scheme launch. The crucial penetration strategies constitute collaborations and procurements, penetration pricing, seasonal offers or discounts, product updates, and aggressive marketing or promotional efforts. Customers get to know about your product through your advertising campaigns.

  • The crucial penetration strategies constitute collaborations and procurements, penetration pricing, seasonal offers or discounts, product updates, and aggressive marketing or promotional efforts.
  • Companies look for a good market penetration rate to determine the Total addressable Market .
  • After increasing the promotion, you are bound to grow the product usage and on the other hand, attract competition from your rivals.
  • This market penetration strategy is considered as the star of all the market penetration strategies.

According to – 61% of companies say, “training in strategic account management,” can enable them to enjoy greater revenue, profit, and customer satisfaction. For many organizations, they use penetration to determine the success of their salespeople and offer relevant training to improve the performance of their team. Market development focuses on identifying and developing new markets for existing products while product development focuses on the development of new products in existing markets. In relative terms, a diversification strategy is generally the highest risk endeavor; after all, both product development and market development are required. While it is the highest risk strategy, it can reap huge rewards – either by achieving altogether new revenue opportunities or by reducing a firm’s reliance on a single product/market fit .


By increasing the promotions, you are increasing the usage and also attracting competition customers. Attracting new buyers in the current market– This strategy aims to convert occasional product or service users into regular users. The more loyalty the brand builds, the more repeat sales hence more profits. A change in the pricing model and free samples coupled with aggressive marketing gives new users the chance to try out the products. A business growth strategy is a collection of tactics designed to help your business increase its market share. If your company is running a business in luxury items, then the market penetration strategy would have the worst impact. It would send a message of being a cheap brand, mostly when you’re selling many luxury items at premium prices.

However, businesses have to ensure they have enough capital to stay in surplus before the price is raised up again. The same is the case of McDonald’s that also has implemented the franchising strategy to increase its market presence.

Six Tactics For Market Penetration Strategy

Don’t shy away from new technology or talent to help you get from point A to B as efficiently as possible. Use your growth process as a chance to cherish and champion every opportunity or challenge that comes along the way and always put your product at the heart of it all. In 18 months, Zapier doubled customer lifetime value, managing to 4x its revenue to $50 million. Perhaps you can identify a trend in sales to a percentage of people that you didn’t expect to be interested in your product upon launch.


Adding distribution channels is another market penetration strategy focused on growth. For example, if a brand solely leverages retail outlets, it may benefit from considering adding other ones such as email marketing, online marketing, and telemarketing.