A marketing plan helps a company achieve its marketing goals; that is whether you own a huge technological organization or are a solopreneur, you need a strategy. Your strategy should be based on your goals, industry, and prospects. A marketing plan is part of the above strategic plans. In this post, we will focus on one of the many components of market penetration, like its definition and strategies with examples, as well as its pricing strategy.
Now, we will be going into details on this topic and understand what it is all about.
Market Penetration
Market penetration measures a product or service’s share of the target business. Along with business entrance, market share methods for a certain product or service may be used. Thus, Market penetration provides organizations with vital insight into how customers view their products and the market as a whole. Comparing a firm’s sales performance to that of competitors might reveal how well it is selling; and whether or not its goods and services are competitive. Business penetration is a method for estimating store share and future profits.
Alternatively, market entrance is used to measure the overall health of an industry in order to estimate the growth; or increase in market share that can be achieved by various businesses within the industry. You will further understand the meaning of market penetration by the definition given below.
Advantages of Market Penetration
Organizations benefits from market penetration in various ways:
#1. Increase Sales
The major purpose is to increase sales. Sale penetration strategies can boost a company’s bottom line.
#2. Enhancing Visibility
These strategies can help a product or service reach unexplored markets or segments. Companies should enter buyer categories; where they can add value to customers and get competitive advantages.
#3. Builds Brand Equity
Business penetration can boost a brand’s equity. For example, Rolex can use the public perception of accuracy, exclusivity, and toughness.
#4. Increase Product Placement
More perks or cheaper prices might provide better consumer value. A company’s market offering must also be truly differentiated to provide greater consumer value. A company’s positioning strategy requires differentiation.
Disadvantages of Market Penetration
Drawbacks of business penetration methods include:
#1. Poor Branding
When companies reduce the price of a product, they risk hurting the product/brand image. Customers may feel the company is compelled to cut or provide it at a discount due to declining popularity.
#2. Open to ‘wrong
Because of market penetration, new target audience members are exposed to a product. Having the wrong product could damage your company’s image. This is due to mis-segmentation
#3. Unnecessary Stress
Market penetration may affect sales and marketing divisions, but prices may not fall as swiftly as expected. Customers may not be able to buy soon enough.
Market Penetration Strategies
An approach in which a company aims to achieve a larger market share in a market; where it already has an offering is called a market penetration strategy. Market development is another approach to capture a larger proportion of an existing market.
In other words, it is a tool to strategize on how to grow in a very successful market; where competing products already exist; and to take market share by poaching the subscribers of your rivals.
How To Create A Market Penetration Strategy
When planning your market penetration strategy and increasing your market share; think about how you may develop your company. Using your existing SaaS product to attract new clients in your target market.
Tactics market penetration strategies to do include:
- Changing prices (high or low)
- Buying a market competitor
- Increasing your brand exposure with your digital marketing strategy
- Modifying your products or solving specific client issues
- Product innovation to gain new customers
Likewise, price reductions and enhancements are often the emphases of SaaS market penetration efforts.
Market Penetration Definition
A method of determining how much of a product or service a consumer uses; relative to the whole market for that product or service in the definition is referred to as market penetration. As well as using market penetration to gain market share; techniques developed to raise market share for a particular product or service may be implemented.
According to the definition, the number of potential customers (market penetration); can be used to estimate the size of the market. However, if the whole market is huge, it’s possible that new entrants to the business will be encouraged; and they might even be encouraged to believe that, they can also increase their market share; or become a portion of the total number of customers in the industry.
Examples of Market Penetration
Retail expansion strategies might try and test several market penetration instances. Thus, every successful project has a unique method. The concept of market penetration also refers to bringing something fresh to the market. It is also used as a market share percentage measurement tool. These are some examples of market penetration.
#1. Beat Competition
Companies typically win market share by developing unique features that even competitors can’t match. Either that or devising cost-cutting strategies that rivals can Construct a reliable client base might help you increase market share.
#2. Field Marketing
Field marketers in considering some examples of market penetration, do assist to build brands; manage customer connections, and also generate leads for clients/companies in their local markets.
#3. Influencer Marketing
Influencers are, therefore, popular with companies, Prominent celebrities with big social media followings that might impact product sales. However, experiential marketing encompasses events, roadshows, and targeted direct sales initiatives, among others. Field marketers can also quickly introduce a product to customers, improving market penetration.
#4. Resellers
Profit is thus made by buying goods at a discount and selling them at a premium. Onboarding and product demos also help retain consumers after the sale. With a target demographic, they want to acquire new customers.
#5. Newer Regions
Untapped markets have been demonstrated to boost product adoption rates. Because the use cases are similar, companies that have had success in one place may expand globally. Beat
Market Penetration Pricing
Market penetration pricing is a tool in marketing strategy used to attract customers to a new product or service; by initially offering it at a cheaper price. It helps a new product or service gain market share and attracts clients from the competition. In addition, Market penetration pricing relies on low beginning prices to make a new product; known to a large number of clients.
A price penetration strategy aims to gain business share by enticing customers; to try new products and keep them until prices return to normal. Some online news websites offer a free trial month of a subscription-based service; while others offer a six-month free checking account. In other words, when done well, it may often both improve market share and sales volume. Sales will cause production costs to go down, as well as having an impact on inventory turnover. As with any marketing strategy, long-term retention of clients is essential.
Market Penetration Strategy Examples
Here are some market penetration strategies you might try out when doing your study and planning.
#1. Price Adjustment
Think about decreasing or raising prices if your items aren’t selling. This may set your company apart from competitors. Consider adding a new classification technique to meet specific client demands. Pricing adjustments may require product development, especially if you go premium.
#2. Launch A New Product Or Service
Make sure your new product or service is needed. Imagine your company’s new beginning. To ensure a new product is lucrative, interview customers and research the market.
This may be related to your pricing strategy. Make careful you differentiate pricing and marketing for similar products or services. Look for strategies to cross-promote and boost client lifetime value.
#3. Update Your Products
Refresh your existing offerings. Start by discovering niche markets within your target market. Features, components, or unique versions can be new.
The goal is to increase scale by reusing existing components.
#4. Partnerships And Purchases
It’s not always easy to gain traction. Minor or emerging competitors may be unable to establish traction due to insufficient resources and a consumer base. Combining your customer base and resources may help here.
This is good for new markets. By partnering with an established company, you avoid beginning from scratch.
#5. Marketing Plan Revisions
In some cases, you may not need to make major changes. Don’t cut costs. Changing your ads’ messaging or presenting alternate incentives can assist. Or restart marketing or create a loyalty program.
Define your target demographic and your competitors’ posture. Is there a market void? Are your copy and imagery failing to convey your goal or value? Is your marketing budget allocated correctly?
In any case, assess your current marketing ROI and identify improvements. Adapt pricing or feature adjustments to begin testing and preparing new ways. Keep an eye on performance and be ready to make small changes if needed.
What Is Market Penetration Strategy?
To capture a larger portion of the market, a brand might use market penetration techniques to take an established product; or service to a market that is already thriving and profitable.
What Is Market Penetration and Why Is It Important?
Using market penetration, the firm lowers its price. This draws existing customers and converts them to buy the newly offered low-cost goods. For almost 70% of clients, price is a deciding factor.
What Is a Penetration Strategy?
An approach in which a company aims to achieve a larger market share in a market; where it already has an offering is called a market penetration strategy.
What Are the 4 Market Factors?
When marketing a product or service, the four Ps—product, pricing, place, and promotion—comprise the “marketing mix” consisting of four fundamental aspects. Typically, while developing marketing plans and strategies to effectively reach their target audience, firms consider the four Ps.
Which Is the Best Way to Describe Market Penetration?
Market penetration is the proportion of the anticipated total available market that your company is able to sell a product or service to (TAM). This metric can help you define the serviceable available market (SAM), or the portion of the market you anticipate you can obtain.
Why Is Market Penetration Low Risk?
Market penetration strategies are considered to be the lowest-risk option of the four growth strategies presented in the Ansoff Matrix. This is due to its use of pre-existing products and markets, unlike the other options which require a new product, a new market, or both.
