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Market Penetration Strategy
What Is Market Penetration Strategy
Definition of Market Penetration Strategy
Put simply, a market penetration strategy is a process of infiltrating an already existing market (where current or similar products already exist) with a new product (from your company or organization).
It can also refer to the strategy a company or organization uses to expand or further saturate their customer base in a market they are already in. For example, you may develop a market penetration strategy if you are launching a new product that would appeal to a different segment of your current market.
Market penetration strategy is part of the Ansoff Matrix, a strategic framework developed in 1957 that helps company leaders plan for future growth.
What is a good market penetration rate?
What a ‘good’ market penetration rate looks like will depend on your product, industry, and your total addressable market (TAM).
If you know your TAM, you can use this formula to calculate your current market penetration: Market Penetration Rate = (number of customers / TAM) x 100
Now, compare your rate to the average market penetration rate to see where you stand:
Average market penetration:
Consumer products = 2 to 6%
Business products = 10 to 40%
If your penetration rate is looking a little low, there are ways to increase it...
Ways to increase market penetration
There are a few common ways to increase market penetration:
Adjusting (increasing or dropping) pricing to appeal to new audiences
Channeling further investment into marketing and advertising efforts
Updating your product so that is better addresses customer concerns or roadblocks, and/or improving its functionality
Acquisitions or partnerships with other companies in your space
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