In this part, I'm gonna discuss an issue, more about established businesses rather than the startups. well, every succeeded startup will become a business, once it finishes the introductory period. in the life cycle of a product or startup, the Growth and Maturity segments, should be studied as businesses.
With this in mind, let's see what's are subject:
In simple words, market penetration is success in selling your product or service in a specific market. We are talking about the pie and your part of it, not about the size of pie, not even about how big is your part, but how big is it comparing the whole pie.
So market penetration will be measurable when others are studied in the market, same segment as you are. in other word, market penetration is a comparison of your successful sales to the total target market for that product or service.
The term, Market Penetration, can be used in two ways in Business:
- as a measurement and metric
- as a strategy for growth
we are going to focus on the second, while you can learn about the terminology of it, here
as a Strategy
when you are supplying a product or providing a service, you look for people to buy or adopt them. these people are not in an infinite world and you will face the scarce market very soon. the set of acts and decisions you can take to increase the rate of your sales out of the theoretical size of the market, is referred as Market Penetration Strategy.
A business will utilize a market penetration strategy to attempt to penetrate in an existing market. The goal is to get in quickly with your product or service and capture a large share of the market. Market penetration is also a measure of the percentage of the market that your product or service is able to capture. A marketing penetration strategy involves
increased sale of already existing products to a market that is already in existence.
So Market Penetration will be also in comparison with other strategies for growth, which are not about the current existed market, but by establishing new markets or expanding the current existed market.
It is very obvious that this strategy is a conservative way of growth, since it's in existed market and current products. if you are going to disrupt the game, you should diversify your product or your market (or even both, which is the highest risk with high possible rewards!)
there are certain techniques for Market Penetration:
- price wars
- offers and sales
- more distribution channels
Chinese car makers are simply using this strategy to stay in the market. low quality comparing to Korean, Japanese and European car manufacturers, no genuine design but lower prices! once they had sustainable market share, we can imagine they spend more on quality and design, well the prices will be different then too.
In Soft drinks market, pricing is less noticeable. Here promotion makes the competition. the problem for new comers to drink business the amount current companies like Pepsi and coca-cola are spending on advertisements and promotions.
Take Red bull as an example. they have high pricing, you can drink same thing with one forth of the price, still same taste and even formula, but different brand. but the numerous distribution channels and advertisements you see from Red-bull, convinces you every time to pay more.