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.
- 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).
- 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.
- 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.
Some of the examples of market penetration strategies are:
- Price adjustments: 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.
- Launch a new product/service: 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.
- Adjust your current product: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.
- Partner with or acquire another business: This is 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.
- Adjust your marketing campaigns: 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.
To know more about market penetration strategies, here’s a link to the complete article: https://articles.bplans.com/what-is-a-market-penetration-strategy/
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