Market Penetration Strategy

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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. It is a way of determining the size of the current market. 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 customers of a product.

Market Penetration Strategy

Market Penetration Strategy, as its name depicts, is a way to get an estimate of the market value of a particular product/service. This strategy is essential for a company as it determines in advance whether a new product/service will get any market share or not. The new product is more likely to get a market share if the market is significant. But if the market for any product or service is small, there is no place for any new products in the market, and if the company introduces a new product, it will not be a successful product.

It relates to the number of potential customers who bought a company’s product instead of the competitors’ products. It is usually represented in percentages, showing that a particular company’s product holds a certain percentage of market share.

Market Penetration Rate

A simple formula calculates the market penetration rate:


Using the above equation, you can find the market penetration rate for your products.

Ideal Market Penetration Rate

The ideal market penetration rate depends upon the product or the service, industry, and TAM (Total Addressable Market). The Total Addressable market can also be referred to as the total market of the product/service.

Once you have calculated the market penetration for a product or service, you can compare your penetration rate with the average market penetration rate. The average market penetration rate for consumer products is 2 to 6 percent, and for business products, it is 10 to 40 percent.

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Creating the Market Penetration Strategy

The process of creating a market penetration strategy depends upon the type of product or service that you offer. It would sometimes be simple and complex at other times. However, here are the common steps that should be taken to create a successful market penetration strategy for your company:

  • Market Analysis
  • Improving the product
  • Planning the marketing strategy
  • Launching the product and tracking the Market Penetration Data

Market Analysis:

Before launching a new product, you must have some plan to penetrate your industry, but you won’t do that if you do not know the current market. So, the first step in developing an effective strategy is to analyze the existing products and the current leaders in your niche. Try to get the market penetration percentage and see what they are doing to get their recent results. This step may take some time, as you will have to visit the market and gather information about your competitors.

Improving the Product:

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. Consider the wants, needs, and desires of the market you are targeting.

Plan Your Marketing Strategy:

In this step, you will have to know the social media platforms or the physical markets your potential customers visit the most. This way, you will understand where to promote or market your product.

Launching the Product and Tracking the Market Penetration Data:

You can launch the product and track its progress by collecting data about its market after you have performed the first three steps.

Market Penetration Strategy
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