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Market Penetration: What It Is and Strategies to Increase It
This is clearly evident with the frequent releases of updated smartwatches, cellphones, gaming consoles, and other technological devices. Market penetration is often cited as a percentage representing the total share of target customers attracted. Market penetration for companies is typically expressed as a percentage, meaning the company's product represents a certain percentage of the total market for those products. Companies can employ strategies such as cost leadership, differentiation, and developing new sales channels to address increased competition and retain their market leader status.
What Is Market Penetration Strategy? – 8 Proven Tactics
CNET targeted the Latin world and entered the market by introducing a Spanish version of the tech news site while partnering with renowned actress Sofia Vergara. Hence, DVMAGIC INTERNATIONAL is important to understand the market and what needs to be done to stay ahead of the competition. At Cross-Border Transportation Services, we are committed to reducing the environmental impact of cross-border transportation through our sustainability initiative.
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The number of customers will each be a unique customer that the company has secured business with. By reviewing their market penetration, BBB was able to identify a small, existing market they could tap into — kids' leggings. Unwanted burdens on other divisions, such as manufacturing, development, and distribution, may be generated from market penetration. That’s because retailers like Foot Locker and Dick’s know Nike delivers in sales. Understanding these varying penetration rates can inform strategic price adjustments in different e-commerce categories.
Ideal market penetration for consumer products is estimated to be between 2-6% of the total addressable market, while a successful market penetration rate for business products is between 10-40%. Comparatively, your penetration rate should ideally be higher than the average market penetration rate in order to gain a greater share of the market. Pricing strategies are vital for businesses aiming to penetrate the market effectively. One such strategy is penetration pricing, which involves setting a low introductory price for a new product to gain market share and attract customers.
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Companies can also leverage successful market penetration by being more strategic with what they offer customers. Instead of being a price taker, companies that have a deeper presence in a market are more likely to be able to set their own price and sale terms or enhance their products as they see fit. In many ways, market penetration can only occur through product differentiation and being able to convey unique benefits to consumers. Distribution channels significantly contribute to extending the market reach and propelling growth. Expanding retail and online sales outlets and forming strategic partnerships can help businesses broaden their customer base, increase sales, and gain a competitive edge in the market. There are many market penetration strategies for you to choose, plan, and apply to at your company, so read this article to determine what is your company’s best option and get started right away.
Our brand identity will encompass our logo, tagline, and company values, all of which will reflect our commitment to providing reliable and efficient cross-border transportation services. The cross-border B2C E-commerce market is segmented on the basis of offering, payment method, category, end user, and region. By payment method, it is bifurcated into credit/debit cards, digital wallets, internet banking, and others. By category, it is segregated into apparel and accessories, personal care & beauty, entertainment & education, healthcare & nutrition, foods & beverages, and others. On the basis of end user, it is divided into adults, teenagers/millennials, senior citizens, and others. By region, the market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
The price adjustment of the existing product means that you offer the product at a lower price than competitors. It would instantly help the company increase the market share and gradually earn the reputation of economical product manufacturer. The average market penetration rate for ordinary consumer products falls within the range of 2% to 6%, and it ranks for business products from 10% to 40%. You should compare your product’s market penetration rate with the average rate to see the difference. If the market penetration rate of your product is lower, then you try to improve it. Market penetration strategy is one of the four growth strategies explained in the product/market expansion grid known as Ansoff Matrix.
It is a good bet to put yourself in a developed market as there is a high demand for goods in this field. However, to be competitive and expand alongside existing firms, it demands strong development and execution of policies around the product positioning, pricing, customers’ satisfaction, and marketing. In simple terms, it’s a way to plan how to expand in an increasingly profitable market where there are similar goods and to win market share by taking customers from your rivals. For example, you may need to establish a market penetration strategy if you are introducing a new product of interest to a different niche of your current market. Market penetration through mergers and acquisitions involves acquiring or merging with other companies to expand the customer base and gain a larger market share.
Taking all of the above into account, it is possible to affirm that all market penetration actions that a company plans and executes generally have goals of growth, expansion, and development. When you lower the price under such circumstances, it will impact the profitability of your business. Therefore, your focus should be product quality, brand image, packaging, and marketing. Many food products are launched in the market with a penetration pricing strategy. A few companies also give away free packets of their new items by sponsoring events and supplying sample packs to participants. Let us also say that 30 million of the 300 million future consumers have wristwatches.
In other words, we can say that the fast growth of your business is dependent on lower prices and market penetration. The strategy of market penetration may not function if the price range is already set low. For example, when the price is previously low, the consumers have by now built confidence in an existing company.
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