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Market Penetration Examples - Appeal Your Customers To Choose You

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There are many tried-and-true market penetration examples that have been used as part of retail expansion plans. And there is no one way to be successful. Market penetration is a strategy for breaking into a new market.

It is also used as a way to measure how much of the market a service or product can get. Retail professionals should always think about using both of these definitions in their plans for growth for the best results.

A strategy for getting into a market can be broken down into tactics that must work with the market. The market conditions or indicators should serve as "proofs of concept" that either support or disprove the use of a particular strategy.

So, what are the different ways that retail companies try to get into a market, and what signs can be used to choose the best one?

What Is Market Penetration?

COPYRIGHT_MARX: Published on https://marxcommunications.com/market-penetration-examples/ by Keith Peterson on 2022-10-07T05:13:44.220Z

What is Market Penetration?

The term "market penetration" can be used in both a theoretical and a real way. On the one hand, a brand calculates its market penetration to figure out how big a market is and how many people in it buy its products and services.

In a literal sense, market penetration is what you do to beat your competitors and get a bigger share of the market.

Market penetration is the ratio of how many products or services are sold to how big the market is thought to be. In theory, a brand wants to get rid of all its competitors and own the whole market for a certain product or service.

Calculating the size of the whole market and figuring out how much of it you own is very helpful for both new and well-known brands.

What Is The Purpose Of Market Penetration?

Market penetration is a strategy that is used to sell more of an existing product or service in an existing market in order to get a bigger share of that market. This strategy is often used at the beginning of a business or before it goes on the market to prove that there is a market.

It is also used to find out how big a market is for a product or service, how many competitors there are, and how much of the market each of them has. By using his strategy, businesses can decide if it's a good idea to get into their target market or not.

Market penetration also shows how a business can make its products or services more appealing to customers than those of its competitors. When sales are low or down compared to other years, business owners can also use market penetration strategies to get sales going again.

If sales are going up, but not as fast as those of competitors, that means the market is getting smaller. In this case, strategies for getting deeper into the market can be used to get back market share.

High Market Penetration

As you might expect, most brands want their market share to be above average or good. Having a high rate of penetration brings in money right away.

Amazon had 49% of the US e-commerce market in 2018, which was more than its top three competitors put together. To put it another way, 5% of all retail dollars spent in the whole United States go to Amazon.

In the same year, about 15% to 20% of the market was taken over by iPhones. Apple sold 77.3 million iPhones in the December quarter, giving it 19.2% of the market.

A brand with a lot of market share makes money right away and has a good reputation that it can keep using. The real benefit, though, is being able to keep moving forward and up. Another benefit is that you can set the prices that your competitors will follow, instead of having to follow others.

Ways To Increase Penetration In The Market

A man and a woman looking in a paper and a man in front of them talking
A man and a woman looking in a paper and a man in front of them talking
  • Improving Your Product: It's obvious that if you offer the best product or service, you'll get more customers. Businesses need to look at their products and services and see how they are better than the competition. They have to think about what's good and bad about their competitors and make their product or service better.
  • In this case, customer feedback will also help businesses figure out what customers really want and what their competitors are missing.
  • Setting the Right Price: If two products have the same features or benefits, customers usually choose the one with the lowest price. Penetration Pricing is the idea that if a business sells a product for less than its competitors, it will make more sales. Setting a lower price is a good way to get noticed quickly on the market.
  • Increase Market Presence: Instead of only selling their products or services in one market, businesses can slowly expand into other markets or regions. Start with the small markets and work your way up to the bigger ones.

Advantages Of Market Penetration

Increases Sales

Unquestionably, its main goal is to boost sales. When market penetration strategies are used correctly, they can help a company's top line.

Improve Product Visibility

Unique market penetration strategies can make a product or service more visible in areas and market segments that haven't been explored yet. But a business should only enter buyer segments where it can offer more value to customers than its competitors and get an edge over them.

Enhances Brand Equity

A company's brand value can go up if it gets into more markets. For example, a watch brand like Rolex can use market penetration strategies to build on the public's already high opinion of how accurate, exclusive, and durable its watches are.

Improve Product Positioning

A company can offer more value to its customers by either charging less than competitors or giving customers more.

benefits to make up for the higher prices. So, good positioning starts with differentiation, which means making the company's market offering stand out to give customers more value.

Companies must take steps to deliver and talk about what makes them different, which is needed to support the positioning strategy that has been chosen.

Disadvantages Of Market Penetration

Faltering Brand Image

When a company lowers the price of a product, they risk making customers think less of the product or brand and have the wrong idea about it. Some customers may think that, since the product is becoming less popular, the company has no choice but to lower the price or give it away for free.

Attract The ‘Wrong’ Audience

When a market penetration strategy brings a product to more people in the target audience, not all of them will be good customers. There is a chance that the wrong "product fit" could hurt the company's reputation. It happens when the market is not split up correctly.

Creates Undue Pressure

Market penetration can put too much pressure on other departments, like production, sales, and manufacturing.

Manufacturers might not be able to cut costs as quickly as they had hoped, and producers might not be able to make their processes more efficient. Sales reps might not be able to sell as much as they would have liked.

Best And Successful Market Penetration Examples To Try

Penetration Pricing

Penetration Pricing | Marketing Strategy

When going into a new market, many stores try to make more sales at first by setting prices lower than their competitors.

This way of setting prices works well in markets where people care a lot about prices and retailers can make a lot of money by selling a lot of products. Once loyalty is established, most stores will go back to their normal pricing strategy.

Location Intelligence indicator: Retail workers should always take into account the average income of the people in a given area when changing prices. If the buying power of a certain group of people is very high, it's possible that a product could be seen as "less valuable" if it's priced low at first, because people in that group aren't usually deal hunters.

Product Launches

10 Marketing Strategies for Your Product Launch 🚀

Putting out a new product on the market is another way to grow a business through market penetration. When companies release new products, they tend to get a lot of buzz from the people who want to buy them.

This is easy to take advantage of by using the fact that consumers are more aware of a certain product to build a strong brand presence.

Location Intelligence indicator: It's important for any product launch to pay attention to how consumers spend their money and know what kinds of products they buy. If your new product fits with what people want and how they act, the launch will be even stronger because it meets consumer expectations.

Define New Target Segments

Another good example of market penetration is finding new audiences among a larger population. Many times, a product or brand's popularity among a certain group of people can slow its growth.

Promoting your products in new niches is a great way to get into new markets and grow your customer base.

Location Intelligence Indicator: If you correctly profile the people in your target market, you might be able to find a new market segment. Maybe you didn't know that one of your products was becoming popular with a certain group. Geolocation data can help you find these patterns so you can change the way you market.

Expand Into Different Territories

This method of getting into the market is one of the most common ways businesses try to grow. Once a market is full, most stores will start to look for other places to open.

Moving to a new area is one of the easiest ways to build a retail empire, but it will only work if the market conditions are right.

Location Intelligence Indicator: Growing in different places in a sustainable way takes smart business sense. Big data insights that show how complicated the market is in a new area can help you make sure you're expanding your business to the right place where there are a lot of people in your target market.

Start A Chain Or Franchise

How Franchising Works : Mcdonalds Franchise Example

If people like your business more and more, it might be a good time to open a second location. Retailers can do this in two ways: they can open a chain and run it themselves, or they can franchise and let someone else run their brand in another place.

Location Intelligence indicator: When choosing a location for your next chain or franchise store, it's important for retailers to know how influential each of their catchment areas really is. This is the only way to keep two locations from cutting into each other's sales and make sure that each gets the most market share possible.

Form Strategic Partnerships

As a way to get into new markets, some companies look for other companies that are like them and where there are untapped synergies. Partnerships between retail brands can be made through co-branding agreements or even mergers.

It's important to remember that when two companies merge, the original brand name doesn't always stay the same.

Location Intelligence indicator: It's hard to find synergies with similar businesses to merge with or form partnerships with. Retailers who use geolocated data to find out which products are selling well in a certain area can then find the companies that are selling those products and work with them.

Market Penetration Examples In Big Companies

Ansoff Examples Starbucks, McDonalds, Coca Cola, and Apple Strategies | Dr. Acar

Market penetration starts with a plan, but when that plan is put into action, it leads to steps that can be taken to take over the market in a stable way.

By 2017, Apple's smartphones had a market share of more than 50% of the world market. Since the iPhone first came out, Apple has always added new features, upgrades, and accessories. Because of this, Apple has a bigger share of the market than all of its competitors put together.

The first Dunkin' Donuts opened in Massachusetts in the 1940s. The brand that used to be called Dunkin' Donuts is now in 46 countries. But one-third of all Dunkin' Donuts stores are in New England, where its most loyal customers are.

The Coca-Cola brand became known as a drink that goes well with snacks. It benefited from the refreshment market until people started choosing healthier drinks. Coke made Diet Coke get a bigger share of the beverage market and attract people who cared more about their health.

When research showed that more women than men liked Diet Coke, Coke Zero was made as a "catchall" solution.

People Also Ask

What Is Meant By Market Penetration?

Market penetration means that a good or service is sold well in a certain market. It is measured by comparing the number of sales of an existing good or service to the size of its target market as a whole.

What Is An Example Of Market Penetration Pricing?

Netflix is a great example of how to use market penetration pricing to beat a big rival. In the late 1990s and early 2000s, more and more people rented DVDs.

Even though Blockbuster was the leader in home entertainment, it was known for late fees and a small selection. Netflix had a unique proposal.

How Does Apple Use Market Penetration?

Market penetration means selling more of the company's current products to get a bigger share of the market. Apple uses this strategy to grow by selling more iPhones and iPads in North America, where it already has markets.

Conclusion

As part of a market penetration strategy, you sell more of your product in the market you already have. This helps you get a bigger share of the market and steal more customers from your competitors.

You should be able to increase your market share and slowly take over your market with strategic planning around pricing, competitors, increasing your marketing efforts, and making any necessary changes to your product.

There are many examples of market penetration that you can choose, plan, and use at your business. Choose the best one for your goals and get started.

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About The Authors

Keith Peterson

Keith Peterson - I'm an expert IT marketing professional with over 10 years of experience in various Digital Marketing channels such as SEO (search engine optimization), SEM (search engine marketing), SMO (social media optimization), ORM (online reputation management), PPC (Google Adwords, Bing Adwords), Lead Generation, Adwords campaign management, Blogging (Corporate and Personal), and so on. Web development and design are unquestionably another of my passions. In fast-paced, high-pressure environments, I excel as an SEO Executive, SEO Analyst, SR SEO Analyst, team leader, and digital marketing strategist, efficiently managing multiple projects, prioritizing and meeting tight deadlines, analyzing and solving problems.

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