A market penetration strategy is a product market strategy in which a company aims to establish more domination in a market in which it already has a presence. A component of this approach frequently focuses on increasing one's share of an existing market via a process known as market development.
Market growth entails the concrete measures you want to take to broaden your target market. Instead of focusing on clients in your present market, you focus on an underserved, non-buying, or new segment of the market.
Market Penetration - Meaning, Strategy, Purpose with Examples of Internet, Smartphones etc. (254)
Market Penetration Strategy And SaaS
A market penetration approach is a low-risk company development method for SaaS firms that are bootstrapped or hesitant to invest extensively in more hazardous growth techniques.
COPYRIGHT_MARX: Published on https://marxcommunications.com/market-penetration-strategy/ by Keith Peterson on 2022-10-22T17:08:01.496Z
Simply said, it's a strategy for planning how to expand in an already robust industry with similar products, and acquiring market share by stealing your competitors' subscribers.
Positioning oneself in a well-established market is a secure decision since it indicates that there is a demand for items in this category. To compete and expand alongside current organizations, however, solid implementation and execution of strategies surrounding your product positioning, price, user experience, and marketing are required.
10 Best Market Penetration Strategy
The actionable component of a market penetration definition is concerned with practical strategies. Market penetration tactics enable a brand to take an existing product or service to an already thriving market with strong demand and begin capturing a bigger proportion of the overall market, eventually draining competitors of opportunity and money.
Market penetration (as a collection of acts) is based on Igor Ansoff's Ansoff Matrix. The grid includes four growth techniques for entering a new or current market with new or existing products/services.
Utilize Dynamic Pricing
Many internet merchants participate in pricing wars in order to entice customers to purchase items and services at the lowest possible cost. The market penetration approach becomes more aggressive and sophisticated since internet pricing fluctuates throughout the day.
Dynamic pricing enables pricing automation, which means that regardless of the size or complexity of a specific product or service, the related software investigates the market and sets prices to produce actionable knowledge.
Include Distribution Channels
Adding distribution channels is another growth-oriented market penetration technique. For example, if a business relies only on retail locations, it may profit from expanding its reach by using additional channels such as email marketing, web marketing, and telemarketing.
Specific Locations To Target
Some products and services have seasonal demand, while others have a higher demand based on geography (A sunscreen brand targeting sunny Los Angeles versus rainy Seattle). Targeting a needy area would result in an increase in usage and sales in that area.
Enhance Products
If a brand can attribute market share to a specific product or service, it makes sense to explore improving on what the audience currently enjoys. Understanding what people enjoy (or, more importantly, detest) about a product provides a chance to make it even more appreciated and preferred based on technological advancements in materials, newly designed accessories, and so on.
Expand Into New Geographical Markets
The ever-increasing spending in the Latin American market has piqued the interest of numerous businesses, prompting them to expand their offers to Mexico and other Latin American countries. To make the possibility for expansion a reality, many organizations use Spanish translation services to guarantee that their offers are not just in Spanish, but also successfully resonate with the Latin American peoples and culture.
CNET's foray into the Hispanic market with zeal, teaming with Latin World Entertainment and signing well-known celebrity Sophia Vergara, is a prime illustration of this.
Make An Entry Barrier
Wise companies build barriers to entry for rivals by repurposing existing resources or pursuing new ones that will either make a product or service outstanding or allow it to be offered at an incomparable price.
A food provider, for example, that relies on numerous farms for production may reduce total costs by investing in its own farm rather than purchasing essential items from a third party. Amazon is constantly investing in its customer service, features, and market penetration, making it practically hard for another online platform to compete.
Modify A Design
Water is important to human life, yet it has only been available in plastic bottles in the last century. Wine is another example of a beverage that has been around for centuries, but selling it in a box rather than a bottle is a fairly modern market penetration technique.
Make It Easier To Purchase
How easy is it for customers to buy from you online? Do you provide an online checkout? Making your goods and services easy to locate and purchase is a certain approach to gain a larger proportion of a particular market.
Create And Recruit Proven Advocates
News-of-mouth continues to be an excellent strategy to spread the word and gain additional supporters. Many companies have a membership and/or referral schemes. Advocates build support by actively recruiting friends and family, allowing the brand to capture a greater market share and earn more money.
Amazon Prime membership establishes its own internal "club." According to 26 Amazon Prime Day statistics, 100 million US buyers have an Amazon Prime subscription (62% of Amazon's customer base in the US)!
Educate The Market
The issue for a newer brand entering an established market is not developing a need since it already exists. The true challenge is teaching the market about a new option or choices while diverting attention away from existing brands.
Cabot, a cheese manufacturer, uses Pinterest and a range of social media platforms to educate the market on grilled cheese recipes, farms and farmers in their 'family' of production, New England ski areas, and lactose-free choices.
What Is Market Penetration Pricing?
Businesses use this marketing tactic to entice customers to a new product by selling it at a reduced price. This is done to entice clients away from other brands and to outsell equivalent items at a higher price range.
What Are The Most Common Risks Of A Market Penetration Strategy?
Price reductions across the board might result from a market penetration strategy. Competitors sometimes attempt to match pricing, especially if their items are identical. To outperform the competition, the firm that launched the market penetration plan must cut its pricing even further.
Conclusion
Market penetration strategy entails focusing on selling more of your SaaS product into your existing market in order to get a larger market share and more consumers from your competition.
It should be able to raise your market share and gradually achieve dominance in your industry with strategic planning around price, competition, boosting your promotional activities, and making any required adjustments to your product.