Market penetration refers to the successful selling of a product or service in a specific market. It is measured by the amount of sales volume of an existing good or service compared to the total target market for that product or service. Igor Ansoff first devised and published the Ansoff Matrix in the Harvard Business Review in , within an article titled "Strategies for Diversification". With numerous options available, this matrix helps narrow down the best fit for an organization. This strategy involves selling current products or services to the existing market in order to obtain a higher market share. This could involve persuading current customers to buy more and new customers to start buying or even converting customers from their competitors. New strategies involve utilizing pathways and finding new ways to improve profits and increase sales and productivity in order to stay relevant and competitive in the long run.
Market Penetration Analysis
Market penetration is a measure of how much a product or service is being used by customers compared to the total estimated market for that product or service. Market penetration can also be used in developing strategies employed to increase the market share of a particular product or service. Market penetration can be used to determine the size of the potential market. If the total market is large, new entrants to the industry might be encouraged that they can gain market share or a percentage of the total number of potential customers in the industry. The penetration numbers might indicate the potential for growth for cell phone makers. In other words, market penetration can be used to assess an industry as a whole to determine the potential for companies within the industry to gain market share or grow their revenue through sales. Revisiting our example, the global cell phone market penetration is often used to estimate whether cell phone producers can meet their earnings and revenue estimates.
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As soon as a company enters a new market, it strives for market penetration. The main objective behind the market penetration strategy is to launch a product , enter the market as swiftly as possible and finally, capture a sizeable market share. Market penetration is also, sometimes used as a measure to know whether a product is doing well in the market or not. Start Your Free Marketing Course.