Market penetration is a strategy that involves selling products or services in an already existing strategic context to gain a larger market share (the percentage of a market segment).
This aggressive strategy develops an already existing market niche and can be defined as the percentage of people in the target who have bought a specific brand or product category.
The means used for market penetration are:
- Competitive pricing
- The use of reward systems, loyalty points, or discounts
- Developing a new marketing strategy to attract more customers
- Acquiring competing companies (in mature markets) to expand market share
Market penetration, market development, and product development together establish market growth for a company. Overall, they cover current products in current markets and products present in new markets, including the development of new products for already existing markets.
Attention! When making changes, care must be taken not to drastically alter the brand's aspects with its contents. The customer may no longer recognize the brand and thus distrust using the product, opting for competing brands instead.
How to understand the influence of advertising on the market?
A few steps are sufficient to understand the influence of advertising on the market:
Step 1 Identify the most suitable demographic data for a product: location is very important. If a company operates nationally, it should reach as many people across the entire country as possible. The smaller the area, the more specific can be the people within that country.
Step 2 Understand market penetration competitors: based on the penetration that other products have achieved, one can calculate the number reached by demographics by multiplying the total number by the percentage of products.
Step.3 Calculate the number of customers a company needs to sell to: in order to make a profit.
Market penetration is a tool for understanding the potential earnings of a business and is an integral part of calculating a resource-based business model.
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