Business market penetration rate

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. Watch our Demo Courses and Videos. A company trying to adopt the concepts of market penetration must remember to also implement specific plans and tactics to challenge the competitors and boost sales figures.

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.

Market penetration is a crucial indicator as to whether your marketing and sales strategies are working. Market penetration is the percentage of identified potential customers you have acquired. Not meeting the desired penetration rate could be a strategic issue in marketing or sales, or it could be that you need to take the time with market development to expand the potential consumer base. Here's how you determine your penetration rate.

Estimating market penetration suggests the probable number of customers in a target market. In "Strategic Management Theory: An Integrated Approach," Charles Hill refers to market penetration as a business strategy that concentrates an organization's efforts toward the expansion of an existing market share in a current product market. Using this strategy, a company relies on heavy advertising to influence the customer's choice of brands and to create a brand name reputation for its product.