#Penetration strategy example how to#

You have well-established distribution channels and vendor relationships.Brand awareness for your business is high.You’re well-established in your industry.The higher your market penetration the more likely that you have some or all of the following market advantages: In general, you want your market penetration to be high. How does your current standing affect brand perception? How do you compare to your competitors? Is there any room for growth? Any threat of new entrants?

To truly take advantage of knowing your market penetration rate, you need to understand what that rate means for your business within the market. You can also add it into your monthly plan review sessions if you’re actively running campaigns without a distinct end date. To stay up-to-date, it’s best to review this measurement before and after a campaign to gauge performance. Keeping track of this measurement and noting any positive or negative changes can help inform your return on investment for any marketing or sales campaigns. Think of it as a baseline for what’s feasible and what your penetration rate needs to be for your business to be viable long-term. While it may not be exact, since it’s based on market size estimations, it can still provide you with a legitimate number to measure your actual results. While the action and measurement may seem like two separate activities, you can actually leverage your market penetration measurement to develop a market penetration strategy. Market penetration rate = (Number of customers / target market size) x 100 You can find this measurement using the following equation:

The actual measurement is a specific assessment regarding how much you anticipate selling or actually do sell as a percentage of the total available market. You can actively engage in market penetration, which is your attempt to enter or expand into a given market. Market penetration is both a measurement and an activity. Additionally, it can serve as a baseline for developing a strategy to increase your service obtainable market (SOM), or the subset of customers that you can realistically acquire. This is a measurement that can help you define the serviceable available market (SAM), which is the portion you estimate that you can acquire.

Market penetration is the amount that your business is able to sell a product or service to customers compared to the estimated total available market (TAM). So, what exactly is a market penetration strategy and how do you develop one? Market penetration definition This requires you to take what you’ve learned during your market analysis to develop a market penetration strategy for your business.

#Penetration strategy example how to#

It doesn’t matter whatever the case is, companies should also keep in mind the demand and market competition factor before pricing the new product.If you’re looking to start or expand your business, you need to have a firm understanding of how to enter and grow within your chosen market. Other businesses may follow the return on investment strategy it means that you decide how much return you want on your investment.

Some companies may follow the cost-plus pricing strategy, it means adding up all the fixed and variable costs and then add a percentage of profit on it. Therefore, businesses and companies may test various pricing strategies before setting the final price of a new product. But it’s a very important and challenging part of any business especially when the product is new in the market because you don’t know how the market would react to the product price.

Example of Penetration Pricing Strategy.