Market penetration can mean one of two things.
Many marketers see this as an activity alone. In that light, it stands for the processes involved in getting a product into a market where it normally does not exist. That definition can be expended to mean improving the awareness around such a product in the desired market where it already exists.
On the other hand, market penetration can also be a measurement.
Here, it stands for the rate at which your product/ service is being consumed relative to the total consumption rate of similar products/ services in that market.
Today, we are not taking one apart from the other. Both should work hand in hand anyway.
What Is Good Market Penetration?
Every business desires growth. Our resource on measuring content marketing ROI shows that there are different ways to measure growth.
For a business, that could be in the number of sales realized. For others, it is the consumer reach, customer retention potential, or other internally-determined metrics.
No matter which it is, though, the market penetration plays a huge role in getting to those goals. There is no way we can measure the growth of a business without looking at how much of the market share it has captured.
Depending on the primary audience base, there is a disparity in the market share that is deemed healthy for businesses.
Most consumer goods manufacturers, for example, can get by with anywhere from 2% of the entire target market. They could go as high as 6% and be doing exceptionally well. The same is not true for B2B brands that have to cater to businesses alone – which is a smaller target audience.
In the latter scenario, 10% is the lower benchmark. Brands can aim for as high as 40% of the target market to reach its fullest potentials.
The figures might look very far between the B2B and B2C niches, but almost the same level of energy will go into the realization of those numbers.
The Importance of High Market Penetration
The big brands know that their strength does not come from the prices they command or their products alone. Most of that authority is on the influence of their brand name itself.
Mobile phone retailers have a better chance of selling a Samsung or iPhone than they would fare with Xiaomi, Oppo, and other models. That is not for the fact that the other models are bad, but they do not command the same kind of authority we see with the former choices.
Customers will also expect these mobile retailers to carry a large selection of the Samsung and Apple devices as opposed to the others. This way, they can choose something that appeals to them at different price and feature points.
With the above scenario, it is evident that a high market penetration comes with other perks. They include, but are not limited to:
- Being perceived as a thought leader in your market
- Needing less effort to sell more products/ services in the long run
- A stronger brand equity
- Highly-scalable operations, allowing you to make more from the overhead margins
- High sale volume and
- Preference among marketers, retailers, affiliates, and other middlemen. After all, they are guaranteed better sales prospects when they are with you.
The pointers above alone show that many brands are approaching market penetration in the wrong way. Instead of looking at things from an angle of how they can get more sales, they should be focused on how to make all aspects of their brand better appealing to the target market.
Market Penetration Strategies
We have been through a lot of offers of ‘growth hacks’ and such other tall promises ourselves. If there is anything you should know about iResearch already, it is that we never look for the shortcuts. It is much better to build sustainable, scalable systems that will stand the test of time and pay serious dividends too.
That is why we did not just bring the market penetration strategies we think will work. Uncovering what some of the most reputable brands in the world have had work for them, these are some of the best, tried, and trusted strategies to implement.
Strategy #1 – Pricing
A common mistake to make with pricing as a market penetration strategy is thinking that it can only go low.
It might sound counterintuitive, but one of the best market penetration protocols can be increasing your pricing too.
When selling to an audience base that does not look for deals, a lower price looks like a lesser quality offering to them.
A similar strategy is what brands like Rolex and Omega have used to stay ahead of the luxury watchmaking curve. Other watchmakers looking to make their units more affordable will be shunned by those who have believed the promise of quality associated with the price tags that come with the Rolexes.
This does not mean lowering prices is poor either.
The Indian market has a low per capita income when compared to Europe and the US. Apple recognizes this to be one of the reasons why they are not capturing as much market share in the country. Having started as a high-tier item, they cannot simply go back on their working model overnight.
Thus, the company started creating spinoffs of its yearly releases to include a cheaper option. To better the deal, they started the budget iPhone line (the iPhone SE/ SE 2). By all standards, those phones are not cheap – but they are as cheap as an iPhone should get.
Strategy #2 – Implement Consumer Feedback
We have always maintained that we are now in the age of the consumer.
There was a time when the brand was the one making all the decisions for the consumers. Today, it is the other way around.
The successful brands are those that have established an effective feedback loop that allows them to get/ implement their consumers’ opinions.
The upside to such a tactic is that you are not just churning out products and services. You are, rather, creating what the target market wants. Such a compatible fit will be hard to ignore, putting you in front of competitors when the target market is making a choice.
Coca-Cola comes to mind here.
After launching the Diet Coke, they realized their goal of bringing a healthier version of the drink to the target soda market. But there was another problem almost instantly, with women being the main buyers of this drink. For one reason or the other, the men felt like they were not supposed to be drinking this.
Coca-Cola did not kill the entire line. They, instead, created another product and called it ‘Coke Zero.’ Guess who loved that one? Yes, the men!
Strategy #3 – Localization
In one of our recent publications, we discussed marketing for a local market and how to get the best out of it.
Localization does a lot of wonders for brands looking to get a better stand in their market. The impacts of this strategy will depend on whether you are offering a product or service.
On the product side, Apple exemplifies this in setting up production plants in India. This will help the company produce its units locally and sell them at a much lesser price than if they were imported.
For services, localization means understanding how the said service will help your local market the best.
KPMG, via its CEO Outlook program, is a valid example in this section.
This piece of thought leadership content contains a global report from all of the CEOs that the brand interacts with. They further break the report down to localities, proving valuable insights from the CEOs particular to such markets too.
By so doing, they keep their relevance as a global company while reassuring the local players of how well they can pivot to meet its needs too.
Strategy #4 – Launch a New Product
This has been subtly mentioned all through this piece but it also deserves a section of its own.
From Apple’s cheaper iPhone to Coke Zero, a new product could also help improve your market penetration rate.
The new product does not have to be wildly different from what you used to offer. Like the chosen companies have shown, this new product could just be a slight tweak to what you already have working for you. Put a new name on it, ensure it drives value, and present it to the audience.
Such highly-specialized, targeted packages are not meant to capture the entire market, though.
Ordinary Coke is still the biggest seller in the market. The Diet/ Zero Coke is there to capture a category of the market that is not very much interested in those. They will also serve as a gateway to the original Coke for those that get into the family via the new products.
That should be the same for you.
The new products/ services should not be targeted at erasing the existing products. Instead, it should be developed to capture another section of the market and offer them a gateway into your main offering.
Strategy #5 – Acquisition
If your brand is big enough to make acquisitions, it is time to start looking into them.
They say that if you cannot beat them, you should join them. Instead of joining them, you could also buy them.
Working with financial partners has opened our eyes to some of the secrets behind acquisitions. Our favorite example is that of the relationship existing between traditional banks and fintech startups.
These traditional banks snoozed on the digital money movement and might have even kicked against it. Fintech has now grown to the stage where it is an unstoppable force in itself. Thus, traditional banks have to adapt to changes in the money landscape.
Going back to build their fintech solutions will take time and effort. Thus, they simply acquire the startups that appeal to them. This acquisition helps the traditional banks to reach an emerging market in the fintech niche while also broadening its services at the same time.
Towing that lane beats having to do it all from scratch, up the point of customer acquisition.
This way, they can even integrate the fintech solutions to their core processes, boosting user engagement of the parent brand in the process.
Strategy #6 – Marketing
Seems like we almost forgot one of the best tools in our arsenal!
At one point, Samsung switched up hard against Apple and started some aggressive marketing. Samsung became so brazen in its ads and concepts that they were not even hiding that they were directly attacking the iPhone. Nothing unhealthy, though.
From teasing the features that made the Samsung devices better than the iPhones to offering an easy way to switch between devices, it was an all-out marketing war. Samsung would even allow iPhone users to trade in their units for a new Samsung device!
That campaign ran for years and we cannot say Samsung did not benefit from all of that buzz. Sometimes, such aggressive marketing is what you need to steal the market share from your competitors.
Side Note: Samsung did not just throw caution to the wind with their marketing. They were well calculated, streamlined, and agile about the whole business.
This was the work of a highly organized and effective marketing team that knew its targets and how to hit them. Without a good marketing team on your side, it could all blowback in your brand’s face.
Final thoughts on Market Penetration
Seasonality and trends in the market mean you should always be looking for more market penetration than you currently enjoy. Competition is not resting on its oars either, so you should be grabbing as much as you need.
Depending on a lot of factors – your industry, product/ service, and target market demographics – only a combination of specific strategies will work for you. Reach out to an expert today to discuss the best market penetration strategies for your brand.Back to Blogs