Market penetration
Barron's Marketing Dictionary:
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market penetration
Depth of sales of a particular product in a given market. The deeper the penetration, the higher the volume of product sales. In order to expand the sales of current products in markets where their products are already being sold, marketers utilize market penetration strategies such as cutting prices, increasing advertising, obtaining better store or shelf positions for their products, or innovative distribution tactics.
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Market penetration
Barron's Business Dictionary:
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Market penetration
1. marketing strategy used by a manufacturer to increase the sales of a product within an existing market through the employment of more aggressive marketing tactics.
2. degree to which a particular product is purchased in a particular market.
| Market Order, Market Makers, Market Letter | |
| Market Price, Market Profile, Market Rent |
Investopedia Financial Dictionary:
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Market Penetration
A measure of the amount of sales or adoption of a product or service compared to the total theoretical market for that product or service. The amount of sales or adoption can be an individual company's sale or industry while the theoretical market can be the total population or an estimate of total potential consumers for the product.
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For example, if there are 300 million people in a country and 65 million of those people have cell phones then the market penetration of cell phones would be approximately 22%. This would mean in theory there are still 235 million more potential customers for cell phones, which may be a good sign of growth for cell phone makers. In general, the older the offering or industry, the greater the market penetration.
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Market penetration
Market penetration is one of the four growth strategies of the Product-Market Growth Matrix as defined by Ansoff. Market penetration occurs when a company enters/penetrates a market in which current products already exist. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service (by advertising etc.). Ansoff developed the Product-Market Growth Matrix to help firms recognize if there was any advantage of entering a market. The other three growth strategies in the Product-Market Growth Matrix are:
- Product development (existing markets, new products): McDonalds is always within the fast-food industry, but frequently markets new burgers.
- Market development (new markets, existing products): Lucozade was first marketed for sick children and then rebranded to target athletes.
- Diversification (new markets, new products): Mohen A.S, Bion Products, Selectron Ltd, bk
"Penetration is a measure of brand or category popularity. It is defined as the number of people who buy a specific brand or a category of goods at least once in a given period, divided by the size of the relevant market population." [1]
Methodologies
The penetration that brands and products have can be recorded by companies such as ACNielsen and TNS who offer panel measurement services to calculate this and other consumer measures. In these cases penetration is given as a percentage of a country's households who have bought that particular brand or product at least once within a defined period of time.
References
- ^ Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance. Upper Saddle River, New Jersey: Pearson Education, Inc. ISBN 0-13-705829-2. The definitions, purposes, and constructs of classes of measures that appear in Marketing Metrics are part of the Marketing Accountability Standards Board (MASB) ongoing Common Language: Marketing Activities and Metrics Project.
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Barron's Marketing Dictionary
Dictionary of Marketing Terms. Copyright © 2000 by Barron's Educational Series, Inc. All rights reserved.
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Dictionary of Business Terms. Copyright © 2007 by Barron's Educational Series, Inc. All rights reserved.
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