What is MARKET PENETRATION? What does MARKET PENETRATION mean? MARKET PENETRATION meaning - MARKET PENETRATION definition - MARKET PENETRATION explanation.
Source: Wikipedia.org article, adapted under https://creativecommons.org/licenses/by-sa/3.0/ license.
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Market penetration refers to the successful selling of a product or service in a specific market, and 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. Market penetration is the key performance metric for a business growth strategy stemming from the Ansoff Matrix (Richardson, M., & Evans, C. (2007). H. Igor Ansoff first devised and published The Ansoff Matrix in the Harvard Business Review in 1957, within an article titled "Strategies for Diversification". The grid/matrix is utilized across businesses to help evaluate and determine the next stages the company must take in order to grow, and the risks associated with the chosen strategy. With numerous options available, this matrix helps narrow down the best fit for your organization.
This strategy involves selling current products or services into the existing market in order to obtain a higher market share. This could involve persuading current customers to buy more and new customers to start buying or even converting customers from their competitors. This could be implemented using methods such as competitive pricing, increase in marketing communications or utilizing reward systems such as loyalty points/discounts. New Strategies involve utilizing pathways and finding new ways to improve profits, increase sales and productivity, in order to stay relevant and competitive in the long run.
Market penetration, although it can be performed throughout the business's life, it can be especially helpful in the primary stages of set up. It helps establish the businesses current station and which direction it needs to expand in to achieve market growth. Successful outcomes stem from careful monitoring by key staff and leaders. Timing is key to a successful market growth; this can be dependent on the overall market welfare, the business's competitors and current events. Questions, brainstorming and discussions can help distinguish whether it is the best time for market growth. These can include questions surrounding market share increases or decreases. Sales can be declining but shows opportunity for the business, it could be the perfect time to make alterations so as to grow market share. Market penetration can also be helpful when sales are proving to slow down, customers often need to be re-introduced to a company or reminded why they need your company's goods/services. With the consumers attention span becoming less and less, organizations need to constantly keep on top of competitors to stay relevant.
Some factors of market penetration are holding costs, advanced inventory management practices and technology (e.g. ongoing replenishment and vendor managed inventory), supply chain problems and economies of scale (e.g., Chang and Lee 1995, Chen et al. 2005, Gaur and Kesavan 2005, Gaur et al. 2005, Hendricks and Singhal 2005, Huson and Nanda 1995, Lieberman et al. 1996).
Market penetration, market development, and product development together establish market growth for a company. Overall the major growth opportunities they implement, attempts to peak sales through stressing current products in present markets and present products in new markets. This includes developing new products for existing markets, subsequently. It is about finding new ways to boost sales and keep customers loyal and increase market share. When implementing change companies must be careful not to compromise their existing revenue or customers. ...