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How to build a Market Penetration strategy?


Market Penetration: What, why and how? 

Every business owner comes across the word ‘market penetration’. It can hold different meanings in different contexts. It is essential to know what it means and how you can create a market penetration strategy. 

Keep on reading to learn more about market penetration and how to use it as a measurement.


Meaning of market penetration

Market penetration can have two meanings. It can be both market penetration rate and market penetration strategy. The former is measured as a percentage and the latter is performed as a business activity to grow your market share. 

If you are a distributor and there are 100 retailers in your service area. You have 30 recurring retailers who buy goods from you. Then you have a 30% penetration rate. 

Market penetration can also be viewed as an activity that is performed to increase your market share. 


Calculation of penetration rate

When you use market penetration as measurement, it is calculated as penetration rate. Penetration rate tells you how much of your products/services the customers are using with respect to the total market size. It shows you an insight about where your business stands in the market as compared to your competitors. 

(Number of Customers / Target Market Size) x 100 = Penetration Rate

You can measure penetration rate after each quarter, year or every sales campaign. It will show the results of your efforts done towards market penetration and the scope of improvement. 

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Importance of market penetration for field service businesses

Why is market penetration so important? Let’s find out. These are the main reasons why every business no matter how big or small should focus on preparing a market penetration strategy.  

  • Focus on increase in sale 

Market penetration is crucial to acquire more customers, sell more products, and expand a business. It helps to increase sales which means more revenue for the business. 

  • Market acquisition 

Market penetration boosts adoption of your product by your target customers. You acquire more and more customers eventually increasing your market share & understanding your market deeply. 

  • Finding growth opportunities 

You discover new areas for business while looking for penetration opportunities. New product/service ideas and changes in current product also come forward. These types of new opportunities help in the growth of business. 

How to build a market penetration strategy?

A market penetration strategy is simply a plan to gain a higher market share in the market. It states the things you need to do to increase your sales and eventually your market share. 

Here are few things that you can include in your market penetration strategy: 

  • Engage with your buyers: Increase the number of interactions you have with your customers. Take feedback from them and know their wants. You can also perform social selling and cold calling activities more often.  
  • Give better offers: Give introductory offers and discounted bulk orders to your buyers. Changing your pricing is an essential part of market penetration strategy. Pull customers towards you by giving them attractive pricing and discount offers. 
  • Expand to new areas: Identify new areas in which you can expand your business. If you have the resources to expand to new areas, then it is an excellent idea to increase your number of customers. 
  • Launch a new marketing campaign: Revamp your old marketing plan and try to find innovative ways to market your product. You may find something unique that your competitors aren’t doing. Brainstorm to find new ideas to attract customers. 
  • Take advantage of digital marketing: Invest in targeted ads that go to your specific buyers. Tailor your digital marketing efforts for your target audience. Utilize those channels for marketing where your customers are present & rework your marketing strategies to gain customers.
  • Identify the need for a new product: By doing a market analysis, you can identify the need for a new product that your competitors have overlooked. Or you can make changes to your existing product to meet the demands of the buyers. Find out what your target audience wants and deliver that to acquire more market share.  
  • Boost sales rep activities: Motivate your sales reps to put extra efforts in sales activities. Encourage them to have more interactions with qualified leads. You can add new sales strategies to your already existing sales plan to boost sales. Focus on personalized selling and meeting with the buyer whenever possible. 
  • Purchase a competitor: As your business grows, you can buy out a small business or competitor in your area. You can use their brand value to sell more goods and also acquire their current customers. The market share of your business will increase considerably by this strategy.

These were some ways in which you can acquire more share in the market. Do apply them and tweak them in your own unique ways that work best for you. 


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