Every businessman wants the business to grow one way or another. And it seems considerably intuitive, taking efficiency & success in growth. The objective includes an overall boost in capital, brand value, loyalty, and awareness & many more.
There are several factors to ensure positive growth in your business. Each one poses a different valuation in terms of business strategy. We’re to discuss market penetration in particular.
Market Penetration
The term reveals a comparative amount between estimated/targeted market sell to actual sell number. You can get a picture of the potential size of the current market to develop a strategy towards future growth. The mathematical formulation goes as below –
Market Penetration Rate = (Customer Number/Target Selling Number) x 100
There comes no strict rule to measure the rate at a certain time. But one thumb rule implies the determination after every sales campaign.
Market Penetration against Market Development
Though both terms may seem pretty close to each other, the influencing outcomes are different. Development is indeed the practical steps ahead of increased penetration. In fact, you’ll have to focus on market development ahead of planning a greater penetration rate. It comes with strategic action to boost consumer quantity.
Understanding Market Penetration
The generation of service or product highly depends on the penetration rate. It tends to explore the relative acceptance of your product/service to customers. Frequent monitoring of the market selling number is essential to get accurate penetration.
You’ll always want the rate to stay high to make profits. Not to mention, there are specified facts related to companies having a high penetration rate. It includes –
- Established brand name.
- Reputed industry leader.
- Excellent market visibility.
- Very high brand equity.
- Limited scale operation.
- Superior sales volume.
Market Penetration Strategy
The basic strategy aims at a higher market share. It involves tapping into existing market products. You can increase the number of sales to push the penetration rate forward.
Coming from commerce theory, you’re to consider Ansoff Matrix. The gear comprises of 4 well-defined growth strategies. It concerns with – Market Development, Diversification, Market Penetration & Product Development. The considerations remain interconnected to each other based on two criteria – Products and Services & Markets.
Aside from the theoretical economic strategy, you’re to implement some well-known thoughts.
- Changing the retailer price of products/services.
- Identifying customer demands & requirements.
- Initiating promotional offer to increase loyalty.
- Reworking, revising or modifying the current strategy.
- Update, change, or relocate specified product/service.
- Offering franchise opportunities to a certain extent.
- Launching a business in new, demandable territories.
- Choosing reliable partners/associates to continue.
- Developing a sales campaign on certain occasions.
- Trying to purchase small-sized competitor businesses.
Plan, strategy & implementation – every basic concern tends to differ. But you’ll have to stick with a convenient penetration rate to support the business. You can skip the high-risk assessments to keep your business growing.
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