One day, every small business wants to be as big as a Fortune 500 company. In point of fact, in order to reach new heights, any company would want to continue moving forward incrementally. In addition, this is the reason why the business world is so competitive. Every business's ultimate goal is to enter its market and gain market share in an exemplary manner. This is why market penetration strategies are so important to businesses.
The fact of the matter is that market penetration strategies are necessary for business advancement strategies to exist. A company's market share will always be a crucial performance indicator of its progress and authority.
We investigate further, locating the top performers in terms of market share in each sector. For instance, Samsung and Apple are the biggest players in the smartphone industry, with a majority of the market. Their dominance of the industry has always been fiercely contested. Nonetheless, Samsung dominated the smartphone industry, leaving Apple in second place, thanks to extraordinary market penetration strategies.
To back this up, Samsung topped the market in the second quarter of 2022 with a 21.8 percent share. Apple, on the other hand, came in second place with a 15.6% market share. We can largely attribute Samsung's success to its strategies for entering new markets. This case demonstrates why a firm's market penetration strategy is essential. However, exactly what does "market penetration" imply? Let us investigate.
What is market penetration?
A company's market penetration is the percentage of a product's total market share. To elaborate, it specifies how much a product is utilized by consumers in relation to its estimated total market size. It will be a measure of how much a service is used by customers in relation to the size of the overall market for that service for service businesses.
Let's now examine the definition of market penetration strategies as well. It is the strategy that a business takes to increase its share of the market as a whole. In addition, one of the four components of the Ansoff Matrix is market penetration. To put it simply, the Ansoff Matrix is one of the most widely used strategic models utilized by businesses. The set of strategies that a company uses to expand its market share is called its market penetration strategy.
Let's look at an example to illustrate the concept. Over 70% of the US EV market is currently owned by Tesla. Now, suppose the business sets a goal of capturing 90% of the market in the next three years. In order to accomplish this, the business will need to develop an efficient strategy for entering new markets. The company's penetration strategy's key performance indicators will show whether or not it achieves its business goals.
We now know everything there is to know about market penetration and a market penetration strategy. Companies need strategies that can be implemented to successfully penetrate the market. This is the focus of this meticulous blog. The next section offers some fantastic methods for getting into the market.
5 Business Strategies For Successful Market Penetration
1. Revolutionize Your Promotional Practices
Nowadays, marketing and promotional strategies are a major foundation upon which every business's growth is largely dependent. According to vtldesign dotcom's statistical data, major companies like Salesforce and Oracle devote 20 percent or more of their revenue to marketing. In addition, the same reports confirm that marketing ultimately contributed to 38.4% revenue growth for businesses. The very first marketing penetration strategy is the result of this. In this case, you need to make sure that your promotional methods need to be changed.
To elaborate, we now have a wealth of marketing options, such as social media marketing and affiliate marketing, thanks to technological advancements. In addition to the sources, technological advancements changed the way marketing was done in the past. Artificial intelligence (AI), virtual reality (VR), and augmented reality (AR), for instance, have all contributed to the same. In order to attract more potential customers, they have assisted in presenting even straightforward brand messages in the most impressive manner.
As a result, changing the way promotions are done will help your business get more people to know about and see your brand. You'll be able to attract more customers with the help of this increased brand awareness. In addition, this will help you effectively increase your market share.
2. Enhance Your Business Territories
Here, your business territories include all of the channels through which you distribute your goods or services to the market. Effective market penetration relies heavily on distribution channels. The simple formula for success is that the more distribution channels you have, the more easily your target audience can find you.
Therefore, expanding your business's territory is necessary if you want to successfully penetrate your target market. You can improve the distribution channels for online mediums by
- Creating websites
- Selling features of different social media
- Collaborating with e-commerce websites
- Creating separate apps
You can put money into expanding existing brick-and-mortar stores for offline media. In addition, you can locate opportunities to transfer franchises to other individuals. You can delegate it to your other franchise partners rather than handling it all yourself. You will be able to expand your business networks to include partners and customers as a result of this.
You will be able to use a variety of distribution channels in this way to attract more customers to your business. As a result, you will be able to expand your company's market share with success.
3. Acquire or Partner With Other Businesses
Once, Jim Henson was right when he said, "When you can't beat them, join them." Facebook, which is now known as Meta, is the most prominent and perfect example that fits the quote above. This happened when Meta obtained Instagram and Whatsapp, which were a portion of its greatest rivals. This also comes with a fantastic strategy that can help you effectively penetrate your business.
To elaborate, you always have the option of acquiring small businesses or focusing on your rivals, such as Meta. Any business you buy will automatically give you control over its current clientele. Your customer base will grow as a result of this, and it will also help you gain more market share. In addition, there is a significant factor to take into account when forming partnerships with other businesses. Always look for businesses that, in one way or another, complement your own.
For instance, Ferrero Group, an Italian multinational corporation, or simply Ferrero's subsidiary brand Kinderjoy "Nations," has recently announced that it will expand into India. The company collaborated with Discovery Channel as it expanded. The primary objective of this partnership is to raise awareness of children's effective knowledge of wildlife by promoting their unique animal collection. Now that Kinderjoy is a specific product made for kids, partnering with a media outlet that educates increases both partners' value. In addition, it gave them the opportunity to completely penetrate the target market of their partner in order to acquire new audiences or customers.
As a result, entering the market through partnerships or acquisitions is an excellent strategy. The only thing left to do is determine which of these two methods of market penetration will work best for your company.
4. Acquire customers through cost leadership
By offering a product or service at the lowest possible price, businesses employ the cost leadership strategy to gain a competitive advantage. Businesses strive to gain this strategic advantage over their rivals. To put it another way, new customers are attracted to businesses that provide the best products at the most affordable prices.
In such situations, businesses frequently attempt to lead the market in price. To put it another way, a pricing leader is the dominant company in the market that sets prices and the rest of the competition follows. By lowering their profit margins and attracting customers' attention to them, businesses become price leaders. RyanAir is one of the most prominent examples of cost leadership in the aviation sector. The company rose to the top of the aviation industry in terms of cost by employing a dynamic pricing strategy.
However, in the race to be the most cost-effective company, you must also ensure that your prices do not fall too low. Your company's profitability will be directly affected by this, and people may also question your quality as a result. In addition, pricing over the long term cannot be achieved by being cost leader. You can alter your pricing strategy once you have a sizable share of the market. Naturally, excellent customer service would serve as the foundation for that. Customers are even willing to pay premium princess when businesses provide exceptional customer experiences.
Along these lines, dynamic estimating will help you in drawing in an ever increasing number of clients from various gatherings. In the end, this will help increase the company's market share.
5. Embrace Product Diversification
Last but not least, product diversification is a strategy that can help you get into more markets. Let us explain the term to those who are unfamiliar with it. To increase their market share, businesses employ product diversification by launching new product lines or services. The expansion of a company's profitability is the fundamental goal of diversification.
In fact, there are numerous examples of successful product diversification. After starting with cartoons, Disney launched its own OTT platform and cruises. In a similar vein, Coca-Cola expanded into the healthy beverage market after initially focusing on carbonated beverages. Businesses can gain access to additional markets and customers when they grow.
because diversification enables the addition of a wider range of products to your business. You will easily be able to acquire the industry's largest share if you implement this. However, a well-defined change management strategy ought to accompany each diversification strategy. A business's transformations will be easier to integrate if change management is done well.
However, failing to recognize the potential of the target market is one of the greatest obstacles to product diversification. Therefore, before investing a significant amount of money in it, it is absolutely necessary to improve the attractiveness of your target market. The analysis of the business's micro- and macro-environments becomes crucial at this point.
To summarize, businesses frequently find it challenging to increase their market penetration rate in light of the growing level of competition in the business world. Subsequently, the need is to really figure out the market and use a portion of the compelling business sector entrance procedures to improve the development of your business.
In addition, the strategies described above will help you significantly increase your market penetration rate. Therefore, what are you awaiting? Make use of them, and you'll see the difference for yourself.