Market Penetration defined as a measurement is the assessment of how much a product is being sold relative to the total estimated market for that product, expressed as a percentage. This is also known as market penetration rate.
Market penetration strategy is one of the four business growth strategies identified in the Ansoff Matrix, the other three being market development strategy, product development strategy, and diversification strategy. Market penetration strategy refers to when the company attempts to grow using existing products in existing markets.
A simple equation related to market penetration:
Market Penetration Rate = (Number of customers/Size of market) x 100
Market penetration pricing
As the SaaS industry grows, it becomes harder for new companies entering the market to gain market share. The market penetration rates for software products in the collaboration and CRM spaces especially (e.g. Basecamp and HubSpot) are already quite high due to the large number of SaaS products in that space.
Pricing is one of the main tactics that emerging SaaS products use to gain market share and grow their revenue when using market penetration strategy. These adjustments can be easily measured to determine their level of success.
Increasing your marketing and promotional efforts
If startup is attempting to grow through market penetration strategy, changing tactics or becoming more aggressive with your marketing campaigns can help to increase your awareness in the market. This, in turn, can woo more of your competitors’ customers into switching and signing up for your product instead.
Marketing can also help persuade your existing customers to stick with you instead of leaving for the competition. Loyalty schemes, power user features, strategic alliances, and finding unique ways to deliver value to your users can all help you keep your customers.
Making changes to your product
Listening to your customers, and keeping track of what competitors’ customers are saying about their products can help you pinpoint essential features and functions that people are looking for.
Target Specific Locations
Some products and services are seasonal while others have a greater demand depending on location (A sunscreen brand targeting sunny Los Angeles versus rainy Seattle). Targeting the location in need would lead to a surge in use and increase in sales in that region.
If a brand can trace market share to a particular product or service then it would make sense to consider improving upon what the public already likes. Understanding what consumers like (or even better, dislike) about a product presents an opportunity to make it even more loved and preferred depending on technology related to materials, newly developed accessories, etc.
Create a Barrier to Entry
Wise brands create barriers to entry for competitors by utilizing existing resources or seeking those that would either make a product or service superior or allow to offer such at an unbeatable cost.