As every business owner the number one goal and they will all tell you they want to grow their businesses. This seems rather obvious considering effective and successful growth of any towing services or other businesses means you must experience a boost in revenue, brand loyalty and brand awareness. However, there is more to that. Highly successful companies do more to ensure they put themselves in a position for strong and consistent growth and this happens through understanding their market and coming up with strategies to penetrate their market.
Market penetration refers to the amount a product or service that is sold to consumers compared to the estimated total market for that product or service. This measurement is used to determine the potential market size and can aid in developing a strategy for increasing the market share for specific products or services.
To calculate market penetration, use the formula;
(Number of Customers/Target Market Size) x100 = Market Penetration Rate
It is important to frequently monitor market penetration so as to identify any increases or decreases in penetration. A good rule of the thumb in calculating market penetration is after every marketing or sale campaign that you run.
Market Penetration Strategy
A market penetration strategy comes up when a company works towards a higher market share through tapping into its existing products in existing markets. It entails to how a company, already existing in a market with a product, can grow business by increasing sales among the people already in the market.
There are different market penetration strategies employed by companies in their efforts to push their agenda. Some of the most used penetration strategies include;
– Changing pricing
– Revamping your marketing
– Identifying the need for a new product and launch it
– Changing or updating product features
– Growing business in new territories and offering for franchise opportunities
– Identify a business partner to work with
– Purchase a small business or competitor in your industry
– Offer a promotional program to boost loyalty
– Develop a new marketing campaign
When it comes to market penetration, you want to have a very high penetration rate. There are many benefits of having a high penetration rate. Think of a company such as Nike – the company is a market leader when it comes to athletic shoes. What makes Nike have such a huge command of the market? It is because of their quality and pricing? Quality yes, but pricing may not be the case.
With Nike having a high market penetration, it means it’s an industry leader, sells products or services that are already established within the industry. It is a widely recognized brand and has a good visibility in the market. This makes it have a very strong brand equity.
There is also a key difference between market development and market penetration. Market development is a necessary strategy or action when you are trying to increase market share and penetration. It requires to have a clear set of steps that boost the number of potential customers interested in your business.