Sunday, January 17, 2010

Market penetration:

A strategy for company growth by increasing sales of current products to current market segments without changing the product. Starbucks can be a good example of that because it was found in 1971 in Seattle and then it grew too rapidly so that it should be in access to every person. Its ultimate goal is to make 30,000 stores worldwide. Gourmet can also be a good example of it. It started its business just from one bakery outlet and then it expaned too rapidly that it reached in every city approximately. Market penetration is a price strategy that assumes low price will gain high sales volume which, in turn, will results in lowering costs. This strategy is used in price sensitive markets. E.g consider the market for DVD players; it is a high volume market, it has a high no. of competitors, the costs to produce DVD players have fallen and new or changing technology allow businesses to rapidly introduce new features and benefits on new models. The businesses that introduce DVD players quickly, sell high volume at low or reasonable prices are also following a market penetration pricing strategy.