Wednesday, January 20, 2010

Market penetration

Market penetration is one of the four growth strategies of the Product-Market Growth Matrixdefined by Ansoff. Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service (by advertising etc). Ansoff developed the Product-Market Growth Matrix to help firms recognise if there was any advantage of entering a market.

Market penetration occurs when the product and market already exists

Other growth strategies include:

  • Product development (existing markets, new products): McDonalds is always within the fast-food industry, but frequently markets new burgers.
  • Market development (new markets, existing products): Lucozade was first marketed for sick children and then rebranded to target athletes.
  • Diversification (new markets, new products): Mohen A.S, Bion Products, Selectron Ltd, bk

The penetration that brands and products have can be recorded by companies such as ACNielsenand TNS who offer panel measurement services to calculate this and other consumer measures. In these cases penetration is given as a percentage of a country's households who have bought that particular brand or product at least once within a defined period of time.