Market penetration is more than a simple ratio. Greater market penetration can impact your bottom line in many ways—from increased awareness to competitive advantage.

In fact, getting deeper into a market can have a complex series of effects on your sales and growth that go beyond simply making a few more sales.

To unlock such growth, you need the right market penetration strategy.

Let's look at what market penetration is, how it boosts sales and growth, and how you can increase market penetration.

What Does 'Market Penetration' Mean?

"Market penetration" is a measure of how deeply a product or service has reached within a given market, and how much of the market is left to conquer.

Your "market penetration rate" is a figure that shows your company's performance in relation to the total market available.

To use a very simple example, let's say you want to sell your product to a highly niche audience of just 100 people. Of those 100, 27 already own your product. Your market penetration is 27%. And the untapped potential in that market is at 73%.

Now (and here is where it starts to get a bit complicated) of that 73%, 40% have heard of your product, 18% have actively tried your product before, and 60% have no idea who you are or what you're selling.

To reach that 73% market potential, with all its differing experiences and understanding of your product, you will have to develop a range of strategies to increase your market penetration and boost your position within that competitive landscape.

Developing strategies to increase market penetration not only boosts sales and growth but also enables businesses to make smarter business decisions.

You will need to use all the sales prospecting tools and marketing automation solutions at your disposal, driven by clever strategizing and stellar marketing penetration tactics.

How Do Market Penetration Strategies Boost Sales and Growth?

Market penetration strategies can boost sales and growth in several important ways:

  • By increasing market share, market penetration builds awareness of your brand.
  • More customers in a particular market mean more better word-of-mouth, reviews, and organic social media reach.
  • Greater market penetration gives you a stronger competitive advantage.
  • Increased market penetration can prompt innovation, as new customers give new feedback and present new needs.
  • Moving into new markets brings new opportunities for growth.

How to Improve Market Penetration

Here are three popular tactics for boosting market penetration.

1. Change product prices

Altering price is a common and popular market penetration tactic. But it's important that you use it carefully and cleverly.

Slashing prices without properly thinking about profit margins, for example, could be disastrous for your bottom line. What's more, a market penetration strategy that's exclusively based on price cuts risks making your brand reliant on regular sales.

Cutting prices can also devalue your brand. Customers associate higher prices with quality, luxury, and longevity. So, as counterintuitive as it may seem, if your market values luxury, it may be worth raising your prices to appeal to luxury-loving customers. Just make sure your product truly does provides the kind of quality that its price promises!

To pick the right pricing strategy for optimum market penetration, it's important to have a good understanding of who your customers are and what they want. Will the customers in this market appreciate high-quality, high-price products, or do they prefer a bargain?

So, do diligent market research before rolling out your strategy. Tools like Customer 360 and marketing AIs can help you to glean actionable insight into your market. Also, presenting a compelling business proposal tailored to the needs and preferences of your target audience can significantly enhance the effectiveness of your market penetration.

2. Create urgency

The tech and automobile sectors, among others, have a perennial problem: the rate of depreciation. Why would someone buy the very latest cell phone or car when they know they can get the very same model in a few months at a much lower price?

Well, those industries use a variety of tactics to generate demand. Many of those tactics revolve around creating a sense of urgency. The central message is that customers need this thing NOW: to be at the cutting edge, to have the shiniest new gadget before anyone else, to be the most impressive driver on the road, to take the best photos for Instagram, to have the most fun, to be the most popular, and so on.

Customers are persuaded that they need the brand new model. The older models are fine for those who don't care about being future-facing and sophisticated, but those who want to be the very best really need the brand-new version.

Apple cultivates social media accounts, such as this one, that focus on creating a sense of exclusivity, teasing new releases and implying that customers are privileged to get this information early.

Creating urgency isn't easy. Usually, it takes a big marketing budget and a stable of talented influencers. But there are ways to mimic that sense of urgency without the vast resources available to Apple and Tesla.

Using the following tactics not only gets your current customers to buy your new products but also plunges your product a lot deeper into the market:

  • Exclusivity: produce limited editions of a product, or offer limited benefits to the first X number of customers
  • Scarcity: artificially reduce the number of products available so that customers who succeed in buying one will get the rush of obtaining something rare
  • 'Urgent' messaging: for example, frequent use of the term "now" and references to time, which build associations with urgency and encourage customers to purchase quickly

Those tactics not only create urgency but also drive more traffic to your online platforms, helping to grow your online business.

3. Invest in sales representatives and technology

A successful market penetration strategy is all about pushing hard for increased product exposure, communicating your product's value at every opportunity, and boosting sales as high as you can. To do that properly, you need a strong sales team at your back, bolstered by the very best in sales and marketing technology.

For instance, employing innovative project management software, such as ZenTao can streamline your operations, enhancing collaboration and efficiency within your sales team.

So, to crack a new market or increase penetration in a current market, make sure your sales team is operating at optimum levels. If you need to bring in new team members or upskill current members, don't hesitate!

Also, make sure your team is well-equipped with tools and technology. From your outbound sales tools to your CRM and analytics, the right tech can keep you on top of trends and give your sales team the data and agility they need to make market inroads.

Use the Right Market Penetration Strategy to Increase Sales and Growth

Modern companies are, quite rightly, highly focused on the needs of the individual customer. But it's also important to zoom out and look at the market as a whole.

Market share can have a big impact on a company's reputation, competitiveness, and growth. So, it's important to focus on overall market penetration as well as on the satisfaction of individual customers.

A good marketing strategy for market penetration can have far-reaching effects on your sales, boosting your bottom line and providing opportunities for growth.

More Resources on Market Penetration and Expansion

Updating the Standard Four Ps of Marketing

What Revenue Should You Bet On?

Strategizing Your Next Move in the Global Game

Strategic Alliances: Benefits and Risks

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image of Jessica True

Jessica True is the senior director for marketing strategy at Dialpad, cloud communication solutions.

LinkedIn: Jessica True