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The Right Understanding From AZ About Market Penetration

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Market penetration

Market Penetration is a very familiar term in the field of marketing and sales. It plays an important role in expanding the scale and increasing the competitiveness of businesses, especially new businesses or startups. To better understand Market Penetration, the importance and how to build an effective market penetration strategy, please read and follow the article below. DPS Media.

Definition of Market Penetration - market penetration 

According to Philip Kotler, Market Penetration is a low pricing strategy applied by businesses to a product/service to attract more buyers and increase market share.

Penetration strategy to increase market share for businesses
Penetration strategy to increase market share for businesses

Market penetration is calculated according to the following formula:

Market penetration = (Number of customers / target market size) x 100%

For example: Smartphone is an indispensable electronic device for every person. Therefore, the expected market of this item is extremely potential. A company is planning to launch a new line of smartphones targeting a target market size of 200 million people. After a period of launch, the number of customers buying this smartphone product was 20 million people. So the market penetration level of this smartphone line is 10%.

Typically, the market penetration level of consumer products usually ranges from 2 – 6%. As for business products, it can range from 10 - 40%.

The importance of Market Penetration – market penetration

Market penetration strategies are strategies applied by enterprises to increase market share for a product/service of an enterprise in a new market by using marketing strategy. Building a market strategy is an important tool for businesses to get an overview of their products, the level of satisfaction of customers' needs and buying psychology.

In addition, when implementing market penetration strategies, businesses will determine how much product consumption is, who are direct competitors, strengths and weaknesses. This information will be the basis for businesses to build more appropriate sales strategies.

Learn 8 Market Penetration Strategies – the best market penetration today

Dynamic pricing strategy 

Dynamic pricing strategy is a business that deploys options to adjust the price of products/services to help businesses achieve different marketing goals. With this strategy, businesses will base on the situation of the market to make decisions to increase or decrease the price of products/services. However, no matter which form you choose, businesses must also calculate how customers and competitors will react to this change.

Flexible price adjustment strategy
Flexible price adjustment strategy


Distribution channel development 

Today, businesses are constantly expanding and improving the quality of distribution channels to meet the needs of consumers. This will help businesses have a suitable development strategy to bring the most products to customers.

Each distribution channel will have its own characteristics and properties suitable for different products/services. Therefore, businesses need to carefully study the types of distribution channels as well as their products and services to choose the most optimal distribution channel.

Market Penetration Strategy – Market penetration: Product innovation 

Businesses can track the market share of a particular product/service to gauge customer response. From there, offer solutions to improve product quality based on consumer preferences and needs.

Improve quality to increase product popularity
Improve quality to increase product popularity

Some product improvement methods that businesses can apply are: improving the design, improving the quality and improving the features... to help the product be more loved and preferred by customers. This is one of the effective market penetration strategies, helping to prolong the life cycle and bring stable revenue for businesses in the long run.

Promote advertising 

Promotional advertising is a market penetration strategy using various forms of advertising on various fronts. This strategy will help businesses reach the target audience widely as well as increase consumer awareness of the brand.

However, businesses should note that the campaign, whether large or small, needs to be planned in detail and methodically. Because a sketchy advertising campaign, not taken care of carefully, it will be easier for competitors to "destroy" and dominate.

Some commonly used advertising methods are: Banners, signs, advertisements in print newspapers, television, the media…The marketing department of the business should use innovative and innovative marketing techniques to increase the effectiveness of the advertising campaign.

Market Penetration Strategy – Market penetration: Creating barriers to entry 

A smart brand will know how to take advantage of available resources or find things that can be done to make products/services more unique and different. As a result, enterprises will build barriers to entry with competitors and dominate the market.

Understand risk and growth 

When a business launches a new product into the market, there are two possible scenarios: success or failure. Entering a completely new segment of the market always carries unexpected risks. Therefore, understanding the product and the market is the key to deciding whether the business operation of the business will be smooth and convenient.

Understanding the product helps to reduce risks for businesses
Understanding the product helps to reduce risks for businesses

Make differences 

In today's fiercely competitive environment, to win, you must have a completely different product strategy and approach. Because a sales strategy that is not improved and repeated continuously will not bring good results and hinder the development of the business.

Therefore, you need to change your mind and modify your Market Penetration strategies – enter the market as needed. By creating and adding value to your products, you increase your business' chances of success.

Market Penetration Strategy – market penetration: Strategic alliances and cooperation 

Strategic alliances are companies and organizations that share the same target market and sell similar products/services. The purpose of a strategic alliance is to create common interests in order to increase competitive advantage over competitors who are not in the "alliance group".

Strategies for cooperation and alliances between businesses
Strategies for cooperation and alliances between businesses

Instead of growing from within, collaborating and aligning with industry players will help companies achieve their goals faster, easier, and with less risk. In addition, this strategy also brings many other benefits such as:

  • Access to a wider market
  • Access to a variety of distribution channels
  • Access to new technology 
  • Benefits from economies of scale
  • Minimizing the risks and costs of a new strategy or product
  • Increase the level of trust

Steps to develop a new market entry strategy 

Building a Market Penetration strategy - entering the market
Building a Market Penetration strategy - entering the market

Entering a new market is not easy, even for businesses with strong resources. So, before entering any market, you also need to build a scientific and reasonable strategy. Here are eight basic steps to building a successful market entry strategy:

  • Step 1: Research the market size 
  • Step 2: Determine market segment
  • Step 3: Select the target market
  • Step 4: Product positioning
  • Step 5: Pricing the product
  • Step 6: Choose the right penetration strategy
  • Step 7: Marketing to increase market share
  • Step 8: Survey customer feedback and improve the product


Scaling up and optimizing profits is the goal that every business is aiming for. And the Market Penetration strategy - market penetration is what businesses need to implement to increase their competitiveness and dominate the market.

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