Every business operating all around the globe enters the market with the common objective of being the king of its market. Every company wants its industry to be known by its name all around the globe. Let us comprehend this with an example, which is the first company that comes into your mind when someone mentions the EV industry? Certainly, the majority of the answers would be Tesla because Tesla has a 14% market share which states that Tesla has the largest market share in the EV industry. This implies that Tesla is successfully implementing market penetration strategies and is successfully capturing the EV market.
However, now the question arises what exactly is market penetration and what strategies of market penetration are most effective that can assist businesses?
To define, market penetration is an effective indicator that can assist in measuring the number of company products sold in comparison to the total number of products sold in the market. The larger number of products sold the better share of the market a company holds.
Furthermore, market penetration strategies refer to the actions taken by the company in order to enhance its market share effectively. Besides, when a company increases its market share, it leads to more profitability and better revenue.
Hence, this blog highlights some of the foolproof market penetration strategies that can assist the company in maximizing its market share. So, let us delve deeper into the blog without any further ado.
7 Successful Market Penetration Strategies for Businesses
- Enhance Brand Authority
Getting a maximum share of the market means selling the largest amount of products to the target audience. To make that happen, it is essential for your customers to know and trust you. Hence, one of the effective strategies to gain the trust of the audience is to make them aware of your brand.
Having said that, it is essential for companies to boost their brand authority in the market. It can be done effectively through marketing and both traditional and digital marketing methods. You can either engage your internal staff for your digital marketing needs or hire a digital marketing agency. Working with a great advertising agency like Whitehat, a Digital Marketing Agency London, means that you can leave the complex marketing strategies and analysis to them and concentrate on the rest of the business.
Traditional marketing methods can include promotion through
- Billboards
- Pamphlets
- Newspaper advertisements
On the other hand, digital marketing methods comprise
- Social media
- SEO
- Email marketing
- Short Videos
- Podcast
A positive brand reputation will make your company or brand more reliable and authoritative. This will assist in attracting and retaining customers and eventually will lead to better sales and revenue generation. The more loyal and large number of customer companies has the possibility of gaining maximum share of the market.
- Master Cost Leadership
Cost leadership is one of the most important strategies that can be implemented for growing the market share of the company. A company masters the strategy of cost leadership when they emerge as the lowest selling price company in its product category.
In this strategy, companies can offer multiple pricing offers, discounts, and referral codes to attract customers. The pricing of the product can be reduced by cutting the cost in various operations of manufacturing such as packaging, distribution, and product manufacturing.
However, the companies need to make sure that they should never lower the price below a certain level because it can create suspicion among the customers about the quality of the product or service. In addition, a company also has to make sure that while cutting the cost from the operations, it should never compromise the overall quality of the product.
Besides this, when a company emerges as a cost leader among its competitors, it attracts new customers. This can further enhance the conversion rate and revenue of the company which can contribute to achieving the maximum share of the company.
Some of the successful companies that are enjoying cost leadership all across the globe are Walmart, IKEA, and Amazon.
- Improvise your products
Seth Godin correctly said Don’t find customers for your products, find products for your customers. Highlighting this quote brings us to another effective strategy of market penetration. To elaborate, in order to gain the maximum share of the market, companies can constantly improve the efficiency of their product and service to attract new customers.
In order to improvise a product, a company can effectively conduct a gap analysis to find the key areas that require improvement. After conducting a gap analysis, required transformations can be done in order to increase the efficiency of the product.
If the identified gaps are filled efficiently, it can lead to attracting more customers to the brand which will contribute to the overall enhanced profitability of the company. Moreover, the increased number of customers will reflect a better market share of the company.
- Improve and Increase Distribution Channels
Distribution channels play a crucial role in determining the overall business efficiency of the company. It can also assist in increasing the overall revenue of the company because the more distribution channels a company has, the easier it becomes for the company to reach out to the previous or new customers.
For instance, in the contemporary world, sales through online platforms are increasing worldwide. People are now preferring to buy online rather than going for traditional shopping methods. To validate, as per Statista, 80% of the consumers shopped online in the year 2020.
Having said that, in the contemporary world, people are now becoming more comfortable because of the flexibility of time and place. Hence, in order to gain the maximum market share, companies are increasing and improving their distribution channel both online and offline in order to be more widely available to the consumers.
Moreover, Companies can also expand geographically and reach out to the customer through traditional shopping channels. This will assist in improving the customer experience and will also enhance the profitability of the company which will increase in capturing the maximum market share.
- Enhance Your Competitive Advantage
Every company has its own unique selling proposition that makes them different from its other competitors. Those USPs give them a competitive advantage over all other competitors operating in the market. Crucially identifying the competitive advantage through conducting research or analysis can assist in strategically planning the ways to boost them.
Multiple management tools and frameworks such as PESTLE, SWOT, or VRIO analysis can be effectively utilized to comprehend the macro and microenvironment of the company. Identified insights can effectively be utilized to find the comparative advantage of the company.
Once the competitive advantages are identified, companies can effectively boost those competitive advantages in order to gain new customers and a higher share of the market.
- Plan Strategic Mergers And Acquisitions
Mark Zuckerberg’s way of business is a perfect example of ‘when you can’t beat your competition, just buy it. Moreover, it is one of the most powerful strategies in order to enhance the market share of the company.
Mergers happen when two businesses decide to come together in order to reach each other’s target audience and gain a higher capital in the market.
On the other hand, acquisition is the strategy in which a company buys the major share or all the shares of the other companies in order to have more control over the competitor’s business. Just like Metaverse formerly known as Facebook acquired Instagram and Whatsapp to gain a larger market share of the social media industry.
It is not essential that companies have to acquire their competitors because it may not be possible all the time. However, companies can focus on buying small businesses that can increase the efficiency of the business. Moreover, it will also assist in capturing a larger share of the market.
- Improve relationships with current customers
The customer experience is one of the most crucial pillars that define the success of the business. Hence, it is really crucial for companies to constantly work on their customer service in order to acquire and especially retain customers. Moreover, nobody can deny the fact that retaining old customers is as important as attracting new ones.
The reason is that old customer can assist in developing the positive reputation of the company through word of mouth publicity which will assist in acquiring the new customers.
Moreover, existing customers trust you more than the customers who still have to try your product, and old customers are more likely to purchase from you in the future. This will lead to enhancing the overall growth and revenue of the company. To validate, as per Invesp, the probability of selling a product to an existing customer is 60 to 70%, whereas, on the other hand, the probability of selling to a new customer is just 5 to 10%.
The equation between customer relation and market penetration is simple: better customer relations means more satisfied customers. Furthermore, more satisfied customers mean better retention and a better reputation. Finally, a better reputation will attract more customers. Hence, all these together will collectively contribute to the enhanced market share of the company.
To encapsulate, implementing market penetration strategies is not rocket science for companies. The need is to effectively understand and study the market which will assist in getting solid insights into getting control over the market. Moreover, the given above-market penetration strategies will effectively assist you in strengthening the core competencies of the companies. This will further assist you in accruing the maximum share of the market
