When a company decides to enter a new market, it's essential to use market penetration strategy. The aim of market penetration is to effectively use your product, enter the market as quick as possible and seize a large market share. Furthermore, market penetration is frequently used a measure to determine, whether your product or a service is capable of capturing a fixed percentage of the market.
Although market penetration strategy doesn't make any radical changes to the firm's corporate marketing strategy, it has an unbelievable potential to grow profitability and revenue. Also, if a business plans to increase market penetration, it's important to implement certain tactics & strategies that will increase your …show more content…
For instance, if we use an effective marketing strategy that will increase product awareness in certain areas it'll result in higher product consumption that will also increase market penetration.
Advantages and Disadvantages of Market Penetration Strategy/Pricing
Market penetration strategy takes advantage of low prices to increase product demand and increase market share. While the demand is increasing, the organization saves money on product creation costs due to the greater volume of production. Though, market penetration strategy doesn't work for all products and businesses, so some companies use different marketing strategies that seem to be more beneficial.
Advantages of Market Penetration Strategy
Fast Growth - If your business and marketing objective is to enlarge your consumer base, then market penetration is the most effective way to act. When you offer better prices than your competitors, luring out their customers becomes easier that previously expected. Consequently, fast growth is heavily linked with low prices, and the more reasonable they are, the higher the impact will …show more content…
Imagine, you have numerous competitors that are trying to evolve and progress, they are stealing customers from you that results in lowering your profits and revenue. So, considering that you're willing to stay as the market leader, the only choice you have is to outplay them. For instance, low upfront prices will oblige your competitors to shift to alternative strategies with different price regulations. This way, your company will attract the lost consumers and it'll put competitors on defense or the edge of leaving the market.
Disadvantages of Market Penetration Strategy
Unmet Production Costs - It's not always possible to lower the product price as you will. Sometimes, products are expensive to create and small businesses tend to struggle while trying to produce enough to lower the production and product price. It becomes more complex when competing with large firms. Under these circumstances, it would be wiser for small companies to focus on product packaging, marketing campaign, and public image because it has the potential to be as effective as low prices.
Missed Opportunities - Brands that produce luxury products often make mistakes like marketing it as a cheap item. Customers who love luxury products will definitely avoid the product which was marketed as a "cheap luxury." So, if you're focused on luxury products keep in mind that lower prices might make it