Market penetration is a measure of the amount of sales or adoption of a product or service compared to the total theoretical market for that product or service. Apple has been synonymous with growth and innovation, and its stock reflects this. Through concentric diversification a company that manufactures glass jars for the food industry enters the construction market through the manufacturing of glass bricks. Some businesses even give packages of new products away by, for example, sponsoring events and providing sample packs to attendees. Learn why a company would want to invest This strategy is likely to be more expensive than the market focused tactics and requires more time.
Market Penetration Strategy: Definition & Pros and Cons
If competitors do not sell through one of these channels, a company can gain market share for as long as there is no response to this strategy. Next, look at the risks associated with each one, and develop a contingency plan to address the most likely risks. Pricing Strategy October 30, The profitability returned in direct relation to shareholders' investments is called the return on equity. Some businesses even give packages of new products away by, for example, sponsoring events and providing sample packs to attendees. Learn about the top four ways programmatic advertising is changing media. They currently have signed customers.
Penetration strategy — AccountingTools
Which products do you currently offer, and which new products would you like to offer in the future? It also requires more funding to pay for receivables that are outstanding for longer periods of time. From " Strategies for Diversification " by H. There are numerous options available, such as developing new products or opening up new markets, but how do you know which one will work best for your organization? This strategy requires an aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for smaller competitors. Product development, in the lower right quadrant, is slightly more risky, because you're introducing a new product into your existing market. While this approach is likely to be the most costly, diversification offers a company security and an advantage should it suffer in one sector of the business because it can then rely on another.
In the grocery sector, the Aldi chain has pioneered this approach. This may not work for every market, so you have to know your industry. A penetration price is generally chosen when the marketer's goal is to achieve high market share. Its overall profitability will suffer if it has produced far more than it can sell. The activity or fact of increasing the market share of an existing product , or promoting a new product, through strategies such as bundling , advertising, lower prices, or volume discounts. Extend your product by producing different variants, or repackage existing products. There are several tactics you could use to do this, including loyalty schemes, adding value to the current product, or making alterations to the product that encourage greater use.