Market penetration is measured as the percentage of the target market that uses a specific product or service. It can be calculated by dividing the number of customers who purchase a product by the total size of the target market. For example, if a product has a market of 50 million people and 10 million have purchased it, the market penetration would be 20%. Market penetration strategies aim to increase a company's market share by lowering prices to attract more customers. This can lead to higher sales volumes and reduced production costs. However, these strategies also carry risks like damaging a company's brand image if not implemented carefully.

1. MARKETING PENETRATION-3
Market penetration is the exact percentage of the target market that consumes a
specific productor services. Marketpenetration could also be a stellar measureof
the company's sales percentageof all it’s a productit sells. Companies produce
goods and services for a specific population or with a potential market in mind. In
a broad’s point of view, marketpenetration is the measureof individuals in the
target market who consumesomething versus thosewho actually don’t. For
example, if a company determines a productnamed XYZ which has a marketof 50
million people and of those 10 million have already purchaseit, then product
XYZ's market penetration percentage is 20% (1,00,00,000/5,00,00,000 =0.20).
Market penetration could also be represented as the percentage of a company's
sales versus the total sales for a specific product. For example, if all companies
that produce products similar in nature to XYZ, which have total sales of 5 crores,
and company ABC's sales are equal to 1.5 crores, then company XYZ's market
penetration would be 30% (1.5 crores /5 crores = 0.30). In this series of articles
we will tell you everything you need to know on marketpenetration, and since
this a very vasttopic there will be 3 articles on this.

2. In the previous article wesaw efficient tips to help your productpenetrate the
market efficiently, now lets see in depth what are the pros and cons of the market
penetration.
Pros & Cons of Market Penetration Strategies
The Market penetration strategies make the benefits at a reduced prices to
upsurgethe products demand in the market and increaseit’s market share. As the
demand for your productincreases, your business by saving money on the
productmanufacturing the costs due to the larger volume of the production.
Market penetration strategy isn’t going to work for all the products and all types
of businesses. So, somecompanies could utilize the different marketing strategies
than the normalcompanies to be more effective.
Following are some advantages of practicing market penetration strategies: -
SwiftGrowth –
If the aim of your business and marketing activities are to expand your whole
customer base, then marketpenetration is the exact remedy you would require.
When you proposea lower prices than your rivals, this helps you to tempt their
customers becomes possibleand you receive what you expected. This sortof fast
growth is heavily dependent upon the lowering of prices. The more rational these
are the better will be your chances.
Cost-effectiveness –
Certainly, it’s also reasonableto say that the penetration which leads to better
cost-efficiency. Marketpenetration can lead to cost advantages if your business
processes go in the manner as you anticipated. By keeping low prices, you ensure
that customers stay with you and it also means that you can order more quantity
of products fromyour suppliers thateventually results in higher profitfigures.
This is why certain companies take the much risky route and the buy products in
bulk due to the discounted prices and then they implement the penetration
strategies.
Contest Competitors –
One of the most challenging segments of the market penetration strategies is to
combat with your rivals. Justtry to imagine, you have plentiful competitors who

3. are desperately trying to evolve and slow you down and are stealing your
customers which results in lowered profits for you. Now following the rule of
survival, your only way out is to fight and defeat them to stay at the top. For
example, low initial prices will force your competitors to move to alternative
strategies with changed market penetration pricing regulations. By this way, you
will appeal to the lost consumers and it will render competitors on the defensive
or leaving the market altogether.
Now, let’s look at some of the disadvantages of market penetration strategies: -
Unachieved Production Costs –
Lowering the productprice as you will is not always possible. Sometimes,
products arecostly to manufacture, and tiny businesses find it difficult to survive
while producing sufficiently to lower the production and price. This becomes
more complicated when you have to deal with competing firms. Under such
circumstances, it’s best to focus on the marketing campaign, productpackaging
and enhancing public image because these have the same potential having a low-
price structurehas.
Missed Chances –
Some firms who produceluxury products commit the silly mistakeof marketing it
as an inexpensive item. Hence, customers who adores the luxury products which
would avoid being marketed as an “inexpensive item.” Thus, if you’re
concentrated on making the luxury products, then do consider that the low prices
may makeyour sales thinner and the productmight even fail in the market
because of it.
Bad Company Image–
When your company has numerous productlines that also include a luxury line
then, adopting a market penetration strategy would certainly be adverse. For
example, if you applied a particular market penetration strategies for one
particular product, it might badly reflect on the remaining productlines.
Therefore, if a big number of customers get familiar with your cheap product, it’s

4. highly likely that they would forgetthat you also produceluxury items and your
brand’s status as a luxury manufacturer will disappear.
Lack of Results –
Market penetrations are strategies which aren’t going to work at a place where
prices are previously set low. For example, when prices are previously setlow,
then consumers havealready built trust on an existing company, and thus
entering that marketand attempting to beat the competitor would be a highly
ineffective venture, or you should penetrate the market by setting a price even
lower which may cause an initial lose but would help you earnest some clients.
Yet, a new company should focus on gaining its worth in the business, by trying to
create low prices of products.
In the above article, we’vetried to showcaseseveralmarketpenetration
strategies. However, such tactics will be applicable best when you makeuse of
multiple ones together. The increase in reach of your productshould be
accompanied by a subsequentincrease in your promotions. After increasing the
promotion, you are bound to grow the productusage and on the other hand,
attract competition fromyour rivals.