Posted on : 2022-11-18 02:34:56
Article : Good evening, Friday Management TASK 217- Market penetration is a metric to determine the level of market share gained and the potential for new sales, it could be a new product or existing product into new market.
Market penetration is a metric to determine the level of market share gained and the potential for new sales. Market penetration for companies is typically expressed as a percentage, meaning the company's product represents a certain percentage of the total market for those products. Market penetration is not only used on a global and industry-wide scale to measure the scope and for products and services, but also is used by companies to assess their product's market share. On other side market development focuses on the steps to achieving the gains in market share. Market penetration is both a measurement and an activity. For example, if there are 300 million people in a country and 65 million of them own cell phones, the market penetration of cell phones would be approximately 22%. In theory, there are still 235 million more potential customers for cell phones, or 78% of the population remains untapped. The penetration numbers might indicate the potential for growth for cell phone makers.
As soon as a company enters a new market, it strives for market penetration. The main objective behind the market penetration strategy is to launch a product, enter the market as swiftly as possible and finally, capture a sizeable market share. It is also, sometimes used as a measure to know whether a product is doing well in the market or not. A market penetration strategy is when a company works towards a higher market share by tapping into existing products in existing markets. The technique of Market Penetration usually does not affect the overall marketing strategy of a company, but invariably brings a solid growth potential and an increase in revenue generation. A company trying to adopt the concepts of market penetration must remember to also implement specific plans and tactics to challenge the competitors and boost sales figures. However, it must also be considered that market penetration can be a risky affair and has some disadvantages also.
There are several examples of companies using market penetration to grow their business. Dunkin’ (formerly, Dunkin’ Donuts) was started in Quincy, MA back in the 1940s. Since then, Dunkin’ has become a globally-recognized brand. Dunkin’ has since grown substantially and opened stores in 46 countries — yet, the company’s most-loyal customers remain in New England. In fact, there are 12,500 Dunkin’s worldwide (9,000 of which are in the U.S.) In terms of market penetration, Dunkin’ continues to tap into their large and loyal market by opening and maintaining that large portion of their stores in New England. Boston is a small city, and you can walk between almost all 10 of these Dunkin’ locations in just minutes. Dunkin’ knows where their customers are and that those customers want a Dunkin’ store at every city block. Not only has Dunkin’ successfully penetrated their market by opening and maintaining so many stores in New England, but also increased market penetration by making specific changes to their branding and menu.
Most notably, they changed their name from Dunkin’ Donuts to Dunkin. The company does 60% of their business in coffee and other drinks, so the “Donuts” aspect of their original name was arguably a bit misleading. This move was important because the new name, speaks to the breadth of our offerings. The brand name change also gives a signal to customers that there are several other menu items available, aside from donuts. In fact, the name change was paired with many menu additions, including healthier options as well as offerings for non-dairy and vegan customers including their Beyond Sausage and almond milk. All these changes broadened Dunkin’s customer base and target audience by accommodating more people within the market they were already penetrating.
You too might have come across many products/brands market penetration activity, their success or failure. Post your comments or feedback on this topic for the benefit of career executives or entrepreneurs. Our Management solution for this TASK 217 will be posted on our Good Morning Monday Management solution on 21st Nov 2022.
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