Posted on : 2022-11-20 20:03:37
Article : Good morning, Monday Management solution for TASK 217- 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.
Everyone wants to discover what other companies have done successfully. And see what’s possible, across channels, growth processes, “growth hacking”, and growth teams. But uncovering hidden growth opportunities takes time, effort, analysis, and constant testing. Now let us see few examples of market penetration with respect to service sector. They are Etsy and Spotify.
1.Etsy on growth market story- From June 2005 to 2022, craft super seller Etsy went from a concept to nearly 14 billion in sales (in 2021), including more than 4 million sellers and almost 40 million active buyers. Now, Etsy is a publicly-traded Nasdaq company (ETSY) with a $13 billion market cap. Craft sellers were aggravated that eBay was so cumbersome, stingy, and seemed to lack care for sellers, this gave an opportunity for a needed change. These factors created an environment that was supercharged for a platform like Etsy. A marketplace is unique because it requires both buyers and sellers to be successful. Without awesome products, there would be no need for buyers.
The founders went to every artisan flea market and craft fair to introduce them to the craft-specific selling platform. Etsy was able to tap into a rise in the craft industry fuelled by a renaissance of handmade crafters. Some of these early product creators had built an audience but hadn’t interconnected or listed their items through an eCommerce platform. Growing Organically, Etsy only pays for around 2-7% of their traffic. This “grassroots” growth comes from getting out of the way of their sellers. With 150 third-party apps and sellers who are empowered to grow their own business as they see fit, getting out of the way has led to the exponential growth of both sellers and buyers.
Since its IPO, Etsy has continued to grow rapidly. Now, growth comes primarily through experimentation and a growth marketing strategy handled by teams of people. Split testing, coming up with experiments, breaking down features, and changing small elements to gauge usefulness and user response has fuelled growth. The key takeaways from Etsy would be, promoting the company through physical events to public and figuring out ways to empower users to become brand ambassadors is a key to long-term and sustainable growth. Large amounts of growth are possible at every level. Strategies may change, and teams may grow, but organized experimentation, failing fast, and setting up processes will help one to succeed.
2.Spotify. A probably heard name and is likely one of the 406 million users. The company was valued at $10 billion in just six years on the market. Now, it’s publicly traded with a more than $20 billion market cap. This story is incredible.
Music is a giant industry, and the competition could not be tougher. However, there was a gaping hole in the market. Spotify launched in the U.S. with the simple, yet powerful difference of all the music you want for a low monthly fee. From a per album and track pricing method to unlimited is almost the definition of disruption. Growth was immediate.
There were other services, but with no options. These early versions were more like radio and lacked the ability to create a soundtrack to your life. Spotify allowed people to be in control of their music, a feature that many would pay for instead of being fed music. The premium model is one often used to help disrupt industries. Spotify does this by delicately placing ads and limiting features as not to upset users or be classified as pirating (70% of ad income goes to song rights holders).
Before launching in the U.S. in 2011 (partnering with Facebook which was another huge proponent to early growth), the company beta launched and then officially launched in multiple European countries. These tiered releases allowed them to hone their message and buyer personas. Launching in the U.S. caused Spotify to explode, increasing web traffic well over a million visitors a month within four months’ time. Their partnership with Facebook and integrating with the social network garnered another exponential growth session gaining 1 million new users within one month.
End point- 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.
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