Spinta Digital

What is Market Penetration Strategy, And How Do You Optimally Utilize It?

Nobody starts a brand to see it lose momentum or market share to its competitors. While it may be a silly statement to pass, several brands do make some basic mistakes in their chosen market. Also, an important point to be noted here is that, at times, the mistake need not be regarding what you do. But rather, what you aren’t doing obstructs your company’s growth.

This is exactly where a market penetration strategy comes into play. Now, think about the massive brands and the traits that they have in common. The answer is simple. They keep increasing their market share and continue to seize the opportunity. However, the process that they go through need not be as simple enough because even after reaching that pinnacle in terms of achieving success, it requires a constant growth strategy.

So, this blog will explore in detail the market penetration growth strategy and also elucidate some of the best practices that top brands follow to retain their market position.

Without further ado, let’s dive right into it!

What Is Market Penetration?

When you browse the internet, this term has numerous meanings, definitions and several different brands’ two cents on it. But we can look at it from two different perspectives: 1. The Theoretical Sense: On paper, a brand calculates its market penetration rate to gain an overall sense of the market and the percentage of consumers that buy its products/services. 2. The Literal Sense: In the most literal sense, market penetration is the effort that is undertaken by a brand to overtake its competitors and gain a larger share of the market.

Simply put, market penetration is the percentage of products and services sold by a single brand in comparison with the total market. Irrespective of whether you are a new or a well-established brand, it is important to calculate the entire market size and estimate how much of the pie you own.

The Market Penetration Rate

In case you want to calculate how much of the market share is yours, you can do so by using this simple formula:

Market Penetration Rate = (Number of Customers/Size of Market) x 100

For example, say around 100 million people are living in a city out of which 20 million of them own Samsung products.  So, Samsung’s market penetration rate would be 20/100 x 100, which is 20%. So, theoretically, the remaining 80% or 80 million population is still up for grabs.

In case you’re looking for a ballpark figure, a market penetration rate that is from 2% – 6% is considered to be above average, and a good penetration rate falls somewhere between 10% and 40%.

So, it is natural that businesses aspire to above average or good market penetration rates, and having a higher penetration rate without a doubt reaps monetary benefits quite instantly.

However, before we get down to the best practices to nail your market penetration strategy, you need to understand the difference between market penetration and market share.

Market Penetration V/s Market Share

While both the terms are used interchangeably by many, it is important to understand that Market Penetration varies largely from Market Share. To cut a long story short, market penetration denotes the percentage of a given target market that buys the brand’s products/services, while market share is the portion of the total value of a market captured by a brand.

The Best Practices for Hammering Your Market Penetration Strategy

1. Leverage Dynamic Pricing

We have seen several online retailers engage in a price battle, attempting to persuade customers to buy their products and services at the best price. However, even when you decide to sell your products at the lowest possible price than the market average, it is difficult to keep up with the rise and fall of online prices on any given day.

When you deploy dynamic pricing for your products, it allows for pricing automation. This means that irrespective of the complexity or size of the given product/service, the software constantly analyzes the market and sets the price to deliver actionable intelligence.

2. Make Distribution Channels A Part Of Your Penetration Strategy

In today’s digital world, it’s all about how well you distribute your marketing collateral to the right audience at the right time. For instance, in case your brand’s sales are heavily dependent on your retail store, you will have to consider other channels like email marketing or social media marketing, and even telemarketing to stand taller than your competitors and sink your teeth into the larger share of the market.

3. Be Target-Specific

Depending on the nature of your product or service, you need to target specific demographics so the right people see your ads. For instance, in case you’re a sunscreen brand, targeting a sunny region such as Chennai will have a more impact than say, a cool and breezy Kodaikanal. So, it is vital to target the location in need of your product/service which would lead to a further surge in use and thereby an increased sale in that region.

4. Enter New Demographic Markets

Once you have penetrated your chosen target market, it is now time to widen your horizons. So, if you have penetrated enough into your market with well-placed ads and targeting, following the same strategy for different regions might not be a wise move. This is because it’s more likely that the region that you are targeting speaks a different language, and to connect with them on an emotional level, you need to hit the right chords.

For example, CNET, an American-based media website entered the Hispanic market by partnering with Latin World Entertainment which was founded by the well-recognized Hollywood Superstar Sofia Vergara. So, by nailing the vernacular right and by partnering with influencers to that your audience will relate, you can enter newer demographics with zeal.

5. Create and Recruit Advocates Who Vouch For Your Brand

No matter the medium that you choose to promote, word-of-mouth marketing remains at the top of the marketing food chain. This is exactly why many brands have exclusive memberships/referral programs. So, these advocates are already in love with your brand, and they will serve as your brand ambassadors among their family and friends, thus helping your brand penetrate a larger share of the market.


It is needless to say that eCommerce retailers do not necessarily need to recreate the wheel in terms of marketing channels. It has already been well-established and you have a roadmap in hand. But one question that still lingers in many business leaders is, “how do I compete with a Goliath-like Amazon?” The answer here is simple. You need to understand your market penetration rate and develop the best possible penetration strategies to gain a larger share of the target market.

Want to transform your brand by penetrating new and diversified markets and stand tall as a leader in your chosen industry? Get in touch with us today!

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