In the previous example, let us assume there exists a premium brand of wristwatches called Xelor. Let us now understand the difference between market share and market penetration. *Market share is defined as the amount of business a specific company controls in a market. Market penetration is a set of activities pursued by companies and businesses that increase the market share* of a specific product or service. When expressed in the form of a percentage, wristwatches have a market penetration of 10%. The formula for market penetration is the number of people who wear a watch (30 million) versus the total target group (300 million).

Let us further assume that among the 300 million potential users, 30 million wear wristwatches. Let us assume the target audience size is 300 million. The potential market for it is significant.

Let's understand this better with an example:Ī wristwatch is a ubiquitous article of daily use. It is the measure of product adoption versus the theoretical market for the product. Market penetration can be one of two things depending on the context. 'Market penetration is a low pricing strategy adopted by companies for new and existing products to attract a larger number of buyers and a larger market share' - (Kotler and Armstrong, 2009) Considering the numerous elements of a marketing plan, in this article, we deal with a specific one from the mix, i.e., Market Penetration. An integral aspect of the aforementioned strategic plan is a marketing plan.Ī marketing plan serves as a guide towards the ultimate marketing objective(s) of a company. Your game plan must be tailor-made to your objectives, industry, and opportunities. It doesn't matter what line of business you are in - whether you run a large technology firm or you are a solopreneuer, you need a game plan. 'For tomorrow belongs to the people who prepare for it today.' Usually, it is applied to merchandise that is selling in a specific geography. Market penetration is the art and science of increasing sales of existing products/solutions/services without changing them.

Penetration pricing