Using a Market Penetration Strategy to Grow Sales
Are you looking for ways to increase sales within your current market or area? You would be in the majority if you say yes. Most because an increase in sales comes with positive benefits like increased revenue, added brand awareness, and brand loyalty. While some look at massive companies like Google and Apple as able to increase sales on a whim, to truly see growth businesses have to constantly adjust to marketing conditions. This means monitoring current and incoming competitors, and changes to market economies, demographics, and production materials. By doing all this, you are basically developing a new market penetration strategy.
Every Market Penetration Strategy begins with understanding what your current market share looks like. By understanding your market share, you can begin to see where the gaps are in your business plan. The formula for figuring Market Penetration is fairly easy and can be an insightful key performance indicator (KPI). The formula below will express how much a product or service is used by customers compared to its total estimated market.
(Number of Customers / Target Market Size) x 100 = Market Penetration Rate
For example, you are a home services company catering to homeowners/renters of a certain size and cost. You are currently servicing 500 homes. Due to your niche target, you know there are approximately 1000 in your market that fit your preferred audience.
(500 / 1000) x 100 = 50% Market Penetration Rate
A market penetration strategy’s aim is to increase sales of existing products or services within your current geographic market, which would grow your market share. Building this type of strategy can use different tactics in order to grow your market share.
- Attract New Customers with Same Features/Benefits
- Attract New Customers with Reimagined Features/Benefits
- ‘Steal’ Customers from Competitors
These tactics can correspond with your business’s changes in price, promotion, distribution, acquisitions, or mergers. At a high level, there are many ways to develop a tactical market share grab. Below are a few of the approaches we can attempt.
PRICE CHANGE
Changes in pricing are typically noticed by the market. If you are interested in adjusting your pricing, conduct research on all details of your own product or service, as well as, details on competitors’ offerings if possible. Are your products priced higher than competitors? If so, do you have any information about why the product has higher value to the customer? If you are priced lower than competitors, and you still have a loss in market share, you need to evaluate other attributes to your product that could be affecting customer considerations.
REIMAGINE MARKETING
Ideally, reimagining your marketing plan should occur consistently throughout the year. This consistent change will keep the copy and visuals fresh in the public’s mind. Another aspect of a plan change would be targeting. As your customers engage with your business or product through the year, they may change behaviors in viewing habits, online browsing, search patterns, and even attitudes in pricing needs. By altering your marketing to best fit your customers’ needs and attitudes you will be in front of them at the right time and saying the right thing.
PRODUCT DEVELOPMENT
While we are talking about Market Penetration, another aspect of sales growth includes Product Development. As you are reaching out to your customers with surveys or on social media, listen if a new product or feature is needed to enhance customer satisfaction. For instance, Apple launches new iPhones annually with new features. Alternatively, Product Development can also mean your product would align with the needs of another demographic profile. As an example, your furniture store is looking to grow sales in new dining room tables. Instead of featuring them as dining only, you reimagine them as great desks for the new ‘work from home’ workforce.
PRODUCT/SERVICE ENHANCEMENTS
As with any product, customers will have opinions. Your surveys and engagements with the customer should help you better understand likes and dislikes. What are the customers saying about your product? Do they have issues with a fixable feature? Do they need more storage? Would they like more design features like colors? Can your service timing be shorter? Could your service be packaged more effectively?
BUSINESS PARTNERSHIPS
Sometimes the best way to grow is with new friends. In business, partnerships that are mutually beneficial can be exceedingly effective if appropriate for the customer. As you’re building your buyer profile, your research can enlighten you to other customer habits like interests, shopping behavior, sports affiliations, and more. Imagine if your research shows your customers have strong positive feelings towards a local football team, a partnership with the team would be an additional way to connect with customers. Another example would be realty brokers. You’ll often find brokers with multiple real estate agents advertising themselves. Oftentimes, the brokerage will pay the partial costs on the advertising, this is called co-marketing.
MERGERS & ACQUISITIONS
We mentioned earlier that mergers and acquisitions are a form of a market penetration strategy. If you have the resources to purchase or merge with another company, this strategy can be efficient for sales revenue growth. Also, if the acquisition adds complementary products to your store, you can increase your average customer value. For any talks of mergers or acquisitions, you will need to thoroughly research the other business for any red flags or baggage.
CUSTOMER PROGRAMS
As we learn more about our customers, we know that they want certain products or services to be at their most convenient. Loyalty programs or Promotional programs can allow customers to feel rewarded every time they shop with you. You can structure your loyalty program to include discounts, product pre-sale options, or other exclusive offers. These programs give a rationale for your customers to give you further access to personal information details like birthdays, anniversaries, pets info, shopping habits, and more. As an added bonus, this information will boost your customer data and help enhance the overall customer experience.
As a business leader, your development of different strategies is essential to continued growth. A strategy for market penetration will help you dynamically grow revenue within your current market. While we have provided multiple tactics, your business is unique to you due to ownership, location, customer needs, and other factors. If you are looking for a more unique approach to increase sales revenue, we can provide research and creative problem-solving. Whether you are looking at Market Penetration, Product Development, Market Development, or Diversification you can refocus and grow your sales annually with support.