What is Market Penetration?

[Fred_the_frog]

My business book doesn't explain this very well, but is it just basically increasing your market share?

But then if you introduce a new product to increase your market share, then its now called Product Development?

Ahh! A little confused

 

[GraemeL]

Wiki is pretty clear about this and product development, when these words are used to describe strategy.

http://en.wikipedia.org/wiki/Market_penetration

 

[Storage Prices]

Market penetration can be construed quite differently, depending if you are referring to Ansoff's Matrix or just the general use of the term.

In general, it is reasonable to assume market penetration is the act of penetrating a new market.

But Ansoff's Matrix describes it as selling more of an existing product in an existing market.

I often thought whilst I was studying business that the 'market development' and 'market penetration' terms should have been switched in the matrix.

 

[Fred_the_frog]

Market penetration can be construed quite differently, depending if you are referring to Ansoff's Matrix or just the general use of the term.

In general, it is reasonable to assume market penetration is the act of penetrating a new market.

But Ansoff's Matrix describes it as selling more of an existing product in an existing market.

I often thought whilst I was studying business that the 'market development' and 'market penetration' terms should have been switched in the matrix.

Yeah, I'm using the Ansoff's Matrix thing.

 

[GraemeL]

Yeah, I'm using the Ansoff's Matrix thing.

Then if its for a paper or exam, you must follow the rules of the academics!

In real life, Storage Prices is right.

 

[S-Marketing]

Market penetration can be construed quite differently, depending if you are referring to Ansoff's Matrix or just the general use of the term.

In general, it is reasonable to assume market penetration is the act of penetrating a new market.

But Ansoff's Matrix describes it as selling more of an existing product in an existing market.

I often thought whilst I was studying business that the 'market development' and 'market penetration' terms should have been switched in the matrix.

Penetration of a new market in these terms would be classed as diversification. As Fred suggested in his opening post, market penetration is linked to your market share, not necessarily for a particular product, but for your target market as a whole.

 

[Storage Prices]

Penetration of a new market in these terms would be classed as diversification.

Well, either that or Market Development. Depends if it was an existing or a completely new product.

 

[S-Marketing]

Well, either that or Market Development. Depends if it was an existing or a completely new product.

You are quite right. I fear, however, that if we continue this conversation we may just end up confusing matters.

 

[Storage Prices]

Haha, you're probably right

 

[Fred_the_frog]

Thanks for the replies guys. So what do you actually do with Market Penetration? Its a current product in the current market, so what do you do? Just leave it and do as you were doing?

 

[GraemeL]

Thanks for the replies guys. So what do you actually do with Market Penetration? Its a current product in the current market, so what do you do? Just leave it and do as you were doing?

Not quite sure you are on the right track.

Assume you are already making a product, say up market raspberry ice cream. You are selling successfully in the UK and only in the UK. That is your current market.

You could then use your current raspberry product to penetrate a new market, such as France. Your decision would have to be whether or not your current product was appropriate.

It would not be if the French did not like raspberries. In which case if you still wanted to enter the new French market, you would need a new product - maybe a frog flavour!

G

 

[Fred_the_frog]

Not quite sure you are on the right track.

Assume you are already making a product, say up market raspberry ice cream. You are selling successfully in the UK and only in the UK. That is your current market.

You could then use your current raspberry product to penetrate a new market, such as France. Your decision would have to be whether or not your current product was appropriate.

It would not be if the French did not like raspberries. In which case if you still wanted to enter the new French market, you would need a new product - maybe a frog flavour!

G

Thanks, But in Ansoff's matrix thing, it says Market Penetration is having a present product in a present market.

Having a Present product (The ice creams sold in the UK) and putting it in a new market (France) is called Market Development. (According to the matrix) I see what (the user) Storage Prices means when they said these two should be swapped round :/

 

[Storage Prices]

In the matrix, Market Penetration would be the act of selling more of an existing product in an existing market.

Expanding market share, through more heavily promoting your product or extending the usage of your product within the existing market (remember the 'Weetabix Week' campaign? - where they tried to show you all the ways you can eat Weetabix and that it doesn't just have to be for breakfast, or the Special K challenge that attempted to get people to eat the cereal twice a day and not just once?), is really the only thing companies can do whilst remaining within the realms of what Ansoff's Matrix describes as Market Penetration.

 

[Fred_the_frog]

In the matrix, Market Penetration would be the act of selling more of an existing product in an existing market.

Expanding market share, through more heavily promoting your product or extending the usage of your product within the existing market (remember the 'Weetabix Week' campaign? - where they tried to show you all the ways you can eat Weetabix and that it doesn't just have to be for breakfast, or the Special K challenge that attempted to get people to eat the cereal twice a day and not just once?), is really the only thing companies can do whilst remaining within the realms of what Ansoff's Matrix describes as Market Penetration.

Ah, Ok, Thanks. I understand now