Market penetration growth strategy with examples

Business owners want to attract customers, and register massive growth for their startup idea. Many keep themselves busy trying to find the next growth hack in a competitive environment, but few stick to conventional plans of action or proven growth strategies that work. One such growth strategy that has benefitted many businesses is the market penetration growth strategy. 

This growth strategy has helped business owners to increase their market share in existing markets by beating the competition. In this article, we will share examples of a market penetration growth strategy at work. 

What is market penetration growth strategy? 

Growth strategies take the business to the next level through action plans for increasing revenue, market share, or taking the business to new markets. Basically, there are four kinds of growth strategies as per the Ansoff Matrix. 

Source: Wikipedia

The matrix is basically a framework that outlines different growth strategies, used by a business, namely: 

  • Market Penetration: Involves increasing market share in the existing market with an existing set of products:  
  • Market Development: Involves taking existing products to new markets and regions; 
  • Product Development: Involves creating new products based on market research in the existing market; 
  • Diversification: Involves taking new products or services to new regions or markets. 

Out of all four, market penetration is a powerful growth strategy where businesses work towards increasing the sales of existing products. Often considered a low-risk growth strategy, it requires no additional capital investment for product development or entering new markets.

Here are the leading aspects of a market penetration growth strategy: 

  • A company or business focuses on expanding the market share of its existing best-selling products; 
  • Sales and marketing acquire center stage of everyday operations when the company is focused on penetrating markets;  
  • Deep experimentation happens via aggressive promotional campaigns and marketing channels such as social media, influencer marketing, free trials, or giveaway; 
  • Loyalty programs are introduced for existing customers to increase chances of repeat sales; 
  • Upsell, cross-sell, and win-back campaigns are designed to increase average order value. 

Market penetration growth strategy examples. 

Planning for growth is a tricky proposition for businesses that do not have a clear plan for the future. However, Ansoff Matrix provides a decent roadmap for targeting growth without deviating from KPIs that matter. 

Here are a few ways to implement a market penetration growth strategy to capture more market share:

Tweak your pricing strategy.

Companies often reduce the price of best-selling or popular products to attract and acquire new customers. Basically, this is the most common strategy to beat the competition and penetrate deeper into your market. 

Streaming platforms like Netflix are known to use penetration pricing to grab a bigger market share. They attract new customers with a special low-priced deal for the first few months. Once someone signs up, the company nurtures the user by showing contextual recommendations and exclusive shows. After the introductory pricing period ends, the nurtured customer is usually open to paying a higher subscription fee.

The strategy has worked for Netflix well, so far, as it had the highest share in the streaming market in the US at 39.4 percent in 2020. 

Source: T4.AI

Acquire a competitor or complementing business. 

Acquisition is a common strategy to increase market share (and even to enter new markets) for businesses large and small. Every digital startup has aggressively leveraged acquisition to power its market penetration ambitions. 

Amazon is a great example of using acquisition to improve market penetration. It has recently acquired companies like Whole Foods Market, 1Life Healthcare, and iRobot Corporation to improve its market shares. These acquisitions are known to be the largest acquisitions by the eCommerce giant. 

Source: S&P Global

According to Gene Munster, managing partner of Loup Ventures, “ Amazon does acquisitions in areas where they can claim a small market share.”

The recent acquisitions will help Amazon improve the market share of its ventures like Amazon Care, Amazon Home, and Amazon Fresh, along with significant growth benefits for other ventures. 

Improve your distribution network. 

Experimenting and strengthening the distribution channel is a proven way to increase the market share. FMCG brands invest deeply in distribution networks to beat the competition in physical markets. 

Lenskart’s ‘phygital’ (physical+digital) distribution model is one of the best examples of the impact of distribution on increased market share. The eyewear brand from India initially started as a digital-only brand but soon adopted an omnichannel strategy to increase its market share. 

Source: Startup Talky

The company moved from an eCommerce business model to physical store distribution and then to at-home services to delight Indian consumers. Their focus on customer engagement and providing a delightful shopping experience as per their preferences helped them expand to 80+ cities all over India. 

Their digital + physical distribution network and a deep understanding of consumer expectations helped them win a 25% market share in the eyewear market of India. 

Improve the existing product. 

Improving the product based on customer insights and market research data is a great way to beat the competition. Product improvement based on the voice of the customer instills confidence in the minds of the target audience. When this happens, it paves the way for being a ‘customer favorite’ and increasing the market share. 

A great example of penetrating markets by improving the product comes from Coca-Cola. They introduced Diet Coke in the market. However, it was ignored by male Coke lovers, primarily due to the positioning, advertising, and white product packaging.

Source: NBC

The product packaging gave customers a ‘feminine feeling’ from the new product. ‘Gender Contamination’ makes one gender ignore the product as it is appealing to the other gender.

Gender contamination was affecting the market share of Coke Zero. So, Coca-Cola revamped the marketing mix, which started with replacing the white cans with black cans and labels.  

Coca-Cola introduced black cans and labels in New Zealand. Basically, the black color is associated with national sporting teams like the All Blacks in the country. Making this change clearly differentiated the positioning and made Coca-Cola Zero more appealing to the target market, leading to an increased market share.

Power your growth strategy with real-time insights. 

Increasing your market share and getting deeper into the hearts of customers requires a solid understanding of market needs. Evaluating customer insights and the voice of customers using online reviews is a great way to stay in touch with market expectations. 

GapScout scans online reviews, helps conduct market research, and provides deep insights to help you power your growth strategy in real-time. 

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Anmol Sachdeva
Anmol Sachdeva
Anmol is an independent content marketing consultant who loves to write actionable pieces on small business growth, marketing automation, market research, and growth as a solopreneur. Reach out on Twitter.

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