MARKET PENETRATION

Presented by:
Sharan Raj M
Srishti Agarwal
Sourish Bhattacharya
Mukesh
MARKET PENETRATION

1. Marketing strategy used by a manufacturer

to increase the sales of a product within an
existing market through the employment of
more aggressive marketing tactics.
2. Degree to which a particular product is
purchased in a particular market.
MARKET PENETRATION
 Market penetration is one of the four growth
strategies of the Product-Market Growth
Matrix defined by Ansoff.
 Market penetration occurs when the product
and market already exists .
PENETRATION PRICING
 Penetration pricing is the pricing technique of
setting a relatively low initial entry price, often
lower than the eventual market price, to attract
new customers.
ADVANTAGES
 This can achieve high market penetration
rates quickly.
 It can create goodwill among the early
adopters segment.
 It creates cost control and cost reduction
pressures from the start, leading to greater
efficiency.
 It discourages the entry of competitors. Low
prices act as a barrier to entry.
DISADVANTAGES
 The main disadvantage with penetration pricing
is that it establishes long term price
expectations for the product, and image
preconceptions for the brand and company. This
makes it difficult to eventually raise prices.
 Some commentators claim that penetration
pricing attracts only the switchers (bargain
hunters), and that they will switch away as soon
as the price rises.
 Another potential disadvantage is that the low
profit margins may not be sustainable long
enough for the strategy to be effective.
OTHER MODELS OF
PENETRATION
 Bait and hook model where a starter product
is sold at a very low price but requires more
expensive replacements (such as refills)
which are sold at a higher price.
 Taken to the extreme, penetration pricing
becomes predatory pricing, when a firm
initially sells a product or service at
unsustainably low prices to eliminate
competition and establish a monopoly .
GENERIC PENETRATION STRATEGIES
 Cost Leadership
 Lower costs of production and distribution

 Differentiation
 Unique product or brand

 Focus
 Focus on customer needs in a few segments
OTHER GROWTH STRATEGIES
INCLUDE

 Product development (existing markets, new

products): McDonalds is always within the
fast-food industry, but frequently markets
new burgers.
 Market development (new markets, existing
products): Airtel ,
 Diversification (new markets, new products):
Reliance, Tata etc
PRODUCT MARKET GROWTH
STRATEGIES

Market Penetration Product Development

Old
(increase usage) (new uses)

Markets

Market Development Diversification

New (new users) (new users, new uses)

Old New
Products
MARKET PENETRATION
OBJECTIVES
 Maintain or increase the market share of
current products

 Secure dominance of growth markets

 Restructure a mature market by driving

out competitors

 Increase usage by existing customers

CASE STUDY OF LIFEBOUY
Requirement for market penetration:
 Identifying target market
 Strong distribution channel
 Simple marketing message
 Lesser-priced packs to increase affordability
 Packaging in smaller units and localized design
that attracts consumers
 Convenience of storage while in use
 Thorough knowledge of the psyche of target
market
 TACTICS USED

 Sales promotion- Push and Pull strategy

 Extensive distribution- Target market

 Price- Target market consumer

 Change in packaging
THANK YOU