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Market Penetration Pricing

Market Penetration Pricing Helped a Foldable Devices Manufacturer Capture 12% of the Total Addressable Market (TAM)

Market penetration and pricing are two critical challenges for businesses across industries, especially for startups trying to make an impact in a specific region or industry. A market penetration pricing strategy aims to help businesses accelerate product and service acceptance by attracting customers with low initial prices. 

It can be seen as an effective strategy to grow a customer base and stand apart from other market competitors. If you’re looking to improve brand reach using a market penetration pricing strategy, contact our experts to learn how we can help you determine the right prices for your offerings.

What is Market Penetration Pricing?

Product pricing is a critical aspect in marketing strategy development and a key determinant of business performance. Price being a metric that industrial and commercial customers use to judge the value of an offering, it plays a crucial role in impacting brand selection among competing alternatives.

Brands often use a market penetration pricing strategy to determine and set lower prices for their new products and services, i.e., prices that are lower than the optimum price range of a product. Market penetration pricing also helps define a long-range market price to accelerate market acceptance or to increase the existing market share of a brand.

Different Types of Market Penetration Strategies

Market Penetration Pricing

Request a free proposal to learn how we can help you build effective market penetration pricing strategies to capture a fair share of the total addressable market.

About the Client

The client is a leading player in the smartphone industry. With manufacturing units spread globally, the client had a well-established market presence and was one of the most sought-after brands with a growing customer base.

The Business Challenge

Having made its mark in the smartphone industry, the client recently launched a new series of foldable devices. However, the acceptance of the new smartphone did not turn out as perceived by the client, due to which the client wanted to develop a market penetration pricing strategy to attract buyers.

The challenges faced by the company in selling its newly launched foldable devices had prompted them to devise different market penetration strategies aimed at increasing sales and maintaining market position. Therefore, the client wanted to conduct in-depth research using both primary and secondary data sources to analyze the mode of penetration being used for different diversified products sold in the market and strategies helping them attain their existing market position. Using these research insights, the client wanted to develop a market penetration pricing strategy to build a customer base for its new product.

Problem Statement

The need to understand the market penetration strategies employed by players in the smartphone industry will be crucial in creating the marketing strategies of products that the client wishes to launch to conquer markets in different industries. Therefore, identifying the different strategies that can help edge out and survive the competition was crucial for analyzing the market for the new product line.

Our Approach

Our experts conducted in-depth research to analyze the market dynamics, competitor’s offerings, and the client’s overall market penetration strategies. This research aimed to reveal the different modes of market penetration pricing strategies that could benefit the client and accelerate acceptance of the new product.

Infiniti’s three-pronged research methodology aimed to examine how similar products and associated products managed to venture into new markets and conquer the existing markets. Therefore questionnaires and subsequent interviews were a part of the initial phase. Data aggregation, analysis, analysis, and presentation of the data in graphs, charts, and other appropriate forms were performed in the later stages. Data from secondary sources were also used to find conclusive evidence for the inferences to be made from the study.

Request a free brochure to gain exclusive insights into the market penetration pricing strategies that can help you improve brand reach.

Business Outcome

The market penetration pricing strategy devised by our experts helped the client set a low price for their product during the introductory phase. By adopting such an approach, the client was successful in increasing market share and global sales volume. Their objective to reduce production cost was also achieved, resulting in a high ROI.

The market penetration pricing strategy also helped the client to:

  • Capture 12% of the total addressable market (TAM) in the smartphone industry
  • Improve market share
  • Fine-tune their strategy around market penetration pricing, market-entry, product innovation, and marketing

A market penetration pricing strategy is a low-risk strategy when compared to other market penetration strategies and is ideal for businesses and startups that are bootstrapped or unwilling to invest heavily in high-risk growth strategies. It exploits how to brands can drive market share and brand reach in an already thriving market where competing products exist.

Though positioning yourself in a well-established market is a safe bet, it requires robust implementation and execution of strategies around your product positioning, pricing, and marketing to compete and grow alongside existing companies. Infiniti Research can help you analyze markets and develop suitable market penetration pricing strategies to improve market share. Request more info from our experts to know more about our capabilities.

Keys for Success in Building an International Market Penetration Strategy

Venturing into a new market is always a ‘tricky business’. Entering markets overseas where consumers think differently, follow different cultural norms, and speak entirely different languages could prove to be extremely complicated and a daunting task for organizations. For companies seeking to venture into and establish themselves in an already competitive and culturally different market from what they currently operate in, an effective market penetration strategy is a must-have. There are several examples of even some of the top international brands who have failed to garner customer support and establish themselves in new markets despite having a strong brand name and displaying business excellence in key markets of the world. The absence of a strong market penetration strategy is one of the prime reasons for the lack of success.

Having a penetration pricing strategy could prove useful in the case of new market entry. But beyond this, there are several factors that businesses must take into consideration for reaching out to a multilingual and diverse audience. Smart brands do their homework and analyze new ways to engage local customers and undertake promotions that resonate with the audience. Here are some factors to take into account while pursuing a market penetration strategy on an international scale.

An untapped market won’t always be the right one for expansion; there are a lot of variables around brand economics, timing, and more that must be considered. Request a free proposal to know how to identify the right markets to invest in and choose an effective market penetration strategy to successfully establish your business in a new market.

International market penetration strategy

market penetration strategyFocus on demographics

It’s always a good idea to deep-dive into the demographics of a market before formulating a market penetration strategy. Businesses must gain a clear idea of how the market breaks down in terms of age, ethnicity, gender, income, and several broader census categories. Once this is done, brands must hone in on individual regions. Although population across a region are often believed to be homogenous, mostly this is not the case. Varying levels of conformity and diversity can be seen in different regions. Gaining a clear understanding of these diversities can helps brands create a successful market penetration strategy. This will also help brands craft native brand experiences that are personalized and speak specifically to a particular market or region. Consequently, helping to ensure that those messages resonate with the local customers.

Identify target customers

When a brand plans to expand its business into a new region or country, this does not mean that the entire population of that country is their target audience. Once the business gains a clear idea on the demographics of the new market, they easily identify their target customers a build their market penetration strategy accordingly. If the target market size is not estimated, then it would eventually skew the other predictions of the company, making it more difficult for their market penetration strategy to become successful.

If you’re planning to enter new markets overseas, you’re likely looking to leverage market penetration strategy s as a means of gaining a foothold. Get in touch with our experts and learn how we can help you achieve this.

Cost-benefit projections

The feasibility of the market penetration strategy to enter a new market should be estimated. Does the decision make sense financially? Will it net more revenue than the costs incurred? These are some of the key questions that businesses must have answers to before going ahead with the implementation of their market penetration strategy.

Localization

Localizing content and strategies are paramount to resonate and be accepted among local audiences in a new territory. Localization entails layering appropriate cultural nuances on top of content translation. Websites and mobile apps should be revamped to suit the taste of local audiences and are easy to use and understand for them. Any touchpoint of interaction between customers and the brand must be natural and meaningful to the target audience.

Learn more about Infiniti’s solutions for business

Weekly Roundups: Our Pick of the Top Market Penetration Strategies to Improve Profitability

How can companies improve their profits? They can either strive to reduce their cost or improve their profit margins. Achieving any of the two factors is overly challenging, as increasing cost may shoo away the existing customer base and decreasing cost may deteriorate the product quality. However, there is still a ray of hope for companies looking to do neither. Market penetration is another way of improving the company profits. By selling more of the products to new customers in the existing market, companies can increase their revenue stream. In simple terms, market penetration denotes what percentage of people in the target market consume the product. There’s a plethora of market penetration strategy available to businesses to improve their overall business performance. Organizations should carefully pick one these strategies to succeed in the market. Here are some of the top market penetration Request Free Proposalstrategies that you should consider.

Price adjustment

What’s the easiest way to gain more customers you ask? Well, just lower the price of the product temporarily, and people will start buying your product. The price decrease should also take into account the pricing of competitors, as customers will only buy a product if the price is lower than that of the competitors. It is a key market penetration strategy that is almost sure to yield success. However, companies should use this strategy with a lot of care, as overdoing it may have an adverse result and cause losses. On the contrary, increasing the price of the product can help build a perception in the mind of the customers that the product is of high-quality.

Augmented promotion

Another way to make people buy the product is to bombard them with advertisements. Repetition is the key here. People are more likely to recall a brand and make purchase of products whose commercials they have seen in the past few days. Companies should carefully use such strategies, as advertising is expensive. They should know what kind of message to promote, and whom to promote it to. However, such a strategy is used by companies with deep pockets.

Distribution channel

The availability of the product also dictates the sales performance of the company. The idea is to open up more distribution channels so that consumers will have more options to purchase the product. Most new products fail because there are limited channels from where customers can buy. Today, only selling through a retail outlet is not enough. Companies should consider other channels including email marketing, telemarketing, and e-commerce.

Improving product quality

In most cases, the product itself speaks volumes. Many of the great products didn’t require much advertising to push it through. If the product is good, people will talk, and sales will increase. Although sometimes, to improve customer perception, significant improvements to the product may not be required. Communicating the better standard of the product can be enough sometimes. For instance, iPhone promoting its new launch as the best iPhone yet is the perfect fit for this scenario.

Create barriers to entry

A burning question many professionals may ask is how to succeed in the market and maintain the position of a market leader. To do so, businesses should create barriers to entry so high that competition may not think of entering the same market space. They can do so by minimizing variable cost to boost sales. It is equally essential to invest in technologies that give companies an edge over the others.

Strategic alliance

One of the most significant challenges faced by organizations trying to enter new markets is to understand the setup of the market and the consumers. To overcome such a knowledge gap, organizations may enter into strategic alliance with other companies to improve business performance. Strategic alliance may also take place in terms of marketing. For instance, the partnership between Apple iPhone and AT&T allows Apple to sell more iPhones then they usually would have.

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