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
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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.
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 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.
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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.