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 strategies that you should consider.
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.
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.
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.
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.
For more information on the best market entry strategy, market penetration, and marketing strategies: