Penetration Rate

Definition

The penetration rate is defined as the number of people. who buy a specific brand or category of goods. at least once in a given period divided by the size of the target market population. In other words, the penetration rate is a measure that determines. what share of the total potential. market a brand or product has obtained.

What is the difference between penetration rate and market share?

The difference between the two can be better understood by giving an example:. If we assume that out of 10 consumers willing to buy dairy products,. 10 people will buy a dairy product from brand X and 9 people will buy a dairy product from brand Y. Regardless of the number of products purchased,. brand X has 100% penetration rate and Y brand has 90% market penetration rate. On the other hand, if out of 100 products sold in the dairy market,. brand X has sold 60 products and brand Y has sold 40 products,. then brand X has a market share of 60% .and brand Y has a market share of 40%.

Types of penetration rates

Market Penetration: market penetration = (number of consumers or number of products sold / total number of target people) x 100

Brand Penetration: Brand penetration = (customers who bought from a brand / total population) x100

Penetration Share = (customers who bought from a brand/customers who bought a product from a category) x100

For example, the size of the hand and face cream market is 200 million young women, and a beauty brand has sold 12 million of this hand cream; The brand penetration rate is calculated as follows: (12 million / 200 million) x100 = 6%

What is the market penetration strategy?

Market penetration strategy is one of the four business growth strategies. identified in Ansoff’s matrix. The other three strategies are market development strategy,. product development strategy, and diversification strategy. The goal of the market penetration strategy is to increase the penetration rate. of a brand in the market and attract the majority of the market. And it refers to the time when the company tries to have more market share. for a certain product or service. Opening new distribution channels,. changing prices, selling in new areas, partnering with competitors., simplifying the purchasing process and product optimization. are strategies to increase market penetration.

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