Calculate market penetration index












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Market Penetration Simplicable. Market penetration is a crucial indicator as to whether your marketing and sales strategies are working. About the Author With more than 15 years of small business ownership including owning a State Farm agency in Southern California, Kimberlee understands the needs of business owners first hand. Market penetration techniques include any action done for the purpose of increasing overall market share, whether by encouraging consumers of similar products to switch to the company's product or by increasing the amount of the population that can be considered potential customers. In the auto insurance example, while there are 25, licensed drivers, you may only want drivers with a good driving record that have no tickets or accidents. While market penetration focuses on obtaining more customers from those seen as potential customers often those who have expressed an interest in the product category but not necessarily the business's specific product , market development focuses on increasing the number of potential customers. Most commonly, market penetration in this form is expressed as a percentage, calculated by multiplying the current sales volume by , and then dividing that amount by the total sales volume of all similar products, including those sold by competitors.

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The insurance company that is saturated with drivers with clean records may either expand its geographical territory to look for more clean driving records or expand the criteria to people who have only one ticket in the past three years to increase the target market size. Compare your results to averages to see if you are meeting or exceeding your competitors' rates. Market penetration is a measure of the amount of sales or adoption of a product or service compared to the total theoretical market for that product or service. Your local chamber of commerce or Small Business Administration office can help you with smaller geographic data you can use to determine how successful you are.

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The target market should be defined before any marketing campaign. The offers that appear in this table are from partnerships from which Investopedia receives compensation. How to Determine the Penetration Rate for a Business. Market Development to Expand Prospective Market Size At some point, if you are successful at marketing, selling and retaining clients, your company becomes saturated in your market. Most commonly, market penetration in this form is expressed as a percentage, calculated by multiplying the current sales volume by , and then dividing that amount by the total sales volume of all similar products, including those sold by competitors. This can be accomplished with some of the techniques used to increase market penetration, such as advertising and bundling, but it directs the message towards previously untapped market segments.

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Description: Market Economy A market economy is a system in which economic decisions and pricing are guided by the interactions of citizens and businesses. Here's how you determine your penetration rate. The penetration rate is easy to calculate if you know your target market size. Analyzing the Philippines' GDP. How to Determine the Penetration Rate for a Business. Lowering prices and most forms of advertising are done to promote market penetration. Most large industries have national averages for penetration rates. Financial Analysis Market value versus book value. You probably aren't going to sell tree-trimming services to people living in apartments, so marketing to them is a waste of time and money.
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