Market penetration (existing markets, existing products)
Successful managers comprehend that if their company is to expand and remain competitive in the dynamic business environment, they cannot stick with the mindset of “business as usual” in the long run even when things are going well within the organization. They must find new ways to reach new clients and increase sales, revenues, and profits. There are various options available such as opening new markets, developing new products or market penetration. Ansoff Matrix can be used to know which strategy will work best for our organization, to help the managers devise the most suitable plan for our situation, and to think about the possible risks of each option. For our existing products, market penetration would be the best strategy. When our company enters the markets with its present products such as Surfboard, Foils, Bicycle, and Skies, it is referred to as market penetration. This is carried out by taking part in the market share of the rival companies. Other ways of penetrating the markets may be to get current clients to utilize more products or to find new customers for our goods. Market penetration is viewed as a low-risk strategy that we can use to grow and expand our company. It is the safest of the five options as here, the business focus on increasing sales of its existing products in its current markets. The markets hold few surprises for the business entity, and the stakeholders know the products work.
The market penetration strategy will enable the company to increase sales of its existing goods in the markets and therefore increasing our market share. It involves minimal risks, and therefore management of the company can think about using this option. To do this, the organization can attract clients away from our rival companies and/or ensure that our clients purchase our present goods more often. Our business entity can achieve this by reducing the price, increasing promotion and distribution support, modest refinements of products, and the acquisition of a competitor in the same markets. This implies that the corporation will be able to increase sales of existing products on the current markets more than their competitors. The market penetration involves an evaluation of how present offers of the firm can be sold in the existing markets or how to expand the current markets. Our company will have to offer improved quality services than the rival companies to gain and sustain the competitive advantage in the market. The business will accomplish this by creating various customer segments and offering each section with goods and services that meet or even exceed their demands.
The market penetration strategy will enable the business to grow faster. The market penetration is the most effective strategy to use because our marketing and business objective is to expand our customer base. When we offer better prices than our rival companies, luring out the customers will be easier than previously anticipated. Subsequently, faster growth is heavily related to relatively low rates. It means that the more reasonable the prices are, the more rapid the growth of the organization as it will make more sales and therefore earn more revenues and profits. Besides, the strategy will also enable the business to gain economic advantage. Indeed, if the development of industry goes the way we anticipated and hoped, market penetration can bring cost advantages. Low prices, which assure the growth of client base implies that the company can increase the quantities of products ordered from the vendors that shall lead to higher profits earned from the low prices. Moreover, our company can risk more and initially purchase products in bulk and for discounts and then execute the market penetration strategy. The option will allow our organization to combat competition. Combating our competitors is one of the excellent parts of market penetration. Imagine the company has competitors who are attempting to transform and expand; they are robbing clients from our firm which lead to lower revenues and profits. Therefore, if the business entity is still willing to remain as the leader of the market, the only option it has is to outplay the rival companies. For example, low upfront prices shall force our rivals to change to other alternative options with different regulations of prices. This manner, our company shall attract the lost customers, and it will place the competitors on the edge or defense of quitting the market.
It may result in a fast diffusion and adoption of the products of the company in the markets. If the products of the organization are reasonably priced, and of the same quality to the competitors, our goods will spread out into the markets and be bought by clients quickly. This may create goodwill among the initial clients who buy the products because of the aggressive pricing and establish customer referrals as well as strong customer loyalty. Efficiencies are encouraged due to thinner margins of profits because of the dynamic pricing. Capabilities shall be required to sustain profitability. It could discourage rival companies from entering the markets. In case there are high turnovers of products for distributors because of quick sales, it may assist establish enthusiasm for our products from the distributors of the products, like the wholesaler.
