DistributionA firm with a high market penetration rate may decide to expand its distribution in order to continue to grow. For example, if an organic juice brand has reached 80% of customers in France it may decide to expand into Germany.
Brand ValueA high penetration rate can be viewed as a problem for brands. This is particularly true for luxury brands that tend to go through a cycle whereby brand value declines with market saturation as a brand loses its status.
PricingA high penetration rate may be an opportunity to raise prices. A low penetration rate potentially indicates your pricing model is broken.
Advertising & PromotionA low penetration rate is often used as a business case for more advertising and promotion. If a brand of toothpaste has only reached 0.05% of its target market, it may require advertising spending.
SalesPenetration rate is important to sales strategy. For example, a sales team that has reached a high penetration rate may need to focus on cross selling.
Target MarketA high penetration rate may indicate that a target market is too small and needs to be expanded with new products, brands or distribution channels. A low penetration rate may indicate that a target market is too broad and a firm may be more successful targeting high yield customers first.
|Overview: Market Penetration Rate|
The percentage of your target market that you sell to in a given period of time.