Crafting a winning market penetration strategy

Expanding your market and increasing sales is a go-to growth strategy. But what are the best techniques? How can you improve loyalty while still captivating new customers?

The first step is to create a good market penetration strategy. That way, you can combine innovation and effectiveness — enhancing your products and better meeting customer needs — to boost your market share and leave your competitors behind. In this post, we'll show you how.

What is market penetration?

Market penetration is the process of increasing sales of a product or service within an existing market. It’s one of the main growth strategies outlined in the Ansoff Matrix, a strategic planning tool that helps organizations make financial decisions.

The goal is to expand market share, either by:

• Selling more to your current customers — for example, through repeat purchases or upsells
• Attracting competitors’ customers to your business — for example, by offering lower prices, better quality, or superior customer service

Why build a market penetration strategy?

A market penetration strategy, also known as a customer penetration strategy, is a way to maximize your business’ presence and profitability in an existing market. Benefits include:

• Increased revenue: Targeting your existing customer base or the same market segment can boost sales without the risk of entering new markets. After all, you already know who your audience is. This strategy is also cost-effective for leveraging existing products and services, avoiding the expenses of developing and marketing new ones.
• Customer retention: Using techniques like promotions and reward programs increases customer loyalty to your brand or offerings. You reduce not only churn but also customer acquisition costs. Keep in mind: Acquiring new customers is often more expensive than retaining existing ones.
• Long-term growth: A strong market presence can enhance brand recognition, making it easier to introduce new products or services to the same market. And it can also serve as a springboard for expansion into new markets, leveraging existing brand equity and customer relationships.

How to calculate market penetration 

Calculating your market penetration rate (MPR) indicates what percentage of the total addressable market (TAM) you've captured with your brand, product, or service. TAM is the total number of potential customers within your market, based on demographics, geography, or industry. 

Here's the market penetration rate formula:

MPR = (Number of customers acquired / Total addressable market) x 100

Let's say your company has 5,000 customers and the total addressable market is 50,000. In this case, your market penetration rate would be:

MPR = (5,000 / 50,000) x 100

MPR = 0.1 x 100 

MPR = 10%

A low market penetration rate means that you have more potential customers and more space to implement marketing penetration strategies. 

How to create a market penetration strategy

Building a customer penetration strategy involves identifying new ways to increase your market share. But first, you should conduct a strategic analysis to understand where you are now and what you want to achieve. Follow this step-by-step guide:

Step 1: Define your target market

Before you storm the market, take a moment to understand the battlefield. Ask yourself:

• Who is your audience? How do they behave, what do they like or dislike?
• What is your current market penetration rate based on the total addressable market?
• Who are your competitors? What is their market penetration rate? What are their weaknesses and strengths?

To map out what your competitors are doing, use Mural's competitive analysis template. Compare your business to others with the same target market and identify what you can do to stand out in the crowd. 

You can also rely on Mural's SWOT analysis template to assess your strengths, weaknesses, opportunities, and threats. Based on the insights gained, prioritize market strategies and action plans that align with your long-term goals.

Step 2: Set clear market growth goals

Outline what your desired outcome is. What do you want to achieve with your penetration of market strategy? Examples include:

• Increase sales by x%
• Improve customer engagement
• Having a x% market penetration rate

To keep your team focused and on track, use the SMART framework to set goals that are, as the name suggests, specific, measurable, achievable, relevant, and time-bound. Imagine, for instance, that you own a coffee shop chain. You could increase your market penetration by reaching goals that are:

• Specific: Increase sales of our signature latte by 20%
• Measurable: Track daily, weekly, and monthly sales figures
• Achievable: Implement a targeted marketing campaign and staff training
• Relevant: Aligned with your overall goal of boosting revenue
• Time-bound: Achieve this goal by the end of the fiscal year

A great way to set goals is to brainstorm possible scenarios and outcomes that you and your team see for the company. And don't forget to map out those goals collaboratively and intuitively using Mural's online whiteboard. 

Step 3: Focus on the value of your product or service

To increase your market share, you need to show your target customers why your product or service is the best choice for them. Here's how to differentiate you from your competitors:

• Highlight cost savings without compromising on quality when compared to competitors.
• Provide guarantees or warranties to reassure customers about their purchase.
• Promote how your product saves time, reduces effort, or simplifies your customers’ lives
• Use case studies to prove the effectiveness of your product or service.
• If your audience cares about sustainability, ethical practices, or social impact, emphasize how your product aligns with these values.

Step 4: Choose your market strategy wisely

Now let's pick a winning marketing penetration strategy. Your options include:

• Cost tactics: Discounts, promotions, and bundle deals are an effective way to attract customers who prioritize affordability. 
• Improved distribution: Partnering with new distributors, retailers, or online platforms can broaden your audience and make your products more widely available.
• Marketing campaigns: Digital advertising, social media, and email campaigns can boost visibility, raise brand awareness, and attract more customers.
• Customer engagement: Loyalty programs, referral incentives, or exclusive offers can help maintain your current customer base and encourage repeat purchases.

Define which of those approaches works best for your company. You can even categorize them with Mural's sticky notes, assigning different groups of colors to different market penetration goals: let's say pink for cost-related strategies focused on improving sales, blue for accessibility for new neighborhoods, and so on. 

Step 5: Monitor customer feedback

When creating a market penetration strategy, you can also rely on information you already have. Make the most out of surveys, reviews, and direct feedback from your customer base to identify their pain points and needs. 

Next, organize all these insights with Mural's feedback grid template and categorize them according to their tone: positive, neutral, or negative. Use that information to improve your product or service and create a better relationship with your target market. And remember: when your clients feel heard, customer satisfaction and loyalty go up.

Customer penetration strategy checklist

To make sure your efforts are on point, check out this handy market penetration strategy checklist:

• Have clear objectives: You outlined what you want to achieve with your market penetration strategy using SMART goals.
• Understand your target market: You know who your audience is and what their needs and preferences are.
• Know your competitors: You assessed your competitors's performance and strategies.
• Have audited your current market position: You calculated your market share.
• Selected the most effective market penetration tactics: You chose market approaches that align with your goals and highlight the unique benefits of your product or service.
• Enhanced customer experience: You simplified the buying process, offered fast responses, and rewarded loyal customers. 
• Monitor your performance: You track your revenue growth and your customer acquisition rates. 

Top 5 market penetration strategy examples

Ready to turn up the heat on your competition? Let these five examples of effective market penetration strategies inspire you. 

1. Competitive pricing

Offering high-quality products or services for a lower cost than your competitors encourages repeat buys and attracts price-sensitive customers. Studies indicate that penetration pricing strategies also help with customer retention, too.

A good example comes from Netflix, which offers low-cost subscription plans compared to traditional cable TV. By providing affordable access to a wide range of content, Netflix attracted millions of customers and built its subscriber base.

2. More accessibility

Easy-access products and services mean they are more convenient, available, and appealing to a larger portion of the target audience. Increasing the number of sales channels or offering faster delivery and flexible payment options make customers more likely to choose your business.

Starbucks is a great example. The coffee chain has expanded its market penetration by opening locations in high-traffic areas like airports and supermarkets. In 2023, there were 38,000 Starbucks stores around the world — a number that keeps growing. Its app also allows customers to order ahead, making it easier to access their favorite drinks.

Adopting new technologies, such as apps, can improve efficiency and lead to overall business growth. And it's also a way to gain a competitive advantage in the market, attracting more customers and expanding market share.

3. Brand awareness

Brand strategies focus on making your brand recognizable, memorable, and trusted by your target audience. It can help increase customer acquisition, build credibility, and differentiate your product or service in the market. 

Nike, for example, invests in advertising campaigns featuring athletes and celebrities to build brand awareness and connect with its target audience. 

4. Discounts and loyalty programs

Customer reward systems are an effective way to:

• Strengthen relationships with existing customers
• Solidify your business space in the market 
• Attract new customers 

Uber Eats, for example, incentivizes users to use the platform more often by offering  restaurant-specific deals and delivery fee discounts, and even save on delivery fees with an Uber One membership. 

Another popular form of loyalty program comes from airlines. Providing points redeemable for flights, upgrades, or other benefits encourages customers to stick with one airline for most of their travel needs.

5. Targeting competitor customers

Capturing your competitor's market share is the best way to have more customers because they’re already familiar with the type of product or service you offer. This reduces the need for extensive education or awareness campaigns.

A good example is Samsung. They target iPhone users by running campaigns like Former Genius highlighting features lacking in Apple devices, such as better camera quality and technology innovations. Focusing on the pain points of Apple's customers made it easier for Samsung to stand out when marketing its new features.  

Unlock new market share with Mural

Mural makes the process of crafting a winning market penetration strategy more visual and collaborative. As a visual work platform, we offer an intuitive workspace to help you outline the tactics that will impact your business the most.

Get started with our feature market analysis template to:

• Identify new customers: Explore potential and target markets, identify needs and barriers, and create a strategy that stands out. 
• Spark new ideas: Explore unique approaches and perspectives for your penetration strategies by thinking together with Mural AI.

• Spread your findings: Mural's integrations make it easier to share your strategies through different platforms — including Google Workspace and Slack — so you can connect with different teams. 

Sign up with Mural to build a powerful market penetration strategy.