Market Penetration Guide: How to Increase Market Share

Better still, companies can grow market share using the same simple tactic, as satisfied customers frequently speak of their positive experience to friends and relatives who then become new customers. Many of those consumers become loyal customers, which adds to the company's market share and decreases market share for the company from which they switched. Innovation is one method by which a company may increase market share. Higher market share puts companies at a competitive advantage. Learn what market penetration means, why it matters for SMBs and 7 proven strategies you can use to gain more market share.

Once you have your market penetration rate, proceed to implement strategies to improve it. You’ll find the first figure in your customer relationship management (CRM) system and the second in market research reports. Before you can look at increasing penetration, learn to measure your current penetration rate. Small businesses can use the data to improve personalization efforts and keep pace with larger, more advanced competitors.

As more customers adopt your platform, how to win market share it becomes more valuable for everyone and more consumers will be interested in it. You may even enjoy network effects if you’re a community-based B2B business like Slack and G2. You could negotiate better rates with volume discounts to further increase your margins.

How to drive growth and outshine the competition

With an agile business model, you focus on flexible resources that can respond quickly to change, shared responsibility, and action-oriented goals.5 Leveraging that information with data analytics gives you an edge, allowing you to spot market trends and opportunities. For instance, a payroll software company might partner with an earned wage access provider to create a seamless integration.

A culture of innovation and accountability, for instance, encourages employee engagement, which in turn fuels business growth. People are your greatest asset, so investing in your teams can have far-reaching and positive effects on business growth. The key to market penetration is to perform thorough market research, where you analyze the demand, size, saturation, economic indicators, and other factors to identify a profitable option.

Improve product or service quality

Startups and small-to-medium businesses (SMBs) may have less penetration, but can win a larger market share through a solid market penetration strategy. You can use several strategies to increase market share, like optimizing pricing and improving sales efficiency. Increasing market share is an easier growth strategy for small business-to-business (B2B) companies than chasing new territories or innovating new products. Even if your research deliverables are not fully defined yet, we would love to meet with you and discuss how our capabilities can support your success. Freedonia’s experienced in-house research staff are experts in analyzing company sales, estimating market size, tracking industry trends, and calculating market share. A market share analysis incorporates many different pieces of data that may not be publicly available.

Customers recognize your business, products, and unique values in the market, which builds trust, loyalty, and ultimately, growth. Consistent marketing efforts and messaging also promotes business growth and strategy that you can easily manage. Identifying and communicating your unique benefits and features helps new customers understand why they should choose your product or service. Additionally, identifying complementary products allows you to enter new segments or entirely new markets that meet customer needs and increase revenue growth.

Market size refers to the annual volume or value of a product sold, representing the total opportunity available for companies that supply those goods. When you clearly understand the scope of the market, you can accurately determine market size, an essential element for calculating market share. A market share analysis is useful for understanding the size of the total market opportunity relative to company size and a company’s position within the market. Gain a top-tier education with real-world applications at one of the best business programs in the US.10 Contact an admissions outreach advisor to learn more.

• By offering your product at a more attractive price than competitors, you can quickly gain market share and attract price-sensitive customers.
• The site functions to advertise a certain medical procedure, so I can’t speak to any traffic metrics.
• Collaborating with complementary businesses, influencers, or even competitors (in some cases) allows companies to leverage each other’s strengths, resources, and customer base.
• You want to ensure that you’re pricing products appropriately to provide value to customers but not lose out on revenue opportunities to beat the competition.

How Can Companies Increase Market Share?

SMBs with bigger customer bases often enjoy more supplier bargaining power. Now that you know the difference between all these terms, it’s time to learn why increasing penetration matters for SMBs. While increasing product market fit can increase market share and penetration, it’s not a market expansion strategy as it doesn’t increase your total addressable market. Successful market penetration leads to more brand recognition and higher sales without launching a new product or entering a new market. It aims to increase penetration by running targeted LinkedIn campaigns to increase brand awareness and lowering prices to convert more customers.

These strategies for growth help both companies increase capabilities and expand the market reach and customer potential.3 New tech and digital tools also help improve the customer experience, making it easier to interact with your business. Integrating technology into your business gives you big-picture views of your organization, helping you make better decisions.

From there, it’s a case of implementing feedback to improve product-market fit. Once you’ve collected all that feedback, you’ll need a place to store it. Happy customers will tell their friends about a great product, creating organic growth through customer referrals. For example, a software company charges $20 per user for up to 10 seats, with a discounted rate of $15 per user for teams of 50 or more. Pricing is a powerful market penetration strategy that helps you gain market share by undercutting competitors and removing barriers to adoption. Pipedrive’s workflow automation features let you further streamline processes.

A high-touch service accelerates sales processes, increases deal sizes and boosts conversion rates. Instead of trying to sell to everyone, you take a personalized approach that addresses key decision-makers’ unique pain points and goals. Account-based marketing (ABM) is a sales strategy that concentrates sales resources on high-value prospects within your target market. The combination of in-depth research and rapid development helped Superhuman create a premium email experience, valued at $825 million in 2021.

Sales performance improves through consistent measurement, coaching and review. Market penetration strategies like price optimization and ABM can increase market share without the need to launch new products or enter new markets. By creating an ecosystem for third-party apps, Pipedrive accesses new target audiences and markets without direct sales effort. You can reach more of your sales prospects with the help of partner companies and platforms. Sales teams spend more time on the deals that are most likely to convert as a result. It helps teams close more deals in their existing markets with less effort.

A published market research report such as Freedonia’s US Roofing provides company profiles for the top eight companies. These profiles can help you look beyond the top-line data to identify a company’s competitive advantages and understand how it competes in the market. In addition, keep in mind that many companies are not pure players and may operate in multiple industry segments. For private companies, this information is not usually publicized and may only be known by a handful of industry insiders. Because market sizing requires specialized expertise, companies often purchase market sizing data available in published market research reports from reputable firms such as The Freedonia Group, or commission a study from Freedonia Strategic Insights for information on more niche markets.