What is a market penetration strategy? Provide an example of a market penetration strategy and describe how using it effectively might increase a firm’s sales.
Below are 4 discussions to above, please write 4 separate peer responses (one for each) supported by 2 scholars for each. Response to DQ 1…Response to DQ 2…. I would encourage you to ask open ended questions whenever possible such as please explain how that is currently done?
DQ 1
According to the text, “A market penetration strategy involves actions taken to increase the sales of a product or service through greater marketing efforts or through increased production capacity and efficiency” (Barringer, B. R., & Ireland, R. D. 2015). Furthermore, an increase in a products market share is typically accomplished by increasing advertising expenditures, offering sales promotions, lowering the price, increasing the size of the sales force or increasing a company’s social media efforts (Barringer, B. R., & Ireland, R. D. 2015). When launching a business, it is imperative to plan and assess the market entry, as it can make or break the business venture (Dearin, C. 2017). In order to excel, the business must be clear on how they are entering into the market and what the steps are in that process (Dearin, C. 2017). With a clear understanding of the “What” and “How” of the market entry, the business will be able to build credibility and grow within the target market (Dearin, C. 2017).
An example of this is Starbucks coffee, as they emphasize on specialty coffee products (Thompson, A. 2017). Starbucks Coffee uses the broad differentiation generic strategy (Thompson, A. 2017). In this generic strategy, the goal is to make the company different from other competitors(Thompson, A. 2017). It is such difference that makes Starbucks stand out (Thompson, A. 2017).Starbucks Coffee’s main intensive growth strategy is market penetration(Thompson, A. 2017). This intensive strategy supports the firm’s growth by maximizing revenues from existing markets(Thompson, A. 2017).
Starbucks already has presence in 65 countries around the world (Thompson, A. 2017). In order for Starbucks to maximize their revenue and growth the company opens more company owned stores (Thompson, A. 2017).
References:
Barringer, B. R., & Ireland, R. D. (2015). Entrepreneurship: Successfully launching new ventures (5th ed.). Don Mills, Canada: Pearson Education Inc.
Dearin, C. (2017, November 07). Why Your Market Entry Strategy Can Make Or Break Your International Business. Retrieved from https://dearinassociates.com/market-entry-strategy-can-make-break-international-business/
Thompson, A. (2017, January 31). Starbucks Coffee’s Generic and Intensive Growth Strategies. Retrieved from http://panmore.com/starbucks-coffee-generic-strategy-intensive-growth-strategies
DQ 2
Market penetration is “seeking increased market share for present products or services in present markets through greater marketing efforts.” (David & David, 2017. P. 134). An increase in a product’s market can be achieved by “increasing advertising expenditures, offering sales promotions, lowering the price, increasing the size of the sales force, or increasing a company’s social media effort” (Barringer & Ireland, 2015. P. 479).
Apple uses a skimming pricing as market penetration strategy; “price skimming is the strategy of charging a relatively high price during the launch of a new, innovative product and then lowering the price over time to access different points on the demand curve.” (Dawson, 2019).
The Apple skimming pricing strategy keeps prices high to establish a strong brand loyalty with customers. Customers are persuaded that Apple products are high quality; each new phone model is marketed with more advanced and thrilling features convincing consumers to pay the steep prices (Woodruff, 2019).
Apple price skimming strategy focuses on attracting early adopters of a new product, the company maximize its profits by charging high prices to this segment of the market. When sales to the targeted segment slows or competitors emerge, Apple keeps progressively lowers its price skimming each layer of the market effectively increasing its sales. (Mack, 2018).
References
Barringer, B. R., & Ireland, R. D. (2015). Entrepreneurship: Successfully launching new ventures (5th ed.). Don Mills, Canada: Pearson Education Inc
David, F. R., & David, F. R. (2017). Strategic management: A competitive advantage approach, concepts & cases (16th ed.). Don Mills, Canada: Pearson Education Inc
Dawson., T., (2019). Everything you need to know about about price skimming. Retrieved from https://www.priceintelligently.com/blog/bid/183669/ride-the-demand-curve-price-skimming-and-your-pricing-strategy
Mack., S., (2018). Penetration Vs. Skimming Marketing Strategies. Retrieved from https://yourbusiness.azcentral.com/penetration-vs-skimming-marketing-strategies-8080.html
Woodruff., J., (2019). Penetration Pricing Examples. Retrieved from https://smallbusiness.chron.com/penetration-pricing-examples-18365.html
DQ 3
Barringer and Ireland define a market penetration strategy as one which “involves actions taken to increase sales of a product or service through greater marketing efforts or through increased production capacity and efficiency” (p. 479, 2016). According to Sherman, the right strategy can determine a business’s success – especially when new ventures are competing with well-established ones -and beyond as businesses must create new strategies to maintain their share (2019). While market penetration is “a measure of the amount of sales…compared to the total theoretical market for that product” (Kenton, para 1, 2018), the strategy is used to acquire more customers and includes activities to used increase that share. Market penetration strategies can include advertising initiatives, changes in price, product bundling, increasing the sales force, social media campaigns, or offering differentiation (Sherman, 2019; Barringer & Ireland, 2016).
As mentioned by Sherman, a strategy that can be used to maintain or increase share is that of “finding new customers” (2019). An example of a market penetration strategy aimed at finding customers is the of the Spanx launch of a men’s wear line. As Spanx is already the market leader in shapewear for women, the firm looked to increase their market share of the undergarment industry by finding new customers -men (Brody, 2018). According to Sara Blakely of Spanx, men’s undergarments had not been reimagined in decades, so her company took this as an opportunity to create a new line and penetrate a new market (Brody, 2018).
References
Barringer, B.R. and Ireland, R.D. (2016). Entrepreneurship. Successfully launching new ventures, Fifth Ed. Toronto, Pearson.
Brody, L. (2018). The Ideas Should Never Stop. Entrepreneur, 46(10), 17–19. Retrieved from https://search-ebscohost-com.libraryservices.yorkvilleu.ca/login.aspx?direct=true&AuthType=url,cookie,ip,uid&db=bth&AN=133131003
Kenton, W. (24 June 2018). Market Penetration. Investopedia. Retrieved from https://www.investopedia.com/terms/m/market-penetration.asp
Sherman, F. (4 March 2019). Examples of penetration strategies. Chron. Retrieved from https://smallbusiness.chron.com/examples-penetration-strategies-11699.html
DQ 4
Companies utilize market penetration strategies to enter existing markets and with their products to capture greater market share than their competitors. The difficulties surrounding this strategy is that it involves increased sale of already existing products to a market that is already in existence (Segetlija, Mesaric, & Dujak, 2012). Businesses have been known for using other “criteria for assessing their growth: sales, number of employees, physical expansion, success of a product line, or increased market share” (Quintana, & Beeril, 2001, p. 55). Growth is an important aspect of every business operation and is the main focus for most companies regardless of their size. A marketing strategy is a critical plan that helps the organization know where it should concentrate its limited resources in order to accrue the most benefits, maximize growth, and maintain a significant competitive advantage (Baker, 2008).
An example of a marketing strategy that effectively penetrated existing markets with an existing product is the case of Heinz ketchup. The company was continuously losing market share, due to lack of customer interest. In 2014 it fought back with the “It has to be Heinz” advertising blitz in Europe (Sherman, 2019). The ads showed parents putting ketchup on their children’s meals; made no statements about the product’s quality or claims it was better than cheaper, and the nostalgic campaign successfully pushed Heinz’ market share back up (Sherman, 2019). Recognizing how consumers use your product and what gap it fills within everyday life is critical for an effective penetrating, advertising market strategy.
References
Baker, M. (2008). The Strategic Marketing Plan Audit. ISBN 1-902433-99-8.
Quintana, K., and Beeril, L. (2001). Market Orientation: The Construct, Research proposition, and Managerial Implications; Journal of Marketing.
Segetlija, Z., Mesaric J. and Dujak, D. (2012). Importance of distribution channels – marketing channels for national economy. University of J.J.Strossmayer, Faculty of Economics in Osijek
Sherman, F. (2019). Chron; Examples of Penetration Strategies. Retrieved From: https://smallbusiness.chron.com/examples-penetration-strategies-11699.html
