Market penetration is a measure of how well a product or service is being used by customers compared to the total estimated market for that product or service.

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Market penetration

Define

Market penetration in English is Market penetration.

Market penetration is a measure of the extent to which a product or service is being used by customers relative to the total estimated market for that product or service.

Market penetration can also be used in developing strategies to increase the market share of a particular product or service.

Meaning

Market penetration can be used to determine the size of a potential market. If the total market is large, the new entrants to the industry may still have a chance to gain a slice of the market share or attract a certain percentage of the total potential customers of the industry. branch.

For example, a country with 300 million inhabitants and 65 million of them owning mobile phones, the market penetration rate of mobile phones would be approximately 22%.

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In theory, there are still more than 235 million potential customers for the mobile phone market, or 78% of the population, still untapped. The penetration numbers could point to growth potential for mobile phone manufacturers.

In other words, market penetration is used to assess the industry as a whole, thereby identifying the potential for companies in the industry to gain market share or increase revenue through sales efforts.

Continuing with the example above, global mobile phone market penetration is often used to estimate whether mobile phone manufacturers can meet their projected earnings and revenue levels. are not.

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– If the market is considered saturated, it means that existing businesses take the majority of the market share, thus leaving no room for revenue growth from new businesses.

Practical contact

During the fourth quarter of 2018, Apple Inc. (AAPL) has captured more than 50% share of the worldwide smartphone market. Apple has continuously introduced new versions of iPhones (especially the high-end iPhone X) and other products with unique features, improved performance.

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By making a successful market entry, Apple has a larger market share than all its competitors combined. However, Apple still has the opportunity to grow its customer base by targeting competitors’ customers and directing them to Apple products and services.