The early stages of a product's conception, production, and subsequent research into the ideal time to begin the marketing efforts are all laborious tasks. A CEO or CMO's primary concern while developing a product is user acquisition. No matter how strongly you believe in the worth and capability of the product, it would be best if you still establish robust market penetration techniques.
So, to target both your early adopters and increase your user acquisition, let us first understand market penetration, then focus on a few market penetration strategies and then head on to shed light on how MVP is established in the market.
What is market penetration?
Market penetration can be considered a plan to grow your start-up and strive into an already thriving market. The primary goal of market penetration is to launch a product, mark a swift entry into the market and look to capture a sizeable market share. The risk demands the CEO/CMO to adopt vigorous tactics and plans to challenge competitors and boost revenue.
In other words, market penetration employs both a theoretical and literal meaning. Theoretically, it means gaining a sense of market size and the percentage of consumers buying the product. Literal meaning points to the actions taken to overtake competitors and gain and generate market share.
Market penetration as an activity
A 2x2 matrix representing- market penetration, product development strategy, market development strategy, and diversification strategy was developed by Igro Ansoff, and he named it as Ansoff Matrix.
The strategy step of the marketing-planning process employs the Ansoff Matrix. It is used to determine which overarching strategy the company should employ, after which it highlights the risks associated with it. Here, product development and diversification are much riskier than market development and market penetration.
Trade giants like Coco-Cola, Heineken, and Apple are deliberately employing Ansoff Matrix to excel in their marketing strategies.
Other than this, you can implement a few more strategies based on the broader product goals to grab a good hold of the market.
Understanding market penetration strategies
"Market penetration strategies are steps taken to acquire a greater market share by tapping into the existing products in the market."
The prime focus of market penetration strategy is the underserved audience, non-buying or new portion of the market. Market penetration strategy is overall a cost-effective method that offers swift growth to the products and helps combat your competitors.
Best known market penetration strategy
To expand your market grid, you must abide by a few of the below-discussed market penetration strategies.
1. Price adjustments
It would be best if you judiciously made price adjustments. A sudden hike in price might make you look like a company aiming for high profits, and a sudden downfall will make the customer question your quality.
Price adjustments must be made based on how the market is flourishing and your competitor's quality and pricing tactics.
2. Augmented promotion
If you are sure how the prices will be presented to the target audience, focus on the marketing promotion of your product. These promotions can be as light as changing a messaging line or as large as creating a marketing campaign.
Be it either way, and you need to be on your toes, keep an eye on your competitors, and give them a chance to break into your promotional program.
3. Add distribution channels
The increasing competition demands owners to step out from their websites and look for other communication channels to showcase their products. Go for email marketing, franchising, digital channels, or strategic alliances.
4. Improving products
The quick switch to new market trends and the ever-demanding customers have urged organizations to keep a constant eye on these changing trends and amend policies to improvise the products. As a CMO, you can conduct plans to talk to your audience, and with minute packaging changes or customer demands, you can think of improving your product.
5. Create a barrier to entry
It is important to correctly leverage your business's strength to do justice to it. You can drop the minimum variable cost to create competitors' entry barriers. Companies like Amazon constantly upgrade customer policies that have prevented their competitors from entering their market. For example, a food supplier who depends on several farms for services may cut costs by investing in his farm rather than buying from third-party vendors. These investments immensely drop the cost of production.
6. Knowing risk and growth
Whenever an organization plans to launch a new product, the foremost concern is the success or failure of the product. The risk also lies in entering and capturing a brand new marketplace. An effective market penetration strategy with smooth delivery makes things easy. Also, good communication with customers and sensitivity to their needs lowers the risk and enhances growth.
Diversification means launching new products in a new marketing environment. The need for such launches arises when either the current market saturates or certain environmental factors such as economic, social, and technological have compelled an organization to undertake a switch. Such market penetration strategies are generally followed in the health care sectors, which are ever-changing and evolving. Hospitals have diversified their services through long-term care facilities, reimbursement, network referrals, and utilization.
Can MVP help in understanding the market?
The internet has taken the world by storm, and this swift change has compelled organizations to shift from traditional business methods to the digital market. Industries like EdTech, travel etc. are moving to the digital marketplace. This digitization results in more significant ROI and nominal investment, and on top of that, it gives enormous exposure to a vast crowd that generates high sales.
MVP promotion is significantly different from promoting a full-fledged app. MVP in the early phase is small and only addresses the target audience. MVP's market penetration strategy is solely based on three factors-
- and purpose of promotion.
While working on the market strategy for an MVP, specific questions need to be addressed.
- Which influencers need to be chosen?
- Which communication channel will result in greater ROI will be generated?
- Around which values and benefits will communication be built?
Best practices to introduce an MVP
Proven tools and methods are best to promote your MVP, which include blogs, email marketing, and even leaflets or press printing can do wonders.
Social media marketing is a display advertisement that generates the greatest ROI for start-ups.
The strategy behind using an MVP to penetrate the market is to encourage the target audience to test the app, provide feedback and become active users. Also, to convince investors to invest in the future development of MVP.
If we dig around, we will find how EdTech giant UpGrad has brilliantly used the MVP model to capture the international market. They have acquired KnowledgeHut (renaming it as UpGrad KnowledgeHut) and made their short-term tech skill programs available for online purchase. This acquisition helped them spread their wings easily throughout the global market and get hold of potential customers.
As a CEO/CMO, you should aim to employ market penetration strategies that aim to meet your broader business goals and helps you reach specified milestones, along with meeting the financial forecasts.
A loose strategy that doesn't support your business goals must be dropped off at once. Also, there is an acute need to review the market penetration rate and other relevant strategies monthly.
Our enthusiastic team at Anuyat maintains quality service by communicating with you and helps in optimizing your marketing activities with MVP development services.
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getanmvp.com is an effort from Anuyat.com to help entrepreneurs understand the dynamics of Minimum Viable Product and what it takes to build a product-market fit out of their digital ideas.
Anuyat is a Pune-based company and offers Technical Consultancy, User Experience Engineering, DevOps Solutions, Mobile & Web Applications and of course, MVP.