Marketing and Market Penetration

Paper Summary:

In this article, the writer notes that market penetration is both a growth strategy and a pricing strategy. Before seeking to implement a market penetration strategy a company must perform accurate market research to determine whether or not penetration pricing will optimize growth. Marketing managers must first rule out other strategies such as product development, market development and diversification. The writer discusses that market penetration falls under a cost leadership strategy in that it focuses on providing existing customs with existing products at a lower price than competitors. The writer also notes that some critical contingencies that must be considered prior to implementation are operating capital, engineering capabilities as well as manufacturing and distribution costs. The writer then points out that it is simply not feasible for a company to offer penetration pricing when production costs do not warrant it.

Outline:
Introduction
Market Penetration as a Growth and Pricing Strategy
Market Penetration and the Marketing Plan
Market Penetration in a Global Economy

From the Paper:

"In a global economy market penetration goes far beyond selecting a growth strategy with an underlying pricing model. As the bricks and mortar companies of yesterday are transformed into electronic commerce entities there are other factors that must be considered for successful market penetration. Penetration of a foreign market requires extensive knowledge of that market. While technology is forging more efficient paths for market penetration, companies cannot afford to recklessly enter markets without performing their due diligence. The results of rushing to a market unprepared cannot only be disastrous for the company but for the industry and even the entire country where the company is domiciled.
"When executed properly a market penetration strategy can gain and sustain competitive advantage for a firm. A firm that meets the conditions necessary to implement penetration pricing can exploit its strategic advantages and help achieve its overall goals."

Sample of Sources Used:

• Akhtar, M. (2005, November 29). Global market penetration by Islamic banks. Pakistan Financial Business Recorder.
• Ansoff, I. (1988). The New corporate strategy. New York, NY: John Wiley & Sons.
• Chen, M. (1999). The Optimal penetration pricing strategy model under the dynamic demand function. Asia-Pacific Journal of Operations Research (Vol.16, Issue 2) pg.139-154.
• Duke, C. (1994). Matching appropriate pricing strategy with markets and objectives. Journal of Product & Brand Management (Vol.3, Issue 2) pg. 23.
• European Banker (2006). Consumer finance: Building bridges to new markets. European Banker pg. 9.

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