market penetration

Market Penetration/Share

The percentage of an industry or sector that a single company controls. For example, if Retail Company A conducts 10% of all retail sales in the United States, it is said to have a 10% market share or penetration. It is important that a company, especially a large company, maintains a substantial market share in order to remain competitive. However, companies that achieve too high a market share through mergers, acquisitions, or other methods may become regarded as monopolies and violate local antitrust laws. Some companies have a large market share compared to their competitors, but not enough to be considered a monopoly: these are called gorillas. See also: Herfindahl-Hirschman Index.

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market penetration

a BUSINESS STRATEGY pursued by a firm which is aimed at increasing the sales of the firm's existing products in its present markets thereby increasing its MARKET SHARE in those markets. This strategy involves the deployment of various MARKETING MIX elements (pricing, advertising etc.), together with appropriate MARKET SEGMENTATION policies aimed at competing more aggressively against rival suppliers. See PRODUCT MARKET MATRIX, MARKET PENETRATION PRICING, CONCENTRATED MARKETING STRATEGY.

Collins Dictionary of Business, 3rd ed. © 2002, 2005 C Pass, B Lowes, A Pendleton, L Chadwick, D O’Reilly and M Afferson