Some business owners believe entering a saturated market poses too much risk to successfully turn a profit. But this thinking also fails to take into consideration the other alternative – entering an untested market. An untested market poses similar financial threats due to carving out a road not taken – meaning no template, no formula, no data – which in essence can be more expensive.
Highly competitive markets give you one very important piece of information – a competitive market tells you that there is a wealth of eager buyers wanting that product and/or service. So if you’ve opted to enter a competitive market, you haven’t made a bad decision. But, when you’re in a competitive and highly saturated market, it’s important to get strategic about market penetration and how you’re going to effectively market your business to stand out and make sales.
In these instances, we recommend 12 tactics to increase market penetration and improve sales.
Price Point Penetration
One of the most obvious starting points for market penetration is to reduce your products price point – this is known as competitive pricing and it’s the oldest trick in the book. It works because it makes your product more attractive to potential buyers who value the cost of a product.
It’s also important to understand the risks involved in price reductions.
If you opt to drop the price, then it’s important to realise that you will need to reverse engineer your product. You will need to find ways to decrease costs within the production and overall operations of your business, in order to truly make the new price viable
On top of this price point is also heavily associated with brand identity. If you’re a luxury business, or a service business – customers may associate your price point with quality. Generally speaking lower prices means lower quality. In the long run this may negatively affect your base line.
Up the Ante on your Offers
Another trusty, tried and true tactic for ultimate market penetration is to increase and improve your offers and promotions. Making your product promotions more alluring increases their pull power to not only existing customers, but new customers that value unique offers.
It’s important to note that the offers and promotions NEED to be unique, they need to be compelling and they need to be able to stop a customer in their tracks. They can’t be plain, run-of-the-mill offers that have been recycled over the last decade. It needs to be tactical, such as VIP Discounts, Insider Only Early Bird Specials, Time Bound – Limited Edition Releases, and anything that represents an immediate, and long lasting benefit to the customer.
Expand Your Reach
If you have a product that is channel driven, the most effective way to increase sales is to increase the reach of your product across that channel? There are an extensive number of ways to do this, whether it’s paying for increased reach, finding similar channels with your target audience on there, finding channel partners and representatives who align with your product and are willing to promote your product with benefits in return.
This is seen most commonly on channels like YouTube and Instagram, with influencers in particular niches promoting products relevant to their audience in exchange for payment or free products.
When you partner with others who have an extensive reach with your target audience – it has a two fold benefit. It increases your reach, and it also validates your product, as it’s being endorsed by a figure your audience knows and trusts.
Promote increased usage of Product
By promoting increased product usage, you’re encouraging consumers to use more of your product and/or service within a quicker time frame. This increases product demand & need therefore improving sales within a pre existing market of customers.
Have you ever noticed that a packet of chips come half full, or that protein powders come three quarters full and recommend a VERY large serving spoon size? Skin care brands also like to sell their products in incredibly small bottles so you need to purchase more with them.
Add into the equation, heavy marketing on these products within the group of people already using it, consumption will continue to increase.
Attract Competitors’ Customers
How? This is cheeky, but if Coca Cola can do it, so can you. Wherever there is competitor heavy target areas, you could aim to drop your pricing within that area in comparison to existing dealers that have your competitors product. This will bring across more customers to your business, and give you a bigger share of your target audience pie.
Naturally, this is a smart market penetration tactic.
Cold Customer Targeting
Encouraging new customers or clients to transition over to you in a highly saturated, competitive market can be a tough obstacle to overcome. Tough, but not impossible. When it comes to penetrating a cold market, digital marketing and advertising plays a crucial role.
How? create an image of “normalcy”, or the “standard” using tactics to familiarise new audiences with their product. So next time you’re fresh in their mind and they feel like they know you already. It increases your brand awareness, and reduces barriers of purchase.
There are numerous strategies you could implement to market your product to cold audiences, but they can be complex and generally work best when they’re all used in unison. For interest running a brand awareness campaign in conjunction with a promotion or limited offer will work well, but it will work even better if you implement a conversion video campaign, SEO for easy discoverability, and content marketing to create trust and knowledge around your product and business.
If you’re in a competitive industry, there’s a simple way to penetrate your market – and it’s by eliminating a massive chunk of the people in the audience that you’re marketing to. It sounds counterintuitive but hear us out. Niching down and refining your offer to suit a smaller audience in a big market helps you stand out by providing more specific services that more accurately fit your target market. By appealing to everyone in a saturated market, you’re appealing to no one. It’s not personal enough, running the risk of your business being to generic for most people in the modern economy.
Identifying smaller subgroups within a saturated market is an incredible way to become well known for a specific thing, and better target a smaller, but higher quality target audience.
For instance, if you’re a cafe owner in the hospitality industry, you could niche down by being:
Etc. By doing this you’re attracting people who are most interested in those topics/areas. There’s also less competition the more you niche down giving you dominant access over the market. Your customers are already out there and haven’t been able to find a more suitable alternative. By outwardly niching down, you are offering them something no one else on the market is, making them more likely to buy from you.
Pump up the Personality
The goal of market penetration in a saturated market is simply to stand out in the crowd. To be different enough from the others in a way that appeals to customers, without negatively effecting your baseline or reputation.
One of the easiest ways to do this is by revealing the personality of the business – we’re human, we choose our friends and intimate relationships based on connection, what makes you think we’re any different when it comes to buying products?
By revealing your personality, you’re giving customers another opportunity to create a connection with your brand and determine whether or not you’re right for them. If you’ve successfully identified the right target audience for your business, then it stands to reason that your personality will be exactly what they’re wanting.
This can be demonstrated through branding, customer service, packaging, websites, mission and vision statements and what you stand for.
Understand your Risks & Growth Opportunities
Market penetration in a saturated market relies heavily on you having a strong understanding of the risks involved in each strategy and the opportunity for growth. Why? Because it allows you to mitigate risk and plan effectively. Business strategy is a meticulous process and we always advise owners to seek external advice from a business advisory service before implementing any new strategies that have the potential to damage their operations, finances or brand.
It’s absolutely critical that you understand your market and product to do well beyond expectations in a highly saturated market. With so many competitors at your doorstep – one wrong turn or bad product launch can turn customers off for good!
Create Barriers to Entry
Barriers to entry in this instance refers to creating such a refined, high calibre of service and/or product that other competitors simply can’t compete, and if they can – they’ll still find it hard to match your level. How? Leveraging and expanding upon your business’s unique strengths and personal brand to create one of a kind systems and experiences. For example cultivating distinct processes and systems creates a level of customer satisfaction and experience that other competitors can’t replicate, boosting your sales and establishing a firm barrier to entry for your competitors.
One way to remedy saturated markets and increase your market penetration is to diversify. How? One tactic to diversify your business is by manufacturing completely new products and entering the market, establishing you as an authority in this new field.
Diversification is, not surprisingly, a general bi-product of a saturated market. It’s what happens when a market becomes too competitive that business owners are forced to begin thinking outside the realm of normal in order to create something innovative and new that enables them to stand out.
Diversifying your business from an area of strength that illuminates what your business is naturally best as it is the most secure way to gain a larger portion of market pie and succeed.
Some markets are outright near impossible to enter, and some smaller businesses can quickly find themselves sinking whilst trying to swim. It’s too difficult, due to any number of reasons, for them to enter a new market without a little help.
A tactic to mitigate this issue is to enter a strategic alliance, or partnership with another entity to improve your visibility in the saturated market. Ie. Joint venture business, mergers, endorsing partnerships, affiliate partnerships.
Finding a way to align with another business which is mutually beneficial for the both of you can have drastic effects on your baseline, increase revenue and improve your reach in an otherwise impossible arena.
If you’d like to discuss how we can help your business shout out from the crowd. Contact our office on 9433 3288. We’re a business advisory service provider in Perth, and we’re here to help you gain unbiased clarity on your unique circumstances. Call us today to learn more.
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