What Does Market Penetration Mean?
A measure of the amount of sales or adoption of a product or service compared to the total theoretical market for that product or service. The amount of sales or adoption can be an individual company’s sale or industry while the theoretical market can be the total population or an estimate of total potential consumers for the product.
Investopedia explains Market Penetration
For example, if there are 300 million people in a country and 65 million of those people have cell phones then the market penetration of cell phones would be approximately 22%. This would mean in theory there are still 235 million more potential customers for cell phones, which may be a good sign of growth for cell phone makers. In general, the older the offering or industry, the greater the market penetration.
Starbucks was founded in 1971 in Seattle, and was able to achieve widespread market penetration across the United States. Soon after, they expanded globally.
This occurs when the market you are analyzing makes some sort of change or advancement. Using the Starbucks example, market development has occured over the past couple of years as consumers are becoming more health conscience. Preferences are moving toward different types of teas/drinks and consumers are demanding more healthy alternatives. These factors have aided to market development, with different franchises popping up, such as Argo tea, which become direct competitors to Starbucks.
Using the Starbucks example: In response to the market development mentioned above, Starbucks is introducing new product developments in order to compete with companies aiming to offer consumers more health conscience drink options. Enter the new product, "Skinny Lattes" and low fat/calorie syrups at Starbucks.
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