Market penetration is a measure of the number of prescription of a generic compared to the total theoretical prescriptions. While market penetration of a generic focuses on measuring the relevance/ needs of a generic in terms of usage by a specific speciality in a given period of time.
Higher a market penetration for a generic indicates potential for increased prescription by the specific speciality. In other words, the smaller a product's market penetration, the more a company should invest in its strategy for marketing that item.
How could you use market penetration?
A market penetration strategy involves focusing on selling your existing products or services into your existing markets to gain a higher market share.
Penetration strategy is the concept of taking aggressive action to greatly expand one's share of total sales in a market. The resulting increased sales volume typically allows a business to produce goods or obtain merchandise at lower cost, thereby allowing it to generate a higher profit percentage.
Market penetration refers to the successful prescription of a product in a specific market. It is measured by number of doctors who prescribe a particular brand divided by the relevant market size, expressed as a percentage. An example, if 500 doctors out of 100,000 prescribe a brand, the brand penetration rate is 0.005 (500/100,000), or 0.5 percent.
The aim of market penetration is to effectively use your product, enter the market as quick as possible and seize a large market share. ... Also, if a business plans to increase market penetration, it's important to implement certain tactics & strategies that will increase your sales and decrease the competitors.
Market penetration is one of the four alternative growth strategies in the Ansoff Matrix. A market penetration strategy involves focusing on promoting your existing brand into your existing markets to gain a higher market share. This is the first strategy most company will consider because it carries the lowest amount of risk.
This strategy promoting more to current prescribers and to new prescribers who can be thought of as being in the same therapeutic purposes. For example, if your current prescriber base consists of gastroenterologist for therapeutic indication of Rabeprazole then this strategy would involve attempting to promoting more of your existing brand to this same group.
One key constraint is that you cannot allow anything in your drive to grow market share to compromise your existing success. You need to be aware of what has made the product a success so far and ensure that nothing you do will undermine it.
You should give this strategy careful consideration if you are not in a position to invest heavily or are not comfortable with taking risks, as the amount of risk associated with this strategy is relatively low.
There are four approaches you can adopt when implementing this strategy:
Maintain or increase the market share of current products
You can achieve this by adopting a strategy that is made up of a combination of growth-share matrix in the BCG. MedAnalytics uses BCG matrix to understand necessary of investment of a brand- “When and why need to invest for a brand” This would involve focusing on investment, cash generation and part of PLC management. This part of marketing is responsible for managing the promotion of the product to secure dominance in the growth.
Secure dominance of growth markets
An approach you could take is identify a new specialty for your product, for example Dentistry and Dental surgeon group, you found in market penetration report who need to prescribe Rabeprazole with NSAIDS frequently. An excellent decision of such a strategy would be for you to invest in that new category of your brand prescriber and to then aggressively market your brand to this specialty group.
Your role in the discussion senior executives will have in defining their strategy is that of providing the market intelligence that helps to inform the executive team of the current dynamics of the market. The data you provide will help the team decide whether a growth market is an extension of the current market or is truly a 'new' market. This decision of investment is likely to be based on how your organization is going to approach this growth market.
Restructure a mature market by driving out competitors
Our brand may find itself in a mature or saturated market and to achieve further market share requires a different approach. This strategy requires an aggressive promotional campaign, supported by a strategy designed to make the market unattractive for smaller competitors.
With a mature market there are no more specialty sectors to exploit and the only way to attain market share is to take it from competitors. Examples of this strategy can be seen in some of the brands, where the larger players now dominate. More recently there has been the introduction of loyalty campaigns, where the company compete for market share through doctors’ loyalty programs.
Increase usage by existing prescribers
Another approach to market penetration is to persuade your existing doctors to prescribe your brand more frequently. There are several tactics you could use to do this, including loyalty schemes, adding value to the current brand by promoting the “detailing mixture”, or making brand extension to the generic that encourage greater use.
The tactics of this approach all aim to 'tie in' your prescribers to your brand by making it more difficult for them to move to another competitor’s brand. The ability of your company to achieve higher usage by prescribers can be greatly enhanced by rapidly changing technologies (brand extension) that encourage prescribers to upgrade or that offer more reasons to use the brand. A good example of this would be Multivitamins: extensions are now upgraded with the addition of new features and capabilities like Multivitamin with minerals, for old, for adult, for teen-him/ her, and for kids-chewable form. A successful market penetration strategy requires to understand market situation of your and competitor’s brand.
It relies on you having successful products in a market that you already know well.
The key role you are likely to be asked to perform is capturing the intelligence that is required to make informed decisions. Understanding why this information is being asked for should help you to capture and pass on the most relevant and significant information.
Market penetration involves focusing on promoting your existing brand into your existing markets to gain a higher market share.
This can be achieved in four ways: maintaining or increasing the market share of current brand; securing dominance of growth markets; restructuring a mature market by driving out competitors; or increasing usage by existing customers.