Two key measures of a product’s popularity are market penetration rate and penetration share.
Market penetration rate is the number of people who buy a specific brand or a category of goods at least once in a given period, divided by the size of the relevant market population. A brand’s penetration share, in contrast to penetration rate, is determined by comparing that brand’s customer population to the number of customers for its category in the relevant market as a whole. Here again, to be considered a customer, one must have purchased the brand or category at least once during the period.
Often, managers must decide whether to seek sales growth by acquiring existing category users from their competitors or by expanding the total population of category users, attracting new customers to the market. Penetration metrics help indicate which of these strategies would be most appropriate and help managers to monitor their success. These equations can also be calculated for usage instead of purchase.
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