Grow Your Brand by Going Beyond Market Share

So, you got your brand established in its market compared to its other competitors. You’ve been in the game for some time and have a decent market share, about 20%. You want to increase your sales because you see how well you’re performing, but you don’t know where to start. Start with what you know (market share) and take it to the next level (share of penetration).  Be the better business owner and go beyond what you know.

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Share of penetration is comprised of 2 components – brand and category. Penetration is essentially the number of people or households that bought your brand (brand penetration) or any brand in your category (category penetration) within a specific time period.  So, to understand your share of penetration, you’d divide your brand penetration by your category penetration. This answers what is your brand’s share of households that purchase a brand in this product category.

Let’s say you sell lipsticks. Brand penetration tells you how many people bought your lipstick and category penetration how many lipsticks were bought overall. This data is relevant to you because it indicates the demand for lipsticks for your market(s) and how well your lipstick is performing. You can take it further by assessing the types of lipsticks that are selling the best so you can direct your efforts accordingly. 

The type of information you’d obtain from understanding your share of penetration could also reveal if it’s time for you to consider other products. For example, let’s say your lipstick did well last year. You think to yourself that maybe you can find a way to increase unit sales and ultimately profits. You assess the share of penetration and it supports your thought process so you go ahead and implement the same strategy for the following year.

When it’s time to analyze data for this new year, you notice a pretty sharp decline. You’re confused and look at last year’s share of penetration again. You decide to analyze trends as well and noticed something key: your lipstick performed well last year because it was in trend. This past year was about glosses. You obtained a report predicting trends for next year and it’s discussing lip kits. In order to do better than last year’s share of penetration, you explore new products, possibly a bundle with your popular lipstick and a new, accompanying lip product. Or it might be time to raise prices. It’s all dependent on how you interpret your data.

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Share of penetration helps you assess how your sales can improve but it’s important to look beyond the numbers. Data must be analyzed and synthesized in order for it to work for you. Go beyond raising product prices and looking at data on the surface. You must draw conclusions and use trends to make sound business decisions.

To get a better understanding of cosmetics and pricing changes, read more (Links to an external site.) about equivalized volume and how consumers reacted to Anastasia Beverly Hill’s eyeshadow palette price increase.

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