Definition of ‘Penetration’
Definition: Penetration defines how many users are there for a product. It is one of the measures of a company or industry’s success in getting consumers to use their products. The penetration numbers for India are very low in most products, like telephones (tele density) or shampoos, soaps, cosmetics and so on.
Description: A rising penetration of products in the country signifies a greater consumer class, willing to use products. Rising penetration should translate into rising market share for the leader as well. Low penetration numbers are usually quoted in India’s context to show what potential exists in the Indian market place.
Penetration of a product depends on several factors, like income, marketing activity, needs, positioning, logistics of making the product available in the first place, demographics as well as an understanding of consumer needs.
For example, shampoo’s penetration in India is still low in rural areas as people there use soap for hair washing, and not so much shampoo.
FMCG marketers found that selling low unit cost, single use sachets to rural markets encouraged price-sensitive rural people to try shampoo. The sachet has since then been one of the greatest causes of increasing shampoo, soap and all other types of products into rural markets