Market penetration is an important concept in business planning and development. When you think in terms of market penetration you are figuring out they type and number of client you need in order to meet your revenue projections. Your market penetration strategy must also consider the types of businesses in terms of your geographic location.

You can't simply choose your market penetration strategy arbitrarily. It has to be grounded in research of the businesses in your geographic area. You need to figure out how many businesses of a certain size and type exist and then tailor your market penetration strategy around the results.

Geographic Market Penetration Research

When you start thinking about the type of customer you need to target to meet your revenue goals it is wise to set up a grid. This grid will track the type and number of business based on geographic location.

Start by putting your business in the middle of a grid. Then move out in concentric rings further and further from where you're located.

What businesses are 15 minutes from where you are, 30 minutes from where you are, etc...? Do not go beyond 90 minutes. Remember you need billable hours so you can't take up your whole day driving to and from clients' places of business.

Figure out the different size levels of the businesses in your area. How many business with 1 to 10 employees and 100k to 1 million in revenue are within 60-90 minutes?

How many of these sweet spot clients are within 15 minutes, 30 minutes, etc.. from you?

Then track large small-businesses with 50 to 200 employees and 50 to 100 computers the same way.

To gather the type of business size information you need for your market penetration research there are a variety of sources to consult including:

libraries
economic development or small business assistance offices
mailing list brokers
online research
direct phone inquiries
Dunn and Bradstreet
Zap Date
Info USA

The Bottom Line on Market Penetration

Market penetration must be looked at in terms of the business base in your geographic area. You need to first determine the revenue you must generate and then look at the businesses within your area that can support these revenue projections. A good market penetration strategy is one that considers your geographic business base and revenue projections in conjunction with one another.

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