We come across multiple terms when it comes to Penetration: Household Penetration, Market Penetration, Category penetration and Brand Penetration. And understandably, some of us might find it a little confusing to differentiate. I will try and explain these metrics (with some examples, of course).
Market Penetration / Household Penetration
Market Penetration / Household Penetration
Market Penetration of a particular product is defined as a measure of its sales (or adoption) when compared to the total relevant market for the product.
Market Penetration = # of Households buying a brand / Total # of Households
An article I came across at Bain Insights, indicates that household penetration is the biggest contributor to brand growth. A little dated article, but an interesting read none the less.
Category Penetration
Category penetration indicates how well
a category is performing when compared to other categories. Since each category has a different purchase cycle, the time duration considered to calculate Category Penetration can differ. It can range from a week, a quarter,
half-a-year or to a year.
Let us try to understand this with an example. We want to find out what is the customer penetration of biscuits in a given store. We have data for Biscuit shoppers
and Total shoppers for the last 6 months.
Biscuit Shoppers
|
Total Shoppers
|
Category Penetration
|
|
01/08/2015
|
61,306
|
95,628
|
64%
|
01/09/2015
|
56,671
|
90,452
|
63%
|
01/10/2015
|
46,040
|
77,414
|
59%
|
01/11/2015
|
36,395
|
79,798
|
46%
|
01/12/2015
|
51,975
|
107,579
|
48%
|
01/01/2016
|
55,592
|
103,930
|
53%
|
Category Penetration = # of Shoppers buying Biscuits / Total Shoppers of the store
(Also known as Customer Penetration in a Category)
Brand Penetration
Brand penetration is defined as how well a
brand is performing within a category when compared with other brands in the
same category. Category penetration & Brand penetration, together, can help identify brands that may not be doing well within a popular category.
Continuing with our above example, let us see the brand penetration of the Munch-On brand of biscuits.
|
Biscuit Shoppers
|
Munch-On Shoppers
|
Munch-On Penetration
|
|
|
01/08/2015
|
61,306
|
314
|
1%
|
|
01/09/2015
|
56,671
|
2,509
|
4%
|
|
01/10/2015
|
46,040
|
2,393
|
5%
|
|
01/11/2015
|
36,395
|
2,330
|
6%
|
|
01/12/2015
|
51,975
|
4,649
|
9%
|
|
01/01/2016
|
55,592
|
5,476
|
10%
|
Brand Penetration = # of Shoppers buying a brand / # of Shoppers shopping in that category
(Also known as Customer Penetration in a Brand)
This shows that while people do mostly buy biscuits, Munch-On biscuits has a low brand penetration. It does have an interesting trend though with a gradual increasing customer penetration. There can be couple of reasons why there is low customer penetration for Munch-On biscuits in a fairly popular Biscuits category including poor placement or it being a recent launch.
I hope the above examples have helped you understand the concepts of Category Penetration and Brand Penetration.
