Customers and pricing
Penetration rate
The share of potential customers who already use the product.
Facts checked against sources onWhat does Penetration rate mean?
The penetration rate is the share of the possible customers, people or households, that already buy or use a product. Low penetration can mean room to grow; high penetration means growth must come from replacement, higher spend or taking share.
Where does it come up in case interview prep?
- Real growth, people and incomeLesson in Markets and economies: the world a case lives in
- How to use a country in a caseLesson in Markets and economies: the world a case lives in
- Who the customer is: segments by need and by valueLesson in Customers and growth: the economics of marketing
- The funnel and conversion maths: reach, consideration, trial and repeatLesson in Customers and growth: the economics of marketing
- Brand economics: the price premium and the repeat rateLesson in Customers and growth: the economics of marketing
- How consumer goods companies make moneyLesson in Consumer packaged goods (FMCG)
- Distribution, promotions, private label, and innovationLesson in Consumer packaged goods (FMCG)
- Education players, trends, and how to crack the casesLesson in Education and edtech
Related terms
- TAM, SAM and SOMTotal market, the part you can serve, and the part you can win.
- Market sizingEstimating how big a market or quantity is.
- Market shareOur sales as a share of total market sales.
- Relative market shareOur share divided by the largest competitor's share.
- Share of walletOur share of what one customer spends in the category.
- ARPU (average revenue per user)Revenue divided by the average number of users.
- AOV (average order value)Revenue divided by the number of orders.
- CAC (customer acquisition cost)What it costs, on average, to win one new customer.
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