Penetration vs. Market Share

Market penetration and market share are sometimes used interchangeably. In the model, we recommend to differentiate these two concepts.

We define market penetration or percent accessible as a technology's or a solution's penetration to the total available market. A popular example would be smartphone penetration to the entire cellphone markets (see pictures below). Android, Apple, Microsoft, etc. are smartphone platforms. When talking about penetration, we don't separate them.


We define market share as the percentage of market taken by a particular brand over the accessible market which is calculated by total available market multiplied by penetration. Iphone customers to smartphone buyers is Iphone's market share. 

To drive penetration of the technology means to grow the accessible market, it may be a great idea for all the smartphone platforms to form a coalition to promote the smartphone technology. In this case, competitors are your friends. To get a big market share means to get a bigger slice, it requires different actions and probably a different attitude towards competitors.

By including both penetration and market share yet differentiating them in the model, people are able to focus on the things matter and come up with the actions needed to drive growth.


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