Agenda
• Concept • Application •Case example • Methodology
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Applications
of
Penetration
• Given the pattern of penetration curves over time, and given th at this relationship holds to some extent in almost every case, penetration curves can be a powerful tool in predicting the gro wth of new products
Curves Company
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Penetration curves can be useful in addressing a series of different str ategic questions which arise when new products enter a market.
• Penetration can occur at the expense of an existing product, or it can drive n
ew markets to grow
• Several factors will influence the end state, or saturation point, of a product:
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Penetration Curve (S-Curve)
Author: Nancy Greene
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March 1998
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Characteristics of Penetration Curves Company Logo
When considering penetration curves, there are a few characteristics to keep in mind:
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What is a Penetration Curve? (S-Curv Company Logo e)
• Products can be thought of as following a life-cycle that has s everal distinct phases:
–early adoption/trial
–mass adoption
– saturation/substitution
– decline
• The product life-cycle generates a series of market penetratio n rates that tend to follow a specific pattern, called an S-curve (or penetration curve)
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Agenda
• Concept • Application •Case example • Methodology
Company Logo
Copyright © by ARTCOM PT All rights reserved.
Copyright© 1998 Bain & Company, Inc.
The product beco mes accepted by t he general market; characterized by r apid product grow th
The product has either saturated the market, or is already being sub stituted for by another product that is in an e arlier phase of the pro duct life cycle
Compadoption/trial
Driven by people who always adopt new things early a nd fuel the produc t’s initial growth
Mass adoption Saturation/substitution
Decline
The decline of the p roduct, driven by co mplete substitution f or or replacement w ith another product
Time
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Product Life-Cycle
Products can be thought of as following a lif e-cycle that has several distinct phases.
• Validating/determining market growth for a new or established product • Showing precedents for success of a product through existing penetration curves • Predicting the saturation level for a product • Determining market entry strategy or timing, given the predicted penetration of a prod
– duration/speed of product life-cycle – competitive forces – innovation – culture/society
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