Market Penetration as a Growth Strategy for Small and Medium-Sized Enterprises in Nigeria

Small and medium-sized enterprises (SMEs) play a pivotal role as engines of growth in many economies. SMEs are also responsible for driving entrepreneurship, innovation, and competition in many sectors of an economy. They account for a very substantial proportion of all economic activity and employment in most countries of the world. The global crisis has increased the need for SMEs in the developing world, such as Nigeria, to participate in the wider movement for sustainable business growth. While governments build capacities that encourage enterprise growth, the SMEs themselves need to adopt business strategies that promote the growth and expansion of their businesses. This paper discusses one of such growth strategies— market penetration strategy— an intensive growth strategy proposed by Igor Ansoff. This strategy allows the firm to penetrate more deeply into its existing market and increase its share of that market. The paper suggests and describes the strategies of segmenting the firm’s product market to identify distinct customer groups that offer the firm an opportunity to select target market(s) for which it could develop a fine-tuned marketing mix. The paper uses the consumer’s product purchase patterns and product use-related factors to illustrate the procedures for identifying and targeting profitable segments in the firm’s existing market. Given that a small and medium-sized enterprise operating in a product market is most likely a small firm surrounded by large firms, the paper recommends the market nicher strategy as the most appropriate competitive strategy for Nigeria’s SMEs.