Difference between penetration rate and market share?

Question

Hi,

I would like to know what is the difference between penetration rate and market share?

Thank you.

Answer 1

Some more context would have been helpful. However, basic definition of the items can be the following. I have taken the example of COVID vaccines to make it easier to understand.

Market Penetration: How much percentage of vaccine eligible people have actually got a vaccine. In other words - what is the ‘penetration’ of COVID vaccines in the market.
Market Share: How much percentage people got the Pfizer vaccine, Astra-Zeneca vaccine, J&J vaccine etc. In other words - what is the market share of each vaccine.

This diagram below illustrates this concept.

Answer 2

Hi there,

Think of penetration rate as the “macro” or big picture view. Of all the people who could use the product (i.e. the TAM), it's the % of people actually using it. This represents missed (or potential) opportunity.

Market share is of that captured market (TAM times penetration rate), what % do you specifically get? All competitors' market share should add up to the current market size.

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