What is market penetration?

Market penetration is the percentage of customers in a region who buy or are interested in buying a company's goods and services relative to the total amount of customers in the region. For example, if you were to build a movie theater in a town of 200 people and find that 100 people are showing up for each Friday showing, you have achieved 50% market penetration. Businesses use market penetration to determine the success of their sales and marketing, increasing their presence if they feel that they have not achieved market penetration, and funneling valuable cash to other projects if they have a very high market penetration.