HHPEN= (No. of households reached in a geographical area/ Total no. of household in that area)*100
For example: Out of 30,000 homes in Delhi only 6,700 subscribe to a cable TV service in Delhi then the household penetration level would be expressed as (6,700/ 30,000)*100 = 22.33 %.
This would basically mean that there are still 23,300 potential customers for cable TV service in Delhi which may be good sign of growth for the company.
Generally the older the company, better household penetration rate it has.
Purpose: Managers often have to decide whether to pursue sales growth by acquiring existing users from their competitors or by expanding the category and attracting new customers to the market. Penetration metrics help managers to make this decision and monitor the success as it tells which of these strategies would be most appropriate.