Posted in Marketing and Strategy Terms, Total Reads: 1097
Definition: Market Saturation
Market saturation is the point in life cycle of product where maximum sales volume for the product under current level of demand is reached. It is reached at maturity stage in the life cycle of the product.
Example: Smart phone market is reaching saturation. Samsung’s 2014 Q1 results showed that revenue increased by just 1.2%. Also mobile device sale is declining 1.2% year over year highlighting growing saturation in smart phone market.
Many companies design products in such a way so as to tackle market saturation. For Example: Smart phones are designed to wear down unlike earlier robust phones; screens are extremely prone to shattering, scratches etc making the phone replacement to be an only option. Also, they keep bringing new models with new features so that with product improvement the demand will increase as people will upgrade to higher quality phones.
What does a saturated market indicates?
• Market saturation signals that product has reached maturity level and that to generate further demand product improvement or change is required
• It might also signal that the product is outdated and no longer needed in current scenario
At this stage either a radical new product/technology can be introduced in line with changing market trends to keep up with the market.