Market saturation occurs when a product has been widely purchased, creating a challenge for long-term companies to continue generating revenue. Population growth and influencing attitudes about multiple purchase ownership can help alleviate low sales numbers due to glut. Competition can also play a role in increasing market share.
When a product is introduced to consumers, producers hope that consumers will respond positively by buying that product. Market saturation can be considered evidence of a successful sales record. When a market is saturated with a product, that product prevails among consumers.
Market saturation can be seen as a positive because consumers bought an offered product. Those purchases have occurred on such a large scale that the likelihood of future purchases may drop dramatically. At a monthly farmers market, this is an ideal situation. Almost everyone who comes to the market buys Mrs. Smith’s jam and she dismantles her stand and goes home with her profits.
In general, however, business does not work this way. Companies are not established simply to sell a product and then dismantle the business. Most companies are long-term companies. Therefore, once the market becomes saturated with their products, they are presented with the challenge of how to continue generating revenue.
Market saturation can be overcome by several things. Some of them can be influenced by the producers, but some cannot. One of the factors that producers have no control over, but which can help alleviate low sales numbers due to glut, is population growth. More people in a society tend to increase the number of unsupplied consumers.
It is important to note that market saturation does not mean that every consumer has a product. Instead, the term generally means that a substantial portion of those likely to buy a product have already done so. Families often consist of several individuals. Therefore, if the residential housing market is saturated, that means that not all people, but rather the majority of families, have already bought homes.
This leads to a saturation factor that growers can manipulate. If producers can influence attitudes about multiple purchase ownership, they can create demand in a saturated market. One industry that can be looked at as a prime example of this is the cosmetics industry, which leads women to believe that a single shade of lipstick and eye shadow are not enough. Constant desire and disregard for existing personal stock fuels constant demand and drastically reduces market saturation problems.
Market saturation is not always due to the success of a single producer. In some cases, markets dry up because there are too many suppliers of a product. This highlights the role that competition can play in such cases. If Producer 1 can gain access to Producer 2’s consumers, Producer 1’s market share increases and offers the opportunity to sell more products.
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