When
a product is introduced to consumers, the 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 is prevalent among consumers.
Market
saturation can be viewed as a positive because consumers purchased an offered
product. Those purchases have occurred on such a large scale that the
likelihood of future purchases may be drastically diminished. At a monthly
farmer’s market, this is an ideal situation. Almost everyone who comes to the
market buys Mrs. Smith’s jam and she dismantles her booth and goes home with
her profits.
In general, however, business does not
work this way. Companies do not establish themselves to simply sell a product
and then dismantle the business. Most businesses are long-term ventures.
Therefore, once the market becomes saturated with their products, they are
presented with a challenge of how to continue generating revenue.
Market saturation can be overcome by a
number of things. Some of them can be influenced by producers but others
cannot. One of the factors that producers have no control over, but which can
help to alleviate low sales figures due to market saturation, is population
growth. More people in a society tend to add to the numbers 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 who are likely to purchase a product have
already done so. Families often consist of several individuals. Therefore, if
the residential housing market is saturated, that means that not every
individual but most families have already purchased homes.
This leads to a market saturation factor that producers
may be able to manipulate. If producers can influence attitudes about the
ownership of multiple purchases, they may create demand in a market that was
saturated. An industry that can be observed for an excellent example of this is
the cosmetics industry, which leads women to believe that a single shade of
lipstick and eye shadow are not enough. The constant desire and the disregard for
existing personal stock fuels constant demand and drastically reduces market
saturation issues.
Market saturation is not always due to the success of a
single producer. In some instances, markets get exhausted because there are too
many suppliers of a product. This highlights the role that competition can
play in such instances. If Producer 1 is able to obtain access to Producer 2’s
consumers, Producer 1’s market share becomes larger and offers the opportunity to sell more
products.