Market Saturation
Market Saturation is a stage in the life of one product on the market when everyone who needs the product already has it, and potential of that product is currently maximized. Only way to achieve further growth in that product is to innovate and offer more superior product of the same kind or to achieve extended consumer demand on that particular product.
If one company has limited innovative potential, and does not produce a better product, it is possible for other companies to overtake market demand with improved product of the same kind and outrun competitors in market share.
In addition, if a company produces a perfect product, there will be no need for a replacement, so it is one aspect of market saturation as well, and producers intentionally makes product that will eventually need a replacement.
When market saturation comes into effect, producer whose product becomes forlorn will usually cut down sale and advertising expenditures in order to focus on research and development phase in order to produce superior product, which demands large budget to be in place.
| Related Terms: |