Market Saturation

When you’re starting on a new business venture, it’s vital that you carry out an analysis of your chosen market. Your market analysis will cover your industry, the target market, and finally, what competition is already out there.

When conducting this research, you may discover that the market is already saturated, but what does that mean?

What Is Market Saturation?

Market saturation occurs when there is little demand for services or products. This is often down to increased competition in that given market.

Market saturation can also occur when the customer’s need for a product or service decreases or when your product or service becomes obsolete – an example of this is when technological advances are made in a specific market.

Market saturation can mean that there’s little room for growth for a business – but does that mean you shouldn’t pursue your business venture? Not necessarily. You can still achieve great things within a saturated market if you take the right approach.

How Can You Succeed in a Saturated Market?

To succeed in a saturated market, you need to think outside the box.

Improved Products and New Products

This is one of the most common ways that businesses thrive in a saturated market. By offering up a unique product or service, you make yourself stand out from the competition. Look beyond what the competition is offering.

Be Price Focused

There are two ways that you can win in a saturated market when it comes to price. You can undercut the competition, but this may lead to customers thinking that you offer a less attractive service or product. On the other hand, you can set your prices higher than the competition and provide a high-end service or product.

Offer Value

When you carry out your market analysis, you’ll know what added value your competitors have. By going beyond what your competition offers, you can make your offering stand out. Go the extra mile.

Engage in Customer Loyalty

Repeat business is key to winning in a saturated market. If you engage in a customer loyalty program that exceeds what the competition offers, you can create additional business from the customers you already have.


See our full list of over 50 Small Business Terms here


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