Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Market Saturation

What it is:

Market saturation is the maximum sales volume for a product or service under current market conditions assuming a constant level of demand.

How it works (Example):

When the number of units of a given product or service has leveled off, resulting in a decline in further sales, that product or service has reached its market saturation. Market saturation is determined by market demand as well as economic climate and market competition. For example, a given product may reach market saturation because there is a drop in consumer confidence or, alternatively, because it is outdated and no longer needed.

Why it Matters:

Market saturation is a signal to producers that they must take action to generate further sales. This could simply be a change in marketing strategy that generates additional demand, or it could be a modification of an existing product design.

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