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product may reach market saturation because there is a drop in consumer confidence or, alternatively, because it is outdated and no longer needed.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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Cached on May 23, 2012, 9:32 am