So you have a great idea for a business. You’ve outlined the idea, found your audience, and feel as if you’re ready to get launched.
However, there’s still a decent amount of work you still need to put in. You must test the vitality of this idea of yours and see if it can survive in what is always a very competitive market.
Is the demand there for what you want to provide, or is there a level of market saturation that would make your business unsustainable? If you’re unfamiliar with the concept of market saturation, it’s certainly something you should take the time to learn about. What is market saturation? Read on and we’ll walk you through what you need to know.
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How can you be sure your business succeeds? It might feel to you like you have a guaranteed success on your hands. Who wouldn’t love your idea?
However, the market can be much more oppressive to new businesses than we like to believe. Luckily, there are steps you can take to determine how fertile the market might be to your idea.
If you’re currently up and running, you can compare your company’s total sales to the total sales of the industry in which you do business. That’ll give you a sense of how large your market share is. If you’re not up and running (or even if you are) it can be a good idea to look into existing similar companies.
How much of the market share do they each seem to claim?
Market saturation occurs when there seems to be no more demand for existing services and products. It means that customer acquisition in the required field will be very difficult to manage and succeed at.
A market can be become saturated for a number of reasons. A high level of competition decreased consumer interest, or technological innovation can all contribute to saturation.
An example might help to make this all more clear. Let’s look at the world of streaming content providers. For a long time, Netflix was the only real streaming company in business.
Today, there are so many different media streaming companies. The market has become much more saturated, and as such, it would be harder for a new company to break in and obtain a significant market share.
Fighting Saturation in the Marketplace
A saturated market can make it very difficult for a business to stand out from the crowd. For some, this may be a reason to stay away from or even get out of this particular industry.
However, for others, a saturated market can provide certain ideal opportunities. At the very least, a saturated market indicates that there’s a large audience who is interested in a certain type of project.
With a little hard work and creativity, it is possible for a business to take advantage of and succeed in a saturated marketplace.
The main thing a business will need to do is differentiate themselves from the other competitors in the market. If you need to learn how to differentiate yourself and your business from the competition, check out a few of the below strategies.
Introducing a New Product
One of the most effective ways is by introducing a new product that will grab consumer attention. If a business can introduce something that will raise demand within that industry, they should be able to take over a much larger portion of the market share.
An easy example of this is when Apple released the iPhone. They completely changed the cell phone game and took over a massive amount of the market share as a result.
In many cases, a product doesn’t have to be brand new to garner market attention. If you can innovate and improve upon an existing product, this often can be just as helpful.
A Change in the Pricing Model
What if you could completely change what people expect to pay for a product? MoviePass did this in the summer of 2018, introducing the idea of a monthly movie pass for only $10. This was massively below what most consumers expected to pay to go to the movies each month.
As a result of this price change, MoviePass took on a massive share of the market. They weren’t able to sustain this change and eventually went out of business, but their brief success shows how powerful (and potentially difficult) a change in pricing model can be.
If you can undercut the competition with lower prices, you can take over a significant portion of the market. You just need to find a way to sustain yourself in the process.
Provide a Premium Service
Maybe you’re selling more or less the same product as another company is. Can you make doing business with your company far more pleasurable than the competition?
Offering free upgrades, 24/7 customer service, free returns, member perks… these are just a few of the common ways in which some businesses try to add value to their services. If consumers enjoy doing business with you, they’re likely to come back more often, increasing your overall market share.
What Is Market Saturation?
If you’re looking to succeed in business, you need to know how to answer the question of ‘what is market saturation?’ Succeeding in a saturated market can be difficult, but the above strategies can help you stand out.
Need more business advice? Check out the rest of our blog for more.