What Is Market Saturation and Why Does It Happen?

Posted by Maziar Adl
Maziar Adl
Find me on:

Illustration: Full ShelvesDelivering products to your market is exciting as it helps your company build your customer base, drives your revenue, and improves the lives of your customers. But markets don’t have unlimited room for growth. There is a saturation point in every market for every product or service. How do you reach this point, and what can you do about it? We’ll explore some options in this post. 


What Is Market Saturation?

Market saturation occurs when the product has reached its maximum potential within a specific market or industry. This means the demand for that product decreases, and there is little room for growth or expansion without innovation. Saturation of the market can happen on a micro level or a macro level. 


Micro vs. Macro Market Saturation

On a micro level, market saturation means that a particular product has reached its maximum growth in a specific market. The macro level means that all product types have reached their maximum growth in a specific market. For example, on a micro level, a particular cell phone brand may reach saturation if it refuses to release new versions of its phone or launch improved features while the competition does. An example of a macro market saturation is real estate. The real estate market ebbs and flows, and when it ebbs, there can be little movement of properties for real estate agents across the market, regardless of their company. 


Why Does Market Saturation Happen?

Illustration: focus on one productMarket saturation can happen for many different reasons, depending on the circumstances. One issue could be too much competition for that product type in that market or too many companies offering the same service. Another reason a product reaches market saturation is due to a decrease in demand or need for the product. The product may have been a passing trend or has not been kept up-to-date with technological advances, making it less competitive. 


Look for Signs in Customer Feedback

Products must stay competitive by researching what customers need and what the competition is working on. Companies that prioritize consumer research and feedback have their finger on the pulse of the market to deliver products that customers need and want. As they introduce new features that customers can use and enjoy, their demand and interest in your products will continue to thrive, whether your product is digital, physical, or a hybrid of cyber-physical.


Be Proactive in Your Product Management 

A company must make their version of a product stand out from the competition to avoid being lost in the sea of competitors, reaching the market saturation point sooner. Innovation is a strong driver of better products and can help products stand out while simultaneously meeting the demands of customers. Taking a proactive approach to product management includes sharing customer feedback with all stakeholders and consulting cross-functional teams for ideas. Having the flexibility to pivot and make changes also helps deliver competitive products. 


Define a Product Strategy

Adding new features to your products is one factor in standing out from the competition. Another factor is setting the entire company apart. When companies differentiate themselves from the competition with a product strategy, they are more likely to win over and keep a loyal customer fan base. Consumers find it easier to choose a brand when they understand their messaging and what that brand stands for. 


What to Do When Market Saturation Happens

Illustration: Choose a PathWhen market saturation happens, there are several things a company and its product teams can focus on. Here are a few examples of strategies to use.


Innovate and Improve the Product

Working to improve the product should always be a focus, and iterations should never be set in stone but always be open to innovation and improvements. It’s a wise idea not to wait until market saturation hits to implement new ideas and plans. Instead, continual improvement on products should be a part of your product strategy every step of the way. 


Add New Features

Adding new features to the product is a way of improving the model. But keep your customer top of mind. Just because you add a flashy feature doesn’t guarantee more sales. Unless your users need and value the feature, they won’t be thrilled by your product. 


Improve Branding and Messaging

For some companies, they might have the best product on the market, but their branding and messaging could be clearer and more consistent. Refining your branding can help your internal teams clarify company goals and how the product aligns with them and create a messaging strategy to communicate that information to the market. 

Messaging is an important factor to consider. Product teams and marketing teams need to communicate with each other about the benefits of the product and how those relate to the target audience.


Enter New Markets

A complex strategy to overcome market saturation is to enter new markets. Companies can research and identify other places or demographics that would benefit from their product and track any necessary adjustments that would be needed for each market. Not sure where to start? Try using a product segmentation strategy. 

Many companies will expand their share by launching into new markets with different consumers. For example, this could be a digital device creating a model that is specifically targeting kids, providing fun colors, and increasing digital security features to make parents happy. Another example could be creating a budget-friendly version of your product, removing the luxury features in favor of a basic, accessible model, or vice versa. A commonly bought product may want to launch a high-end luxury version of the product to reach a smaller but tailored market. 


Use Your Roadmaps to Plan and Analyze Opportunities 

Illustration: business growthThe best way to combat market saturation is to consult your roadmaps by using product roadmapping tools. Using the right software, you can plan out your product lines and analyze your key metrics to find opportunities for improvement. The following are some ways your product roadmap can help you avoid market saturation. 


Map Out Product Lines

Product roadmapping software lets you map out your product lines for easy comparison, analysis, and management. When you can see which products in each line are reaching saturation and which ones are not, it can spark solutions you might otherwise overlook. 


Manage Product Features

Monitoring product features helps you identify which products are using certain features, require a feature update, or need something completely new to launch and be competitive. Knowing what features are phasing in and out helps you proactively plan your improvements.


Communicate With Your Teams

Using effective tools to manage your roadmaps helps you communicate better with your teams on how products perform and what is needed to keep them competitive. 


Find Opportunities and Gaps

When you’re consistently reviewing your products, their performance on the market, and consumer feedback, you can work to find gaps in the market. These opportunities can inform how you improve and innovate your product lines, especially when collaborating with other teams


Set Product Goals and Share Your Product Vision

Illustration: Working together to meet target goalsYour roadmaps are an effective place to set your product goals and share your product vision with all your teams. Using the right tools can support your efforts by making communication seamless and fostering cross-collaboration. Learn how Gocious can help your product development teams build better products by booking your free demo


Topics: Product Development

  • There are no suggestions because the search field is empty.