When a product is introduced to consumers, the producers hope that consumers will respond positively by buying that product. Market saturation can be considered evidence of a successful sales record. When a market is saturated with a product, that product is prevalent among consumers.
Market saturation can be viewed as a positive because consumers purchased an offered product. Those purchases have occurred on such a large scale that the likelihood of future purchases may be drastically diminished. At a monthly farmer’s market, this is an ideal situation. Almost everyone who comes to the market buys Mrs. Smith’s jam and she dismantles her booth and goes home with her profits.
In general, however, business does not work this way. Companies do not establish themselves to simply sell a product and then dismantle the business. Most businesses are long-term ventures. Therefore, once the market becomes saturated with their products, they are presented with a challenge of how to continue generating revenue.
Market saturation can be overcome by a number of things. Some of them can be influenced by producers but others cannot. One of the factors that producers have no control over, but which can help to alleviate low sales figures due to saturation, is population growth. More people in a society tend to add to the numbers of unsupplied consumers.
It is important to note that market saturation does not mean that every consumer has a product. Instead, the term generally means that a substantial portion of those who are likely to purchase a product have already done so. Families often consist of several individuals. Therefore, if the residential housing market is saturated, that means that not every individual but most families have already purchased homes.
This leads to a saturation factor that producers may be able to manipulate. If producers can influence attitudes about the ownership of multiple purchases, they may create demand in a market that was saturated. An industry that can be observed for an excellent example of this is the cosmetics industry, which leads women to believe that a single shade of lipstick and eye shadow are not enough. The constant desire and the disregard for existing personal stock fuels constant demand and drastically reduces market saturation issues.
Market saturation is not always due to the success of a single producer. In some instances, markets get exhausted because there are too many suppliers of a product. This highlights the role that competition can play in such instances. If Producer 1 is able to obtain access to Producer 2’s consumers, Producer 1’s market share becomes larger and offers the opportunity to sell more products.