Market Saturation

Market Saturation:

• The point at which a market is no longer generating new demand for a firm’s products, due to competition, decreased need, obsolescence, or some other factor.
• In economics, “market saturation”  is a term used to described a situation in which a product has become diffused (distributed) within a market.
• The actual level of saturation can depend on consumer purchasing power, as well as competition, prices, and technology.
• Market saturation occur when the amount of product in a market has been maximized in the current state of the marketplace.
• When the saturation point is reached supplying organizations must rely on replacement business where items in use in the market have to be replaced as they get old, perhaps malfunction or when users want to upgrade to a later version of the item.
• At the point of saturation, further growth can only be achieved through product improvements, market share gains or rise in overall consumer demand.
  For example:
  In advanced economies an extremely high percentage of households own refrigerators (about 98% of households). The market is said to be saturated as the diffusion rate is about 98%. Therefore, further growth of sales of refrigerators will occur basically only as result of population growth.

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