At what stage of the product life cycle does market saturation typically occur?

Every new product goes through a lifecycle, with different stages having specific characteristics, challenges, and opportunities. It starts with the introduction stage, where the product is launched, and potential customers become aware of it. Then, it enters the growth stage, where sales and revenues start increasing rapidly. Following that is the maturity stage, where sales growth slows down and can eventually stagnate as market saturation occurs. In this article, we’ll focus on the topic of market saturation and explore at which stage of the product life cycle it typically occurs.

What is market saturation?

Market saturation is a stage of the product life cycle where further growth becomes impossible. It means that the product has reached its peak sales volume, and there are no new potential customers to target. In fact, market saturation doesn’t necessarily mean sales decline, but rather stagnation. It becomes challenging for companies to increase sales, as there are no more potential buyers to target who have not already purchased the product.

At which stage of the product life cycle does market saturation typically occur?

Market saturation typically occurs during the maturity stage of the product life cycle. In the introduction stage, the product is new, and customers are unaware of it. Although there are few competitors, the market potential is high, and sales are expected to grow. In the growth stage, the product gains momentum, and sales increase rapidly. However, in the maturity stage, the market becomes saturated with competitors, and sales start to plateau.

During the maturity stage, the sales growth rate slows down, and companies face challenges in sustaining their market share. The competition intensifies, and there are often price wars and promotional activities to retain customers and attract new ones. As a result, market saturation becomes inevitable, and companies need to find new strategies to remain competitive.

Examples of market saturation:

One classic example of market saturation is the personal computer industry. When the first personal computers were introduced, they were a novelty, and the market potential was enormous. However, as more and more companies entered the market, the competition intensified, and market saturation became a reality. Today, there are a few dominant players in the personal computer industry, and the competition is intense, making it challenging for new entrants to make significant gains.

Another example of market saturation is the mobile phone industry. Once the mobile phones became a mainstream product, the competition between different companies intensified, and the market became crowded. However, a company like Apple, with its iPhone, avoided market saturation by constantly innovating and introducing new features and functionalities.

How to avoid market saturation:

Market saturation can be a daunting challenge for companies, but there are ways companies can avoid it. The following are some strategies:

1. Expand the target market – Companies can explore new markets to expand their target customers. For example, when Coca-Cola faced market saturation in the U.S, they decided to expand to international markets where the demand for their product was higher.
2. Introduce new features – Companies can innovate and introduce new features or functionalities to their products. For example, smartphones constantly introduce new features to remain relevant.
3. Reposition the product – Companies can reposition their product to target different customers or different market segments. For example, Tide detergent repositioned itself to target environmentally conscious customers by introducing Tide purclean, a plant-based detergent.
4. Focus on customer service – Companies can differentiate themselves from their competitors by providing excellent customer service. This can foster customer loyalty and increase customer satisfaction.
5. Diversify – Companies can diversify their product portfolio to reduce their reliance on a particular product. For example, Amazon started as an online bookstore but has since diversified to various other areas, including video streaming, food delivery, and healthcare.

Conclusion:

Market saturation is an inevitable stage of the product life cycle that companies must prepare for. With the right strategies, companies can avoid market saturation and continue to grow their sales. The maturity stage presents various challenges, but the right approach can help companies remain competitive and profitable. Companies must focus on innovation, customer satisfaction, and diversification to navigate the challenging waters of market saturation.