What is Market Saturation?
Recently, I started building a site for a Locksmith. For those of you who are not familiar this industry is highly competitive. Market saturation arises when the volume of a product or service in a marketplace has been maximized. A saturated market occurs when multiple businesses in the same geographic area compete for the same customers. Frequently there is more product available than potential clients.
There are two types of saturation:
1. Microeconomic market saturation:
For example, my locksmith has several neighbors who compete for the same products. His market is saturated on the micro scale.
2. Macroeconomic market saturation:
This occurs when an entire industry suffers a lack of demand. For example the demand for smart phones reduced the interest in flip phones. Macroencomic saturation happens when all potential clients have their needs met. For example, since the pandemic so many companies are offering egroceries that this market has become hard to penetrate.Eventually, the e-commerce food and grocery market might become saturated.
Market Saturation Causes
Market saturation causes businesses to struggle and fail. Understanding the problem can help us tackle a solution.
Technological changes can reduce or obliterate the demand for older products. If you needed a way to keep food fresh in your home, you would not look for an ice box with blocks of ice. You would immediately search for a refrigeratior.
Increased competition: New locksmith businesses opening up in the same area selling the same products. There are a few major players that have garnered brand loyalty through years of providing good services. Penetrating the market is challenging. There are so many similar smaller businesses marketing the same product that acquiring new customers is increasingly difficult.
Changing customer base: Changes in the demands of the people. For example when fashion trends fade the demand for specific products becomes obsolete. The demand for birthday cakes has dropped as people become more aware of health. However the demand for birthday cupcakes has increased.
Steps to beat market saturation:
- Research competition : Check what your largest competitors are doing and how they are targeting your customers. Can you target the same issues from a different angle? Creativity is not an option if you are trying to challenge big brands. It is a prerequisite. Consider a brand like Netflix. They challenged Blockbuster by offering to mail DVDs to their customers.
- Create a niche: If there are many businesses offering the same products a good way to penetrate the market is to offer something that they do not. Can you improve on the customer service experience? Is there a gap in the market that is not identified? For example Spanx was started by Sara Blakely who turned an old fashioned women’s girdle worn by elderly women into a popular fashion product.
- Provide value: Are there additional services that clients wished they had? Can you offer a free upgrade? Can you diversify your product by offering adjacent services? What can you provide for your customer that would have him come back to you for additional services?
- Marketing and brand awareness: Providing educational content and creating brand awareness will make it easier for you to qualify leads to see you as a trusted and viable solution. Providing educational content that helps buyers a) find you and b) see your product or service as a credible solution—is increasingly becoming companies’ main source of qualified leads. Research has shown that most consumers feel more comfortable about trusting a brand if they have read their content. Content marketing costs a lot less than advertising.
Today, the first stop in check out your brand will be your website. Is the content up to date?
Engage with the client: Using phone, form, text or chat. If you respond within 5 minutes, you have a 90% greater chance of closing a deal with them.
Search: Browsing is a thing of the past. There is so much content on the internet that the only way to reach it is to search. It is highly unlikely that your customer will search and find you directly. They may find local internet directories. Can you list your business there? Ensure that all the company’s essential information is accurate on the directory.
An emphasis on Search Engine Optimization (SEO) will increase qualified leads finding your website through a Search Engine. Remember that Google has the lion’s share of searches, but they are not the only search engine.
Effective advertising is the fastest way to engage your audience and make them aware of your brand and reach new audiences.
Post regularly to social media and include video content. (YouTube is also a search engine.) Maintain an active presence on these pages. Add fresh content regularly and respond promptly to messages, comments and likes.
Unique and effective marketing is probably the best strategy when a market is saturated with product and service options, particularly when the services are very similar. Effective strategies and niche marketing can often make the difference for a company.