Market Saturation

Written By
Paul Tracy
Updated November 4, 2020

What is Market Saturation?

Market saturation is the maximum sales volume for a product or service under current market conditions assuming a constant level of demand.

How Does Market Saturation Work?

When the number of units of a given product or service has leveled off, resulting in a decline in further sales, that product or service has reached its market saturation. Market saturation is determined by market demand as well as economic climate and market competition. For example, a given product may reach market saturation because there is a drop in consumer confidence or, alternatively, because it is outdated and no longer needed.

Why Does Market Saturation Matter?

Market saturation is a signal to producers that they must take action to generate further sales. This could simply be a change in marketing strategy that generates additional demand, or it could be a modification of an existing product design.

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