There are several things that you can do when starting a new business to ensure its viability and potential for survival. The most important step is to conduct a market study that includes a detailed analysis of your industry, target market and competition. This should be part of your initial business plan, and also during periods of growth.
What is your market share?
You can calculate your share of the market in its simplest form by dividing total sales for your company by total sales within your industry. Your research should reveal that your product or service is in high demand and that your competition doesn’t have a complete hold on the market. These data indicate that your business has room to grow.
What if, after analyzing the market, you find that your product or service isn’t in high demand or the market is highly competitive? What if your market analysis shows that there is not a huge demand for your product or service, or the market is already highly competitive? Not necessarily.
Market Saturation explained
Market saturation is the situation described above. When a market no longer generates new demand for certain services or products, it is called “market saturation”. It can be due to a variety of factors, such as increased competition, decreased demand for the product, or technological innovations. Market saturation can be a problem because it limits growth opportunities. However, this is not always the case.
How to succeed in a saturated market
Market saturation can mean that your business is unable to compete due to a lack in profitability on the current market. However, it can also indicate a strong demand for goods and services as well as future growth potential. It is possible to succeed in a market that has been saturated. But it takes creativity, consistency and innovation. It is important to find ways to distinguish your business from its competitors. Here are some ways to position your business in a saturated marketplace:
- New Product Development and Product Improvements: Offering a new product or improving an existing one is a great way to enter a market that has become saturated. It is important to create a product that will increase demand and give your business the opportunity to steal market share from your competitors. You may have to go beyond the products and services that your company currently provides.
- Pricing model adjustment: There are two ways to break into a saturated marketplace when it comes to pricing. You can try to undercut your competition and attract budget-conscious customers. This can be risky, as it could create the reputation of being cheap and low quality. You can also raise your prices to make your product appear as a premium option.
- Value Added Services: You can steal market share by increasing the value of your products and services to your customers. This can be done by offering a superior customer experience, which your customers can’t find from the competition. To increase perceived value, you can offer incentives to customers like free upgrades and 24/7 customer service.
- Customer Loyalty is the focus: Take this concept one step further and create loyalty programs with incentives such as discounts, free trials or rebates. This can be a powerful differentiator in your business. It allows you to enter a saturated market, by rewarding repeat customers and leveraging existing customers.
To compete in a market that is saturated, you must be able go head to head with your competitors and do something unique. It may be necessary to test a variety of different strategies to find the one that will give your business the edge over others. Make sure that your business plan is well-written and you refer to it frequently to ensure that you stay on track.
