Market Saturation

DEFINITION of 'Market Saturation'

When the amount of product provided in a market has been maximized in the current state of the marketplace. At the point of saturation, further growth can only be achieved through product improvements, market share gains or a rise in overall consumer demand.

BREAKING DOWN 'Market Saturation'

Many companies are already aware of the problems of market saturation and have intentionally designed their products to "wear down" or otherwise need replacement at some point. For example, selling a light bulb that never burned out would limit consumer demand for more of this product.

Services revenue also becomes an important consideration when product revenue begins to slow; IBM smartly changed its business model toward providing services once it saw saturation in the large computer server market.

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