Starting a business could possibly mean competing with hundreds, if not thousands of other businesses doing the same thing that you are attempting to do.
In most cases, some people get discouraged and decide that it isn’t a good business to start, since there are so many other people doing it.
That is what we would refer to as entering a saturated market, where one can either do very well in or not do well at all.
I Am An Entrepreneur spoke to Jeremy Lang, the Executive Director at Business Partners Limited on what a saturated market is and whether your business can make it in a saturated market. And yes, we have your back, always we will give you the good and the bad.
We asked Lang what exactly a saturated market is and how does one tell if that market is saturated?
“A saturated market is one in which the demand for your particular product or service is diminished or shows no increase because of the increased number of competitors that have established themselves in the market creating a greater level of supply for the existing level of demand,” says Lang.
When you enter a saturated market, you need to decided and be clear about whether you are staying in it or if you are going to do something else.
Lang gives us tips on how to stand out in a saturated market:
• The answer lies primarily in how you position your brand and product or service offering relative to your target market. • You can basically position yourself using a combination of 3 key elements based on the nature of the target market you serve and what is important for your customer base: quality, price and service.
Is it any one of the 3 or any combination of the 3?
• Quality – ensure that your product quality is superior to any other competitor. • Price – Ensure that you are the most competitively priced compared to your competitors • Service – Ensure that you provide superior customer service to that of your competitors
Lang says innovation also plays an important role in one’s business standing out in a saturated market.
“To be successful in a saturated market, innovation is key to remain relevant and ahead of competitors,” says Lang.
Innovation may be in the form of:
• Innovative products or services • Innovation in the way in which you engage with your customers including the platforms of how you make these products and services available to them • Innovation in the way in which you produce goods or services which may lead to greater profit margins.
Let us get into the bad, what are the disadvantages of entering a saturated market?
• Limited customer growth potential. • The market can become quite price competitive, which results in profit margins coming under severe pressure. • You have to work harder than your competitors as a new market entrant at taking market share away from other competitors • You may have to sacrifice on price initially to gain market share and exposure thus putting profit margins under significant pressure • If you don’t at least stay on par with your competitors as far as product development is concerned, there is a risk that your product or service may become irrelevant or obsolete.
IAAE will not talk about the bad only, so we asked Lang for a list of advantages of getting into a saturated market:
• There is an established market so buyers are familiar with and can relate to the product or service offering • There are benchmarks and other relevant data available which gives good insight to key operational and financial indicators which your business should be achieving • There is an established and experienced labour pool which you can attract and do not necessarily have to train or develop from scratch • There are many examples of successes and failures which allows you to learn from the mistakes and achievements of others • A saturated market pushes you as a business owner to constantly innovate to give you a competitive advantage.
Often, people start businesses that are quite similar, we asked Lang what one can do to ensure that they do good even in a saturated market?
• Consider partnerships to elevate and grow your business • Continue to innovate products, processes and levels of customer engagement • Use technology as an enabler to improve efficiencies and effectiveness in your business • Have a well-defined and effective market strategy • Develop a customer centric culture at all levels in your business
One can conclude that being in a saturated market does not mean your business will not do well, it simply means you have to put in more work to ensure you stand out.