What is Saturation Stage?
The saturation stage is the fourth stage of the product life cycle (PLC) where the growth of the business firm’s end and sales and profits of it becomes horizontal for a certain period of time. Firm’s sales rise and falls with basic economic indicators and profits go on decreasing.
There is not only perfect competition but also cutthroat competition at this stage. Thus, in this state, marketers must work for customer satisfaction rather than profit. Improving product quality, rationalizing products, separating products, intense use of sales promotion strategy, enticing designs, and adopting multi-purpose packaging strategies are all used to maintain or improve market share.
If these strategies fail to produce expected results, marketers would be wise to abandon the current market segment and enter a new one or even would abandon the existing product and try to introduce a new one.
Characterisitcs of the Saturation Stage
The common characteristics of the saturation stage of the product life cycle are mentioned below.
As the maturity stage has passed, in this stage there is not only perfect competition, instead there exists cut-throat competition. Every marketer employs all possible ways to get his products sold.
Profits Go On Decreasing
In the saturation stage, the sales and profits of the firm go on decreasing continuously. At the peak of this stage, there seems no way of growth to the firm, the sales become stable to some period. Customers are highly specialized, they prefer peak satisfaction, and due to cutthroat competition, the profits start decreasing.
Highly Segmented Market
In the maturity stage, the concept of market segmentation is assumed, and so far to this stage, the market has become highly segmented. The marketing and promotional efforts have reached every segment of the market.
Product Modification is Done
The existing products might not best satisfy the customers in this saturation stage. The products are either modified, standardized, or differentiated. There is no increase in sales without doing it. Moreover, to increase sales also the existing product that does not create demand for it is abandoned and the new one is launched as the introduction stage.
High Entry Barriers
In saturation, there exist high entry barriers to the new firms or competitors. Since there is cutthroat competition, the new competitors even do not think to compete in such a situation. In fact, existing competitors are suffering in this situation to survive.
Purely Consumers Market
So far the saturation stage is the pure consumers market. Here, no competitors survive if it only focuses on selling products rather satisfying the customers. To get the desired sales goals, marketers need must focus on satisfying customers and building good relationships with them. Here, the success or failure of the markter largely depends upon the satisfaction and other attractive benefits to the customers.
Saturation Stage Strategy
The goal of strategies used in the saturation stage is to stand ahead, create a distinctive position in the market, and make possible efforts to stop the decreasing profits. The mentioned below strategies can be assumed to improve this stage.
To successfully implement the product strategy, here the marketer has to differentiate and standardize products to make them very different than the competitors. In addition, improvement should be done to provide unique benefits, multi-purpose packages, new designs, and product performance that best satisfy the customers.
Here, due to the availability of the highest price ranges products, in this stage, it would be better to reduce the price than previous stages. The price should be fair that serves benefits when consumers buy. While setting price the emphasis should be given to customer satisfaction and set lower than competitors, and focusing on rationalization of product’s quality, performance, design.
The distribution of products should be done in a way that beats the distribution systems of the competitors. The distribution facility should influence the customer to buy from it and also refer others. In addition, the emphasis should be on improving the existing distributing outlets, and if it does not work, should establish new outlets considering the present conditions.
The promotional strategy should be excessive on sales promotion activities. Since it is a consumers market all the efforts should be on customers’ needs and satisfaction. A markter should provide better free gifts, free samples, one-buy-one-free, and so forth than competitors.
In addition, for example, if the competitor is providing the one-buy-one-free gift of the same products, you should give one-buy-two-free offers to attract more customers to your product and make more sales. However, doing this consideration must be given to the quality and cost of the product.
Market Segmentation Strategy
Since the market is highly segmented, the focus should be given to the customer’s needs and providing them peak satisfaction rather than profits. First, all possible efforts should be implemented to satisfy the segmented markets, if not, it is advised to search and enter into the new market segment as there are not so and declining opportunities.
Since the competition is cutthroat in the fourth stage of PLC, the marketer should adopt both attack and safe strategies. The marketer must try to beat the competitors, stand ahead of them, provide better quality than them, offer differentiated yet quality products, proactively step in proving peak satisfaction, and so forth.
However, in the end, the goal should be to steal competitors’ customers but not by losing their own and being active in the market.