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Do you understand saturated markets?

Do you understand saturated markets?

January 14, 2011
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It occurred to me today that people use the term “saturated market” very loosely.

If you do a little research (Wikipedia) you will learn what market saturation really is. The term is used to define a product that has hit the diffusion point in a marketplace. The best examples here would be the refrigerator, automobiles and even the famous George Foreman grill.

These products are saturated because the majority of households that need these products already have them.

More often than not people use this term to describe competitive markets. Most often I hear it used as an excuse for not entering into a competitive space. Unless you are planning to start refrigerator company, car company or make a better electric grill, chances are your market is not saturated.

He someone asked me today if I thought the dating market was saturated. My first response was kind of jerky because I thought it was a stupid question. But then I realized that most people just don’t understand competitive markets.

The dating space is far from saturated for a number of reasons. Firstly, every day thousands of people enter the dating market online. Secondly research shows that most of these people will buy more than one dating membership. Some people get addicted to shopping for a new mate to the point where they become serial daters.

There will always be room for a new dating site with a new angle to come in to this competitive marketplace and scoop up all the business. That still doesn’t make the dating market saturated :-)

I remember several years ago I was selling a piece of search engine submission software, and someone e-mailed me asking me why I bothered including Google in my software when clearly AltaVista and Infoseek are dominating the market. Imagine if Larry Page and Sergey Brin thought that way. We would still be using search engine’s with antiquated algorithms and a poor user experience.

I also remember when Internet Explorer and Netscape dominated my desktop or browser supremacy. Then this little unknown startup called Firefox came out of nowhere and entered into what some people might consider a saturated market. Today Firefox is a major player in the browser space.

The last example I will leave you with his MySpace.com. Certainly not the first social network, but easily one of the largest in its time. A little unknown social networking site for college students opens itself to the public and quickly outpaces MySpace’s market share. Some people might have said social networking was a saturated market before Facebook came along.

The truth is, the best categories to enter online are the ones with the most consumers regardless of how competitive you might think the market is.

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