A product or service that becomes profitable in the market will always attract new players. As a business trend becomes increasingly popular, more enterprises tend to join the industry, and soon enough, the market becomes saturated. Whatever it is in business that is struggling for competitive advantage, fighting the economic recession or coming across a personal roadblock, it is all about finding the positive perspective of the situation at hand. There is always a new approach to doing business, and to penetrate an already saturated market, you need to do things differently.
For a new product in the market to stand out, it has to offer a unique value. Just a bit of packaging is not enough. It has to offer something different, communicated through an exceptional brand. Consumers make choices and it is often very difficult to change their perceptions to choose a different product afterwards. If consumers perceive that there is a low risk in trying something new, they will try it, but if the new product does not live up to its promise, consumers are likely to switch back.
If you are already in a successful enterprise, how do you maintain your position and hold your ground amidst increasing competition? How do you find your edge in a market that is tipping or saturated? What are the necessary steps to undertake to sustain profitability in your business?
The first question we need to answer is; how do you determine if the market is already saturated? Aside from conducting a comprehensive market research, these are the signs that you need to look out for:
• More businesses are offering the product or service.
• It is increasingly becoming a household name.
• The price of the product or service is decreasing.
• Innovative and cheaper alternatives, as well as imitations of the products are available.
• Marketing and advertising for the product or service have increased.
Penetrating The Market
Whether you are just starting out or already in a business, penetrating a saturated market and surviving amidst stiff competition takes careful planning and execution. The following tips may offer you ideas on how to go about this:
• Keep existing customers by rewarding loyalty.
• Explore new markets for the product or service.
• Sustain profits with new offerings related to your business.
• Reinvent or reposition the brand.
• Tap alternative distribution channels (wholesale, retail sales, affiliate programs, etc).
• Invest on research and develop innovations.
• Explore measures on how you can decrease prices with minimal effect on profit.
Market penetration strategy can be implemented by increasing sales force, increasing distribution and promotion of products, and improving marketing and advertising activities. Although it is not guaranteed that market penetration fully works after investing in sales and marketing of products and services. A firm should therefore go for this strategy only if any of the following desirable situations exist:
• Current market is not fully saturated.
• Market share of the competitors are decreasing whereas the industry growth rate is increasing.
• Existing buyers have the potential to purchase same products and services in more quantity.
• If economies of scale provides competitive edge.
Product Development Through Innovation
You only need to be slightly better than your competitor to have the upper hand. Always learn and study the new techniques and technologies that you can use as a competitive advantage. No matter how saturated the market is, as long as you can slightly outperform an already existing product, you will continue to increase revenue.
Product development involves coming up with new ideas which can be generated using basic research methodologies such as:
• Analysis of cultural peculiarities through close observation, reading, and interpretation.
• SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis.
• Market and consumer trend.
• Routine checks on the activities of competitors.
• Trade shows –This can also be used to gain insight into new product lines or product features.
Idea Screening Phase
Evaluation of innovative product ideas and strategies as well as marketing trends is invaluable. It offers insights into the compatibility of new ideas with the overall business objectives. It provides answers to the following questions:
• Will the product benefit the customer in the target market?
• What is the size and growth estimates of the market segment?
• What is the current or potential competitive pressure for the product idea?
• What are the business assumptions, industry sales and market trends upon which the product idea is based?
• Will the product be profitable when manufactured and delivered to the customer at the target price?
What business analysis does is to calculate the likely selling price based on competition and customer feedback. It estimates sales volume based on market size, and assess profitability and breakeven point (the point at which gains equal losses).
Market testing is essential in business analysis, and it is carried out by producing a physical prototype to test the product and its packaging in common usage scenarios. At this point, one needs to conduct focus group customer surveys, and produce an initial run of the product, and then sell it in a test market area to establish customer acceptance.
Post Product Development Phase
After the product has been tested and accepted by the consumers, the next phase is the commercialisation of the product. It includes the following post-product development activities:
• Product Launch.
• Producing and placing advertisements and other promotional activities.
• Filling the distribution pipeline with the product.
• New product pricing.
• Internal and external value analysis.
• Defining value segments.
• Acquiring competitive technologies.
• Product costs and forecast of unit volumes, revenue, and profit.
Market Pricing Strategy
This is one of the fastest strategies which consist of lowering prices with the intention to gain high sales volume, which in turn would lower costs. This marketing plan is mostly used in price sensitive markets by companies attempting to increase their market share. An existing company facing a new competitor that has adopted market pricing strategy should reassess its capability and establish a correlation between lowering prices, increasing volume of sales and profit to determine what option is best.
Creating A New Submarket
The major challenge with going into an existing market that is saturated (with little product differentiation) is that margins are generally very low, but there are opportunities to create a submarket which others have not imagined.
Uncover unfilled needs in an existing market. Endeavour to understand existing customer needs that are not currently being met within the industry. Talk to the customers and find out their needs which the big players have become complacent about. Add value to existing products by filling up these needs after identifying them, or create a new product entirely to fill the existing gaps.
Marketing Your New Products Without Hype
When you launch a new product, you may likely get the attention of your competitors. What you want is to penetrate into this new submarket and take advantage of the complacency of the bigger players. The existing players are often bound by existing systems (structural/regulatory) and ideas that are difficult to change. Make sure your product possess radical ideas or features. This is crucial since you want them to think that "this new product will never sell”. Avoiding attention at this point is necessary.
To optimise growth, one needs to develop a number of alternative options rather than focus on single opportunity in isolation. Such options can then be filtered to determine which one has the greatest likelihood of success. A recent research undertaken by the Blackbox Seed Accelerator, a business advisory firm, found that many start-up companies failed because they focused on a single product line and paid more attention on their product than on their potential customers.