Saturated Markets

1. If a retail area is acknowledged to be “saturated,” what does this signify for existing retailers? For prospective retailers considering this area?

Saturation of a retail area signifies that there are enough retailers in a particular geographic area to satisfy consumers needs in that area and also enables retailers to prosper. But on the other hand, a saturated retail area also has a very high threat of getting over stored where they will be lots of retail stores and no one will be able to make profit .

Therefore in order to survive for a long time in a saturated market it is very necessary for the existing retailers to capture their share of the market and retain it.

They need to focus on the following factors

Increase Customer Value: In an environment of fierce competition where there will be lot of price slashing to attract customers it is very necessary to understand our customers and offer them a value for the price they are paying for the product. The existing retailers should understand their customers well and need to figure what kind of pricing strategies and offers will the consumers accept and willing to pay for. They need to offer better quality product, should learn to keep their customers happy, they should give them new offers and discount specially too loyal customers. They should have different loyalty programs for their valuable customers to keep them happy and make them coming back to you again and again. They should establish a good data base to track their customers; their preferences and their shopping behaviors to be able to better satisfy them. In this phase when lots of retailers will slash down price to attract more and more customers and increase their profits, I think the best strategy is to research your market well and find out what price the consumers will accept and provide the with good benefits in that price, as reducing your price will affect your profits and your market share too in the long run.

New Product and services: To keep the product line profitable it is very necessary to differentiate your product from the competitor’s product. Retailers need to offer new or upgrade offerings. This should be done keeping in mind your target customers and researching your market and make sure that the target market is ready to accept the new offering. They can provide some extra services to their customers to so that they see more benefits from buying it from them than any other retailers in the area.

Reduce costs by focusing on your target market: When the market area has reached the saturation point it is evident that customers are familiar with the product. In such cases, retailers do not need to focus a lot on marketing campaigns and can reduce their costs by less costly marketing campaigns like in such stage where product offerings is reaching maturity stage the promotional campaigns work well. Instead of having marketing campaigns for the large unfocused market they should focus on their target market and provide the offering that the consumers will be ready to pay for. By this stage they should have determined their customers and should just focus their resources on customers who they know will buy their product. They should provide these customers with good value as going behind new customers can be costly and can also result in waste of resources and money.

Slowly move to profitable store locations: A market which is saturated or reaching saturated has lots of competitors and slowly market share In these areas start decreasing it is very necessary for the retailers to move to locations where profit margin is higher and has better chance to have a larger market share. They should