Saturated Markets

1026 WordsNov 27, 20065 Pages
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…show more content…
For the prospective retailers considering this area, it 's not advisable to enter this market until and unless they have developed a competitive advantage that differentiates them from the other existing stores. By competitive advantage it is favorable to have a product related advantage like their product offering is bit different, or the services provided is different or their store layout is more convenient to shop in which is considered a lot in case of supermarkets. They should not focus on price related advantage as it is very difficult to retain that advantage in long run and is soon eroded when the other existing customers will decrease or increase their price too. Also, the existing customers who have been in the market for long therefore, they have more cost advantages and will be able to develop a low pricing much better than the new ones. Also, prospective retailers entering market can add more threats of making the retail area over stored and eroding the existing retailer 's profitability too. Therefore, it is not advisable for prospective retailers to enter as it is too late now. In conclusion, in a saturated market where there are lots of retailers located in a certain area It signifies that the market is reaching its mature stage where there are lots of competitors and the profitability is less. Its an indication that market has reached its maximum level and
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