Growth strategies for oversaturated markets: an impossibility? No!
Saturated markets represent a special challenge for companies, which must be countered with suitable measures. Classic methods hardly work here, especially since the dynamics of change should not be underestimated. Dwindling sales and especially profits are the result. Only one thing is useful here: consistent reversal – an overview.
Growth strategies for oversaturated markets – classic methods hardly work
It is the fundamental goal of companies to place their products and services in the best possible way in the respective market and to generate growth. So much for the theory – in practice, entrepreneurs are confronted with saturated or even oversaturated markets: Big players have already established themselves in the respective segment, and the supply has long been balanced with demand or even exceeds it. What to do? Some considerations should serve as suggestions to develop and implement a viable growth strategy even in such difficult situations.
What exactly does that mean: saturated market?
You can precisely calculate the saturation of the market segment relevant to you and divide it into five phases: introduction, growth, maturity, saturation and degeneration. This gives you an assessment of your potential, but you should assume that full saturation is rarely present. Just reverse the situation: if there are already well-known brands in your developed market segment, you can rely on a well-founded database. Your consumers clearly state what demands and requirements they have for the respective products and services in order to even consider a purchase – in terms of certain properties as well as distribution channels, price levels and communication. Take advantage of this in a targeted manner: In order to regain the decisive lead and generate growth in saturated markets, you can consider the following measures:
1. Introduce key performance indicators (KPI) in the area of product life cycles.
The analysis of the product life cycle provides you with a powerful tool for successfully achieving growth in saturated markets: You gain the information that is relevant for developing a forward-looking growth strategy. The basis are the sales figures for a product or service over a longer period of time. As a rule, these depict an S-shaped curve that not only allows you to identify the status quo, but above all allows you to forecast the next phases.
2. Increase your development speed with suitable processes such as Stage Gate.
Once you have analyzed the market potential of your products or services, you can firstly schedule the development and innovation activities. If you now incorporate the insights from the saturated market, you have the tools at hand to work out new substantive approaches. In view of the increasing speed of change, however, innovative methods are also necessary when developing new products – conventional models quickly reach their limits. With processes like Stage Gate, you not only ensure compliance with the required quality, but also do not skip or short cut any process steps. At the same time, you always keep the relation in line with the strategy of your company, because only in this way can you proceed efficiently and successfully.
It is not to be underestimated that you act across divisions with such a process – and this is exactly where the key to effectiveness lies: It is no longer a department that acts alone, such as research and development or marketing, but the different specialists work together. In this way, they can bring in different perspectives and skills from the start and ultimately also assume responsibility as a team. In addition, if you manage to organize a parallel processing of the upcoming tasks within the various areas and continually review the progress critically, you as a company become extremely conscious of your resources.
It makes sense to professionally support the transition to such a work method – you are certainly welcome to use our experience in this matter.
3. Switch from Cost Plus Selling to Value Selling.
Another important trend that should affect your growth strategy is individualization: customers want individualized products and services that they pick up exactly where there is a particular problem to be solved. This in turn means that negotiation and sales processes change drastically. You cannot take this development into account at all with Cost Plus Selling, this approach is far too static and does not do adjust to the new circumstances.
An important aspect of your growth strategy should therefore be the Value Selling approach: Successful sales are therefore based focusing on the benefits – both those that your company expects from the customer and the customer benefit. The price for your products or services should therefore reflect the individual benefit. For service companies, for example, this can be profit sharing. In other industries a proven model can be developed likewise.
If you have any questions about your specific challenge of generating growth in saturated markets, simply contact us – we will be happy to assist you.