Weekend Musing: Market Saturation?

Posted: February 17, 2013 in HEALTH AND HEALTH POLICIES
Tags: , , , ,

Weekend Musing: Market Saturation?

It is usually quite annoying to listen to doctors try to get involved in issues other than patient care.

This is a sentiment that many people, doctors included, hold tightly unto, for reasons that remain quite unclear to me. This sentiment definitely raises more questions, than answers.

That said, I would go on to say this for myself. Among doctors, I will probably not rank very highly, based on the amount of clinical knowledge in my head. I generally make up for this with a good work ethic and broader knowledge on a whole lot of other issues, ranging from irrelevant football data and statistics, through health policy and health economics, to more general social issues. I therefore tend to have musings, on a wide range of issues.

Now that we have got that mule out of the way, let us examine the real issue, contained in this article.

Market Saturation.

Market saturation is defined as a point, at which a market is no longer generating new demand for a firm’s products, due to competition, decreased need, obsolescence, or some other factor. It is a situation in which a product has become diffuse or distributed within a market.

A product or service that becomes profitable in the market will almost always invite new players. As a business trend becomes increasingly popular, more and more enterprises tend to join the industry, and soon enough, the market becomes saturated.

As an example, in many households, and depending on the economy, the number of automobiles per family is greater than 1. To the extent that further market growth (i.e. growth of the demand for automobiles) is constrained (the main buyers already own the product). The automobile market is basically saturated. Future sales depend on several factors including the rate of obsolescence (at what age cars are replaced), population growth, and societal changes such as the spread of multi-car families.

It is important to note that market saturation does not mean that every consumer has a product. Instead, the term generally means that a substantial portion of those who are likely to purchase a product have already done so.

Over a decade ago, when mobile phones took over the world, we were presented with a huge emerging market. Soon afterwards, a number of investors wrongly pulled out of mobile phone companies, with the wrong impression that it was a tipping and potentially saturated market. Considering that the man hawking sales in traffic owns a mobile phone or two, those investors could be forgiven for their knee jerk reactions!

Fast-forward to 2013 and mobile phones are still it. With innovation, and emerging technologies, the mobile phone industry continues to successfully navigate a saturated market. The trick however, must lie in the details. And no one is sharing.

Non-governmental Organizations (NGOs) are mostly non-profit organizations, and so many people will be surprised that I will mention NGOs and market saturation in one breath. At this point, I will urge you to remember that I am a doctor. What do I really know right? 😉

Health based NGOs have become a dozen for a dime. Many of which are doing redundant work, and some, no work at all. However, many of these NGOs actually strive day and night, to make a difference to thousands of people out there. And a lot of them are quite successful at it!

Many questions then arise, for many NGOs, who set up to address a need, and also go out to raise funds, in their bid to do “good” work. What are the necessary steps to undertake that will help ensure and sustain the benefit of your work? How do you guarantee effectiveness and efficiency in your area of work, to potential donors?

How do you find your edge in a market that has already reached saturation?

Should these NGOs use diversification strategy? How much innovation can these NGOs really bring into their work, to ensure evolution in a saturated market?

I run two health-based NGOs, and volunteer for a number of others, and my experience tells me that mere suggestions of a diversification strategy and innovation are not enough to convince anyone, or to actually bring about a sustained effort and output, on the part of the NGO.

Motivation and addressing the need of a population are such huge players, in the need for and effective benefit provided by an NGO. Professionalism and accountability help build the brand and image of an NGO, and helps them successfully improve the lives of the communities that they address. However, when all of this is in place, convincing donors and potential partners of the value, that any such organization will add to the community, is a huge challenge.

I am hosting a webinar and a session on the issue of addressing Market Saturation in health and healthcare, in the coming month. However, I figured it would be really great to get a buzz on this issue, and get a few perspectives from a wider online community, even before the sessions start.

My questions to the economists, and to everyone else, who reads this and is kind enough to use the comments’ section are these:

  1. Does market saturation affect a Non-profit?
  2. If yes, how can a non-profit organization, address market saturation?

Use the comments’ section, freely! 🙂

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