What happened to the good old days?
Common responses of executives going through the Saturation Phase:
“We tend to overthink things.”
“The marketplace has changed and we don't know our place in it.”
“We're more opportunistic than strategic.”
“I can't stop worrying about work when I go home.”
“We're experiencing some internal discord.”
“Margins are tighter than they were a year ago.”
Saturation is that sickening moment when the growth curve plateaus, and maybe even drops, for the first time. Once-clear waters are infested with sharks, and once-clear minds begin to cloud with uncertainty. Now’s the time to keep your head: all is not lost, but this phase will test your mettle and call for every ounce of conviction, attention, and leadership.
No silver bullets.
The Saturation Phase is as inevitable as it is unpleasant. Companies in profitable and growing industries are going to attract competitors, and sooner or later one too many companies enter the market. As growth begins to slow and the size of the industry pie becomes increasingly fixed, players are forced to compete more aggressively for each slice. Good for customers. Not so good for product and service providers.
Companies in this phase can initially mistake slowing sales for something they’re doing wrong. That can cause organizational leaders to lose precious time questioning their own leadership, rather than recognizing that what they’re experiencing is symptomatic of changing industry dynamics and calls for dispassionate analysis and smart strategic adjustments. Instead, they often begin to doubt their own ability and judgment and, lacking the confidence they once had, become more opportunistic than strategic.
One common example of opportunism is sacrificing margin through price reductions, price promotions, or a combination of the two. It’s as rational as it is justifiable, given increasingly challenging competitive dynamics. But it’s also a reflex—and usually an unhealthy one. Pricing pressure is a classic indicator of market saturation, and to give in to it is to exacerbate the trend.
As companies move through the Saturation Phase, they tend to feel increasingly disoriented, can begin to drift, and start to lose faith in themselves and each other, threatening even the healthiest corporate cultures. It’s not uncommon to begin casting about for silver bullet solutions in an effort to get back to growth, sometimes even seeking to bolster the top line through mergers and acquisitions.
Fortunately, there are a number of strategies that can help companies recalibrate their product and service offerings, distribution systems, and marketing approaches to focus on the denominator of the price/value equation, keeping them ahead of competitors who are dealing with the same dynamics. But ahead lies the Commoditization Phase, which should be avoided at all costs.
Become who you were designed to be.
Forces at Work
Good research during the Saturation Phase can be vital to informing good strategy. This is where most brands lose sight of how much they look like competitors, or forget that customer preferences have changed from what worked a decade ago. Now is no time to stop scouting. Keep gathering intel that fuels relevance and differentiation.
As tensions rise and teams start to look inward for a place to cast blame, clarity and focus on your brand’s raison d’être will be vital. Don’t get dragged into mistrust, gossip, and mutiny. Clear vision and clear leadership can keep a team aligned and strong through even the fiercest storms.
Most of the advertising you see comes from brands in the Saturation Phase, and for good reason. You can’t rely on novelty anymore. Customers know your category and know what to expect, and even how to shop you. Consistent, strong brand-building is the cost of doing business and will separate the wheat from the chaff.
Take the 5-minute diagnostic.
You’re in the fight of your life.
Now’s a great time to call in reinforcements. Plenty of firms thrive in this phase, but you may need an extra dose of the perspective and clarity that are in short supply right now.
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