Saturation in a market segment occurs when a large number of products with very similar characteristics are offered. In a context of saturation, consumer interest in products decreases, reducing the effective demand for the segment and often leading to its disappearance.
Therefore, the launch of new products in such a context has a high probability of failure. An example is what has been observed in the film industry, where saturation is beginning to be detected in superhero films. See here.
In a recent article written by professors Alicia Barroso and Samira Reis, both in the Department of Business Economics at the Universidad Carlos III de Madrid, and by professors Marco Giarratana (Bocconi University, Milan) and Olav Sorenson (Yale University, USA), entitled “Crowding, Satiation and Saturation: The Days os Television Series’ Lives”, the connection between saturation and success in the television series industry is analyzed. In their article, the professors explain how the saturation of segments, also known as themes, affects the success of series in the television market. The work shows that the demand for these themes depends directly on the previous consumption of similar products previously offered. In other words, market segments that were empty (new) become saturated due to the continuous attempt to satisfy demand. The authors find that the survival rates of series depend significantly on the accumulated consumption of offers within the same theme or segment.
To reach this conclusion, the authors use data from the television series industry in the United States (1946-2003). The article clearly shows how the massive launch of series on the same theme increases the probability that a series will be withdrawn. To identify those products that are considered similar, a novel methodology is used, particularly interesting for the identification of segments, in which grouping techniques are applied to recognize the similarity in the texts that describe the television series.
The results obtained have important implications for companies that compete in the same sector, especially in making decisions about which segments are the most appropriate when launching a new product. Likewise, the article helps to understand which business models are the most appropriate for the survival of a product in an environment saturated with articles with very similar characteristics.