What does 'market saturation' signify in a business context?

In a business context, market saturation signifies the point at which a product or service has been fully taken up by the existing market. In this scenario, the demand for that product or service is maximized, meaning that there is little to no room for new customers or sales growth. Consequently, businesses may find it challenging to generate new demand in a saturated market; they must either innovate or find new markets entirely to sustain their growth.

Understanding this concept is crucial for strategic planning and marketing, as it prompts businesses to consider diversifying their offerings or exploring untapped markets to stimulate growth after reaching saturation in their current market.