Final answer:
In marketing, 'market saturation' describes the number of stores and types of intermediaries at the retail level of distribution. Factors like competition, monopolistic markets, and shifts due to technology and globalization play key roles. Models such as the Huff Model and Hoteling Model help analyze and predict retail locations and consumer behavior.
Step-by-step explanation:
In marketing, the term market saturation is used to describe the number of stores in a geographical area—and type of intermediaries to be used at the retail level of distribution. Market saturation is a critical concept in setting a business's strategy, primarily influenced by factors like competition, consumer behavior, and technological and global shifts in market dynamics. For instance, the Huff Model is often employed by retail site analysts to predict customer shopping behavior based on the store's distance, size, and product desirability, in comparison to competition.
Firms in a monopolistic competition market, like the Mall of America, deal with many competitors offering similar but not identical products, creating a scenario with a significant number of options for consumers. The degree of market competition has immensely increased due to advancements in communication technologies and globalization, allowing consumers to shop from anywhere, increasing competition for local retailers.
Site location models, like the Hoteling Model, also shed light on retail patterns by suggesting that with competitors offering similar products, consumers will prefer the shortest distance to shop. Furthermore, market definitions evolve with technological advancements and globalization, where buyers and suppliers connect globally, impacting local retail business competition levels. The market structure varies based on the urban hierarchy, with larger cities offering more specialized goods and services, while smaller towns provide basic needs.