When the amount of product provided in a market has been maximized in the current state of the marketplace. At the point of saturation, further growth can only be achieved through product improvements, market share gains or a rise in overall consumer demand. 

Investopedia Says:
Many companies are already aware of the problems of market saturation and have intentionally designed their products to "wear down" or otherwise need replacement at some point. For example, selling a light bulb that never burned out would limit consumer demand for more of this product.

Services revenue also becomes an important consideration when product revenue begins to slow; IBM smartly changed its business model toward providing services once it saw saturation in the large computer server market.

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