The thrill of discovering a gap in the market and filling it with a novel product or service is a dream come true for many aspiring business owners.
What is a market gap?
It refers to a set of customers whose demands are presently unfulfilled. Closing the gap means finding a way – read, launching a product or service – to satisfy these people's needs in some form. This can be done in one of the following ways:
- By creating a completely new product or service
- By enhancing an existing product or service
- By introducing an existing product or service to a new market
But how to you spot the gap in the market in the first place? Let's explore four of the most common ways you can do it.
1. Solve a problem you've experienced yourself
A common piece of advice is to start by looking for market needs within their own lives. By paying attention to the problems and frustrations you encounter daily, you can identify potential business opportunities that address unmet needs.
Reflect on the tasks or processes that you find particularly bothersome or time-consuming. What job needs to be done but is difficult or impossible with the existing products or services? By considering your own experiences as a consumer, you can gain valuable insight into potential opportunities for innovation.
In fact, many successful businesses have been founded on this very principle. For example, Neil Blumenthal, co-founder of Warby Parker, was frustrated with the high cost of prescription glasses after losing his own pair. He saw a gap in the market for affordable, stylish eyewear and founded Warby Parker to address this need.
Try to think critically about the products you use daily, then ask these two questions to yourself:
One: Is there a unique or innovative way I can provide a service to people?
For example, the e-commerce company GEGE offers a subscription service for baby diapers. The company didn't invent diapers – instead, they found a unique way to sell them. Their subscription service and home delivery are their unique selling points that speak to busy parents.
Two: Can my product simplify someone's life or enhance their experience by being faster, more automated, affordable, enjoyable, or healthier?
A good example is the Feedr platform that provides office workers with customized meals from healthy food suppliers. Food delivery isn't anything new per se, but the way they provide their services is – they've teamed up with thoughtfully chosen food vendors, which allows the company to provide a healthier option to traditional services.
2. Stay on top of regulatory changes
Staying informed about the latest legislation changes and new regulations can serve as a valuable tool for identifying new business opportunities. When new laws or regulations are introduced, they can trigger significant changes within industries, which can create opportunities for innovation and new solutions.
For example, the COVID-19 pandemic created various business prospects, despite initially creating substantial downturn in global markets. Lockdowns, closure of schools, shopping malls, and limitations on public gatherings – these regulations made entrepreneurs think creatively, and many came up with new business ideas.
Here's just one of many examples of businesses launched during the Covid-19 pandemic. During lockdown, Verity de Yong, founder of Ved Cooks, noticed how much waste she was generating by eating every meal at home. This inspired her to start experimenting with the skins and leftovers of food items, such as onions and avocados, to determine if they could be used to create natural dyes for fabric. This is how her sustainable and eco-friendly table linens brand was born.
3. Conduct market research
Undertaking market analysis is an excellent means of identifying untapped market potential. This entails studying local and/or global trends to develop a better understanding of the market needs. Market research is probably the most popular way first-time entrepreneurs, as well as established businesses discover gaps in the market that can be filled by their own offerings.
Here are a few strategies you can use to conduct market research:
Explore Google Trends
Google Trends is a valuable tool for gauging what people are searching for. And if people are searching for something, it may be a strong signal they'd be interested in purchasing it. Google Trends provides real-time data and location-based trends that you can take into consideration, just bear in mind that it may have limitations when it comes to niche ideas with lower search volumes.
- Study what's trending on social media
Social media platforms can provide valuable insights into present trends and consumer preferences. Try browsing trending hashtags and exploring suggested content on Facebook, Instagram, Twitter, and other platforms to see what topics and products are capturing people's attention.
- Analyze product reviews
If you're considering to enhance an existing product, try researching top-selling items on online marketplaces such as Amazon, Etsy, and eBay, and analyze their reviews. Positive reviews will serve as an insight into the strengths of the existing products, highlighting areas that you may want to consider incorporating into your own. Whereas negative reviews can illuminate what's missing. Where are other companies underperforming? Why are their customers unhappy?
For example, this review of a rolling suitcase criticizes the short lifespan of its wheels. The customer also states that they'd like the wheels to be replaceable. You can take note of such complains and suggestions from actual users, then incorporate these features in your product.
4. Study businesses in the chosen industry
If you already have a particular industry or sector for your business in mind, it's worth analyzing both the strengths and weaknesses of your future competitors.
In doing so, you can identify market demands that are not being met, which your business could cater to, thereby setting yourself apart from rivals and appealing to potential customers.
Here are a few factors to consider:
One: customer service
Can you offer more personalized and customer-friendly services? Then you could gain a competitive edge by tapping into a market segment that is dissatisfied with poor customer service. Make sure to emphasize your bespoke customer service to attract customers who are looking for those particular features.
With an increasing focus on environmental concerns, sustainability is becoming an essential factor for consumers. By emphasizing your ethical manufacturing practices and responsible disposal methods, you can attract environmentally-conscious consumers who are looking for sustainable options.
For example, BRUNA positions itself as a sustainable brand and highlights the fact that their jewelry is made of pearls, shells, and gemstones obtained from local artisans in Italy and Thailand. Additionally, they use materials like 100% recycled gold and sterling silver to ensure eco-friendliness.
Many consumers complain about the declining quality of products, especially with the growing trend of cost-cutting measures. Offering a higher quality product with narrower margins may initially cost you more, but it canbe worth it if you're looking to build a loyal customer base that values quality and reliability.
In general, products and services can be categorized as budget, mid-range, and premium offerings. In certain markets, one of these segments might be missing, creating an opportunity for a new player to fill the gap. By analyzing your competitors' offerings, you can identify the "sweet spot" that is currently underserved. A classic example of this is Henry Ford's revolutionization of the car industry by making cars affordable to a broader audience.
There is always space for something new
The business world is ever-changing, providing opportunities for innovative thinking and new solutions to old problems. Wether through personal reflection or competitor analysis, you can identify potential market gaps and capitalize on them. Remember – there is (almost) always room for something new.