A gap in the market is an audience, industry segment, or need that is underserved by businesses. For example, Netflix has filled several market gaps over the years; First, with its initial mail-order movie rentals and then with its streaming platform. Faithful to Nature fills the market gap that occurred when health-conscious consumers wanted an online, central, convenient place to shop for organic, healthy, and natural food and consumer products. Every successful business you can think of has served some sort of market gap.
Finding Opportunities for Market Growth
Whether you are starting a small business or looking for growth opportunities in your current business, market gaps can act as sources of inspiration for your next product or service - as well as finding opportunities in the current market which your competition is unaware of.
Assess Your Strengths
It is often more important that you align your interests and strengths with the business idea that you are planning to execute, than simply try to find a “good” idea and hope for the best. Sometimes no matter how good the idea is, without alignment with your strengths you may find it too hard to turn it into a thriving business. It doesn’t do you any good to find a gap in the market that you can’t take full advantage of. So before you start to look for market gaps, it only makes sense for you to know exactly where your strengths lie.
Start by making a list of your perceived strengths and use past experiences as guidance. Think about what you’re most happy doing and passionate about. Revisit old critiques or performance reviews to pick out anything that might give you some insight. Reach out to colleagues for honest feedback that can help you figure out what specific strengths you could bring to the table. Consider taking a professional aptitude test, which could identify areas of strengths you can explore in a small business environment.
Consider Niche Markets
Small business owners often think too broadly, or over think, when it comes to the market they plan to enter. However, it is always better to think small when it comes to gaps in the market, and be more specific to increase the likelihood of being more effective when entering the chosen market with your new business.
“How niche is too niche?”
You want to make sure that the market is big enough to sustain growth and business profitability. It should have many existing products because that shows you that there is demand, and due to this there should also be an easily identifiable customer base.
Without the above, your niche may not be big enough to support your new small business.
Niche markets are also great avenues for new businesses to learn from existing businesses. If you see that someone has successfully filled a gap in the market in one industry, you could recreate that success in a similar industry. For example, if a business has succeeded in selling branded masks during the period of Coronavirus, it may pose an opportunity to diversify if you currently have a clothing manufacturing company that could offer its machines to manufacture branded masks.
Sometimes, an industry can go through big changes for legal reasons. Local legislation can create market gaps because they can force an entire industry to make changes it wouldn’t have done otherwise. If you can successfully forecast those changes, or identify them quickly, you can take advantage of those market gaps before your competition.
Keep within proposed legislation by staying abreast of industry laws. You can also sign up for updates from trade organisations, which often track pending legislation and send out analyses to subscribers. At the very least, you can create Google alerts for certain keywords, and you will get emails each time they appear in the news - this can be your go-to for risk-adjusted strategies when considering your next big move.
Identify Unsolved Problems
When you refine a market gap down to its very essence, it is an answer to a problem area that is underserved or is not currently being served at all - an unsolved segment of the market. Solving an existing problem will lead affected customers to you, and if identified correctly your products or services will practically sell themselves.
Customers Can Identify Market Gaps
A straightforward way to find those hidden gaps is to ask your potential customers what they are looking for in the current market. You can do that by researching industry trends, or using a market research company for up to date reports and research papers. Conducting a customer survey will offer a step in the right direction, whether it be researching current customer issues or simply researching public reviews of some of your potential competitors. This can give you some insight into what your competitors aren’t doing right and give you the chance to do it better.
Focusing on a market gap also helps you make sure you avoid diving into a market that is already oversaturated. After all, a saturated market is often a dead-end for new businesses. So with these tips, make sure you clearly identify and describe your target market and reasons for choosing it in your business plan.
If you require assistance with market research when starting a new business, or diversifying into new markets, please visit the WhyFive Insights page to access their contact and service information.