Gaps are meant to be filled! In the business world, finding that market gap is almost as good as a lifetime achievement award literally. Market gaps for unique products or services are the goldmine for prospective businesses and if you pick your business strategy wisely then nothing can stop you from becoming the next unicorn (or even a super unicorn). But is it so easy? That’s the catch. Finding a ‘real’ product gap is not as easy as it looks. In fact it’s almost like finding that eureka moment and backing it up with research like a scientist. Business is for solving problems, this is what the approach is behind the market gaps! When I was reading all about it, I loved how deep this business concept goes. I am super excited to share the practical application of this business theory matched with my own magic of Ruchi’s Geeky Logic!
What is a Market Gap in Business?
No tech jargon here! In the simplest of terms, you will find hundreds of businesses serving various industries. They might be delivering products or services or features. But then you notice there exists an unmet need of consumers that has a potential demand but no business is fulfilling it yet! There, you have your market gap which mainly means unmet needs or opportunities that your competitors or any business is not addressing! The niche focused businesses are often built on these market gaps.
How to Find a Gap in The Market?
As I said, it’s not easy! I for one have this whole list of ideas that came to me at different points of time to create a business (the first one in the list goes at least a decade back!). But when one looks closely not many of them qualify as a market gap. The majority of them already are being serviced by some entrepreneur! With the wave of entrepreneurship everywhere, these market gaps are becoming even more rare than finding a rare diamond. But still there are some unique ways to identify a potential market gap, here’s the list.
1. Keep Monitoring Trends
Nowadays the trends keep changing faster than a blink of an eye. Result? The potential market gaps keep arising. Take the example of Canva. The designing softwares faced a massive tide with the social media literally gaining a place in every home. But the traditional design softwares were just too complicated for non-trained people. Canva found this ‘product gap’ and made designing easy for everyone with their product! Result, it’s now a household name too!
The truth is, consumer behaviour and preferences are constantly changing, you need to keep monitoring these changes to find that ‘eureka’ moment.
2. Pain Points = Next Business Idea
Identifying a business idea requires you to find what the consumers are looking for in an industry and they are not finding it yet. When you zero down on the consumer’s pain points, you could find the next big business idea too. AirBnB is a good example here. People love going to vacations minus the hassle of finding a good hotel and instead preferring a cosy home style setup. This pain point was addressed successfully by AirBnB, results we all know already!
3. Observe, Observe, Observe
The more you look closely, the more you will increase the chances of finding your next ‘big’ business idea. If you have watched Shark Tank India, you would have noticed many brands were built because the business owners themselves faced a pain point and did not find the solution to it. Result? They addressed that pain point themselves and built a business for millions of people looking for a similar solution.
4. International Market Can be a Good Reference
Many successful businesses nowadays were actually conceptualized in the international market first while their presence was not there in domestic markets for a long time. If your consumer seems ready then this reference can help you make a good business here. Reinventing overseas business has often been a starting point of servicing a market gap in business.
5. Domestic Market Saturation = Overseas Opportunity
Vice versa of the above point, sometimes markets are saturated in the domestic area but internationally it may be a gap, all you need to do is identify it and adapt your business to service the international market.
6. Find the Niche Area
Niche areas are often unnoticed mainly because the demand is not very high but recognising the potential is the key which helped many billion dollar businesses to grow. Niche focused businesses are majorly built on identifying gaps in the market or even gaps in the existing businesses.
7. Customer Feedbacks are a Treasure
If you are already running a business, your customers give you constant feedback and this includes what they are looking for. If you recognise the demand here, you can grow a parallel vertical for the business. This goes true for competitors too, check what their consumers are looking for. The easiest way to do so is finding their views in the reviews section of the websites.
Nowadays you can scroll through the social media comments left by the consumers as well. When they interact with posts on your prospective competitors’ pages, they could be discussing their pain points which are not being addressed, this could be your area to shine by building a business.
8. Innovation and Improvement is a Great Start Point
If you have the capability to innovate or improve an existing solution by making it better, then this is also equivalent to addressing a market gap. Example time! When the first iPhone was launched by Apple, people were already habituated to using smartphones but the innovation and improvement made iPhones find its real footing. The result we all know!
P.S.: Latest innovation on the block is AI generated Ghibli Art i.e. Ghibli styled AI images! Do you think it caters to a market gap?
9. Early Identification is the Winner
Whoever identifies the opportunity first, wins! Spot gaps in markets by identifying opportunities early, this is the only way to take timely benefit of a gap in the market.
10. Competitor Analysis
When you recognise a potential gap in the market, simply find the closest five to ten competitors, check if they are serving the unmet needs. If not, after more in depth research you can shortlist your business idea! Customer segmentation can help too, as it would help in better understanding of how competitors are addressing their marketing traits.
How to Know if the Gap in Market is Viable?
Identifying the viability of a business idea is essential. We don’t want to spend all our time, emotions and efforts for it to result in a sunk cost fallacy, right? Not many business books talk specifically about this, but here’s my logical spin on all the practical guidelines.
1. Strong Unique Selling Proposition
Product differentiator should be super apparent. If your product or service has very similar businesses serving solutions which look alike or are close to yours, then the market gap doesn’t exist. The business idea is not niche! You can still go on to build a successful business but you won’t find the benefit of servicing a niche area.
2. Timing is Important
Many times you would have heard big business CEOs and MDs talking about why they didn’t invest in a startup only because they felt that the market is not ready for it yet. If the business idea is fantastic but your prospective consumers are not ready for the solution, then the potential demand does not exist. Being too early to a new market is fantastic as it means less competition but you need to be double sure.
3. Less Direct Competition
Serving a niche market area means lower total addressable market (TAM) (More on this later coming up, to keep it super simple, what it means is the number of prospective buyers for your product or service). If already close direct competition exists then it’s difficult for the business to survive, i.e. you are going away from the blue ocean strategy.
4. Thorough Market Research
Just like any business venture, before you move ahead you need to do a thorough market research. Taking feedback, pilot testing or even doing a competitor analysis is all a part of being triple sure to check the viability of the market gap you want to address.
5. Check Why Competitors are Not Servicing the Unmet Needs
There is a possibility that due to underlying factors, the market gap was actually identified by the close competitors too but they didn’t find it viable to address it for certain reasons. You need to research and analyse why the competitors did not serve the gap. Is it because the gap is unnoticed or because this market gap is actually unserviceable?
Phew! Identifying a business idea is tricky. What’s even more difficult is finding a market gap for unique products. But like one of my professors used to say while I was penning down my research dissertation, you will notice millions of topics are covered by everyone, but still there always exists a tiny overlooked topic that’s waiting to be researched. Same holds true for finding that product gap too. Happy searching!