Gap in the market – definition and meaning
A gap in the market is an opportunity to make and sell something that is not available yet. However, consumers would like to have it. The ‘gap’ refers to the difference between the supply and demand for that product. In other words, it means a consumer-need that supply has not yet met.
For companies, a gap in the market represents an opportunity for it to widen its customer base. You can achieve market penetration by identifying a gap in the market and filling it.
Gap in the market attributes
A gap in the market has at least one of the following attributes.
- It is something original. In other words, it is new; there is nothing like it in the market.
- It already exists. However, an upgrade or improvement would boost sales significantly.
- The product already exists. However, nobody has tried to sell it in a new market. Introducing it to a new market would increase sales considerably.
According to the Macmillan Dictionary, a gap in the market is:
“An opportunity to produce something that is not yet available but that people would like to have.”
Spotting a gap in the market
There are gaps in the market everywhere. The secret is finding one that you can exploit. In other words, identifying potential demand that you can satisfy with your skills and resources.
According to smepals.com, you should expose yourself to as many interesting and new people as possible. You should also expose yourself to as many experiences and ideas as you can.
After extensive exposure, your brain is more likely to be innovative and make new and creative associations.
Smepals.com makes the following comment:
“It’s very hard to find a gap in the market without getting out there and meeting people. Challenging yourself to do new things. Exploring. Being curious. Making new connections.”
“Make it a habit to draw in as much information as you can and use it like jigsaw pieces in a puzzle.”
Should I exploit the gap?
When you find a gap in the market, the next step is to determine whether you should exploit it. Most business opportunities consist of four elements, which must all be present simultaneously. The four elements are:
- There must be demand, i.e., a need, for this product or service. If you found a gap in the market, demand exists.
- You have the means to meet this demand.
- You have a way to apply the means to meet the demand.
- There is a method to benefit. In other words, it is profitable.
If the gap you identified appears to have these four elements, there is a good chance you will succeed. However, if one element is missing, be cautious, or look for a new partner. In this context, a partner means somebody else with whom you could go into business.
If for example, you do not have the means to meet the demand, perhaps you know somebody who does. If you trust that person or company, you could consider teaming up with them.
Gap in the market – be realistic
When trying to identify a gap in the market, it is important to be realistic and practical.
For example, a new type of airplane that traveled at the speed of light would be incredibly popular. Imagine being able to fly from New York to Sydney in a fraction of a second.
Even though demand is there for this light-speed travel, we do not yet have the technology to meet it. In fact, we are probably centuries away from inventing anything like that. Therefore, considering it for commercial purposes would be pointless.
Video – A gap in the market
In this KochiesBiz video, Debbie Lawson talks about her company Dharma Bums. She used to work in the fashion business, found a gap in the market, and exploited it. Her company now sells to over seventy-five countries.