Identifying opportunity and finding a market gap

A market gap is a need of customers that is not served, or served poorly, by existing products or services. Filling it gives the entrepreneur a space with less competition.

Sources of opportunity

• Customer problems and complaints: frustration with price, quality, delay or availability.
• Changes in technology: e.g. mobile payments created new services.
• Changes in regulation, demography and lifestyle: ageing, urbanisation, new rules.
• Imports and local shortages: products bought from abroad that can be made locally.
• Own skills and work experience, hobbies.
• Competitor weaknesses.

Methods to find a gap

1. Observation and field visits: watch how people solve a problem today.
2. Surveys, interviews and focus groups with target users.
3. Trend analysis (PESTLE): political, economic, social, technological, legal, environmental changes.
4. Competitor mapping: plot competitors on price vs quality; empty areas show gaps.
5. Problem-solution brainstorming and "jobs-to-be-done" analysis.

 Quality
  high |  [GAP]        A     <- A: high quality, high price
       |
       |
  low  |  C            B     <- B, C: low quality
       +---------------------
        low           high  Price

Here no competitor offers high quality at a low price, so the top-left area is the gap.

An opportunity is worth pursuing when the need is real, the market is large enough, and the entrepreneur can deliver at a profit.

Answer: A market gap is an unserved need; find it by studying customer problems, trends and competitors with observation, surveys and positioning maps.