Market gaps are everywhere. The question is how to find profitable market gaps that are a good match for your skills and resources.
A market gap can be defined as follows:
- It is new and original.
- It offers the opportunitiy to improve something that already exists.
- It creates a new market for an existing product or service.
How to find profitable market gaps
The best way to find profitable market gaps is to expose yourself to new experiences, new ideas and new people.
Challenge yourself to do new things, meet new people and talk about topics that you usually don’t talk about. Try to collect as much information as possible so that your mind can start making new connections.
Collecting new information will stimulate your creativity and help your brain develop innovative ideas or see opportunities that other people do not see.
Here are some ideas to help you get started.
1. Ask your customers
Asking customers directly can show you unmet needs and areas for improvement that could turn out to be profitable market gaps.
You can use surveys, social media interactions, and direct feedback to understand what your customers are looking for.
This approach can be particularly effective in emerging and developing countries, where direct feedback from customers may reveal unique local challenges and preferences that larger or international companies might overlook.
2. Go to industry events or trade shows
Going to industry events and trade shows can give you valuable insights into the latest trends and innovations.
These gatherings are often where new products and services are first introduced. They also offer an opportunity to network with industry leaders.
You can gain inspiration from these events and identify potential profitable market gaps in your local markets that have not yet been exploited.
3. Look for creative combinations
Analyse your competitors to see what they are doing successfully.
This can reveal profitable market gaps that you can commercialise.
The key is not to copy what your competitor is doing, but to find your own way to take advantage of the opportunities that you identify.
Another way to come up with creative combinations is to form partnerships with local universities, research institutions and other businesses.
Collaborating on research projects or joint ventures can lead to the discovery of market gaps that can be commercialised.
4. Pay attention to government policies
This one speaks for itself.
Governments often introduce policies and initiatives to stimulate economic growth and innovation.
Keeping up to date with these initiatives can help you identify new market opportunities.
5. Study trends and new technology
Pay attention to emerging technologies and trends. These may create interesting new markets by creating opportunities that previously did not exist.
At the moment, AI and machine learning are creating new business opportunities.
Drones are an example where new businesses can emerge, such as a drone repair service or a drone leasing service.
This business did not exist until someone saw how the arrival of the new technology created profitable market gaps.
Identifying and exploiting profitable market gaps
Once you identify a market gap that is potentially profitable, you have to act quickly.
You will have to develop a strategy that allows you to enter this market and start making money as quickly as possible.
Here are some ways to do that.
1. Adapt successful models from other regions
Study successful business models in other regions to see if they can be adapted to your local market.
This does not mean copying the model.
It means understanding the core value proposition and adapting it to fit local needs and preferences.
This approach can be particularly effective in areas where certain products or services have not yet been introduced.
Some time ago, I worked with a farmer in Tanzania who wanted to increase his profits. Specifically, he was looking for ways to stop selling his products on local markets where he was dependent on fluctuating daily demand.
He had studied a successful business model from another country and wanted to see if he could use the same model in Tanzania.
During our coaching sessions, we identified the most profitable customers in the market he wanted to target. We also identified people in his network who would be able to introduce him to these potential customers.
Next, we created a product for these customers and tested their response. It was positive.
He then leveraged his contacts to win several bigger customers, which led to an increase in his sales and profits.
2. Focus on niche markets
In every market, you will find niche markets that are ignored by larger companies.
These market niches can create very interesting opportunities for you.
Additionally, try to focus on the needs of specific types of customers.
For example, many consumers in emerging and developing economies are becoming more aware of environmental and social issues.
By positioning your business as environmentally friendly or socially responsible, you can attract a loyal customer base and differentiate yourself from competitors.
Practical example
Some time ago, I coached a furniture manufacturer in South America.
The company had been in existence for over 10 years and had built up a good reputation for high quality and locally-made products that also served to create jobs and higher income for local artisans. We identified this as key strengths.
To increase their profitability, we identified several highly profitable customer segments. We selected these segments by looking for customers that were interested in things that this business was good at.
We then updated their marketing to focus on these strengths. As a result, the business brought in new customers and started generating higher sales.
3. Adapt products or services for local markets
Conduct thorough market research to identify underserved or unserved customers.
In your market research, pay attention to the size of the market, its growth potential, customer demographics and any competition.
There are various tools you can use to do market research.
One of the best-known is the SWOT analysis. This can help you understand your position in the market and identify viable gaps to exploit.
4. Use your community relationships
Having strong relationships with the local community can provide a competitive advantage for your business.
This is because strong local relationships also helps you understand local cultures, values and traditions. And this can help you create products and services that are a good fit for your target audience.
Community support can also lead to word-of-mouth marketing. This is one of the best types of marketing a business can have!
5. Leverage technology
Technology can be a great equaliser and help you to gain an advantage over bigger competitors.
Using digital tools and platforms can help small businesses reach wider audiences and streamline operations.
For example, I worked with a tech company in South America that consolidates data from multiple different sources to create a single dashboard for small and medium businesses that need supply chain and logistics solutions.
Their solution works so well that they are beating well-known names to win customers.
Test the market before you commit!
Before fully launching a new product or service, make sure to test the market.
Use customer feedback from these tests to improve your product or service. This approach helps to minimise risk and ensures that you meet customer needs.
Conclusion
Finding profitable market gaps requires creativity, research and a willingness to embrace and test new ideas.
Doing so will help you identify profitable market gaps and capitalise on them to grow your business faster and more profitably.
Guide My Growth helps small and medium enterprises in Africa, Asia and LATAM grow through effective and time-tested strategies that lead to higher sales, increased profits and faster growth.
