Entrepreneurship is all about identifying and addressing unmet needs in the market. Successful businesses earn profits by providing value and solving real problems.
A great example is Signaturely, a digital platform that provides easy-to-use electronic signature solutions. Founded during the pandemic, Signaturely saw a market gap for a simpler, more affordable alternative to major players like DocuSign. This made them ideal for freelancers and small businesses.
This article will discuss proven methods like market research, data analysis, and customer surveys to help you identify market gaps. We’ll also explore how to innovate based on these findings and expand your market offering.
What’s a Market Gap and Why It’s Important?
A market gap is a specific area within a market where there is a lack of products, services, or solutions to meet existing consumer demand. It represents an opportunity for businesses to fill that void by developing.
For example, Airbnb realized the limited affordable lodging options for travelers beyond traditional hotels and came up with unique and cost-effective accommodations.
By enabling homeowners to rent out their spare rooms or properties, Airbnb filled this gap, creating a new category of lodging that appealed to budget-conscious and experience-driven travelers.
Similarly, Beyond Meat is meeting the growing demand for plant-based meat products among health-conscious and environmentally aware consumers.
According to a study by the Harvard Business Review, nearly 95% of new products fail every year due to a lack of innovation and underserved consumer needs.
Monitor User Interactions to Uncover Fresh Insights about Gaps in the Market
Analyzing how customers engage with your application can reveal hidden needs, frustrations, and areas where enhancements or innovations are required. Consider funnel analysis, for example.
By observing user conversions at critical stages of the user’s journey, you can determine where they encounter challenges, experience obstacles, or abandon the process. Addressing these aspects of the user experience can significantly enhance customer satisfaction and loyalty.
For example, Slack employed user interaction monitoring to analyze the onboarding experience of new teams. They found that users frequently struggled to invite team members and set up channels effectively.
In response, Slack introduced a guided onboarding process with interactive tutorials to help teams navigate these features. They experienced increased user activation rates and improved satisfaction levels following these adjustments.
Gather and Assess Customer Input for Spotting Untapped Customer Needs
Initiate surveys to identify market opportunities. Gathering customer insights within a SaaS (Software as a Service) environment is straightforward. With platforms like Userpilot, you can easily generate and deploy in-app surveys to collect user feedback.
Consistently collect feedback to monitor shifts in user sentiment, ensuring you stay ahead of evolving needs and seize opportunities for improvement.
Additionally, consider implementing contextual surveys to gather specific feedback regarding particular features. For instance, after launching a new function, prompt a “Customer Effort Score” survey to pinpoint ways to enhance usability and intuitiveness.
Alongside quantitative questions, always add open-ended inquiries to understand user feelings better. For example: How would you rate the ease of completing ‘Task X’?
Collect passive responses via an on-demand feedback widget. Don’t rely solely on direct requests for input. You can integrate a feedback widget within your application, enabling users to share their thoughts whenever convenient.
You can also ask customers to share their experiences with your product – what they appreciated or found lacking. While they may not specifically outline the solutions they need, evaluating their comments can inspire ideas for new challenges that could be addressed.
Some tools you can use to collect and analyze customer input are:
- SurveyMonkey
- Typeform
- Qualtrics
- Google Forms
- UserTesting
- Hotjar
- NPS Tools (e.g., Delighted, Promoter.io)
Here are some more ideas for you:
Analyze Customer Journey Maps
Creating detailed customer journey maps can highlight critical stages where users face challenges. According to a report from Forrester, optimizing customer journeys can lead to revenue growth.
By understanding these journey pain points, businesses can tailor their offerings to satisfy customer needs and fill gaps in the market.
Common Observations
Sometimes simply being observant at the right places and time can be game-changing. For example, Dylan Jacob, the founder of BrüMate, discovered the gap by observing consumer behavior in social settings.
He noticed that while insulated drinkware for coffee and water was plentiful, there wasn’t a product specifically designed to keep alcoholic beverages at optimal temperatures. This was particularly noticeable during outdoor activities like tailgating, camping, and barbecues, where people wanted to keep their beer, wine, or cocktails cold for longer periods.
Jacob also recognized the growing trend of craft beer and wine consumption, where consumers valued both taste and temperature. His keen market awareness and understanding of customer frustrations—warm drinks, condensation, and lack of portability—allowed him to create a product that addressed these pain points, filling an untapped niche with BrüMate’s stylish and functional designs.
Interested in learning more about how entrepreneurs uncover market gaps and turn them into successful ventures? Check out our detailed case studies at Ownerpreneur for insight and inspiration.
Utilize Online Reviews to Gauge Customer Sentiment
Monitoring online reviews on G2 and Trustpilot can provide insight into customer experiences and pain points. You can do that for your brand and for your competitors, too.
Find out what your competitors are doing wrong, and you may find a gap in the market.
Competitor Analysis for Market Gap Identification
One strategy you can use is to examine recently successful unique offerings by your competitors. Assess the distinct services that have gained traction in the market. Observe competitors to understand the unique value they deliver to customers.
If their approach resonates, explore the needs they are addressing and how they ensure sustainable delivery of their services. Recognize that some innovative ideas may become outdated as consumer needs evolve due to technological advancements, particularly online developments.
Next, you can also draw inspiration from competitors and enhance their strategies. For example, Instagram’s stories were inspired by Snapchat. However, Instagram also improved the feature by introducing reactions and replies to stories.
Success often hinges on learning from others, especially those who have achieved it already. When looking at competitors for inspiration, aim to build upon their concepts.
Leverage Social Media Insights
Social media platforms provide a treasure trove of data regarding customer preferences and trends. A study by Sprout Social revealed that 71% of consumers who have a positive social media experience with a brand are likely to recommend it.
You can spot emerging trends or unmet needs, representing market gaps, by analyzing engagement metrics and customer conversations.
Explore Emerging Demographic Trends
Monitoring demographic shifts is essential for spotting untapped market opportunities. A Nielsen report highlights that multicultural consumers represent a growing segment with over $3 trillion in purchasing power.
For instance, Gen Z has a deep preference for sustainability and ethics. They prefer sustainable fashion over H&M and Zara. There are still many markets out there that can leverage sustainability and create innovative products.
However, the same generation also has a low tolerance for inauthenticity, so your intent should be good and your cause genuine.
Mapping the Consumer Behaviour of Gen Z & Millennials
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Test and Iterate New Product Ideas
Rapid prototyping and A/B testing can reveal unmet customer needs by gathering real-time feedback. Organizations can quickly pivot to address market gaps and enhance offerings that align with consumer desires by iterating on product concepts based on customer insights.
Facebook is known for its rigorous use of A/B testing to refine features and enhance user experience. For instance, when Facebook introduced the “Like” button, they experimented with different designs and placements on the page.
By analyzing user interactions and feedback from these tests, Facebook could determine which variation garnered the most engagement. This iterative product development approach helped them create a more effective feature that resonated with users.
Leveraging AI and Technology to Identify Market Gaps
Giants, like Amazon, employ advanced AI algorithms to analyze purchasing patterns and customer reviews. Amazon can identify gaps in product offerings by examining data on what customers buy and what they express dissatisfaction with.
For instance, if multiple reviews indicate a demand for a specific feature in a product category, it can prompt Amazon to introduce new items that fulfill that need.
Shopify also uses AI-driven analytics tools to help merchants understand customer behavior and trends.
You can use the following AI tools for Market Research:
- Quantilope
- Speak
- Pecan
- Appen
How To Use A.I. For FAST Market Research (3 Prompts That Will Save You Time)
Find Your North Star by Leveraging New Platforms
When the App Store and Google Play launched, while smartphones were at the cusp of evolution, many new apps, games, and businesses exploded overnight.
By leveraging the App Store’s features and prominence, Instagram positioned itself to rapidly gain users and establish itself as a go-to platform for visual content. Many influencers found their markets riding on the internet wave, in turn. Similarly, the launch of TikTok created many stars when it first launched.
Much like the App Store and social media platforms, the explosion of interest in cryptocurrencies enabled many entrepreneurs and developers to explore new opportunities. Projects like Ethereum introduced smart contracts, allowing developers to create decentralized applications (dApps) and driving innovation in industries beyond finance.
In the current technological era, businesses can find their North Star by leveraging powerful AI tools such as OpenAI’s ChatGPT. You can develop and launch an app for the GPT Store using the OpenAI GPT Builder and serve the underserved Open AI user base.
It could be an astrology app for GPT users or an advanced algebraic math calculator for high-level computing.
Companies promoting educational content like ebooks, online courses, etc., or e-commerce can also utilize ChatGPT to engage users through interactive experiences, driving retention and brand loyalty.
Draw Inspiration from Global Markets
Exploring international markets can provide a wealth of ideas for your business. Investigate worldwide and local niche markets to find successful products that have yet to enter your area.
The US-based Uber and Lyft inspired Ola and DiDi to provide cab-based mobile app services in India and China.
Identify the problems these products solve or the needs they fulfill. Are there similar challenges faced by consumers in your market? If so, this presents a potential opportunity for innovation.
Conclusion
To round up, you must conduct strong market research and study your users, their journey maps, and their reviews, conduct surveys for direct feedback, and integrate widgets to understand customer satisfaction.
You can also do a competitor analysis or draw inspiration from global markets. You can develop new prototypes or do A/B testing for different features. Finally, you can leverage the latest platforms and tools like the GPT Store, just like how Instagram leveraged the App Store when it was launched and how OpenSea became a winner in the Crypto and NFT movement.
We want to end this article with another inspiring story. Signaturely is a digital platform that provides easy-to-use electronic signature solutions. Its founders identified a market gap during the pandemic when the shift to remote work increased demand for digital business solutions like electronic signatures. While major players like DocuSign catered to large enterprises, Signaturely saw an opportunity to offer a simpler, more affordable alternative for freelancers and small businesses.
By addressing the need for a user-friendly, budget-conscious solution, they successfully filled this gap with essential features that met the specific needs of a smaller market.
To learn more about how businesses identify and capitalize on market gaps, explore our in-depth case studies at Ownerpreneur. Join for free today!