The Business Book

22

T H E R E ’ S A G A P I N

T H E M A R K E T , B U T

F

inding a space in the

market that is unchallenged

by competition is the Holy

Grail of positioning strategy.

Unfortunately these spaces—

known as market gaps—are often

illusive, and the benefits of finding

one are often equally illusory.

Although competition is a fact of

life, it makes business difficult,

contributing to an ever-downward

pressure on prices, ever-rising costs

(such as the funding of new product

development and marketing), and an

incessant need to outmaneuver and

outsmart rivals. In contrast, the

benefits of finding a market gap—a

small niche segment of a market that

is unfettered by competition—are

obvious: greater control over prices,

lower costs, and improved profits.

The identification of a market

gap, combined with a dose of

entrepreneurial spirit, is often all

that is needed to launch a new

business. In 2006, Twitter founder

Jack Dorsey combined short-form

communication with social media,

providing a service that no one else

had spotted. Free to most users,

revenue comes from companies who

pay for promotional tweets and

profiles: Twitter earned advertising

revenues of $582 million in 2013.

Many markets are crowded,

with multiple sellers chasing

the same customers.

For these sellers, competition

lowers profitability.

Market gaps—a new product or

sector of the market—offer the

enticing prospect of healthy

profitability.

But does the gap contain

enough business

to generate a profit?

There’s a gap in the

market, but is there a

market in the gap?

IN CONTEXT

FOCUS

Positioning strategy

KEY DATES

1950s and 60s Markets are

dominated by large companies

offering mass-produced items,

such as Coca-Cola. Choice is

limited, but the scope for

products targeted at new

sectors of the market is high.

1970s and 80s Markets

become more segmented as

companys generate new

products and market them

toward narrower groups.

1990s and 2000s Companies

and brands position themselves

ever-more aggressively and

distinctively in the

overcrowded marketplace.

2010s Finding and sustaining

market niches is assisted by

the promotional capabilities

of the Internet, which allow

“one-to-one” marketing and

customization of products.

I S T H E R E A M A R K E T

I N T H E G A P?

FINDING A PROFITABLE NICHE