FINDING GAPS IN THE MARKETPLACE

FINDING GAPS IN THE MARKETPLACE
Gaps in the marketplace are the third source of business ideas. There are many examples of products that consumers need or want that aren’t available in a particular location or aren’t available at all. Part of the problem is created by large retailers, like Walmart and Costco, which compete primarily on price and offer the most popular items targeted toward mainstream consumers. While this approach allows the large retailers to achieve economies of scale, it leaves gaps in the marketplace. This is the reason that clothing boutiques and specialty shops exist. These businesses are willing to carry merchandise that doesn’t sell in large enough quantities for Walmart and Costco to carry.
Product gaps in the marketplace represent potentially viable business opportunities. For example, in 2000, Tish Cirovolo realized that there were no guitars on the market made specifically for women. To fill this gap, she started Daisy Rock guitars, a company that makes guitars just for women. Daisy Rock guitars are stylish, come in feminine colors, and incorporate design features that accommodate a woman’s smaller hand and build. In a related manner, Southpaw Guitars located in Houston, Texas, carries only guitars that are designed and produced for left-handed players. Another company that is filling a gap in the marketplace is ModCloth, the subject of Case 11.1. ModCloth sells vintage and vintage-inspired clothing for 18- to 32-year-old women, which is a surprisingly large market. The company just raised $19.8 million in Series B funding. A start-up in a completely different industry is GreenJob Spider. GreenJob Spider fills a gap in the online recruiting industry by supporting a job site for employers and prospective employees in “green” industries such as solar, wind, recycling, green buildings, and LED lighting.
A common way that gaps in the marketplace are recognized is when people become frustrated because they can’t find a product or service that they need and recognize that other people feel the same way. This scenario played out for Lorna Ketler and Barb Wilkins, who became frustrated when they couldn’t find stylish “plus-sized” clothing that fit. In response to their frustration, they started Bodacious, a store that sells fun and stylish “plus size” clothing that fits. Ketler and Wilkins’s experience illustrates how compelling a business idea can be when it strikes just the right chord by filling a gap that deeply resonates with a specific clientele. Reflecting on the success of Bodacious, Wilkins said:
It’s so rewarding when you take a risk and it pays off for you and people are telling you every single day, “I am so glad you are here.” We’ve had people cry in our store. It happens a lot. They’re crying because they’re so happy (that they’re finding clothes that fit). One woman put on a pair of jeans that fit her, and she called me an hour later and said, “They still look good, even at home!” Sometimes people have a body change that happens, whether they have been ill or had a baby, and there’s lots of emotion involved in it. If you can go and buy clothes that fit, that helps people feel good about themselves.
A related technique for generating new business ideas is to take an existing product or service and create a new category by targeting a completely different target market. This approach essentially involves creating a gap and filling it. An example is PopCap games, a company that was started to create a new category in the electronic games industry called “casual games.” The games are casual and relaxing rather than flashy and action-packed and are made for people who want to wind down after a busy day.
One thing a new firm has to be careful about is that if it says it’s capitalizing on an environmental trend, solving a problem, or filling a gap in the marketplace, it has to deliver on its promises. If a start-up’s initial customers find out its more hype than substance, they will quickly abandon it. This unfortunate scenario played out for Clearly Canadian