MANY markets in Africa are crowded, with many sellers chasing the same customers.
For these sellers, competition lowers profitability.
Market gaps — a new product, service or sector of the market — offer the enticing prospect of healthy profitability.
But does the gap contain enough business to generate a profit?
This curiosity serves as a clarion call for entrepreneurs and investors eager to capitalise on unmet consumer needs.
As such, a more nuanced question arises: “Is there a market in the gap?”
This query delves deeper, questioning not just the existence of an opportunity, but its viability and potential for sustainable success.
Identifying the gap
“Your legacy is being written by yourself. Make the right decisions,” Mr Aliko Dangote, a Nigerian businessman, says to African entrepreneurs.
This statement is very crucial when identifying a market gap.
A gap in the market typically signifies an area where consumer demand is not fully satisfied by existing products or services.
This could emerge from various factors such as technological advancements, demographic shifts or changing consumer preferences.
For instance, the rise of eco-conscious consumers has created gaps in markets ranging from fashion to food packaging, with businesses scrambling to offer sustainable alternatives.
Analysing market viability
Identifying a gap is merely the first step.
The critical challenge lies in determining whether this gap represents a profitable opportunity.
This involves rigorous market research to assess potential demand, competitive landscape and barriers to entry.
A gap might exist, but if it is too narrow or if the target audience is too niche, the market within that gap might not be substantial enough to support a new business venture.
Case in point: The tech industry
“Opportunities don’t happen. You create them,” says Kenyan businessman Mr Chris Kirubi.
Consider the tech industry, where gaps frequently appear due to rapid innovation.
The advent of wearable technology, for example, created a gap for smart watches that combine fitness tracking with connectivity.
Global companies like Apple and Fitbit successfully filled this gap, demonstrating that there was indeed a market within it.
However, lesser-known brands that attempted to enter the same space often struggled, highlighting that not every gap guarantees a thriving market.
Consumer behaviour and trends
Another crucial factor is consumer behaviour.
A gap might exist because consumers are unaware of a need or are resistant to change.
For example, the introduction of electric vehicles (EVs) created a gap in the automotive market.
As we speak, in African markets, consumer scepticism and infrastructure challenges have hindered widespread adoption of EVs.
It might take years of technological improvements, policy support and shifts in consumer attitudes, for the market within this gap to flourish.
Regardless, in business, it is important to take risks.
As Mr Mo Ibrahim, a Sudanese-British billionaire businessman, says “to win big, you sometimes have to take big risks”.
Strategic considerations
Entrepreneurs must also consider strategic factors such as differentiation and scalability.
Filling a market gap requires a unique value proposition that sets a business apart from potential competitors.
Additionally, scalability is essential to ensure long-term growth and profitability.
A gap that can be filled by a small, local business might not translate into a scalable opportunity for a larger enterprise.
The notion of a gap in the market is enticing, but it is imperative to delve deeper and ask whether there is a market in the gap.
This involves comprehensive research, understanding consumer behaviour and strategic planning.
As history shows, many have ventured into gaps only to find that the market within them was not as promising as anticipated.
Thus, while gaps represent potential opportunities, they also demand careful scrutiny to determine their true viability.
*Stephene Chikozho is chief executive of Big Business Africa, a dynamic and influential network dedicated to fostering collaboration, innovation, and success for businesses in Africa. He writes in his personal capacity. He can be contacted on WhatsApp: +263772409651 or email: ceo@bigbusiness.africa