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8 ways to spot market gaps in 2023
Market gaps are customer needs that are currently unfulfilled or underserved by existing services or products. Pinpointing these untapped opportunities offers businesses a wealth of advantages: from boosting revenue and expanding their customer base, to enhancing user satisfaction and standing out from the competition.
But how do you identify—and evaluate—these market gaps, while still balancing business goals and customer needs?
Last updated18 Jul 2023
Reading time9 min
In this article, we compare eight different ways to discover new market gaps. Whether you’re an entrepreneur launching a start-up, a product manager working to diversify your SaaS product’s features, or a business manager trying to expand your brand’s user base, you'll walk away with an understanding of:
Strategies to identify hidden market demands
Tools and resources to aid your market analysis process
Practical examples of market gaps that companies filled
Take the guesswork out of your market gap analysis
Use Hotjar to understand how people use your product and what they actually want from it.
Market gaps present businesses with opportunities to innovate and expand their reach. These eight comprehensive strategies help you identify market demands and foster customer-centric growth:
Conduct an internal audit: innovate from within by identifying opportunities for growth in your existing products and operations
Collect customer feedback: foster user-centric innovation by understanding and addressing customer needs
Monitor social media: get unfiltered insights into user sentiment and newly emerging topics
Conduct competitor analysis: enhance your market position by capitalizing on gaps in your competitors' offerings
Observe industry trends: stay ahead of the curve by forecasting market opportunities based on sectoral trends
Follow pending legislation: adapt to market changes driven by regulatory shifts to position yourself as an innovative pioneer
Think globally: tap into unmet needs in international markets and extend your business reach
Consider lateral expansion: leverage your industry knowledge to diversify your portfolio and reach new customer segments
Pair these strategies with behavior analytics platforms like Hotjar to ensure your business remains agile and customer-centric in a competitive market landscape.
1. Conduct an internal audit
A critical—and often overlooked—first step to spotting untapped market opportunities is conducting an internal assessment of your current business, the products you offer, and your website.
While many market gap analysis strategies lean heavily on an external analysis or creating a brand-new product, an internal review highlights gaps in your existing operations and resources. This presents a unique opportunity to efficiently optimize and innovate from within your current business framework.
For example, beginning your assessment with a UX design audit or web design audit provides you with a foundational understanding of users' experiences with your product, service, or website, establishing a benchmark you can continually refer back to throughout your broader market gap analysis.
Tools and strategies for conducting an internal audit to fill market gaps
Organize an internal hackathon: capture innovative ideas from those who know your business the best—your employees—by hosting an intensive brainstorming event to generate fresh ideas
💡 Pro tip: use session recordings to identify market gaps.
Session recordings serve as an indispensable resource during an internal business assessment, providing detailed playbacks of users’ interactions with your product or website—including moments of confusion or frustration. Often hiding behind these problematic zones is a gap in your product that users would like filled.
For example, a spike in drop-offs during a particular stage in the user journey could indicate a missing feature that users were expecting—but not finding. Similarly, frequent rage clicking could signify where users anticipated more interactivity than your product offers.
Session recordings enable you to delve into the 'why' behind these areas of friction, empowering your team to craft targeted solutions that fill business gaps and align your product more closely with market demand.
Hotjar Recordings helps you identify opportunities to optimize and improve your current products and services
2. Collect customer feedback
Collecting customer feedback isn't just about resolving technical issues—it's a proactive method to nurture user-centric innovation, enabling you to better anticipate and cater to their ever-evolving needs.
Customers are often forthcoming with suggestions or feature requests that would further improve their experience, revealing untapped product optimization opportunities. Collecting feedback is also an effective way to hear first-hand what your customers are looking for—but not finding—with competitor products.
Tools and strategies for collecting customer feedback to identify market gaps
Organize interviews: use behavior analysis tools like Hotjar Engage to strategically target, recruit, and interview users and discover how they perceive your product—along with ideas for improvement
Monitor your NPS® score: track your Net Promoter Score (NPS®) for a snapshot of customer satisfaction and loyalty, highlighting areas that require improvement to better meet user needs
👀 See it in action: how Zoom used customer feedback to capture 50% of the video conferencing market.
Updates included enhanced security measures like virtual waiting rooms, expanded meeting capacity, breakout rooms for small-group work, and new personalization options—features not immediately available from competitors.
As a result, Zoom’s daily active users increased by 2,900% in the span of four months during 2020, capturing 50% of the video conferencing software market in 2021 (Trust Radius).
3. Monitor social media sentiment
Social media listening provides a raw, unfiltered glimpse into user sentiment, uncovering market gaps that direct feedback like surveys or interviews may miss.
In particular, platforms like Reddit or Discord offer businesses a unique opportunity to observe people anonymously expressing their opinions about your brand, providing candid customer insights about their pain points and desires.
Also, engaging with social media conversations positions your business as responsive and committed to continuous improvement, fostering stronger customer relationships and trust.
Tools and strategies for monitoring online sentiment to identify market gaps
Monitoring user sentiment gives you valuable insights into how your customers or users feel about your product or service. This allows you to make necessary changes or improvements to keep them happy, and helps you identify potential issues before they become too serious.
4. Conduct competitor analysis
Understanding how your product or service differs from your rivals’ is essential to sharpening your unique value proposition—particularly in saturated markets—and this is where competitor analysis comes in.
Competitor analysis involves examining your competitors’ strengths and weaknesses—like service offerings, customer sentiment, and marketing strategies—and unearthing areas where they’re underperforming or failing to meet customer needs.
These overlooked aspects give your business an opportunity to step in and fulfill those customer demands, so you can carve out a more distinct position in the market.
Tools and strategies for conducting competitor analysis to identify market gaps
Benchmark competitor pricing: regularly check your competitors' pricing with tools like PriceShape or Price2Spy to reveal pricing gaps, enabling you to test different bundling options or subscription models
💡 Pro tip: use Hotjar Surveys to detect new competitors.
By asking users open-ended questions, surveys are a strategic way to gain qualitative market insights, like identifying newly emerging competitors that you may not be aware of yet—but users are.
Surveys are also an easy way to keep a close watch on newly developing user desires—and adjust your product or service to meet these needs—before your competitors do.
Surveys help identify new competitors and user pain points, so you can adjust your business strategy accordingly
5. Observe industry trends
Capitalizing on industry trends requires staying in sync with the rapidly changing interests and preferences of your target customers—and leveraging those insights to forecast future market opportunities.
This proactive approach enables you to integrate predictive insights into your business and product roadmap, so you can offer innovative, timely solutions that resonate with your customers’ newly emerging needs.
Tools and strategies for observing industry trends to identify market gaps
Attend industry events: participate in industry trade shows, conferences, and webinars to stay updated on emerging products and technologies, and observe first-hand how competitors are differentiating themselves
6. Follow pending legislation
Closely monitoring upcoming legislation offers business owners insightful cues for identifying new market opportunities, as regulatory changes frequently drive shifts in consumer needs and reshape the market landscape.
By staying ahead of these changes, you ensure your products' regulatory compliance while simultaneously demonstrating your business’s commitment to meeting evolving customer needs.
This strategy positions you as an innovative market pioneer, enabling your business to quickly capitalize on early-mover advantages like capturing a new customer segment and influencing consumer preferences.
Tools and strategies for tracking pending legislation to identify market gaps
Set up RSS feeds: use platforms like Feedly to follow legal and regulatory websites and blogs that report on pending legislation specific to your market
👀 See it in action: how Selfapy filled a key market gap by tracking pending legislation.
When Germany's Digital Healthcare Act (DiGA) was pending in 2019, mental health app Selfapy began adapting its digital health course offerings to meet anticipated regulation changes. The team particularly focused on their 12-week online course for managing depression—a timely resource during the peak of COVID-19, when depression rates soared and access to physicians was challenging.
As a result of closely following legislation updates, Selfapy was among the first mental health companies to offer compliant, prescribable digital health solutions to German patients in 2020, filling a significant market gap and gaining early-mover advantages in their industry.
7. Think globally
While local and regional markets might be near-saturated, there may be international markets with unmet needs that your product or service can address.
Differences in cultural norms, socioeconomic factors, or technological readiness present a wealth of opportunities for businesses willing to venture beyond familiar terrain.
Tools and strategies for expanding globally to fill market gaps
Engage local experts: partner with local consultants or agencies who have deep-rooted knowledge of the local culture, economy, and politics to help navigate market nuances
8. Consider lateral expansion
Lateral expansion represents an opportunity for established businesses to leverage their industry knowledge and resources to address a wider range of customer needs.
The benefits of this strategy include portfolio diversification, expanded brand reach, and new user segments, leading to sustained growth and a competitive edge in the market.
Tools and strategies for lateral expansion to fill market gaps
Acquire a company: join platforms like PitchBook or Crunchbase to identify potential acquisitions that complement your existing product, or to connect with businesses looking for strategic partnerships
Update user personas: review and refine your user personas to ensure they reflect the distinct needs and preferences of a new, lateral target audience
👀 See it in action: how Hotjar made lateral moves to fill a market gap.
Hotjar was built in response to a gap in the behavior analytics market, which lacked visually-oriented tools for understanding user behavior. From the onset, Hotjar differentiated itself by combining quantitative and qualitative user insights into one comprehensive product.
But Hotjar didn’t start out with the extensive toolkit it offers today—its beta version focused on heatmaps, recordings, and surveys. Yet, as digital trends shifted and user needs became more sophisticated, Hotjar seized the opportunity for lateral expansion.
Hotjar diversified its product suite to include new tools and features like Highlights, Dashboard, and Trends, elevating the user experience and broadening product capabilities. Hotjar also made a notable lateral move by acquiring PingPong, a user testing and interview platform. This addition paved the way for Hotjar Engage, an innovative tool that automates the entire user research process with interviews.
These moves not only enhanced Hotjar's product offering but also propelled it to become one of the most comprehensive solutions in the behavior analytics industry.
Hotjar’s lateral acquisition of PingPong led to the development of a new product, Hotjar Engage
Keep your customers in mind when searching for market gaps
Market gap analysis is an ongoing process that requires active listening, adaptability, and a commitment to delivering innovative solutions.
Keeping your customers at the forefront of your market gap exploration ensures your efforts are aligned with their needs and desires.
Using tools like Hotjar reinforces the customer-centric focus of your strategy, helping you successfully seize new product and service opportunities and drive business success.
Keep customers at the heart of your market gap analysis
Understand what your users need better than ever with Hotjar.
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