Swotting up to find gaps in the market

Finding 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 outmanoeuvre 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 firms who pay for promotional tweets and profiles: Twitter earned advertising revenues of $582 million in 2013.

Not all gaps are lucrative, however. The Amphicar, for instance, was an amphibious car produced in the 1960s for US consumers who wanted to drive on roads and rivers. It was a quirky novelty, but the market was too small to be profitable. This was also true for bottled water for pets – launched in the USA in 1994, Thirsty Cat! and Thirsty Dog! failed to entice pet owners.

Snapple, the manufacturer of healthy tea and juice drinks, is a firm that has successfully found a sustainable and profitable niche. A glance at the beverage counter of any supermarket reveals that dozens of brands compete for sales. Many firms have failed in this ultra-competitive market: for example, Pepsi tried to capture a non-existent market for morning cola with its short-lived, high-caffeine drink, AM.

Success for Snapple came from positioning the product as a unique brand – Snapple was one of the first firms to manufacture juices and drinks made completely from natural ingredients. Its founders ran a health store in Manhattan, and the firm used the slogan: “100% Natural”. Snapple targeted commuters, students, and lunch-time office workers with a new healthy “snack” drink, combining its Unique Selling Proposition (USP) with irreverent marketing and small bottles that were designed to be consumed in one sitting. Distribution was through small, inner-city stores where customers could “grab-and-go”. These tactics helped to secure a profitable and sustainable niche, distinguishing Snapple from its rivals in the 1980s and 1990s. In 1994 sales peaked at $674 million.

Unoccupied market territory can present major opportunities for firms, but the challenge lies in identifying which gaps are profitable and which are traps. During the 1990s, many firms became excited about the potential of the “green” market, across a whole range of goods. But this market has failed to materialize in any profitable way. This marks one of the potential pitfalls in identifying market gaps based on market research: consumers often have strong attitudes or opinions on trends or issues – such as ecology – that they are disinclined to consider when purchasing products, especially if they affect cost. Many market gaps, it seems, are tempting, but illusory.

Whether a firm is long established or in its start-up phase, a key strategic issue is its competitive advantage – the factor that gives it an edge over its competitors. The only way to establish, understand, and protect competitive advantage is to study the competition. Who is competing with the firm for its customers’ time and money? Do they sell competitive products or potential substitutes? What are their strengths and weaknesses? How are they perceived in the market?

For Ray Kroc, the US businessman behind the success of fast-food chain McDonalds, this reportedly involved inspecting competitors’ trash. But there is a range of more conventional tools to help firms to understand themselves, their markets, and their competition.

The most popular such tool is SWOT analysis. Created by US management consultant Albert Humphrey in 1966, it is used to identify internal strengths (S) and weaknesses (W), and to analyse external opportunities (O) and threats (T). Internal factors that can be considered as either strengths or weaknesses include: the experience and expertise of management; the skill of a workforce; product quality; the firm’s financial health; and the strength of its brand. External factors that might be opportunities or threats include market growth; new technologies; barriers to entering markets; overseas sales potential; and changing customer demographics and preferences. SWOT analysis is widely used by businesses of all types, and it is a staple of business management courses. It is a creative tool that allows managers to assess a firm’s current position, and to imagine possible future positions.

When well-executed, a SWOT analysis should inform strategic planning and decision-making. It allows a firm to identify what it does better than the competition (or vice versa), what changes it may need to make to minimize threats, and what opportunities may give the firm competitive advantage. The key to strategic fit is to make sure that the firm’s internal and external environments match: its internal strengths must be aligned with the external opportunities. Any internal weaknesses should be addressed so as to minimize the extent of external threat. When undertaking SWOT analysis, the views of staff and even customers can be included – it should provide an opportunity to solicit views from all stakeholders. The greater the number of views included, the deeper the analysis and the more useful the findings. However, there are limitations. While a firm may be able to judge its internal weaknesses and strengths accurately, projections about future events and trends (which will affect opportunities and threats) are always subject to error. Different stakeholders will also be privy to different levels of information about a firm’s activities, and therefore its current position. Balance is key; senior managers may have a full view of the firm, but their perspective needs to be informed by alternative views from all levels of the organization. As with all business tools, the factor that governs the success of SWOT analysis is whether or not it leads to action.

Creating Content that Converts

Content marketing is a powerful arm to add to your overall marketing strategy. It establishes you as an authority, it increases your revenue, and has high profit potential. Bill Gates talked about this way back in 1996, as the Internet was starting to come into its own.

Content is not, however, a magic bullet. It is not a rapid growth strategy, often taking months to grow into its potential. It does not guarantee you internet celebrity, or riches beyond your wildest dreams. (In the wrong hands, it can even harm your brand and put off potential customers.) Many businesses blog, or podcast, or post on social media for years and never see a dime in return for all their efforts. They might argue that they’ve built great brand equity, and that they’ve gained authority and credibility in their industry without selling out. Well, that might be true, but you can’t eat brand equity, and you sure as hell can’t pay a team with it.

Now, I’m the first to admit that everything would be awesome if I could just write and write and never have to think about whether it was actually going to generate money in return. Unfortunately, that’s called going broke — it’s not in my 10-year plan, and I’d take a guess that it’s not in yours either.

The only way to make content marketing pay off is to develop a complete ecosystem around your primary content platform (whether that’s your blog, podcast, or YouTube channel), instead of hoping it will just work by itself. Creating a complete system around your content leverages the resources that could help grow your business, instead of wasting them.

For now, understand that every business produces content, whether it’s intentional or not. Every business has at least one expert in it. And it’s that expertise that provides your business with its competitive edge. You must leverage this as the critical resource in your marketing, so let’s dive into how to do that.

To develop any successful marketing strategy, you need to have a clear picture of the goals in your business. This is particularly true of content marketing: sitting down to bang out anything that pops into your head is not a sensible way to approach it. You need to have a consistent strategy for the content you’re producing, so that your audience is engaged, comes to know and respect you as an authority, and will buy from you when the time is right. Let’s look at how to produce recurring content in a way that will help you achieve those goals and keep you motivated to keep producing on a regular basis.

What are the things you really, deeply care about in your business? What are you world class at, and how does that serve your customers? Maybe you believe you have the very best product in your niche and can defend that position. Maybe you go above and beyond for your customers in very tangible ways. Maybe innovation has allowed you to change your industry and is a critical part of how you function. Whatever it might be, brainstorm and explore the things that are most important to you and your business.

Then take a look at your customers: every customer group is different. If you are selling to a fashion niche, maybe your audience takes presentation and style extremely seriously, and want to know what famous stylish people are doing, or what trends they need to be aware of in the coming months. Maybe your audience is very focused on ethical sourcing and production, and want to see transparency and sustainability in the brands they support. What are your customers looking to you for insight about, and how do those topics overlap with the values you outlined above?

What do you want to be known as an industry authority for? A few years ago, Gary Keller and Jay Papasan wrote a book called The One Thing. The core idea of that book is to identify the one thing in your business that will make everything else easier or irrelevant… and the same goes for your content marketing. What is the one thing you can focus on becoming known for that will make it easier to develop, market and sell products that your audience will buy again and again?

Gary Vaynerchuk is known for his no-nonsense prioritization of hustle. You know if you work with him that things are absolutely going to get done. Tim Ferriss is known for his endless self-experimentation. You know if you work with him you’re going to get innovative, uncommon results. Warren Buffett is known for his slow, measured approach to investing. You know if you work with him that you’ll get steady returns over the long term. What is the one thing people should know about working with you?

The simplest way to become an authority on something is to say the same things about that topic over and over again. This is why people like Tony Robbins, Peter Drucker, Charlie Munger and Warren Buffet become superstars in their industries. Firstly, what they say works — it gets the results they claim. But secondly, they hammer on the same things over and over again. They communicate the same messages over the course of their entire careers, and create powerful positioning and profits as a result.

What is the format in which you produce your best content? People will often talk about how you need to tailor your content production to how your audience consumes it. I think it’s better to choose the format that you most enjoy working in, because if you like it, your audience will like it. For example: if you’re awesome at creating long-form blog posts (like Mark Manson or Tim Urban at Wait But Why) but are lacklustre with video, don’t try to wrangle together a YouTube channel. If you get a kick out of creating the content, it will show: it will engage your audience because it’s high energy, it will be focused, and it will address things they care about in a way that shows you care about it too.

But if you have to have five espressos and lock yourself in a distraction-free room for a day just to produce one video, the strain and negativity of that is going to come through. This creates a feedback loop: you don’t like doing it, so people don’t like consuming it, so it doesn’t perform. Don’t do stuff you hate. If you hate writing, do video. If you hate both, do podcasting. Just find the medium that works for you and run it.

What’s your quarterly plan? Last but definitely not least: make a specific plan for the immediate future. Develop content themes to go along with your ‘one thing’, and map out several topics within each theme to cover over the next three months. Pick four themes total, and three topics per theme. Write the headline for each of the 12 topics, assign a date to each one, and use that as your content framework. You can include any sales campaigns or announcements in this plan if you want to.

Simplified, here’s the overview of what should be in your quarterly plan: •​A clear statement of your ‘one thing’:

  • ​Four themes you want to rotate through ​
  • Three topics per theme, including key points to touch on for each ​
  • Headlines for each topic (I recommend brainstorming a few variations so you can pick the best one) •
  • Scheduled date of publication for each topic

Mapping your content out like this ensures that you can be strategic about your production: you can lead your audience to a certain action over time, you can educate them about a product before you’ve announced it, or you can just give them a complete, cohesive body of knowledge about the things that you all value. Whatever your goal, creating a plan in advance allows you to use your content to achieve it.