There may be a Gap in the Market but is there a Market in the App?

Generative AI (GenAI) and the advent of numerous platforms (e.g. Microsoft Power; Lindy; Lovable) enabling the development of apps without requiring coding knowledge significantly reduced the barriers to entry to develop apps. A degree in computer science, venture capital and months of engineering is no longer required. Now everyone can do it, can’t they? And it seems as though everyone is.

However, while everyone can build an app, very few turn one into a real, sustainable, profitable business - that is the “reality check”.  Building an app arguably no longer represents competitive advantage particularly where there is no proprietary code. The easy part is developing a Minimum Viable Product (MVP); the hard part is taking it forward from that point and commercializing it – success depends upon distribution, marketing and sales. Aspects often avoided at the planning stage instead the focus is on the excitement of building an app without market research and user validation. 

Often the journey starts with a developer creating a solution in response to a problem they or someone they know has experienced, rather than addressing broader, monetizable demand. While a “gap in the market” may have been identified, the crucial question “is there a market in the gap” remains unanswered.

Frequently, early demand-side research was not factored in to plans and an assessment of the market in terms of size to create a sustainable business and scale, where that is the aim is considered far too late.  

Build It & Customers Will Buy

There is a misconception that just because a product is unique (that’s if it actually is) it will automatically gain traction. Very few products/services developed by Small and Medium Enterprises (SMEs) fall into the category of “technology push” innovations. That is, R&D type innovation where existing products are enhanced (e.g. Dyson bagless vacuum cleaner; Smartphones) or new products developed (e.g. wearable tech) before there is consumer demand. Unfortunately, many of the apps being developed do not fall into this category.

Technology Pull

“Technology pull” is innovation where market needs, consumer demand drive the development of new technologies. This requires research to identify what consumers want and then developing products to meet those needs to give the best chance of being successful.

Many failures could be avoided if demand-side research was conducted early on before resources are wasted. Often capital is not the business’s alone. It may comprise investor funds; or pubic grants intended to stimulate growth in the economy. In other words: other people’s money. When apps launch without validated need or a path to sustainability it results in zero-minimal users, no revenue and poignant resource misallocation not to mention disappointed ‘inventors’ that may have spent considerable time on the project.

Research First

Founders can significantly improve the odds of developing a successful product by undertaking research first. This may lead them to modify plans; or abandon their idea altogether but that should be long before significant time or capital is committed.  

Sources of excellent secondary research are publicly accessible via institutions such as the British Library including the Business & IP Centre; and City Business Library. Through these institutions access to market intelligence (for instance Mintel reports) is available that would otherwise be cost prohibitive. Another good source is Deloitte offering access to their research reports on the internet without charge.  

Organizations such as the London Chamber of Commerce & Industry (LCCI) and the British Chambers of Commerce (BCC) offer practical support for businesses looking to develop new products or services and expand into new markets both in the UK and overseas.

For businesses, especially SMEs, leveraging business advice and other professional services such as those offered by Get Your Business Started Ltd (GYBS) will not guarantee success but it will help to mitigate risks. GYBS can offer structured guidance on growth strategies that might otherwise take years to acquire independently.

Research shows that businesses that take advice survive much longer compared with their counterparts that do not seek external advice.

What’s the Problem?

Clarifying the problem to be solved is critical. A business needs to be able to articulate in precise terms the problem, who experiences the problem (potential-customer segments), how frequently and why existing alternatives (competitors), if any, fall short.

It is worth pausing to consider the definition of customer segment:

“People or organizations who share some common

characteristic which helps explain/predict

their response to suppliers’ marketing stimuli.”

The challenge for the business is to identify those customer segments and test assumptions via primary research. There are a variety of research methods that can be deployed from surveys, observation, focus groups and many more (best method/s will depend upon the context).

However, arguably there is no better research method than test marketing (that’s where the MVP comes in) and pre-sales experiments where these are possible. Evidence of customers’ willingness to buy transforms plans from guesswork (informed where post-research) to a compelling argument demonstrating market demand. 

However, a MVP should not be the starting point - it should be the result of demand-side (and other market research) evidence.

In an era where AI platforms enable everyone to build apps often without any proprietary code, there is no potentially valuable intellectual property (IP) in the technology for the developer business.

Without developing software that is potentially patentable (topic of a blog for another day), an app is just a digital product that can be copied and not defended. It will not be the foundation of a sustainable business. Further, it will not attract investment which is typically the unrealistic expectation of many businesses intending to launch or expand by developing an app using GenAI.

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