What the heck is a market gap anyway?

From time to time I always hear my mostly non-economist friends complaning about wanting to be rich (they mostly do this when they're broke). The fun thing is that always the next sentence is something like this: "It could be so easy if only I could find a market gap..."

Unfortunately, most people tend to get the idea of a market gap wrong:
Finding a market gap has actually little to do with luck, and a whole lot to do with statistics and observation. You can be very creative, but you don't have to.
The most interestig question now: how do I find a market gap? Funnily, this is something you may hear VERY briefly in marketing 101 , and it seems that most people either don't know much about it, or they don't want to share their knowledge. Just look at this wikipedia entry:

"A market opportunity emerges if a product or a service, based on either one technology or several, fulfills the need(s) of a (preferably increasing) market better than the competition and better than substitution-technologies within the given environmental frame (e.g. society, politics, legislation, etc.). [...] "

OK... What? You see what I mean. As I mentioned above, this is typically one aspect of marketing. Against common belief, large companys do not have a research department with a bunch of crazy scientists hanging around and doing all kinds of experiments and occasionaly finding something that is worth selling. It's actually more like this example:
Assume you are the head of marketing of a big company that produces sanitary products. You notice, that since your son reached puberty his skin is full of pimples. You think about, why your company doesn't provide a decent product that helps him with this problem. So you go to the research guys and explain them that you need a product that helps your son get rid of his problem. See? No big mystery. Just some observation. Maybe this example is not the best, but it should have prepared you for an in-depth analysis of how to spot market gaps.

As I think, there are basically three types of market gaps, and if you know them, you easily are able to find some yourself (but be aware: not every market gap turns out to be lucrative)

1. Create a new product
Most people would define a market gap this way. Something that doesn't exist yet.
Creating a new product or service involves heavy research, observation and a tiny bit of creativity. To begin with: Think about what you really need or miss in life. Just recently I found something that fitted one thing I really needed badly:
Suppose you are on a first date, and of course you are kinda nervous because your date is overwhelmingly beautiful, but still you're hanging in there, being suave as hell and then just as you tell your best story, which is actually more of an average story but you try to compensate it with heavy gesturing, she is immediately turned off. Why? Well, in the heat of moment you must have sweated like a danish cartoonist in mecca, and she saw that unpleasent body reaction through the armpits of your shirt.
A lot of people in that situation would really love something to prevent this. As I recently went to my local grocery store I found a kind of pad, which you could put in your shirt so that the sweat doesn't get through. That is how you create a new product and therefore fill up a market gap. However, just as I told before, you should do some research whether or not that product is already out on the market (maybe you just missed it?).

2. Improving a product or service that already exists
Sometimes you can just improve an already existing product and fill up a market gap. Examples? Just look at the iPhone. What is so new about it? It has a touch screen, can be used as an mp3 player and you can access the net - wow, big deal, back in 2006 my motorola A925 could already do this. So why does everyone praise that apple phone, but the same people kept laughing at me back then for heaving such a big cell phone (which is really interesting, because the iPhone for that matter is gigantic, too)? Apple sure does know how to promote a product and make it look "sexy", so the coolness factor has been dramatically improved, as well as the whole user interface and pc/mac sync. However, one reason the A925 failed, sure was that at time it was freakishly expensive to hit the net with your phone.
So we learn: Even though a product exists, there is almost always room for improvement. If there is a need for improvement, even some minor adjustments like design, you can hit the market with a better version of that product or service.
Of course an improvement does not have to be technical or designwise - a smaller price is a big improvement in most markets. That's why as soon as something new turns out to be cool, a whole bunch of replicas appear and try to get customers who can't afford the original product.

3. Introduce a given product to a new market
Ever wondered what your hometown is missing? If you know something: congratulations, you just found another market gap! For example, Hollister just opened a store in Frankfurt.
Turns out, that there was a giant amount of people who really likes that stuff (honestly, Hollister just sucks. I mean really, who buys that crap?) but just couldn't get it nearby. And I bet if someone introduces Dunkin' Donuts to Frankfurt, he or she will make a fortune (i like donuts). Of course franchising sucks, because it's way too expensive and regulated and shit, but still I hope you get my point.
Does someone in your town offer yoga classes? No? Where do people, who want to take yoga classes go then? This kind of market gap works best for services that are either frequently used ( a gym, private tutoring, a pizza place, supermarkets), meaning people can't afford to lose much time time travelling to get that service/ product (who would drive 1h to the gym, if he could apply to one that is only a 5min walk away?) or for services that are maybe just needed once, but should not be far away to make you feel safe (most craftsmen abuse this dilemma: where do you go when you're tv is broke? or your car? you're very likely to stay local. And what about computer problems? Does your hometown provide any computer services? No? If you know something about PCs, you could be that guy!).

I hope I could give you a rough idea about how to find a market gap. As you see, it's no big secret after all.