Gap analysis involves the comparison of actual performance with potential or desired

performance. Gap analysis is a very important part to find any shortcomings in the process.
Demand side gaps involve a market situation where consumers are not satisfied buying what
is available because either the level of service provided is not adequate or because the
offering is too expensive. 
Supply side gaps involve firms that provide services that are needed, but ones that can be met
elsewhere at lower prices.
YES, both demand side gap and supply side gap are related to each other. It is important to
close the gap to achieve the desired results.
Closing demand side gap
1. Offer multiple, tiered service output levels to appeal to different segments
2. Expand or retract amount of service level output to the target market
3. Altering the list of segments targeted (re-segmentation by channel flow efficiencies)
Closing supply side gap
1. Changing roles of current channel members
2. Investing in new distribution technologies to reduce total channel flow costs
3. Introducing new distribution function specialists to improve the function of the
channel
Transaction cost economics is understood as alternative modes of organizing transactions that
minimize transaction costs. Transaction cost theory means that the optimum organizational
structure is one that achieves economic efficiency by minimizing the costs of exchange. The
theory suggests that each type of transaction produces coordination costs of monitoring,
controlling, and managing transactions. Transaction costs is also defined as the costs of
running the economic system of firms. Such costs are to be distinguished from production
costs and that a decision-maker can make a choice to use a firm structure or source from the
market by comparing transaction costs with internal production costs. Thus, cost is the
primary determinant of such a decision.
According to resource-based theory, organizations that own “strategic resources” have
important competitive advantages over organizations that do not. Some resources, such as
cash and trucks, are not considered to be strategic resources because an organization’s
competitors can readily acquire them. Instead, a resource is strategic to the extent that it is
valuable, rare, difficult to imitate, and non substitutable.