Is your market trending up or down? Is it growing or shrinking? Are people more or less interested in buying what you have to sell than they were a year ago?
Many businesses conduct market research and stop with the size of their market, how many people are interested in what they have to sell. Understanding market size is important but knowing whether that market is trending up or down is also vital for strategic and marketing decision making.
Today, big data tools and analytics can be used by anyone to detect trends in a process called market trend analytics.
What is market trend analytics?
Market trend analytics is the process of determining whether a market is growing, stagnant or in decline and how fast that movement is occurring.
If you know, for example, that your market is stagnant or in decline, then you know your business needs to evolve and take action to accommodate that market. You could create some innovative promotions to kick start the stagnant market or invest in research and development to create new products that can compete in different upward trending markets while you squeeze out the last of the value from the markets you currently operate in.
If you know that your market is growing, then you can move resources away from products in declining markets so you can ramp up supply and cash in while the going is good.
Market trend analytics is something businesses should do at least every year, ideally every six months, so that you can gauge the direction of the market and make better strategic and tactical decisions as a result.
It’s also part of a wider market analysis process when looking to expand or venture into new markets with new or revised products and services.
Market analytics in practice
E-cigarettes is a good example of an upwardly trending market. Even though we have known since the 1950s that smoking is very harmful to human health the big tobacco companies have managed to navigate, question or obfuscate that science so they can continue to profit.
Of course smoking is addictive so even though most people now realise that smoking is killing them it’s difficult to stop. And that’s where the e-cigarettes come in. In the space of just a few years, there is now an e-cigarette shop on every high street.
But no one really knows where that market is going. A smart E-cigarette company could run a scenario analysis to assess various options based on likely possibilities in the market. It is, for example, highly likely that legislative changes will influence the market sooner rather than later. Smoking e-cigarettes is already banned in restaurants and chances are more and more places will be banned as time goes on. This will influence the market and the profitability of the market. They would also be wise to measure customer sentiment on social media and check for an insights on Google Trends to stay on top of the market trends so they are not blindsided by changes they did not see coming.
Applying market analysis in your business
Change in any market is inevitable. The trick is knowing what those changes might be before they arrive so you can stay ahead of them or adapt to meet them and stay competitive.
Every change heralds both and opportunity and a threat. Many also have the potential to dramatically affect the market size and therefore financial viability. Stay mindful of the external environment as well as the internal environment you can control. This might include laws and legislation being passed, consumer sentiment, competition, publicity, traffic to your shop or website, etc. Changes to technology, price sensitivity and changing political conditions can also affect market trends.
But by practicing market analysis, you can stay on top of which trends are having the most influence and which direction your market is headed — before any major changes take place — leaving you well placed to surpass your competition.
This article was written by Bernard Marr from Forbes and was legally licensed through the NewsCred publisher network.