How to Identify Market Trends in Your Business Plan Where is your industry now, and where's it going? Here's the best way to track industry movements.
By Eric Butow
Opinions expressed by BIZ Experiences contributors are their own.
Timing in business is everything.
And the best time to address a trend is before it is even beginning and certainly before it is widely recognized. If you can prepare a business that satisfies a soon-to-be popular need, you can generate growth that is practically off the scale. (This is, by the way, the combination that venture capitalists favor most.) The problem, of course, is spotting the trends first and acting quickly before others jump in line ahead of you.
Marc Andreessen, founder of Netscape Communications, had the good fortune to develop software for browsing the web just as the internet, which had been around for twenty years, was coming to widespread popular attention. The timing of his move made him hundreds of millions of dollars, but some browser developers who came later fell by the wayside.
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How to Identify Trends
What is a trend? Loosely defined, it is a series of occurrences that indicates a pattern. You can use a couple of techniques to identify trends and present your identifications in your plan. Some trend analysts look at past events (usually trends themselves) and project them forward. For example, trend analysts in recent years have looked at the huge numbers of baby boomers, people born in the years between 1946 and 1964. They then projected forward to see that these baby boomers would be retiring in the near future and saw a defined market for that segment of the population.
Another good way to forecast trends is by test marketing. You try to sell something in a single store and see how it does before you roll it out in your whole chain. The key to this technique is trying it in a well-selected test market that closely resembles the market you'll try to sell to later.
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Focus groups and surveys try to catch hold of trends by asking people what's hot. You can ask open-ended questions: What type of apps or new mobile phone features would you like to see? Or show them product samples and see how they react. This is also tricky because you are dealing with a small group of, you hope, representative people and extrapolating to a larger group. If your group isn't representative, your results may be misleading.
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Some other ways you can try to nail a trend in advance: Talk to salespeople who are in touch with customer needs, quiz executives whose jobs are to watch the big picture, read a wide variety of periodicals and try to spot connections, or hire think tanks of experts to brainstorm over what the future might hold.
In most of these trend-forecasting techniques, statistics play a big role. Mathematicians assign numerical values to variables such as loyalty to existing brands, then build a model that can indicate invisible trends to intuitive analysis. Providing some statistics in the trends section of your plan can make it more convincing.
