The only constant today’s businesses can rely on is change. Changes are happening more quickly, and it is becoming more challenging to identify market trends that impact your particular business.
Today’s most successful brands are only successful because they manage to embrace market trends and, thus, shape the future instead of allowing the future to do the shaping. Yet this requires being informed on the latest trends to anticipate and bring forward future developments and innovation.
What Is Market Trends Analysis?
In a nutshell, market trends analysis is a process of evaluating changes to your market. A trend is an assumed future development that potentially has a long-term effect on a selected industry or the overall market.
A market trend analysis involves looking at past and current market data and pinpointing dominant patterns within the market and consumers. By taking into account shifts in consumer preferences and wider market trends, businesses can draw market scenarios to build up surefire marketing strategies.
For instance, in the 1960s, what we consider today junk food was just thought of as another meal; however, today, there is a shift towards healthy food and vegan nutrition. Such a trend has a far-reaching effect on several industries - from tourism and retail to catering and agriculture.
Why Is Market Trends Analysis Important?
Market trends heavily rely on the wants, tastes, and needs of consumers, and they tend to change over time. Since it’s always the consumer who drives your business, recognition of these changes underlines the long-term success of your business strategy, as it can help to make sure your product, service, and overall business model are in line with customer demand.
Although there is not much you can do about demographic trends or shifting customer tastes, you can ensure a timely reaction to such forces. This is the main advantage market trends analysis brings to your business.
Business case studies are full of stories of companies who either managed or failed to embrace upcoming market trends - from some energy producers who recognized the need to go green to the music industry that was late to understand the profound impact of digitization:
Case Study 1: Mattel’s Barbie lost its market leader position within a single year, outraced by the newcomer brand, Bratz, only because it failed to comprehend demographic and generational shifts in consumer preferences. The new youngsters of the 2000s wanted nothing like a princess doll, they wanted daring characters that reflected what ‘being a girl’ really means.
Case Study 2: P&G is one of the leading brands that have great business acumen - by identifying new customer preferences and shifts in market trends, the brand manages to stay ahead of competitors and employ powerful emotional triggers, evoking customer response and, thus, driving sales. Its recent Always #LikeAGirl campaign shifted the brand’s positioning and differentiated it from key competitors by sending messages of female empowerment to connect with the new more socially conscious consumer.
How Can Market Trends Analysis Reinforce Your Business?
By recognizing market trends and proactively embracing them, you can bring products to market that meet the changing customer demands and avoid being overwhelmed by potentially destructive market shifts.
From market opportunities to risk mitigation to innovation drivers, spotting and acting on emerging market trends is essential if you want to build a sustainable business.
Even if you cannot associate your company with the likes of P&G or Apple, you can use market trends analysis to:
1. Enrich Business Forecasting
Looking at current trends can tell you a thing or two about the future. The recent surge in online shopping (partly a pandemic-related rise but a strong market trend for years now) is likely to stay, even when the rest of the pandemic effects are gone, so businesses better get used to the idea that it’s either be online or in decline.
If you spot a certain trend and combine this knowledge with other factors, you will be better equipped to predict what the market you are in will look like tomorrow.
2. Become a Market Leader
Considering the Mattel vs. Bratz case study we mentioned earlier, it’s clear that following trends and implementing them within your company and product strategy can turn you into a market leader, capable of outperforming well-established market players. Trendsetters aren’t the kind of companies that actually set the trend, they are the companies that manage to recognize and implement trends early enough before others act on them.
3. Generate Business Ideas
Market trends may reveal business ideas you can make use of to amplify your business strategy. P&G’s case study shows how a personal hygiene brand made use of a broader societal shift in female empowerment and used this kind of messaging to connect with the changed customer.
4. Identify Potential Business Threats
Trend analysis can also signal early warnings about threatening changes within your market. A downward traffic trend can signpost a decline in interest in particular products or services which, if spotted in time, can inform your product strategy, for example, and spare you from making costly wrong business decisions.
5. Discover Areas of Improvement for Your Business
Based on threats and opportunities you identify after running market trends analysis, you can use these insights to adjust and improve your business strategies to be ahead of the curve and stay relevant within your marketplace in the long run.
Where to Gather Markets Trends Data?
There are three key categories where businesses can find information regarding market trends:
First, they need to pay attention to megatrends, or big trends that are developing over long periods of time and affect the majority of industries. They often come from shifts in society and the global economy.
The second major source of market trends is industry historical data. From the overall rise to early signs of decline, businesses have to pay attention to where their particular niche is going.
The third thing to consider when identifying market trends is shifts in consumer needs and behavior.
We will discuss these three categories in more detail, but before we elaborate on them, we should mention that this is not a complete list of sources for market trends analysis.
Market trends are multidimensional, meaning that many trends that are not so obvious at first glance are nevertheless relevant because of chain reactions, where changes in one market affect a completely different one. Thus, you also have to consider:
Trends in technology
New technology, or the development of old technology, is a major source of market trend shifts. Technology adoption may result in different cost drivers and innovations that bring down costs. The invention of the internal combustion engine, for instance, completely reshaped the future of the automotive industry, leaving electric vehicles behind for a century.
A major factor - ever-changing yet predictable - is the demographic breakdown of the population you are tailoring your product and marketing strategies to. For instance, millennials are the most diverse generational cohort of the population ever seen in the US, which means that companies are dealing with a very different consumer, as ethnically and racially diverse as it has ever been. Thus, brands have to take this into account when crafting marketing campaigns as the concept of a 25-35-year-old female target persona is now almost obsolete.
Upcoming communication trends
From communication channels (think social media back in the late 2000s) to different messaging (think Always’s positioning we mentioned earlier), brands who fail to recognize the shifts in communication with their consumers are likely to give place to more ‘informed’ competitors who manage to connect with their audience at the right time, in the right spot, with the right message.
And, of course, often a part of a go-to-market strategy, economic factors (as well as political, social, and technology) are also an important aspect to consider when trying to uncover market trends. Only a few industries are likely to grow within an overall recession, and the global pandemic has shown us that as much as online shopping may be on the rise, consumer spending online is still lower than the forecasts predicted before the pandemic due to overall low consumer confidence.
Keeping Abreast of Megatrends
Megatrends aren’t that difficult to spot - major publications and media like Forbes, Inc., Business Insider, and NYT often feature an array of articles reflecting the new ‘it’ trends.
Major consulting firms like EY, PWC, McKinsey, Deloitte and others have annual reports dedicated to megatrends, and most of them are publicly available.
Industry leaders you look up to often adopt these megatrends early on, so by closely following what innovations the largest industry brands are implementing, you can also assess whether these trends are likely to affect your business.
For instance, delivery is a megatrend and companies are trying to compete based on who’s faster, more accurate, and offers more flexibility to their customers. Amazon just got a license to operate drones for delivery - so potentially this is a trend other delivery companies should watch out for if they want to stay in the game and compete with Amazon in the future.
Looking at Historical Industry Data
Again, large consulting firms are known to regularly publish data on various industries, predicting their growth or decline. However, industry-specific reports normally come at a cost and they tend to be high.
Tools that reflect online searches or traffic numbers can often indicate whether an industry is on the rise or in decline. Google Trends or more in-depth tools like SEMrush’s Market Explorer can provide insights into your industry’s historical data.
These tools allow you to look at the past and current traffic data to project future movements within your niche by spotting certain growth/decline patterns.
Let’s take a look at the online courses industry. Market Explorer shows that although the overall industry is growing, the rate of this growth is not as fast as we might think (if we don’t consider the 2019 decline):
This kind of market data potentially indicates that unless you are certain that you can compete with an asymmetrically fast-growing Coursera, which takes up the biggest market share, you may have to reconsider your entry to the online courses business.
Spotting Consumer Trends
Your business depends on customer needs and behavior. Thus, consumer trends will often determine the viability of your business and define everything from sales forecasts to product development initiatives.
Collecting customer data
US Census Data is a great source that can help you determine your market size - with its data on demographics, income levels as well as free industry reports, it is an invaluable source of local US demographic trends.
There is also a similar information source called YouGov that automatically builds an average consumer profile based on the company, personality, or object you enter, and the data is available for a few select countries. The profile may include information regarding demographic and sometimes psychographic factors:
However, these sources do not have data for all countries and market niches, plus, they reflect changes with a certain time lag.
For real-time market demographic data, you can use Market Explorer to get demographic insights on your market niche (you can also adjust locations according to your needs):
Getting insights into customer needs
Google provides some great services that can uncover some of the trends related to changing customer interests.
Google Trends gives a high-level idea of the changes in online consumer interest towards given products/services over time, as well as regional details and other topics that interest that audience.
Taking our online courses example, here is the kind of data Google Trends will show:
Think with Google also offers a wide range of free reports and publications related to consumer insights and trends, divided by industry type.
For a more granular approach, you can make use of a Traffic Analytics tool to spot changes in customer needs on a particular product/service level.
The tool allows you to go through your competitors’ most visited pages to see which products and services attract the largest audience share. If you look at how that top pages list has been changing over time, you can spot shifts in customer needs, projecting your competitor audience’s demands onto yours:
Comparing August 2019 to August 2020 data for Coursera, we can see that within one year, machine learning courses gave way to the Science of Well-Being course, signaling a shift in consumer demand for online courses that have to do with wellness.
Spurring Innovation Through Market Trends Analysis
With today’s focus on innovation, dealing with trends and the future is a crucial task for any business, large or small. From product roadmaps to promotion strategies, market trends shape the way businesses operate.
Your Next Steps
Disruptions do not happen overnight, but those who do not keep abreast of market trends may find themselves suddenly focusing on a customer need that is no longer out there. Because no one wants to be in Mattel’s shoes back in the 2000s, everyone wants to be their industry’s Bratz.
Your job doesn’t stop at spotting market trends - the actual work only begins, while the acknowledgment of market trends simply gets you one step closer to embracing market changes.
The key questions you should be able to answer once you’re done with the process we described above, are:
Which market trends are already out there or are coming up in the nearest future? Which ones are relevant for my particular business? (Market trends identification stage)
How does a given trend impact my business? Am I going in the right direction, or should I dramatically change my focus to embrace it? (Market trends projections and business scenarios stage)
What does this trend mean for my business? What happens if I act on it or ignore it? Are my competitors already taking steps to embrace this emerging trend? (Implications analysis and innovation stage)
Once you answer these questions, you’ll be able to prioritize your efforts and decide which changes should be reflected and implemented within your organization to open up space for innovation and to stay relevant within your market.