Market Trend Analysis

Companies need to: identify, monitor, analyze, & respond to major trends in their macro environment (demographic trends, economic trends, technology trends, natural environment trends, political-legal trends, social-cultural trends).

The process of analyzing trends in the macro environment begins by identifying fads, trends, & mega trends that might be opportunities or threats to the company.

Some of the Trend definitions:

Fads are unpredictable, short-lived, without major significance

Trends are changes in the environment that have some momentum & durability

Megatrends are major changes that are slow to form, but once in place, have significant influence for years, Apple Inc. for example.

Most companies use outside experts to help identify and evaluate the most significant trends and megatrends. The experts usually do annual updates of their trend analysis to the company & assist the company in evaluation of the impact on the company’s business.

Major trends analysts who monitor & report on trends include:

o Yankelovich (program called “Monitor”, meets with client companies & prepares specific reports for each client),

o Faith Popcorn (program called the “Popcorn Report”),

o Ken Dychtwald (program called the “Age Wave”, meets with client companies to review the latest updates about the “Baby Boomer” generation),

o Malcolm Gladwell (book “The Tipping Point”, identifies trends relevant for a client company that have reached the Tipping Point or will soon reach the Tipping Point). We did not discuss this book or concept in class, but it is excellent reading for anyone in the class who wants to really understand trend analysis (also, his latest book “Blink” elaborates on how trends develop & gain momentum)

o Sam Hill (book “60 Trends, 60 Minutes”–analysis program called “Trendblasting” takes 60 trends & identifies a process to determine which ones are most important for the client company)

These analysts contract with companies to help the companies develop awareness of the important trends impacting their company and to identify strategies to respond to the most important trends.

The basic methodology pursued by trends analysts is to ask (and answer):

1. What is changing?

2. Why is it happening? Is it just a fad, or is it something more fundamental going on?

3. How & when might it play out?

4. What sort of opportunities (& threats) will arise if the trend continues?

The trends analysts help a company:

o Identify trends & mega trends relevant to the company & how rapidly the trends are growing & changing.

o Understand the potential impact of the trend(s) on the company.

o Focus on possible strategies to benefit from the trend(s).

Management will be continuously identifying, monitoring, analyzing, and responding to trends and mega trends:

This is an approach that could be taken by a company to do environmental scanning and to internalize to the company the importance of relevant external developments. The result could be the beginning of responses to environmental trends that do or could impact the company as opportunities or threats.