trend analysis business plan

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Trend analysis for business improvement

Trend analysis is a technique used to examine and predict movements of an item based on current and historical data. You can use trend analysis to improve your business using trend data to inform your decision-making.

As your business becomes more established, you will be able to compare data and identify trends in:

• financial performance
• competitor movement and growth
• manufacturing efficiency
• new or emerging technologies
• customer complaints
• staff performance reviews and key performance indicators (KPIs).

Understanding the value of trend analysis

Trend analysis helps you compare your business against other businesses to establish a benchmark of how your business should be operating, at both the initial stage and ongoing, or developing.

Analysing market trends is key to adapting and changing your business, keeping current and ahead of the industry, and for continual growth.

Trend analysis consists of:

• trend data, for assessing changes within your own business performance over time
• benchmark data, for comparing your business to a similar organisation (learn about benchmarking your business for greater performance )
• market trends, for analysing the data from a whole industry or sector.

Gathering data

The most important rule for gathering data for trend analysis is that it is up to date, reliable and consistent, because this is what you will base your business decisions on, and you need to have an accurate comparison of information over time.

The amount and quality of data will depend on the information captured over the months and years the business has been operating. But if the business has little or no data, you can use benchmarking data and market trends to gather the information.

If the data is only partially captured or inaccurate, the analysis can only be partially correct.

For example, ensuring you or your bookkeeper retain all data, that it is kept up to date and entered accurately, will mean you can run regular reports on past performance giving you insights into where the business is going.

Tips for gathering data

• Businesses commonly use financial record-keeping software that is compatible with the Australian Taxation Office so that analysis can be done in a more streamlined way.
• Financial ratios and calculators let you use data from your financial statements to learn about your business's profitability.
• Conducting thorough due diligence when buying an established business or franchise will give you an advantage by having access to historical data to rely on in your analysis.

Identifying relevant data

The following explains the type of trend data that may help your analysis, why it is useful to collect and where the data can be sourced.

This data should include near misses and time off work due to injuries or stress.

An increase in WHS events may identify a need to update equipment, provide more training and manage workloads.

• Risk assessments
• Hazard reports
• Injury forms
• Policies and procedures
• Sick leave data

This data should also include net profit changes, stock turnover, debtor and creditor days, casuals and contractor costs.

You will be able to:

• understand the variations across the year
• help manage the number of days till you are paid by creditors
• plan for time you will need additional capital
• plan your workforce needs during the year.
• Profit and loss statements
• Sales transaction records
• Supplier invoices
• Employee expenses
• Cash-flow record

This data should include quality, defects, returns and warranty claims.

You should understand if the manufacturing function of your business is operating efficiently.

• Reports on defects
• Returns documentation
• Warranty claims reports

This data should include:

• waste generated and the cost of waste removal
• energy used
• emissions and carbon footprint.

Calculating emissions, energy usage and waste can help decrease costs by changing to other forms of energy or suppliers.

• Energy bills
• Waste removal invoices
• Wastage reports
• Emissions reports
• Carbon footprint reports

This data includes social media and website traffic.

Understanding trends in customer demographics and operating systems used to view your website, and which social media channels work better and when, are valuable data points for how you market your business.

• Analytics reports from websites
• Analytics reports from social media
• Feedback on surveys
• Response reports from marketing campaigns

This data includes:

• downward sales trends
• repeat business
• customer referrals
• conversion rates
• individual sales staff performance
• help desk calls.

Analysing the trends across your customers and sales will help you decide how to manage customer service and how efficient your salespeople are.

Downward sales trends could indicate an issue with quality, pricing, competition and changing customer preferences.

The Pareto Principle states that 80% of consequences come from 20% of causes. Using the principle for customers and sales means that 20% of your customers should generate 80% of your revenue, so 80% of your energy should be focused on the top 20%.

• Customer complaints
• Repeat business reports
• Customer loyalty program reports
• Customer spending reports
• Staff individual sales
• Returns reports
• Help desk call reports

This data includes staff turnover and number of sick days.

Understanding trends in staff satisfaction that may need a future focus on leadership, employment conditions, ongoing training and opportunities for growth, will ensure a more effective group of employees.

• Staff turnover reports
• Employee feedback surveys
• Number of sick days used reports
• Staff growth and development

This data includes time taken to do the work, rectifications, variations and 'scope-creep' on client projects.

You will be able to understand issues with project cycles, team efficiencies and managing client expectations.

• Completed projects
• Project efficiencies
• Client feedback
• Deliverables and timing reports

Understanding how equipment and plant problems and maintenance schedules affect the business operations over time will help you to better manage risks.

• Risk assessment report
• Equipment maintenance checks
• Maintenance schedules

Understanding how suppliers and couriers have affected the business in the past and when it is likely to occur will allow you to plan with more certainty.

• Delivery reports
• Complaint reports
• Couriers tracking reports

Data analysis

Data analysis can be completed using common business software that includes visualisation of the data in charts and graphs and is often easier to interpret than raw data, as it shows the trends more clearly.

Business intelligence (BI) software was once only affordable for large businesses but is now available as software as a service (SAAS) at a low monthly or yearly cost.

You can also access data and analytics on your website and social media platforms.

The benefits of using BI software include:

• finance and banking
• customer relationship databases
• website and social media analytics
• rostering and other human resources
• equipment and maintenance
• records and file management cloud systems
• filtering aggregated data into date ranges and categories
• exploring raw data within the visualisations
• sharing with staff and stakeholders.

If you are not using BI software or the commonly used business software with visualisations and reports, you can use spreadsheets to manually analyse the data.

Analysis requires you and your advisers to interpret the data—the software you use is only as good as your ability to interpret and act on what you see.

Interpreting your business trend data

When interpreting your data, ask the following questions as part of the analysis.

• When would a trend become worrying and require your action? For example, decreasing purchases in a retail location over the past 1 to 2 quarters may be explained by increasing domestic costs, but over the past year the demographics in your location may have changed. You may need to review your products and services.
• What will be your critical decision points? Can you, for instance, apply a threshold that is an acceptable variation for your business (e.g. 10% over or under)?
• What opportunity might improve your business over another? For example, if your information technology (IT) system is experiencing interruptions and it is a continuing trend, would outsourcing your system be preferable to purchasing a new system? The cost of outsourcing may be better than purchasing a new system.
• What would constitute a crisis trend? In other words, what trend—if it were to continue—might cause permanent damage to the business?
• What patterns are you seeing between the data sets? For example, does the data from your project management system show causes from your customer management system?
• How does your business data compare to your industry benchmarks? How could you improve each function of your business slightly to improve your own benchmarks?

Limitations of trend analysis

There are some limitations to trend analysis, for example:

• external financial crises and recessions, and the effects of a pandemic
• factors that have changed results during the recorded period, such as purchasing new equipment or outsourcing
• adjustments for inflation.

Trend analysis is 'working on the business', rather than 'in the business'.

The Pareto Principle (80% consequences result from 20% causes) also shows the importance of working on the business. The amount of time you commit to trend analysis will give you more valuable improvements across your entire business.

Also consider...

• Find out how to measure your digital performance .
• Understand how to adapt and change your business .
• Read about how to improve your financial performance .
• Last reviewed: 8 Dec 2022
• Last updated: 8 Dec 2022

What Is an Industry Analysis and Trends Business Plan?

An industry analysis and trends business plan is a component of a business plan that provides a comprehensive insight into industry conditions and trends. 3 min read updated on February 01, 2023

An industry analysis and trends business plan is a component of a business plan that provides a comprehensive insight into industry conditions and trends that can impact a company's success and growth. A thorough analysis of your industry and its trends can give you and other people a clearer idea of the feasibility and relevance of your business idea or goals.

Elements of a Business Plan

There are many different types of business plans. When you are creating your business plan, the information you choose to include will depend on your audience and personal preferences, as well as the questions you wish to answer and problems you seek to solve. While business plans may vary greatly, most of them contain the following elements:

• Executive summary
• Business description
• Analysis of business environment analysis
• Industry analysis
• Market analysis
• Competitive analysis
• Marketing plan
• Management plan
• Operations plan
• Financial projections
• What Is an Industry Analysis?

An industry analysis enables you to gain a better understanding of the industry and market in which you will be conducting business. By conducting an industry analysis before you start writing your business plan , you will be able to:

• Identify industry trends, such as potentially problematic aspects of the industry
• Identify trends and opportunities in products and services
• Calculate capital requirements
• Determine business risks and find ways to reduce them

An industry analysis must be specific to the industry in which you are conducting or are planning to conduct business. With the information you obtain from the analysis, you can devise a long-term strategy to mitigate risks and take full advantage of growth opportunities.

It is important not to confuse an industry analysis with a competitor or market analysis. An industry analysis seeks to describe the products or services offered in a specific industry and the boundaries of the marketplace in relation to economic, political, and regulatory issues. In other words, it defines the scope of the marketplace. A market analysis , on the other hand, helps you determine whether or not a market within your industry will be profitable for your products or services.

Conducting an Industry Analysis

The most widely used method for evaluating any industry was devised by Michael E. Porter from Harvard University. This method can help you create an effective strategy for competing in your industry. According to Porter, all industries and markets are influenced by five forces, which include:

• Ease of entry — Companies that are already operating in an industry will enjoy a competitive advantage over newcomers. However, their profits will be reduced unless they find a way to slow down or block the new entries. As for new businesses, they will face a variety of barriers, including government regulations, patents and copyrights, and customer loyalty.
• Suppliers' power — Suppliers of materials, products, or services can have a significant impact on a business' ability to compete. In the event that there are few suppliers offering the products or materials or few alternative products, the suppliers have the power to dictate quantities, prices, and delivery times for companies that have no choice but to buy from them.
• Buyers' power — In an industry where buyers can choose from many competing products, consumers will have strong bargaining power. This can affect the ability of a company to price its products or services without being afraid of losing customers.
• Availability of alternative products — In the situation where two businesses with similar products are competing within an industry, both of them will benefit as their marketing efforts will generally increase demand for their products. However, their market share will be reduced if there is another company selling a different kind of products that can serve as a substitute for theirs.
• Competitive rivalry — Competitive rivalry takes into account the number of competitors present in a particular industry, as well as their relative strength. In an industry where many companies are selling similar products, there is little opportunity for one company to control consumers' or suppliers' tendency to go elsewhere.

There are many free industry analysis tools and resources available to business owners who are preparing to create a business plan, such as:

• Securities and Exchange Commission
• U.S. Census Bureau
• Hoover's Online
• Thomas Register
• Library of Congress Legislative Information
• Websites of trade associations and companies

If you need help creating an industry analysis and trends business plan, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

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Content Approved by UpCounsel

• Business Plan Outline: Everything You Need To Know
• How to Make a Business Plan Format
• Parts of Business Plan and Definition
• Business Description Outline
• Market Analysis: Everything You Need To Know
• Service Business Plan
• IT Company Business Plan
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• Business Plan for Existing Company

Predicting Success: A Comprehensive Guide to Trend Analysis Tools

Updated: August 9, 2023 by Ken Feldman

If you could somehow predict the future, you might be able to plan better and make your organization more successful. This article will explore three statistical tools for doing trend analysis, how they work, their benefits, and how your organization can apply them. 

Overview: What is trend analysis? 

Trend analysis is the use of past data to spot patterns, so you can better predict and forecast what the future will look like. While there are many tools and approaches you can use for trend analysis, we will focus on three common statistical methods for doing it. The three tools are: control charts, regression, and time series analysis.

Let’s start with control charts.

Control charts

The control chart is a graphical representation of your process data over time. Data is gathered either individually or in subgroups . Calculations are made of the mean and range or standard deviation , and then plotted on a graph. Control limits are calculated from the data and depict the expected variation of the process over time. 

While there is variation in every process, some may be considered common cause resulting from the natural variation of the process factors, or special cause due to some unexpected occurrence.

When interpreting the control chart…

• You will look for signals of special cause variation so you can investigate and either eliminate the cause if it negatively impacts the process, or incorporate it if it improves the process. 
• You will also look for patterns and trends . These patterns can be shifts in the process average and/or changes in the variation due to increases or decreases in the range or standard deviation. 
• You may also look for data points trending up or down in a significant manner. There are a number of rules used for interpreting control chart patterns that were developed by a group of engineers at Western Electric.

Below is a control chart exhibiting an upward trend, which, in this case, is bad. This should be investigated and the root cause acted upon as appropriate. If not, the trend will likely continue.

The second tool you can use for trend analysis is regression. This will allow you to observe the relationship between a process variable and time. You can look for a simple linear relationship or more complex non-linear ones. 

Data is collected and plotted on an X-Y chart often referred to as a scatter diagram or plot . If your process is changing over time, you will be able to visually see that. Additionally, you can do some calculations and develop a prediction equation that will estimate the value of your process data for a specific time period. 

Below is an example of a scatter plot with no trend and one with a downward trend. The formula in the second graph can be used to predict values for the trend.

Time series analysis

The final tool for trend analysis discussed in this article will be time series. This tool is based on the concept of looking for patterns in the data and then extrapolating those patterns into the future. 

While regression is useful for examining simple relationships and looking for trends, its downside is the inability to extrapolate much beyond the existing values used in the analysis. This is called intrapolation. On the other hand, the calculations used for time series allows for extrapolation for the future based on the historical data. 

Time series is a form of regression modeling with the difference of allowing future predictions or extrapolation. With time series analysis, you can analyze the future for trends and seasonality. The calculations use a variety of weighting, giving the most recent data values more importance than previous data. 

The key is to match the correct method of analysis with the patterns. When extrapolating a pattern into the future, you must have a basis for believing that the predicted pattern will occur and that conditions won’t significantly change. 

The graph below shows how a trend would be forecast by time series using double exponential smoothing . The green diamonds are the forecasts, and the purple triangles the relative uncertainty of the forecast in the future.

Time series analysis for trend

The graph below shows how trend analysis would forecast and predict for both trend and seasonality.

Time series analysis for trend and seasonality

3 benefits of trend analysis 

The ability to predict enhances your ability to plan. The benefits of trend analysis are the key to your ability to predict. 

1. Simplicity and availability 

Given the sophistication of today’s statistical software, the calculations and display of your trend analysis is relatively simple. 

2. Flexible 

Trend analysis can be done for forecasting of level processes, trends, and seasonality. 

3. Planning 

Assuming your trend analysis is relatively accurate, you will be able to plan for future resources, capital expenditures, personnel, cash flow, etc. 

Why is trend analysis important to understand? 

Given the number of techniques available to do trend analysis, you should understand which one to use and any limitations of its use.

Constraints

The use of regression for trend analysis is common. The problem is that any regression forecasts need to be limited to the boundaries of the existing data. Extrapolating beyond the time frame of your data is not advisable and accuracy becomes dubious. Time series doesn’t have the same limitation.  

Which smoothing elements to use  

The accuracy of your analysis will be dependent on the proper use of statistics. The weighting factor, alpha, as well your choice of smoothing methodology is important to understand to achieve the best and most accurate forecasts. 

Sample size 

To properly estimate the future, you will need adequate sample sizes to accurately identify trends. 

An industry example of trend analysis 

The vice president of sales was doing some strategic planning for one of his top products. He had approximately four years of monthly sales data. To help plan for short-term sales revenue, he decided to do some trend analysis using time series analysis. 

He first attempted to use a simple linear trend. While there was definitely an upward trend to sales, the graph indicated there might also be some seasonality to his sales. As a result, he ran the analysis using Winter’s Multiplicative Model. Based on the lower value for the Mean Absolute Percentage Error (MAPE), it was concluded the Winter’s model provided a better forecast and included an analysis of the trend and the seasonality.

3 best practices when thinking about trend analysis 

While your computer and statistical software make it easy for you to do the calculations and create charts, there are a few less technical things you should consider. 

1. Measurement system 

With trend analysis, you are predicting the future based on your historical data. You must have confidence that you can trust your data. Do a Measurement System Analysis (MSA) study before relying too heavily on your existing or future data. 

2. Experiment 

Run your analysis using different approaches and assumptions to see if one is better than the other for producing accurate and reliable estimates of the future. 

3. Confirm 

Use interim confirmations that your methodology is producing believable forecasts. Continue to refine and revise your analysis as more information becomes available.

Frequently Asked Questions (FAQ) about trend analysis

What are some problems of doing trend analysis .

There are a few common problems you may encounter when doing trend analysis.

• Distortions: Historical data may not be accurate and representative. A random event could distort your analysis.
• Determining cause: It may be difficult to determine the true cause of a trend.
• Large sample sizes: It can be time-consuming and expensive to collect the necessary amount of data.
• Errors: Sampling and measurement error and excessive variation in the process may diminish the accuracy and reliability of your forecasts.

What is a trend? 

In the context of statistics, it is an upward or downward change in measurable process variables over time. 

Can I have a trend and seasonality at the same time? 

Yes. A trend is the upward or downward tendency of a measurable variable over time. Seasonality is a cyclical pattern that repeats itself over time. If your seasonality also exhibits an upward or downward change over time, you can do an analysis and forecast on the combination. The graph below shows what that might look like.

Wrapping up trend analysis 

Trend analysis is a strategy that uses patterns inherent in historical data to make future predictions. You can use control charts, regression, and time series tools to accomplish this. 

Your predictions become critical in helping you plan for the future. The accuracy of the predictions will depend upon a number of factors such as sample size, statistical assumptions, errors, and whether the underlying process is chaotic and changing.

About the Author

Ken Feldman

Trend Analysis: A Detailed Insight into Market Direction Prediction

✅ All InspiredEconomist articles and guides have been fact-checked and reviewed for accuracy. Please refer to our editorial policy for additional information.

Trend Analysis Definition

Trend analysis is a statistical method used to examine and analyze data over a specific time period to identify consistent results and patterns, which can then be used to forecast future behaviors or movements in financial markets. It helps businesses and investors make informed decisions based on past trends and tendencies in data set.

Types of Trend Analysis

When discussing trend analysis, it’s essential to familiarize yourself with its varied types – time series analysis, correlation analysis, and regression analysis.

Time Series Analysis

Time series analysis entails evaluating a series of data points indexed or listed or graphed in time order. In financial settings, it can be a potent tool for understanding seasonal variations in stocks or indices, identifying potential patterns or consistencies over a given time frame, and forecasting future trends.

Correlation Analysis

Correlation analysis represents the degree to which two or more variables fluctuate together. In finance, it is commonly used for portfolio diversification. Softwares such as Excel can calculate the coefficient of correlation between two or more stocks, aiding investors in determining how closely they move together. If two stocks have a high correlation, they will likely experience price movements in the same direction. Therefore, investing in highly correlated stocks would limit portfolio diversification.

Regression Analysis

Regression analysis, meanwhile, is a statistical tool for the investigation of relationships among variables. It forms the foundation of several forms of financial forecasting methods. For instance, it can be used in trend analysis to understand the impact of interest rates on asset prices.

In conclusion, each form of trend analysis offers different insights. Time series analysis enables us to understand patterns and trends over time, correlation analysis helps in diversifying investment portfolios, and regression analysis aids in forecasting financial trends and behavior. These analytical tools combined can present a more robust, dynamic picture of the financial landscape.

Principle of Trend Analysis

The principle of trend analysis is grounded in history and predictive modeling. This financial tool operates on the critical assumption that historical patterns or trends are likely to recur in the future. At the core of this philosophy is the idea that history tends to repeat itself, particularly in markets, and if the patterns of the past have led to certain economic or financial outcomes, then similar situations are likely to evoke parallel results.

This premise rests firmly on the belief that market factors that affected prices, demand, and supply in the past will continue to wield the same influence in the future. For instance, economic events, market sentiment, and business performance that have previously driven a company's stock prices will likely continue to do so.

However, it's crucial to understand that trend analysis doesn't guarantee future performance as it is largely based on historical data. Numerous unpredictable factors can influence the market and alter the course of a trend. It’s a financial tool that should be used in combination with other analytical techniques to make informed decisions.

When applying the principle of trend analysis, precision and attention to detail are paramount. Analysts meticulously examine past data to identify patterns and trends that are then used to forecast future trends. Key elements like the strength, longevity, and nature of the past trend play a crucial role in developing a reliable understanding of what might happen in the future.

Even though the principle of trend analysis is simple, its application requires a nuanced understanding of the market and the factors that influence it. Leveraged correctly, trend analysis can deliver valuable insights into future market behaviors and provide investors or decision-makers with a significant advantage.

Role of Trend Analysis in Business Strategy

Businesses can utilize trend analysis in various strategic ways to drive growth, performance, and competitiveness.

Utilization in Strategic Planning

Trend analysis assists a business in establishing an effective strategic plan. It helps in comprehending industry dynamics, thereby enabling a company to align its strategies with the current trends and forecast the future. Business managers can analyze trends in sales, customer behavior, industry shifts, and more. By observing these trends, a business can identify areas of growth and formulate strategies to capitalize on these tendencies.

For example, if a trend indicates a growing preference for eco-friendly products, businesses can align their production, marketing, and other strategies to meet this demand and gain a competitive edge.

A Tool for Decision Making

Being informed about current and emerging trends is essential for making business decisions. Trend analysis provides insights that lead to an informed decision-making process. Using this analysis, businesses can anticipate changes, which enables them to make proactive decisions rather than merely reacting to circumstances.

For instance, trend analysis might reveal a steady decline in sales for a particular product category. Armed with this information, a company can decide to shift resources to more promising areas.

Identifying Opportunities and Threats

Through trend analysis, businesses can discover opportunities that might have otherwise gone unnoticed. It can indicate new market segments, emerging consumer needs, or areas where the competition is lagging. Taking advantage of these opportunities can spur business growth.

Simultaneously, trend analysis can reveal threats on the horizon. Threats could come from changing consumer preferences, new competitors, regulatory changes, or technological advancements. Recognizing these threats early on allows a business to prepare and minimize potential negative impacts.

In conclusion, trend analysis plays a critical role in strategic business decisions. By providing valuable insights into market dynamics, it helps businesses plan effectively, make informed decisions, and identify opportunities and threats.

Data Required for Trend Analysis

As we delve into the specific components necessary to conduct thorough trend analysis, the importance of data cannot be overstated. In essence, we require two chief types of data for this process: Time-series data and Cross-sectional data .

Time-Series Data

This data category typically covers a consistent interval series over a set period. It may include quarterly revenue, monthly inflation figures, or other metrics depending on the business analysis context. Capturing data over specified periods allows for the measurement of changes, aiding in the discovery of trends within those periods.

Cross-sectional Data

Cross-sectional data provides a snapshot of different units at a specific point in time. Examples of such data might include a comparison of different companies’ revenues at quarter's end, or comparing different countries' GDP at a particular time.

All data harnessed for trend analysis should be accurate and reliable . Accuracy ensures that the collected data correctly represents the phenomena or variables you're tracking. On the other hand, reliability is critical as it allows for consistent results over repeated trials.

Your decision-makers should have total confidence in your gathered data; unreliable or inaccurate data will lead to incorrect interpretations, limiting the effectiveness of developed strategies and potentially pushing the organization down a sub-optimal path.

In trend analysis, making appropriate adjustments to the data can be crucial. One common example of such adjustments is accounting for the effects of inflation . Without this adjustment, it might seem like a company is progressing well with increasing revenue. In reality, however, the apparent growth could be overshadowed by inflation rates, resulting in a net loss of value.

Similarly, other variables that may skew data interpretation should also be accounted for, such as seasonal effects or changes in exchange rates. In this way, a meticulous and comprehensive trend analysis can paint a meaningful picture, providing a robust foundation for crucial business decisions. To neglect these adjustments can gravely distort our interpretation of trends and lead to misguided conclusions.

Process of Conducting Trend Analysis

Here's how you might conduct a trend analysis:

Step 1: Data Collection

To start off, you need data. This could be financial metrics (such as sales revenue, gross margin, etc), customer data, or any other type of information that shows change over time. The data should be relevant to the question you are trying to answer or the trend you are trying to identify.

Step 2: Data Cleansing

Once the data is collected, it needs to be 'cleaned'. This means getting rid of outlying figures that don't add value to your analysis, removing duplicate data points, correcting errors, and dealing with missing or incomplete data. It's best to document the choices you make during this step, as they can significantly affect the results of your analysis.

Step 3: Structuring the Data

After cleansing, the data has to be structured in a way that allows for meaningful comparison. This could mean organizing it chronologically for a time-series analysis, categorizing it by type or geography, or setting it up in any other way that aligns with your analysis goals.

Step 4: Trend identification

Next, you analyze the cleansed and structured data to look for patterns. These could be trends that occur across the entire dataset or within certain segments. You could use a variety of statistical methods and visualization tools to help you in this step, depending on the complexity of the data and the sophistication of your analysis techniques.

Step 5: Statistical testing

Having identified potential trends, you would want to run statistical tests to ensure that the patterns you see are 'real', and not just a product of random chance. There are many testing methodologies available, and the choice depends on the specifics of your data and analysis.

Step 6: Interpretation

Finally, you need to interpret the results of your trend analysis. What are the implications of the trends you've identified? Do they provide useful insights into the future? Do they signal a need for change or business strategy modification? The interpretation step turns the raw data analysis into actionable business intelligence.

Remember, the goal of trend analysis is not just to see what happened, but also to help predict what might happen next and inform decision making. Thus, each step should be conducted carefully and rigoriously to ensure accurate and insightful results.

Limitations of Trend Analysis

Although trend analysis is a powerful tool for forecasting future events based on past data, it's essential to be aware of potential limitations and pitfalls.

Reliance on Past Behavior

One of the most prominent drawbacks of trend analysis is that it predominantly depends upon past behavior to predict future trends. This could lead to incorrect conclusions, particularly in volatile markets. The assumption that the patterns will persist into the future doesn't account for the unexpected events or changes in market conditions that can substantially affect outcomes.

Lack of Contextual Analysis

Trend analysis might fail to consider the larger context within which the trend is taking place. Factors such as economical, political, or technological changes are often overlooked during a simple trend analysis. For instance, the introduction of a disruptive technology could render a previously successful company or industry obsolete, regardless of past trends.

Predicting Volatility

Trend analysis is generally less successful when it comes to predicting volatility or drastic changes in market trends. Market fluctuations, often driven by unpredictable factors or events, are challenging to anticipate based on historical data alone.

Selection of Data

The data selected for analysis could significantly influence the analysis results. Using too small a data set may not provide a true representation of the trend, while utilizing data from an overly long period might include irrelevant and outdated information.

Inaccurate Data

Trend analysis is only as useful as the data it is built upon. If the data collected is inaccurate or faulty, the predictions and conclusions drawn from trend analysis will likely be incorrect.

Potential Misuse of Trend Analysis

Relying excessively on trend analysis results without considering other information can lead to decisively misinformed decisions. While it is a useful tool, it should be only one component of an all-inclusive decision-making process, which includes considering different analysis techniques and perspectives. Ignoring this might lead to an over-reliance on trend analysis, escalating potential risks and errors.

Trend Analysis and Sustainability

In the context of corporate and economic sustainability, trend analysis serves as a vital tool in enhancing a culture of corporate social responsibility (CSR). By carefully observing and understanding patterns in economic and financial trends, businesses can make more informed, sustainable decisions.

Using Trend Analysis to Facilitate CSR

Economic and financial trend analysis, when utilized well, can offer companies insights into industry shifts and potential risks. It helps them anticipate potential changes and make decisions that are beneficial not only for themselves, but also for society. For instance, a company might notice a trend of increasing consumer demand for environmentally-friendly products. Armed with this information, the company could respond by adjusting their production processes to reduce carbon emissions or by sourcing their materials more sustainably.

In addition to adapting business models, understanding trends can also aid corporate social responsibility in other areas. For example, trend analysis may highlight a growing disparity in pay scales within an industry. This could push businesses to reassess their own wage structures to ensure fairness, contributing to a more socially responsible culture.

Balancing Profitability and Responsibility

Let's not overlook the financial importance in connecting trend analysis to corporate social responsibility. Balancing profitability and responsibility is a significant element of corporate sustainability. Companies can utilise financial trend analysis to monitor cost efficiency of their CSR initiatives. If they recognize a trend of rising costs, they may need to innovate and find new methods to maintain their social responsibility while keeping costs in check. An efficient CSR program, discovered through financial trends, facilitates long term sustainability by delivering value to shareholders and society simultaneously.

Aid in Regulatory Compliance

Trend analysis can also act as a tool to prevent future issues concerning regulatory compliance. If a business notices legislative trends towards stricter waste disposal regulations, for instance, it can be proactive and adapt its practices accordingly. This foresight not only ensures compliance, thereby avoiding penalties, but also illustrates the company's commitment to acting as a responsible corporate citizen.

In essence, by using economic and financial trend analysis, corporations can contribute positively to society, demonstrate their social responsibility, and overall achieve a more sustainable future. It both directs and informs the company's strategic decision-making process, enabling it to respond proactively and appropriately to economic, social, and environmental trends.

Trend Analysis Tools and Techniques

Linear regression analysis.

Linear regression analysis is a common statistical tool used in trend analysis. It operates on the fundamental principle of establishing a relationship between two sets of variables, allowing one to forecast future values. One of the significant benefits of this tool is its simplicity and power in predicting future trends. However, a significant drawback lies in its assumption that a linear relationship exists between the variables, which isn't always the case.

Moving Average

The moving average technique, often used in stock market analysis, involves calculating the average of different subsets of a full data set. It helps smooth out price data or other time series data over a specified period. This technique is advantageous because it is straightforward to calculate and understand. It is great for identifying trends in volatile markets. However, a moving average is a 'lagging' indicator, meaning it follows behind the current price action and can thus provide delayed signals.

Exponential Smoothing

Exponential smoothing is another statistical technique used to analyze trends that involves applying decreasing exponential weights over time—making it more sensitive to recent data points. This makes it advantageous in rapidly changing markets. The downside of this method is its complexity and difficulty to understand for beginners.

Relative Strength Index (RSI)

The Relative Strength Index (RSI), predominantly used in technical analysis in trading, is an oscillator that measures the speed of price movement direction. It can help identify when a market is overbought or oversold, which can indicate possible trend reversals. The strength of the RSI is its simplicity and effectiveness; however, it may send false signals in volatile markets.

Time series analysis, often supported by statistical packages like R or Python, is a sophisticated technique that uses intricate models (like ARIMA and state-space models) to forecast future points in the series. It offers precise modeling techniques beneficial in complex and multifaceted market conditions. However, these models can be highly complex and requires a solid statistical understanding to use effectively.

Computer-Aided Trend Analysis

Computer-aided trend analysis uses machine learning and artificial intelligence to analyze trends. Tools like neural networks or support vector machines can handle large amounts of data, considering multiple variables simultaneously. They can self-adapt to evolving trends, making them effective at predicting trends in dynamic markets. Their biggest downside is their "black box" nature—since their decision-making process can often be opaque and hard to interpret for end users.

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Trend Analysis: What Is It and Why Is It Important?

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Business analysts always look for data that provides them with valuable insights. Historical analysis, in particular, deals with sorting through past data to answer what happened, so then management can figure out how the business can benefit from it.

Essentially, they are looking for trends. And not in the way Pokémon GO swept the nations in waves of mainstream popularity – though that was certainly quite cool. What we mean is finding patterns in data or, otherwise said, what the data they’re analyzing has in common. This allows a company to evaluate business performance, come up with better business intelligence techniques , and take corrective actions when necessary.

In this article, we’ll introduce you to an easy-to-use, yet impressive, results-yielding technique that analysts implement during the descriptive phase – trend analysis.

What Is Trend Analysis?

We’ll start by answering what exactly trend analysis is. By now, we know that it is the practice of finding patterns in your data. But, of course, there’s more to it than that.

In most organizations, trend analysis – also known as technical analysis – is used to monitor metrics and their development over time. As such, the technique relies on effective historical analysis.

If you were to go back in history and consider a country’s economic development, you will notice stages of:

The same development applies to companies as well. And, based on this historical analysis, stakeholders can make an estimation about the future of their business.

What Are Trend Analysis Factors?

If we look at Apple’s revenues for the past 5 years, we’ll see the following chart:

This trajectory can give us an idea about the possible development of future sales, right?

Managers and their teams use trend analysis with a focus on the factors that can impact their business. In some situations, these factors are within their control, while in others – they aren’t. High-performing organizations focus trend analysis on both internal and external factors.

Internal Factors

Typically, an internal factor can be influenced. What we mean by this is the variables that can be shaped by management’s decisions. For example, internal factors can be:

• The allocation of manpower, capital , and bonuses
• The selection of targets and business plans

External Factors

External factors, on the other hand, impact the ability of a business to achieve its strategic goals and objectives. Common external factors which often underpin trend analysis include:

• Competitors
• Legislation
• Economic environments
• Political environments

What’s important to note is that, even though a company can’t really influence the development of these factors, it still needs to study them. Why is that? Well, simply because it allows them to make important decisions and have insight on what could be coming next.

Think of a situation when the management can predict sales movements and see they are about to decline because the country of operation is likely to go into a recession. The company can’t prevent that outcome, but what they can do is plan accordingly. Stopping large capital expenditure projects and focusing on cash flows and efficiencies – these are some of the pre-emptive preparations that management has to make in this scenario.

What Are the Most Common Types of Trend Analysis?

Trend analysis can take many forms. Here, we will focus on three of the most common use cases that managers and their teams encounter:

• Performance management
• Project management
• Trading analysis

We’ll go further into detail about what each type is and how a company might use it to benefit their business.

Trend Analysis in Performance Management

Generally, any manager and their team can use trend analysis in their performance management. In this context, we use this type of analysis to monitor, prevent, or remedy aspects of business operations that could potentially harm performance.

Let’s look at an example of performance management through trend analysis. Suppose that a person in your organization needs to deliver the same report at a specific time every day. But then you look at the times this person delivers the report and find that they are always late – the trend here is consistently missing the report deadline. So, based on our analysis, we expect this pattern of decreased employee efficiency will continue.

Surely, the recipients of this report will not be happy. Thus, we need to find the reason why the person is always late. This is called performance management: monitoring someone’s performance, remedying it if it’s not up to par with management’s expectations.

How can we fix the issue? We can apply many tools to understand the root cause. The one we will discuss here considers the different types of waste – a key element in Lean methods. Essentially, we’ll ask the person preparing the report some questions to understand what is happening and why they are late:

• Is the process well-documented?
• Have they been well-trained? Do they know how to refresh the report?
• Do they have a clear idea about the report’s requirements and deadline?
• Do they have all the information they need in order to update the report on time or do they have to wait for someone to give it to them?
• Is there someone that can potentially help them deliver the report faster?
• Do they see any opportunities to optimize the process, to make it shorter and more efficient?

These questions will help us understand if there is any waste in the process. This way we consider the performance trend and used some performance management tools to remedy the process.

Trend Analysis in Project Management

Trend analysis in project management is best suited for managing personnel who is not engaged in an ongoing delivery process. This involves tracking variances in cost and schedule performance. We use this type of analysis as a quality control mechanism to anticipate and better manage employees delivering their projects on time and within budget .

Every project starts with a business case, a cost projection, and the projected benefits that the project will provide throughout its lifetime. Meanwhile, trend analysis allows us to monitor how our performance versus the project costs and benefits planned initially, as well as how we are doing in terms of timing.

Trend Analysis in Trading

The third type of trend analysis is used in trading. We apply the technique to study price and volume movement as a means of us anticipating spikes or dips of traded securities. This kind of trading analysis is relevant for finance professionals whose job involves trading stocks, commodities, or currencies.

An important thing to note here is that this is a highly speculative technique and by far not an exact science.

Companies typically hedge their commodity exposure to mitigate potential financial risks , not relying on technical analysis extensively. Examples of frequently traded and hedged commodities are:

Many businesses need these commodities for their production process. And some hedging strategies are based on trend analysis in the sense that finding patterns in commodity price movements allows companies to gain an idea of how the price is likely to evolve over time.

Based on that, they can define their strategies.

Trend Analysis: Next Steps

As you can see, trend analysis can play a significant role in the future of a business. Based on historical analysis, this technique looks for patterns and highlights issues that might be holding a company back.

Should you embark on the journey towards becoming a business analyst, you’ll be be advising companies on their problem areas, as well as presenting ways to fix them. Moreover, you’ll be a vital part of the business performance optimization and stimulate growth within the company. Doesn’t that sound like the ultimate career goal?

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How to Write the Market Analysis Section of a Business Plan

Alyssa Gregory is an entrepreneur, writer, and marketer with 20 years of experience in the business world. She is the founder of the Small Business Bonfire, a community for entrepreneurs, and has authored more than 2,500 articles for The Balance and other popular small business websites.

The market analysis section of your business plan comes after the products or services section and should provide a detailed overview of the industry you intend to sell your product or service in, including statistics to support your claims.

In general, the market analysis section should include information about the industry, your target market, your competition, and how you intend to make a place for your own product and service. Extensive data for this section should be added to the end of the business plan as appendices, with only the most important statistics included in the market analysis section itself.

What Should a Market Analysis Include?

The market analysis section of your small business plan should include the following:

• Industry Description and Outlook : Describe your industry both qualitatively and quantitatively by laying out the factors that make your industry an attractive place to start and grow a business. Be sure to include detailed statistics that define the industry including size, growth rate , trends, and outlook.
• Target Market : Who is your ideal client/customer? This data should include demographics on the group you are targeting including age, gender, income level, and lifestyle preferences. This section should also include data on the size of the target market, the purchase potential and motivations of the audience, and how you intend to reach the market.
• Market Test Results : This is where you include the results of the market research you conducted as part of your initial investigation into the market. Details about your testing process and supporting statistics should be included in the appendix.
• Lead Time : Lead time is the amount of time it takes for an order to be fulfilled once a customer makes a purchase. This is where you provide information on the research you've completed on how long it will take to handle individual orders and large volume purchases, if applicable.
• Competitive Analysis : Who is your competition? What are the strengths and weaknesses of the competition? What are the potential roadblocks preventing you from entering the market?

7 Tips for Writing a Market Analysis

Here is a collection of tips to help you write an effective and well-rounded market analysis for your small business plan.

• Use the Internet : Since much of the market analysis section relies on raw data, the Internet is a great place to start. Demographic data can be gathered from the U.S. Census Bureau. A series of searches can uncover information on your competition, and you can conduct a portion of your market research online.
• Be the Customer : One of the most effective ways to gauge opportunity among your target market is to look at your products and services through the eyes of a purchaser. What is the problem that needs to be solved? How does the competition solve that problem? How will you solve the problem better or differently?
• Cut to the Chase : It can be helpful to your business plan audience if you include a summary of the market analysis section before diving into the details. This gives the reader an idea about what's to come and helps them zero in on the most important details quickly.
• Conduct Thorough Market Research : Put in the necessary time during the initial exploration phase to research the market and gather as much information as you can. Send out surveys, conduct focus groups, and ask for feedback when you have an opportunity. Then use the data gathered as supporting materials for your market analysis.
• Use Visual Aids : Information that is highly number-driven, such as statistics and metrics included in the market analysis, is typically easier to grasp when it's presented visually. Use charts and graphs to illustrate the most important numbers.
• Be Concise : In most cases, those reading your business plan already have some understanding of the market. Include the most important data and results in the market analysis section and move the support documentation and statistics to the appendix.
• Relate Back to Your Business : All of the statistics and data you incorporate in your market analysis should be related back to your company and your products and services. When you outline the target market's needs, put the focus on how you are uniquely positioned to fulfill those needs.

LONDON--( BUSINESS WIRE )--Infiniti Research, a leading market intelligence solutions provider, has announced the completion of its latest article on trend analysis .

• What is trend analysis?
• Benefits of using trend analysis

Trend Analysis is a technique used to project the current and future movement of events through a time series data analysis. It involves the comparison of data over a specific period of time to spot a pattern or trend. Trend analysis methods can be used to forecast how the business will perform. However, it is also important to be aware of the method’s limitations.

“When business variables including sales, revenue or customer complaints change over time, the patterns that make up the trends can be observed. This allows businesses to project historical data to obtain future values,” says an analyst at Infiniti Research.

Our market intelligence solutions can give you a birds-eye view of potential markets, industries, suppliers, and relevant factors, and can open up new opportunities to give you more control over supply chain costs, availability, and reliability. Request a free proposal to know more.

You may also like to read some of our recent articles on trend analysis:

• Analyzing the Latest Market Trends and Industry Developments in the German Retail Market with Trend Analysis Solution
• Enhancing ROI by 19% for a Beverage Packaging Company – Market Trend Analysis Engagement
• Identifying Trends and Opportunities in the US Food Packaging Market | Infiniti’s Market Trend Analysis Engagement

Benefits of trend analysis

Facilitates comparison

Using market trend analysis, analysts can make a well-charted out comparison between two or more companies for a given period of time. It can also be used to compare the company’s performance with the industry average. Trend analysis methods make it simpler to ascertain the strengths and weaknesses of a particular firm with respect to other related firms operating in the industry. As a result, companies can quickly identify the gaps and implement the necessary changes.

Measuring financial performance

Trend analysis can be used to undertake a comparative study to measure the financial performances of the firm over a period of time. Through this the management to take decisions for the future and alter their processes or actions accordingly. Trend analysis is more effective when compared to the absolutes data, facilitating top management in better decision-making.

Understanding liquidity positions

Trend analysis methods help analysts and the management to understand the short-term liquidity position of the company. It is also an ideal tool to measure long-term solvency position of a firm over the years with using related financial trend ratios.

Measuring profitability position

Using market trend analysis, companies can measure their profitability positions over a given period of time. This can be done using some common related financial trend ratios including operating ratio, net profit ratio, and gross profit ratio.

To stay relevant in the competitive market landscape, chief marketing officers, or CMOs, need to glean more insights from customer data with the help of market intelligence. Get in touch with an expert to know more about how our market intelligence solutions can be tailor-made to combat your business challenges.

About Infiniti Research

Established in 2003, Infiniti Research is a leading market intelligence company providing smart solutions to address your business challenges. Infiniti Research studies markets in more than 100 countries to help analyze competitive activity, see beyond market disruptions, and develop intelligent business strategies. To know more, visit: https://www.infinitiresearch.com/about-us

Infiniti Research Anirban Choudhury Marketing Manager US: +1 844 778 0600 UK: +44 203 893 3400 https://www.infinitiresearch.com/contact-us

Release Summary

Infiniti Research, a leading market intelligence solutions provider, has announced the completion of its latest article on trend analysis.

• #Trendanalysis
• #CompetitiveIntelligence
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How to create a trend analysis?

Analyzing trends: how do you do it.

When things change in the world, your business needs to change too. You need to pay attention to what’s happening around you and figure out what’s important. That’s why trend analysis matters. Then you’ll need to make changes to your business so it keeps up with all the new and relevant stuff that’s happening.

How do you create trend analysis?

Trend analysis is a process that involves looking at data and information to identify patterns and changes in the data over time. To do this, you need to collect data from sources such as surveys, polls, or market reports, and then analyze it to see what kinds of changes are happening. This can help businesses make decisions about where to invest money or what products to create.

To do a trend analysis, you will need to analyze the data or information to identify patterns and changes over time. This can help you to understand how a situation is developing, predict future trends, and make informed decisions.

Looking at data and information to identify patterns and changes over a period is the core of the trend analysis method. To perform this analysis, one needs to integrate the steps, such as identifying data sources, gathering data, and analyzing the data. In order to conduct a successful trend analysis, destep, futuring, and other analytical tools should be applied. The process can identify problems and opportunities that are yet to come, which can help businesses prepare for the future.

DESTEP Method

The DESTEP method is an effective way for businesses to analyze the external environment and plan accordingly. This method considers all the key factors, such as demographic, economic, social, technological, ecological, and political elements. Mapping trends can help you to anticipate changes, allowing you to stay one step ahead of the competition.

Demographics trends: like aging Economic trends: rising and changing income levels, or the impact of inflation for example Social trends: like the impact of social media on the mind set of people Technological trends: for example digitization, or artificial intelligence, etc. Ecological trends: climate issues Political: democracy vs autocracy leading to geo political changes and thus impact your supply chain.

Time to Market

Time to market is the length of time it takes for a product or technology to go from an idea in someone’s head to actually being available for purchase. It includes things like designing, testing, and manufacturing the product, so it can take a lot of time for a new product to become available.

Impact on your business

Impact on your business means the effect that something has on your business. It could be a change, like a new law or regulation, or an event, like a natural disaster. It can also be the result of something you did, like launching a new product. Impact can be positive or negative, but either way it’ll have a lasting effect on your business.

Time Horizon

A time horizon is the length of time you think about when making plans. For example, if you’re saving money for retirement, then your time horizon is likely decades in the future. If you’re planning a vacation, then your time horizon is probably just a few weeks or months.

Macro trends (10-30year)

Macro trends are long-term patterns in the way people and societies live and work. They can take anywhere from 10 to 30 years to play out, and they affect a lot of different parts of our lives, like the economy, technology, and the environment.

Medium trends (3-5 years)

Trends are things that change gradually over time. For example, over the last 3-5 years, people have been buying more and more things online, using their phones more than ever before, and spending more time watching streaming services like Netflix. These are all trends that have been happening over the past few years.

Microtrends (0-1 year)

Microtrends are really small changes or trends that last for a short period of time, usually from 0 to 1 year. They can happen in any area, from technology to fashion to food, and they come and go quickly. For example, a microtrend could be a certain type of clothing that is popular for only a few months.

So which trends do you think are there impacting your business?

Creating a trend analysis involves analyzing historical data to identify patterns, changes, and trends over time. Here’s a step-by-step guide on how to create a trend analysis:

Define the Objective: Determine the purpose of your trend analysis. Clearly define what you want to measure or analyze, such as sales performance, customer behavior, market trends, or financial data.

Gather Relevant Data: Collect the necessary data that is relevant to your objective. This can include historical sales data, customer surveys, market research reports, financial statements, or any other data sources that provide insights into the area you are analyzing.

Clean and Organize the Data: Ensure that your data is accurate, complete, and free of any errors or inconsistencies. Clean and organize the data by removing duplicates, correcting errors, and formatting it in a way that is suitable for analysis.

Identify the Time Frame: Determine the time period you want to analyze. It could be daily, monthly, quarterly, or yearly data, depending on the nature of the trend you are investigating. Ensure that you have sufficient data points to observe meaningful trends.

Plot the Data: Visualize the data using charts or graphs . Line charts are commonly used for trend analysis. Plot the data points along the time axis to observe any patterns, fluctuations, or trends that emerge over time.

Analyze the Data: Examine the plotted data to identify any noticeable trends or patterns. Look for upward or downward trends , seasonality, recurring patterns , or any significant changes that occurred over the selected time frame.

Calculate Statistical Measures: Apply statistical measures to quantify the trends observed in the data. This could include calculating averages, growth rates, percentages, or other relevant statistical indicators to provide more context and insights into the trends.

Interpret the Findings: Draw meaningful conclusions from the trend analysis. Identify the key insights, drivers, and implications of the trends observed. Assess the significance of the trends and their potential impact on future decision-making or strategic planning.

Communicate the Results: Present the trend analysis findings in a clear and concise manner. Use visualizations, charts, and graphs to effectively communicate the trends to stakeholders or decision-makers. Provide supporting explanations and recommendations based on the analysis.

Monitor and Update: Trend analysis is an ongoing process. Continuously monitor the data and update your analysis periodically to track changes and validate the trends over time.

Remember, trend analysis is subjective to the data and the context in which it is analyzed. It requires critical thinking, domain knowledge, and a deep understanding of the subject matter to derive meaningful insights from the data.

Next: structure the trends into a scenario analysis.

This is mostly done by futurists, but It can help managing the next 3-5 years in where to move the business.

Which trends do impact your business?

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How to Write a Market Analysis for a Business Plan

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A lot of preparation goes into starting a business before you can open your doors to the public or launch your online store. One of your first steps should be to write a business plan . A business plan will serve as your roadmap when building your business.

Within your business plan, there’s an important section you should pay careful attention to: your market analysis. Your market analysis helps you understand your target market and how you can thrive within it.

Simply put, your market analysis shows that you’ve done your research. It also contributes to your marketing strategy by defining your target customer and researching their buying habits. Overall, a market analysis will yield invaluable data if you have limited knowledge about your market, the market has fierce competition, and if you require a business loan. In this guide, we'll explore how to conduct your own market analysis.

How to conduct a market analysis: A step-by-step guide

In your market analysis, you can expect to cover the following:

Industry outlook

Target market

Market value

Competition

Barriers to entry

Let’s dive into an in-depth look into each section:

Step 1: Define your objective

Before you begin your market analysis, it’s important to define your objective for writing a market analysis. Are you writing it for internal purposes or for external purposes?

If you were doing a market analysis for internal purposes, you might be brainstorming new products to launch or adjusting your marketing tactics. An example of an external purpose might be that you need a market analysis to get approved for a business loan .

The comprehensiveness of your market analysis will depend on your objective. If you’re preparing for a new product launch, you might focus more heavily on researching the competition. A market analysis for a loan approval would require heavy data and research into market size and growth, share potential, and pricing.

Step 2: Provide an industry outlook

An industry outlook is a general direction of where your industry is heading. Lenders want to know whether you’re targeting a growing industry or declining industry. For example, if you’re looking to sell VCRs in 2020, it’s unlikely that your business will succeed.

Starting your market analysis with an industry outlook offers a preliminary view of the market and what to expect in your market analysis. When writing this section, you'll want to include:

Market size

Are you chasing big markets or are you targeting very niche markets? If you’re targeting a niche market, are there enough customers to support your business and buy your product?

Product life cycle

If you develop a product, what will its life cycle look like? Lenders want an overview of how your product will come into fruition after it’s developed and launched. In this section, you can discuss your product’s:

Research and development

Projected growth

How do you see your company performing over time? Calculating your year-over-year growth will help you and lenders see how your business has grown thus far. Calculating your projected growth shows how your business will fare in future projected market conditions.

Step 3: Determine your target market

This section of your market analysis is dedicated to your potential customer. Who is your ideal target customer? How can you cater your product to serve them specifically?

Don’t make the mistake of wanting to sell your product to everybody. Your target customer should be specific. For example, if you’re selling mittens, you wouldn’t want to market to warmer climates like Hawaii. You should target customers who live in colder regions. The more nuanced your target market is, the more information you’ll have to inform your business and marketing strategy.

With that in mind, your target market section should include the following points:

Demographics

This is where you leave nothing to mystery about your ideal customer. You want to know every aspect of your customer so you can best serve them. Dedicate time to researching the following demographics:

Income level

Create a customer persona

Creating a customer persona can help you better understand your customer. It can be easier to market to a person than data on paper. You can give this persona a name, background, and job. Mold this persona into your target customer.

What are your customer’s pain points? How do these pain points influence how they buy products? What matters most to them? Why do they choose one brand over another?

Research and supporting material

Information without data are just claims. To add credibility to your market analysis, you need to include data. Some methods for collecting data include:

Target group surveys

Focus groups

Reading reviews

Feedback surveys

You can also consult resources online. For example, the U.S. Census Bureau can help you find demographics in calculating your market share. The U.S. Department of Commerce and the U.S. Small Business Administration also offer general data that can help you research your target industry.

Step 4: Calculate market value

You can use either top-down analysis or bottom-up analysis to calculate an estimate of your market value.

A top-down analysis tends to be the easier option of the two. It requires for you to calculate the entire market and then estimate how much of a share you expect your business to get. For example, let’s assume your target market consists of 100,000 people. If you’re optimistic and manage to get 1% of that market, you can expect to make 1,000 sales.

A bottom-up analysis is more data-driven and requires more research. You calculate the individual factors of your business and then estimate how high you can scale them to arrive at a projected market share. Some factors to consider when doing a bottom-up analysis include:

Where products are sold

Who your competition is

The price per unit

How many consumers you expect to reach

The average amount a customer would buy over time

While a bottom-up analysis requires more data than a top-down analysis, you can usually arrive at a more accurate calculation.

Step 5: Get to know your competition

Before you start a business, you need to research the level of competition within your market. Are there certain companies getting the lion’s share of the market? How can you position yourself to stand out from the competition?

There are two types of competitors that you should be aware of: direct competitors and indirect competitors.

Direct competitors are other businesses who sell the same product as you. If you and the company across town both sell apples, you are direct competitors.

An indirect competitor sells a different but similar product to yours. If that company across town sells oranges instead, they are an indirect competitor. Apples and oranges are different but they still target a similar market: people who eat fruits.

Also, here are some questions you want to answer when writing this section of your market analysis:

What are your competitor’s strengths?

What are your competitor’s weaknesses?

How can you cover your competitor’s weaknesses in your own business?

How can you solve the same problems better or differently than your competitors?

How can you leverage technology to better serve your customers?

How big of a threat are your competitors if you open your business?

Step 6: Identify your barriers

Writing a market analysis can help you identify some glaring barriers to starting your business. Researching these barriers will help you avoid any costly legal or business mistakes down the line. Some entry barriers to address in your marketing analysis include:

Technology: How rapid is technology advancing and can it render your product obsolete within the next five years?

Branding: You need to establish your brand identity to stand out in a saturated market.

Cost of entry: Startup costs, like renting a space and hiring employees, are expensive. Also, specialty equipment often comes with hefty price tags. (Consider researching equipment financing to help finance these purchases.)

Location: You need to secure a prime location if you’re opening a physical store.

Competition: A market with fierce competition can be a steep uphill battle (like attempting to go toe-to-toe with Apple or Amazon).

Step 7: Know the regulations

When starting a business, it’s your responsibility to research governmental and state business regulations within your market. Some regulations to keep in mind include (but aren’t limited to):

Employment and labor laws

Advertising

Environmental regulations

If you’re a newer entrepreneur and this is your first business, this part can be daunting so you might want to consult with a business attorney. A legal professional will help you identify the legal requirements specific to your business. You can also check online legal help sites like LegalZoom or Rocket Lawyer.

Tips when writing your market analysis

We wouldn’t be surprised if you feel overwhelmed by the sheer volume of information needed in a market analysis. Keep in mind, though, this research is key to launching a successful business. You don’t want to cut corners, but here are a few tips to help you out when writing your market analysis:

Use visual aids

Nobody likes 30 pages of nothing but text. Using visual aids can break up those text blocks, making your market analysis more visually appealing. When discussing statistics and metrics, charts and graphs will help you better communicate your data.

Include a summary

If you’ve ever read an article from an academic journal, you’ll notice that writers include an abstract that offers the reader a preview.

Use this same tactic when writing your market analysis. It will prime the reader of your market highlights before they dive into the hard data.

Get to the point

It’s better to keep your market analysis concise than to stuff it with fluff and repetition. You’ll want to present your data, analyze it, and then tie it back into how your business can thrive within your target market.

Revisit your market analysis regularly

Markets are always changing and it's important that your business changes with your target market. Revisiting your market analysis ensures that your business operations align with changing market conditions. The best businesses are the ones that can adapt.

Why should you write a market analysis?

Your market analysis helps you look at factors within your market to determine if it’s a good fit for your business model. A market analysis will help you:

1. Learn how to analyze the market need

Markets are always shifting and it’s a good idea to identify current and projected market conditions. These trends will help you understand the size of your market and whether there are paying customers waiting for you. Doing a market analysis helps you confirm that your target market is a lucrative market.

2. Learn about your customers

The best way to serve your customer is to understand them. A market analysis will examine your customer’s buying habits, pain points, and desires. This information will aid you in developing a business that addresses those points.

3. Get approved for a business loan

Starting a business, especially if it’s your first one, requires startup funding. A good first step is to apply for a business loan with your bank or other financial institution.

A thorough market analysis shows that you’re professional, prepared, and worth the investment from lenders. This preparation inspires confidence within the lender that you can build a business and repay the loan.

4. Beat the competition

Your research will offer valuable insight and certain advantages that the competition might not have. For example, thoroughly understanding your customer’s pain points and desires will help you develop a superior product or service than your competitors. If your business is already up and running, an updated market analysis can upgrade your marketing strategy or help you launch a new product.

Final thoughts

There is a saying that the first step to cutting down a tree is to sharpen an axe. In other words, preparation is the key to success. In business, preparation increases the chances that your business will succeed, even in a competitive market.

The market analysis section of your business plan separates the entrepreneurs who have done their homework from those who haven’t. Now that you’ve learned how to write a market analysis, it’s time for you to sharpen your axe and grow a successful business. And keep in mind, if you need help crafting your business plan, you can always turn to business plan software or a free template to help you stay organized.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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Assessing the Future: How to Perform a Trend Analysis Assessment

As we move forward, it’s essential to assess and anticipate trends accurately. This helps us identify patterns and shifts that can impact businesses, industries, and societies. By understanding and applying this skill, we can make informed decisions for the future.

In this article, we will explore conducting trend analysis assessments and the tools and techniques that can help us navigate the ever-changing future.

Understanding the Basics of Trend Checks

Explaining what a trend is.

A trend is the general direction of how something is changing over time.

One way to identify a trend is by finding the average values of a set of data.

There are three main types of trends: short-term, intermediate-term, and long-term.

Recognizing Different Types of Trends

Three main types of trends can be recognized. These are short-term, intermediate-term, and long-term.

Analysts must examine market performance and external forces to carry out a proper trend check. Their goal is to predict the market’s future direction by looking at current trends to predict future ones.

Historical data can be used to understand trends in real-world situations. This can help identify opportunities for buying or selling securities and improve decision-making. However, it’s important to note that trend analysis can be reliant on historical data and the quality of the data being used. This makes its interpretation subject to potential disadvantages.

Upward, Downward, and Flat: What These Trends Mean

Trend analysis shows if the market is going up, down, or staying the same. It helps investors decide when to buy or sell stocks. By looking at data over time, trends can be spotted.

For example, higher highs and higher lows mean it’s going up, while lower and lows are going down. This analysis helps make better decisions and find opportunities to buy or sell. However, it relies on past data and might miss important things like management changes or industry rules.

Piecing Together a Plan for Your Trend Check

Steps for carrying out a proper trend check.

Carrying out a proper trend check involves several steps:

• Analyzing current trends.
• Evaluating market performance and external forces.
• Attempting to predict future market direction.

Tools such as business intelligence (BI) software, spreadsheets, and data visualization tools can be used for tracking trends. A simple calculation can spot a trend in data by plotting aggregated response data over time using survey research data in various chart formats. Additionally, identifying commonalities and differences between groups based on geographical location using the geographic method is important.

QuestionPro and Other Tools for Tracking Trends

Trend check involves analyzing patterns and trends in data over a specific time period.

A simple calculation can spot a trend by identifying commonalities and differences between user groups based on geographical location.

QuestionPro and other tools can be used for tracking trends by plotting aggregated response data over time, displaying historical data, and presenting survey research data.

Real-world ways to use trend analysis and historical data to understand trends include:

• Identifying opportunities for buying or selling securities
• Comparing test scores
• Assessing survey completion status, date, and frequency.

What Goes Into a Trend Check?

Getting ready to look at data trends.

A simple calculation can spot a trend in data. This means recognizing the direction of data movement over a specific period.

To do a proper trend check, experts must:

• Analyze historical data
• Watch trade market details
• Predict market sentiment

Trend analysis involves assessing three main types of trends:

• Short-term trends : last a few days to weeks and are influenced by public or market sentiment.
• Intermediate trends : last a few weeks to several months and show a change in overall market sentiment.
• Long-term trends : last for several months or even years and reflect significant movements in the market.

Each type of trend allows analysts to predict market sentiment over a specific period. This helps make informed decisions for future investments.

How a Simple Calculation Can Spot a Trend

A simple moving average calculation can help spot a trend.

To do this, you add the closing prices of a stock’s most recent “x” number of periods and then divide by the number of periods. This gives a moving average that smooths out price data to spot a trend.

Checking trends involves analyzing historical data, examining market performance, and using trend trading strategies.

Analysts look at current trends to predict future ones and consider external forces and technical indicators to profit from trends.

The pros of trend checks include identifying opportunities for buying or selling securities and improving decision-making.

However, there are potential disadvantages. For example, relying on historical data, needing to test indicators before using them for live trades, and being unable to consider important factors like changes in management or industry regulations.

Critics argue that markets are efficient and already factor in all available information, making trend analysis less useful.

Seeing the Ups and Downs: The Pros and Cons of Trend Checks

What’s good about trend checks.

Trend checks help identify buying and selling opportunities for securities. This improves decision-making. The checks predict future consumer behaviors and help plan business operations.

The data is analyzed using BI software or standard business software. The trend is displayed in charts and graphs, making it easier to interpret. This contributes to long-term business strategy building and provides insights from customer feedback.

Trend checks predominantly work on the business rather than in the industry. They are valuable for understanding consumer behavior, detecting shifts in consumer perception, and analyzing cost drivers.

What’s Not So Good about Them

Trend analysis has some potential disadvantages. It relies on historical data and the quality of the data being used. This can lead to misleading or inaccurate results because the analysis heavily depends on past trends to predict future ones.

Also, trend analysis may not consider important factors such as changes in management or industry regulations. This makes it an ineffective method for analyzing data when these external forces are critical in market dynamics.

Cool Examples of Trend Checks

Using historical data to understand trends.

Historical data helps us understand trends by analyzing patterns and trends over time. We can use this to predict future trends, called trend analysis. To do this, we look at current trends and forecast the market’s future direction.

We can use different data analysis methods, such as temporal, geographic, and intuitive methods.

Using trend analysis has benefits like identifying opportunities for buying or selling securities and making better decisions. However, it has potential drawbacks, like relying on historical data and its quality. Some argue that markets are efficient and already consider all available information, making trend analysis less useful.

Real-world Ways to Use Trend Analysis

To conduct a proper trend check, you must examine market performance and external forces. This helps predict the market’s future direction. Analysts should also use technical indicators like moving averages and relative strength index to profit from trends. A simple calculation can spot a trend by using trend analysis to analyze patterns and trends in data over a specific period.

Another critical step is identifying commonalities and differences between user groups based on geographical location. Some real-world uses of trend analysis are identifying demand trends and low-demand phases for market research or consumer insights, comparing quiz or test scores, understanding consumer behavior, detecting shifts in consumer perception, analyzing cost drivers, and measuring differences in perception and responses over time.

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How to Conduct an Industry Analysis? Steps, Template, Examples

Appinio Research · 16.11.2023 · 39min read

Are you ready to unlock the secrets of Industry Analysis, equipping yourself with the knowledge to navigate markets and make informed strategic decisions? Dive into this guide, where we unravel the significance, objectives, and methods of Industry Analysis.

Whether you're an entrepreneur seeking growth opportunities or a seasoned executive navigating industry shifts, this guide will be your compass in understanding the ever-evolving business terrain.

What is Industry Analysis?

Industry analysis is the process of examining and evaluating the dynamics, trends, and competitive forces within a specific industry or market sector. It involves a comprehensive assessment of the factors that impact the performance and prospects of businesses operating within that industry. Industry analysis serves as a vital tool for businesses and decision-makers to gain a deep understanding of the environment in which they operate.

Key components of industry analysis include:

• Market Size and Growth: Determining the overall size of the market, including factors such as revenue, sales volume, and customer base. Analyzing historical and projected growth rates provides insights into market trends and opportunities.
• Competitive Landscape: Identifying and analyzing competitors within the industry. This includes assessing their market share, strengths, weaknesses, and strategies. Understanding the competitive landscape helps businesses position themselves effectively.
• Customer Behavior and Preferences: Examining consumer behavior , preferences, and purchasing patterns within the industry. This information aids in tailoring products or services to meet customer needs.
• Regulatory and Legal Environment: Assessing the impact of government regulations, policies, and legal requirements on industry operations. Compliance and adaptation to these factors are crucial for business success.
• Technological Trends: Exploring technological advancements and innovations that affect the industry. Staying up-to-date with technology trends can be essential for competitiveness and growth.
• Economic Factors: Considering economic conditions, such as inflation rates, interest rates, and economic cycles, that influence the industry's performance.
• Social and Cultural Trends: Examining societal and cultural shifts, including changing consumer values and lifestyle trends that can impact demand and preferences.
• Environmental and Sustainability Factors: Evaluating environmental concerns and sustainability issues that affect the industry. Industries are increasingly required to address environmental responsibility.
• Supplier and Distribution Networks: Analyzing the availability of suppliers, distribution channels, and supply chain complexities within the industry.
• Risk Factors: Identifying potential risks and uncertainties that could affect industry stability and profitability.

Objectives of Industry Analysis

Industry analysis serves several critical objectives for businesses and decision-makers:

• Understanding Market Dynamics: The primary objective is to gain a comprehensive understanding of the industry's dynamics, including its size, growth prospects, and competitive landscape. This knowledge forms the basis for strategic planning.
• Identifying Growth Opportunities: Industry analysis helps identify growth opportunities within the market. This includes recognizing emerging trends, niche markets, and underserved customer segments.
• Assessing Competitor Strategies: By examining competitors' strengths, weaknesses, and strategies, businesses can formulate effective competitive strategies. This involves positioning the company to capitalize on its strengths and exploit competitors' weaknesses.
• Risk Assessment and Mitigation: Identifying potential risks and vulnerabilities specific to the industry allows businesses to develop risk mitigation strategies and contingency plans. This proactive approach minimizes the impact of adverse events.
• Strategic Decision-Making: Industry analysis provides the data and insights necessary for informed strategic decision-making. It guides decisions related to market entry, product development, pricing strategies, and resource allocation.
• Resource Allocation: By understanding industry dynamics, businesses can allocate resources efficiently. This includes optimizing marketing budgets, supply chain investments, and talent recruitment efforts.
• Innovation and Adaptation: Staying updated on technological trends and shifts in customer preferences enables businesses to innovate and adapt their offerings effectively.

Importance of Industry Analysis in Business

Industry analysis holds immense importance in the business world for several reasons:

• Strategic Planning: It forms the foundation for strategic planning by providing a comprehensive view of the industry's landscape. Businesses can align their goals, objectives, and strategies with industry trends and opportunities.
• Risk Management: Identifying and assessing industry-specific risks allows businesses to manage and mitigate potential threats proactively. This reduces the likelihood of unexpected disruptions.
• Competitive Advantage: In-depth industry analysis helps businesses identify opportunities for gaining a competitive advantage. This could involve product differentiation, cost leadership, or niche market targeting .
• Resource Optimization: Efficient allocation of resources, both financial and human, is possible when businesses have a clear understanding of industry dynamics. It prevents wastage and enhances resource utilization.
• Informed Investment: Industry analysis assists investors in making informed decisions about allocating capital. It provides insights into the growth potential and risk profiles of specific industry sectors.
• Adaptation to Change: As industries evolve, businesses must adapt to changing market conditions. Industry analysis facilitates timely adaptation to new technologies, market shifts, and consumer preferences .
• Market Entry and Expansion: For businesses looking to enter new markets or expand existing operations, industry analysis guides decision-making by evaluating the feasibility and opportunities in target markets.
• Regulatory Compliance: Understanding the regulatory environment is critical for compliance and risk avoidance. Industry analysis helps businesses stay compliant with relevant laws and regulations.

In summary, industry analysis is a fundamental process that empowers businesses to make informed decisions, stay competitive, and navigate the complexities of their respective markets. It is an invaluable tool for strategic planning and long-term success.

How to Prepare for Industry Analysis?

Let's start by going through the crucial preparatory steps for conducting a comprehensive industry analysis.

1. Data Collection and Research

• Primary Research: When embarking on an industry analysis, consider conducting primary research . This involves gathering data directly from industry sources, stakeholders, and potential customers. Methods may include surveys, interviews, focus groups, and observations. Primary research provides firsthand insights and can help validate secondary research findings.
• Secondary Research: Secondary research involves analyzing existing literature, reports, and publications related to your industry. Sources may include academic journals, industry-specific magazines, government publications, and market research reports. Secondary research provides a foundation of knowledge and can help identify gaps in information that require further investigation.
• Data Sources: Explore various data sources to collect valuable industry information. These sources may include industry-specific associations, government agencies, trade publications, and reputable market research firms. Make sure to cross-reference data from multiple sources to ensure accuracy and reliability.

2. Identifying Relevant Industry Metrics

Understanding and identifying the right industry metrics is essential for meaningful analysis. Here, we'll discuss key metrics that can provide valuable insights:

• Market Size: Determining the market's size, whether in terms of revenue, units sold, or customer base, is a fundamental metric. It offers a snapshot of the industry's scale and potential.
• Market Growth Rate: Assessing historical and projected growth rates is crucial for identifying trends and opportunities. Understanding how the market has evolved over time can guide strategic decisions.
• Market Share Analysis: Analyzing market share among industry players can help you identify dominant competitors and their respective positions. This metric also assists in gauging your own company's market presence.
• Market Segmentation : Segmenting the market based on demographics, geography, behavior, or other criteria can provide deeper insights. Understanding the specific needs and preferences of various market segments can inform targeted strategies.

3. Gathering Competitive Intelligence

Competitive intelligence is the cornerstone of effective industry analysis. To gather and utilize information about your competitors:

• Competitor Identification: Begin by creating a comprehensive list of your primary and potential competitors. Consider businesses that offer similar products or services within your target market. It's essential to cast a wide net to capture all relevant competitors.
• SWOT Analysis : Conduct a thorough SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for each competitor. This analysis helps you identify their internal strengths and weaknesses, as well as external opportunities and threats they face.
• Market Share Analysis: Determine the market share held by each competitor and how it has evolved over time. Analyzing changes in market share can reveal shifts in competitive dynamics.
• Product and Pricing Analysis: Evaluate your competitors' product offerings and pricing strategies . Identify any unique features or innovations they offer and consider how your own products or services compare.
• Marketing and Branding Strategies: Examine the marketing and branding strategies employed by competitors. This includes their messaging, advertising channels, and customer engagement tactics. Assess how your marketing efforts stack up.

Industry Analysis Frameworks and Models

Now, let's explore essential frameworks and models commonly used in industry analysis, providing you with practical insights and examples to help you effectively apply these tools.

Porter's Five Forces Model

Porter's Five Forces is a powerful framework developed by Michael Porter to assess the competitive forces within an industry. This model helps you understand the industry's attractiveness and competitive dynamics.

It consists of five key forces:

• Threat of New Entrants: This force evaluates how easy or difficult it is for new companies to enter the industry. Factors that increase barriers to entry include high capital requirements, strong brand loyalty among existing players, and complex regulatory hurdles. For example, the airline industry has significant barriers to entry due to the need for large capital investments in aircraft, airport facilities, and regulatory approvals.
• Bargaining Power of Suppliers: This force examines the influence suppliers have on the industry's profitability. Powerful suppliers can demand higher prices or impose unfavorable terms. For instance, in the automotive industry, suppliers of critical components like microchips can wield significant bargaining power if they are few in number or if their products are highly specialized.
• Bargaining Power of Buyers: The bargaining power of buyers assesses how much influence customers have in negotiating prices and terms. In industries where buyers have many alternatives, such as the smartphone market, they can demand lower prices and better features, putting pressure on manufacturers to innovate and compete.
• Threat of Substitutes: This force considers the availability of substitute products or services that could potentially replace what the industry offers. For example, the rise of electric vehicles represents a significant threat to the traditional gasoline-powered automotive industry as consumers seek eco-friendly alternatives.
• Competitive Rivalry: Competitive rivalry assesses the intensity of competition among existing firms in the industry. A highly competitive industry, such as the smartphone market, often leads to price wars and aggressive marketing strategies as companies vie for market share.

Example: Let's consider the coffee shop industry . New entrants face relatively low barriers, as they can set up a small shop with limited capital. However, the bargaining power of suppliers, such as coffee bean producers, can vary depending on the region and the coffee's rarity. Bargaining power with buyers is moderate, as customers often have several coffee shops to choose from. Threats of substitutes may include energy drinks or homemade coffee, while competitive rivalry is high, with numerous coffee chains and independent cafes competing for customers.

SWOT Analysis

SWOT Analysis is a versatile tool used to assess an organization's internal strengths and weaknesses, as well as external opportunities and threats. By conducting a SWOT analysis, you can gain a comprehensive understanding of your industry and formulate effective strategies.

• Strengths: These are the internal attributes and capabilities that give your business a competitive advantage. For instance, if you're a tech company, having a talented and innovative team can be considered a strength.
• Weaknesses: Weaknesses are internal factors that hinder your business's performance. For example, a lack of financial resources or outdated technology can be weaknesses that need to be addressed.
• Opportunities: Opportunities are external factors that your business can capitalize on. This could be a growing market segment, emerging technologies, or changing consumer trends.
• Threats: Threats are external factors that can potentially harm your business. Examples of threats might include aggressive competition, economic downturns, or regulatory changes.

Example: Let's say you're analyzing the fast-food industry. Strengths could include a well-established brand, a wide menu variety, and efficient supply chain management. Weaknesses may involve a limited focus on healthy options and potential labor issues. Opportunities could include the growing trend toward healthier eating, while threats might encompass health-conscious consumer preferences and increased competition from delivery apps.

PESTEL Analysis

PESTEL Analysis examines the external macro-environmental factors that can impact your industry. The acronym stands for:

• Political: Political factors encompass government policies, stability, and regulations. For example, changes in tax laws or trade agreements can affect industries like international manufacturing.
• Economic: Economic factors include economic growth, inflation rates, and exchange rates. A fluctuating currency exchange rate can influence export-oriented industries like tourism.
• Social: Social factors encompass demographics, cultural trends, and social attitudes. An aging population can lead to increased demand for healthcare services and products.
• Technological: Technological factors involve advancements and innovations. Industries like telecommunications are highly influenced by technological developments, such as the rollout of 5G networks.
• Environmental: Environmental factors cover sustainability, climate change, and ecological concerns. Industries such as renewable energy are directly impacted by environmental regulations and consumer preferences.
• Legal: Legal factors encompass laws, regulations, and compliance requirements. The pharmaceutical industry, for instance, faces stringent regulatory oversight and patent protection laws.

Example: Consider the automobile manufacturing industry. Political factors may include government incentives for electric vehicles. Economic factors can involve fluctuations in fuel prices affecting consumer preferences for fuel-efficient cars. Social factors might encompass the growing interest in eco-friendly transportation options. Technological factors could relate to advancements in autonomous driving technology. Environmental factors may involve emissions regulations, while legal factors could pertain to safety standards and recalls.

Industry Life Cycle Analysis

Industry Life Cycle Analysis categorizes industries into various stages based on their growth and maturity. Understanding where your industry stands in its life cycle can help shape your strategies.

• Introduction: In the introduction stage, the industry is characterized by slow growth, limited competition, and a focus on product development. New players enter the market, and consumers become aware of the product or service. For instance, electric scooters were introduced as a new mode of transportation in recent years.
• Growth: The growth stage is marked by rapid market expansion, increased competition, and rising demand. Companies focus on gaining market share, and innovation is vital. The ride-sharing industry, exemplified by companies like Uber and Lyft, experienced significant growth in this stage.
• Maturity: In the maturity stage, the market stabilizes, and competition intensifies. Companies strive to maintain market share and differentiate themselves through branding and customer loyalty programs. The smartphone industry reached maturity with multiple established players.
• Decline: In the decline stage, the market saturates, and demand decreases. Companies must adapt or diversify to survive. The decline of traditional print media is a well-known example.

Example: Let's analyze the video streaming industry . The introduction stage saw the emergence of streaming services like Netflix. In the growth stage, more players entered the market, and the industry saw rapid expansion. The industry is currently in the maturity stage, with established platforms like Netflix, Amazon Prime, and Disney+ competing for market share. However, with continued innovation and changing consumer preferences, the decline stage may eventually follow.

Value Chain Analysis

Value Chain Analysis dissects a company's activities into primary and support activities to identify areas of competitive advantage. Primary activities directly contribute to creating and delivering a product or service, while support activities facilitate primary activities.

• Primary Activities: These activities include inbound logistics (receiving and storing materials), operations (manufacturing or service delivery), outbound logistics (distribution), marketing and sales, and customer service.
• Support Activities: Support activities include procurement (acquiring materials and resources), technology development (R&D and innovation), human resource management (recruitment and training), and infrastructure (administrative and support functions).

Example: Let's take the example of a smartphone manufacturer. Inbound logistics involve sourcing components, such as processors and displays. Operations include assembly and quality control. Outbound logistics cover shipping and distribution. Marketing and sales involve advertising and retail partnerships. Customer service handles warranty and support.

Procurement ensures a stable supply chain for components. Technology development focuses on research and development of new features. Human resource management includes hiring and training skilled engineers. Infrastructure supports the company's administrative functions.

By applying these frameworks and models effectively, you can better understand your industry, identify strategic opportunities and threats, and develop a solid foundation for informed decision-making.

Data Interpretation and Analysis

Once you have your data, it's time to start interpreting and analyzing the data you've collected during your industry analysis.

You can unlock the full potential of your data with Appinio 's comprehensive research platform. Beyond aiding in data collection, Appinio simplifies the intricate process of data interpretation and analysis. Our intuitive tools empower you to effortlessly transform raw data into actionable insights, giving you a competitive edge in understanding your industry.

Whether it's assessing market trends, evaluating the competitive landscape, or understanding customer behavior, Appinio offers a holistic solution to uncover valuable findings. With our platform, you can make informed decisions, strategize effectively, and stay ahead of industry shifts.

Experience the ease of data collection and interpretation with Appinio – book a demo today!

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1. Analyze Market Size and Growth

Analyzing the market's size and growth is essential for understanding its dynamics and potential. Here's how to conduct a robust analysis:

• Market Size Calculation: Determine the total market size in terms of revenue, units sold, or the number of customers. This figure serves as a baseline for evaluating the industry's scale.
• Historical Growth Analysis: Examine historical data to identify growth trends. This includes looking at past year-over-year growth rates and understanding the factors that influenced them.
• Projected Growth Assessment: Explore industry forecasts and projections to gain insights into the expected future growth of the market. Consider factors such as emerging technologies, changing consumer preferences, and economic conditions.
• Segmentation Analysis: If applicable, analyze market segmentation data to identify growth opportunities in specific market segments. Understand which segments are experiencing the most significant growth and why.

2. Assess Market Trends

Stay ahead of the curve by closely monitoring and assessing market trends. Here's how to effectively evaluate trends within your industry.

• Consumer Behavior Analysis: Dive into consumer behavior data to uncover shifts in preferences, buying patterns, and shopping habits. Understand how technological advancements and cultural changes influence consumer choices.
• Technological Advancements: Keep a keen eye on technological developments that impact your industry. Assess how innovations such as AI, IoT, blockchain, or automation are changing the competitive landscape.
• Regulatory Changes: Stay informed about regulatory shifts and their potential consequences for your industry. Regulations can significantly affect product development, manufacturing processes, and market entry strategies.
• Sustainability and Environmental Trends: Consider the growing importance of sustainability and environmental concerns. Evaluate how your industry is adapting to eco-friendly practices and how these trends affect consumer choices.

3. Evaluate Competitive Landscape

Understanding the competitive landscape is critical for positioning your business effectively. To perform a comprehensive evaluation:

• Competitive Positioning: Determine where your company stands in comparison to competitors. Identify your unique selling propositions and areas where you excel.
• Market Share Analysis: Continuously monitor market share among industry players. Identify trends in market share shifts and assess the strategies that lead to such changes.
• Competitive Advantages and Weaknesses: Analyze your competitors' strengths and weaknesses. Identify areas where you can capitalize on their weaknesses and where you need to fortify your own strengths.

4. Identify Key Success Factors

Recognizing and prioritizing key success factors is crucial for developing effective strategies. To identify and leverage these factors:

• Customer Satisfaction: Prioritize customer satisfaction as a critical success factor. Satisfied customers are more likely to become loyal advocates and contribute to long-term success.
• Quality and Innovation: Focus on product or service quality and continuous innovation. Meeting and exceeding customer expectations can set your business apart from competitors.
• Cost Efficiency: Strive for cost efficiency in your operations. Identifying cost-saving opportunities can lead to improved profitability.
• Marketing and Branding Excellence: Invest in effective marketing and branding strategies to create a strong market presence. Building a recognizable brand can drive customer loyalty and growth.

5. Analyze Customer Behavior and Preferences

Understanding your target audience is central to success. Here's how to analyze customer behavior and preferences:

• Market Segmentation: Use market segmentation to categorize customers based on demographics, psychographics , and behavior. This allows for more personalized marketing and product/service offerings.
• Customer Surveys and Feedback: Gather customer feedback through surveys and feedback mechanisms. Understand their pain points, preferences, and expectations to tailor your offerings.
• Consumer Journey Mapping: Map the customer journey to identify touchpoints where you can improve engagement and satisfaction. Optimize the customer experience to build brand loyalty.

By delving deep into data interpretation and analysis, you can gain valuable insights into your industry, uncover growth opportunities, and refine your strategic approach.

How to Conduct Competitor Analysis?

Competitor analysis is a critical component of industry analysis as it provides valuable insights into your rivals, helping you identify opportunities, threats, and areas for improvement.

1. Identify Competitors

Identifying your competitors is the first step in conducting a thorough competitor analysis. Competitors can be classified into several categories:

• Direct Competitors: These are companies that offer similar products or services to the same target audience. They are your most immediate competitors and often compete directly with you for market share.
• Indirect Competitors: Indirect competitors offer products or services that are related but not identical to yours. They may target a slightly different customer segment or provide an alternative solution to the same problem.
• Potential Competitors: These companies could enter your market in the future. Identifying potential competitors early allows you to anticipate and prepare for new entrants.
• Substitute Products or Services: While not traditional competitors, substitute products or services can fulfill the same customer needs or desires. Understanding these alternatives is crucial to your competitive strategy.

2. Analyze Competitor Strengths and Weaknesses

Once you've identified your competitors, you need to analyze their strengths and weaknesses. This analysis helps you understand how to position your business effectively and identify areas where you can gain a competitive edge.

• Strengths: Consider what your competitors excel at. This could include factors such as brand recognition, innovative products, a large customer base, efficient operations, or strong financial resources.
• Weaknesses: Identify areas where your competitors may be lacking. Weaknesses could involve limited product offerings, poor customer service, outdated technology, or financial instability.

3. Competitive Positioning

Competitive positioning involves defining how you want your business to be perceived relative to your competitors. It's about finding a unique position in the market that sets you apart. Consider the following strategies:

• Cost Leadership: Strive to be the low-cost provider in your industry. This positioning appeals to price-conscious consumers.
• Differentiation: Focus on offering unique features or attributes that make your products or services stand out. This can justify premium pricing.
• Niche Market: Target a specific niche or segment of the market that may be underserved by larger competitors. Tailor your offerings to meet their unique needs.
• Innovation and Technology: Emphasize innovation and technology to position your business as a leader in product or service quality.
• Customer-Centric: Prioritize exceptional customer service and customer experience to build loyalty and a positive reputation.

4. Benchmarking and Gap Analysis

Benchmarking involves comparing your business's performance and practices with those of your competitors or industry leaders. Gap analysis helps identify areas where your business falls short and where improvements are needed.

• Performance Benchmarking: Compare key performance metrics, such as revenue, profitability, market share, and customer satisfaction, with those of your competitors. Identify areas where your performance lags behind or exceeds industry standards.
• Operational Benchmarking: Analyze your operational processes, supply chain, and cost structures compared to your competitors. Look for opportunities to streamline operations and reduce costs.
• Product or Service Benchmarking: Evaluate the features, quality, and pricing of your products or services relative to competitors. Identify gaps and areas for improvement.
• Marketing and Sales Benchmarking: Assess your marketing strategies, customer acquisition costs, and sales effectiveness compared to competitors. Determine whether your marketing efforts are performing at a competitive level.

Market Entry and Expansion Strategies

Market entry and expansion strategies are crucial for businesses looking to enter new markets or expand their presence within existing ones. These strategies can help you effectively target and penetrate your chosen markets.

Market Segmentation and Targeting

• Market Segmentation: Begin by segmenting your target market into distinct groups based on demographics , psychographics, behavior, or other relevant criteria. This helps you understand the diverse needs and preferences of different customer segments.
• Targeting: Once you've segmented the market, select specific target segments that align with your business goals and capabilities. Tailor your marketing and product/service offerings to appeal to these chosen segments.

Market Entry Modes

Selecting the proper market entry mode is crucial for a successful expansion strategy. Entry modes include:

• Exporting: Sell your products or services in international markets through exporting. This is a low-risk approach, but it may limit your market reach.
• Licensing and Franchising: License your brand, technology, or intellectual property to local partners or franchisees. This allows for rapid expansion while sharing the risk and control.
• Joint Ventures and Alliances: Partner with local companies through joint ventures or strategic alliances. This approach leverages local expertise and resources.
• Direct Investment: Establish a physical presence in the target market through subsidiaries, branches, or wholly-owned operations. This offers full control but comes with higher risk and investment.

Competitive Strategy Formulation

Your competitive strategy defines how you will compete effectively in the target market.

• Cost Leadership: Strive to offer products or services at lower prices than competitors while maintaining quality. This strategy appeals to price-sensitive consumers.
• Product Differentiation: Focus on offering unique and innovative products or services that stand out in the market. This strategy justifies premium pricing.
• Market Niche: Target a specific niche or segment within the market that is underserved or has particular needs. Tailor your offerings to meet the unique demands of this niche.
• Market Expansion : Expand your product or service offerings to capture a broader share of the market. This strategy involves diversifying your offerings to appeal to a broader audience.
• Global Expansion: Consider expanding internationally to tap into new markets and diversify your customer base. This strategy involves thorough market research and adaptation to local cultures and regulations.

International Expansion Considerations

If your expansion strategy involves international markets, there are several additional considerations to keep in mind.

• Market Research: Conduct in-depth market research to understand the target country's cultural, economic, and legal differences.
• Regulatory Compliance: Ensure compliance with international trade regulations, customs, and import/export laws.
• Cultural Sensitivity: Adapt your marketing and business practices to align with the cultural norms and preferences of the target market.
• Localization: Consider adapting your products, services, and marketing materials to cater to local tastes and languages.
• Risk Assessment: Evaluate the political, economic, and legal risks associated with operating in the target country. Develop risk mitigation strategies.

By carefully analyzing your competitors and crafting effective market entry and expansion strategies, you can position your business for success in both domestic and international markets.

Risk Assessment and Mitigation

Risk assessment and mitigation are crucial aspects of industry analysis and strategic planning. Identifying potential risks, assessing vulnerabilities, and implementing effective risk management strategies are essential for business continuity and success.

1. Identify Industry Risks

• Market Risks: These risks pertain to factors such as changes in market demand, economic downturns, shifts in consumer preferences, and fluctuations in market prices. For example, the hospitality industry faced significant market risks during the COVID-19 pandemic, resulting in decreased travel and tourism .
• Regulatory and Compliance Risks: Regulatory changes, compliance requirements, and government policies can pose risks to businesses. Industries like healthcare are particularly susceptible to regulatory changes that impact operations and reimbursement.
• Technological Risks: Rapid technological advancements can disrupt industries and render existing products or services obsolete. Companies that fail to adapt to technological shifts may face obsolescence.
• Operational Risks: These risks encompass internal factors that can disrupt operations, such as supply chain disruptions, equipment failures, or cybersecurity breaches.
• Financial Risks: Financial risks include factors like liquidity issues, credit risk , and market volatility. Industries with high capital requirements, such as real estate development, are particularly vulnerable to financial risks.
• Competitive Risks: Intense competition and market saturation can pose challenges to businesses. Failing to respond to competitive threats can result in loss of market share.
• Global Risks: Industries with a worldwide presence face geopolitical risks, currency fluctuations, and international trade uncertainties. For instance, the automotive industry is susceptible to trade disputes affecting the supply chain.

2. Assess Business Vulnerabilities

• SWOT Analysis: Revisit your SWOT analysis to identify internal weaknesses and threats. Assess how these weaknesses may exacerbate industry risks.
• Financial Health: Evaluate your company's financial stability, debt levels, and cash flow. Identify vulnerabilities related to financial health that could hinder your ability to withstand industry-specific challenges.
• Operational Resilience: Assess the robustness of your operational processes and supply chain. Identify areas where disruptions could occur and develop mitigation strategies.
• Market Positioning: Analyze your competitive positioning and market share. Recognize vulnerabilities in your market position that could be exploited by competitors.
• Compliance and Regulatory Adherence: Ensure that your business complies with relevant regulations and standards. Identify vulnerabilities related to non-compliance or regulatory changes.

3. Risk Management Strategies

• Risk Avoidance: In some cases, the best strategy is to avoid high-risk ventures or markets altogether. This may involve refraining from entering certain markets or discontinuing products or services with excessive risk.
• Risk Reduction: Implement measures to reduce identified risks. For example, diversifying your product offerings or customer base can reduce dependence on a single revenue source.
• Risk Transfer: Transfer some risks through methods such as insurance or outsourcing. For instance, businesses can mitigate cybersecurity risks by purchasing cyber insurance.
• Risk Acceptance: In cases where risks cannot be entirely mitigated, it may be necessary to accept a certain level of risk and have contingency plans in place to address potential issues.
• Continuous Monitoring: Establish a system for continuous risk monitoring. Regularly assess the changing landscape and adjust risk management strategies accordingly.

4. Contingency Planning

Contingency planning involves developing strategies and action plans to respond effectively to unforeseen events or crises. It ensures that your business can maintain operations and minimize disruptions in the face of adverse circumstances. Key elements of contingency planning include:

• Risk Scenarios: Identify potential risk scenarios specific to your industry and business. These scenarios should encompass a range of possibilities, from minor disruptions to major crises.
• Response Teams: Establish response teams with clearly defined roles and responsibilities. Ensure that team members are trained and ready to act in the event of a crisis.
• Communication Plans: Develop communication plans that outline how you will communicate with employees, customers, suppliers, and other stakeholders during a crisis. Transparency and timely communication are critical.
• Resource Allocation: Determine how resources, including personnel, finances, and equipment, will be allocated in response to various scenarios.
• Testing and Simulation: Regularly conduct tests and simulations of your contingency plans to identify weaknesses and areas for improvement. Ensure your response teams are well-practiced and ready to execute the plans effectively.
• Documentation and Record Keeping: Maintain comprehensive documentation of contingency plans, response procedures, and communication protocols. This documentation should be easily accessible to relevant personnel.
• Review and Update: Continuously review and update your contingency plans to reflect changing industry dynamics and evolving risks. Regularly seek feedback from response teams to make improvements.

By identifying industry risks, assessing vulnerabilities, implementing risk management strategies, and developing robust contingency plans, your business can navigate the complexities of the industry landscape with greater resilience and preparedness.

Industry Analysis Template

When embarking on the journey of Industry Analysis, having a well-structured template is akin to having a reliable map for your exploration. It provides a systematic framework to ensure you cover all essential aspects of the analysis. Here's a breakdown of an industry analysis template with insights into each section.

Industry Overview

• Objective: Provide a broad perspective of the industry.
• Market Definition: Define the scope and boundaries of the industry, including its products, services, and target audience.
• Market Size and Growth: Present current market size, historical growth trends, and future projections.
• Key Players: Identify major competitors and their market share.
• Market Trends: Highlight significant trends impacting the industry.

Competitive Analysis

• Objective: Understand the competitive landscape within the industry.
• Competitor Identification: List direct and indirect competitors.
• Competitor Profiles: Provide detailed profiles of major competitors, including their strengths, weaknesses, strategies, and market positioning.
• SWOT Analysis: Conduct a SWOT analysis for each major competitor.
• Market Share Analysis: Analyze market share distribution among competitors.

Market Analysis

• Objective: Explore the characteristics and dynamics of the market.
• Customer Segmentation: Define customer segments and their demographics, behavior, and preferences.
• Demand Analysis: Examine factors driving demand and customer buying behavior.
• Supply Chain Analysis: Map out the supply chain, identifying key suppliers and distribution channels.
• Regulatory Environment: Discuss relevant regulations, policies, and compliance requirements.

Technological Analysis

• Objective: Evaluate the technological landscape impacting the industry.
• Technological Trends: Identify emerging technologies and innovations relevant to the industry.
• Digital Transformation: Assess the level of digitalization within the industry and its impact on operations and customer engagement.
• Innovation Opportunities: Explore opportunities for leveraging technology to gain a competitive edge.

Financial Analysis

• Objective: Analyze the financial health of the industry and key players.
• Revenue and Profitability: Review industry-wide revenue trends and profitability ratios.
• Financial Stability: Assess financial stability by examining debt levels and cash flow.
• Investment Patterns: Analyze capital expenditure and investment trends within the industry.

Consumer Insights

• Objective: Understand consumer behavior and preferences.
• Consumer Surveys: Conduct surveys or gather data on consumer preferences, buying habits , and satisfaction levels.
• Market Perception: Gauge consumer perception of brands and products in the industry.
• Consumer Feedback: Collect and analyze customer feedback and reviews.

SWOT Analysis for Your Business

• Objective: Assess your own business within the industry context.
• Strengths: Identify internal strengths that give your business a competitive advantage.
• Weaknesses: Recognize internal weaknesses that may hinder your performance.
• Opportunities: Explore external opportunities that your business can capitalize on.
• Threats: Recognize external threats that may impact your business.

Conclusion and Recommendations

• Objective: Summarize key findings and provide actionable recommendations.
• Summary: Recap the most critical insights from the analysis.
• Recommendations: Offer strategic recommendations for your business based on the analysis.
• Future Outlook: Discuss potential future developments in the industry.

While this template provides a structured approach, adapt it to the specific needs and objectives of your Industry Analysis. It serves as your guide, helping you navigate through the complex landscape of your chosen industry, uncovering opportunities, and mitigating risks along the way.

Remember that the depth and complexity of your industry analysis may vary depending on your specific goals and the industry you are assessing. You can adapt this template to focus on the most relevant aspects and conduct thorough research to gather accurate data and insights. Additionally, consider using industry-specific data sources, reports, and expert opinions to enhance the quality of your analysis.

Industry Analysis Examples

To grasp the practical application of industry analysis, let's delve into a few diverse examples across different sectors. These real-world scenarios demonstrate how industry analysis can guide strategic decision-making.

Tech Industry - Smartphone Segment

Scenario: Imagine you are a product manager at a tech company planning to enter the smartphone market. Industry analysis reveals that the market is highly competitive, dominated by established players like Apple and Samsung.

Use of Industry Analysis:

• Competitive Landscape: Analyze the strengths and weaknesses of competitors, identifying areas where they excel (e.g., Apple's brand loyalty ) and where they might have vulnerabilities (e.g., consumer demand for more affordable options).
• Market Trends: Identify trends like the growing demand for sustainable technology and 5G connectivity, guiding product development and marketing strategies.
• Regulatory Factors: Consider regulatory factors related to intellectual property rights, patents, and international trade agreements that can impact market entry and operations.
• Outcome: Armed with insights from industry analysis, you decide to focus on innovation, emphasizing features like eco-friendliness and affordability. This niche approach helps your company gain a foothold in the competitive market.

Healthcare Industry - Telehealth Services

Scenario: You are a healthcare entrepreneur exploring opportunities in the telehealth sector, especially in the wake of the COVID-19 pandemic. Industry analysis is critical due to rapid market changes.

• Market Size and Growth: Evaluate the growing demand for telehealth services, driven by the need for remote healthcare during the pandemic and convenience factors.
• Regulatory Environment: Understand the evolving regulatory landscape, including changes in telemedicine reimbursement policies and licensing requirements.
• Technological Trends: Explore emerging technologies such as AI-powered diagnosis and remote monitoring that can enhance service offerings.
• Outcome: Industry analysis underscores the potential for telehealth growth. You adapt your business model to align with regulatory changes, invest in cutting-edge technology, and focus on patient-centric care, positioning your telehealth service for success.

Food Industry - Plant-Based Foods

Scenario: As a food industry entrepreneur , you are considering entering the plant-based foods market, driven by increasing consumer interest in health and sustainability.

• Market Trends: Analyze the trend toward plant-based diets and sustainability, reflecting changing consumer preferences.
• Competitive Landscape: Assess the competitive landscape, understanding that established companies and startups are vying for market share.
• Consumer Behavior: Study consumer behavior, recognizing that health-conscious consumers seek plant-based alternatives.
• Outcome: Informed by industry analysis, you launch a line of plant-based products emphasizing both health benefits and sustainability. Effective marketing and product quality gain traction among health-conscious consumers, making your brand a success in the plant-based food industry.

These examples illustrate how industry analysis can guide strategic decisions, whether entering competitive tech markets, navigating dynamic healthcare regulations, or capitalizing on shifting consumer preferences in the food industry. By applying industry analysis effectively, businesses can adapt, innovate, and thrive in their respective sectors.

Industry Analysis is the compass that helps businesses chart their course in the vast sea of markets. By understanding the industry's dynamics, risks, and opportunities, you gain a strategic advantage that can steer your business towards success. From identifying competitors to mitigating risks and formulating competitive strategies, this guide has equipped you with the tools and knowledge needed to navigate the complexities of the business world.

Remember, Industry Analysis is not a one-time task; it's an ongoing journey. Keep monitoring market trends, adapting to changes, and staying ahead of the curve. With a solid foundation in industry analysis, you're well-prepared to tackle challenges, seize opportunities, and make well-informed decisions that drive your business toward prosperity. So, set sail with confidence and let industry analysis be your guiding star on the path to success.

How to Conduct Industry Analysis in Minutes?

Introducing Appinio , the real-time market research platform that transforms how you conduct Industry Analysis. Imagine getting real-time consumer insights in minutes, putting the power of data-driven decision-making at your fingertips. With Appinio, you can:

• Gain insights swiftly: Say goodbye to lengthy research processes. Appinio delivers answers fast, ensuring you stay ahead in the competitive landscape.
• No research degree required: Our intuitive platform is designed for everyone. You don't need a PhD in research to harness its capabilities.
• Global reach, local insights: Define your target group precisely from over 1200 characteristics and access consumer data in over 90 countries.

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Cross-Tabulation Analysis: A Full Guide (+ Examples)

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27.03.2024 | 31min read

Situational Analysis: Definition, Methods, Process, Examples

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Automatic trend analysis drives better business performance

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Rebecca Porter

Sr Product Marketing Program Manager

Understanding hidden patterns in your historic data can help you plan better for the future. See how trend analysis can improve your planning and help you improve business performance in the future.

It’s no secret pinpointing emerging trends is key when it comes to making informed business decisions. Yet finding hidden trends in your data to help guide your next investment or product can often feel like a guessing game without the right tools. Making critical decisions without intelligent forecasting can impact profit and tarnish trust in the planning process.

For example, let’s look at the marketing department for a global games company. With a robust portfolio specializing in child development games, the team carefully optimized marketing spend across their selection to maximize revenue without over-saturating the market.

When tasked with introducing two new childhood development games to the market to help the company maintain its position as an innovator, the marketing team is faced with a difficult decision. How will they choose which games to continue to invest in and which to move marketing dollars from to pay for the launch and promotion of the new games?

A strategic approach requires them to understand which games are coming to the end of their product lifecycle and which are still on an upward trajectory. Using these insights, along with time series forecasting, it becomes easy to understand where demand will be for existing products. These insights will help drive an informed decision about which investments to focus on for future success.

Turn past data into future trends

Time series forecasting uses historical data coupled with related data and drivers to predict the future along a given time horizon. That’s a great place to start, but sometimes this only tells half the story.

Analyzing patterns in the underlying data reveals hidden trends, allowing you to better understand your data, and forecasts help you plan for the future.

Let’s go back to the game company. Using artificial intelligence, the marketing team can analyze historical data while considering the key buying seasons for children’s educational games. This analysis reveals one declining-stage game and five stable games. This is new information, because seasonality previously obscured consistent historical performance data.

Armed with this information, the team recommends moving 70% of the promotion budget from the decline-stage game and 20% from the five stable games to finance the two new game launches.

Doesn’t it feel good to make decisions based on data?

Types of trend analysis

Trend is only one type of pattern hiding in your data. Let’s look deeper at trend analysis and two other patterns helping you make better informed decisions:

• Trend: This shows the general upward or downward direction of your data and the inflection point when the trend started or changed. Although it sounds like this may be obvious, factors like seasonality or high variability can hide even a strong trend. Understanding whether your data, like customer demand, is heading up or down helps you make confident operational decisions.
• Seasonality: This is a repeating pattern over a specific interval of time with a fixed frequency: weekly, fortnightly, monthly, quarterly, or annually. As discussed earlier, knowing data seasonality can help you with things such as profit-maximizing investment decisions.
• Cyclical: This pattern shows fluctuations over time without a fixed frequency. You may notice over the course of a couple of years that you have peaks and troughs in your data. This may be tied to an event or macro-economic information. For example, during each summer Olympics, a cycling club may notice an increase in new members. This then tails off over the course of the following four years, then peaks again.

How does this impact my plans?

You may be thinking, “This is great information, but I have a great forecasting process so I don’t need to worry about understanding underlying patterns in my data.” Not so fast. Although forecasts can give you a more precise look at the day-to-day or week-to-week predictions, understanding the hidden patterns in your data allows you to make more general decisions and can impact how you plan on an ongoing basis.

Let’s look at some examples:

• Workforce planning and customer support team staffing: You work for a technology company supporting financial planning. Seasonality analysis showed you there’s an increase in support cases logged at the end of the month when more users are in the system. Managers can use this information to increase staffing levels for support analysts during that period relative to other times of the month, or they can move all non-case-related work earlier in the month to free analysts to focus on customer cases, increasing customer satisfaction.
• Supply chain and demand planning for a clothing retailer: You’re part of the demand management team at a global clothing retailer. You ran a trend analysis exercise and saw there’s a general upward trend for a racer-back tank tops for women and a downward trend for the women’s scoop-necked t-shirt. Knowing this, you can increase inventory for the racer-back shirt and decrease inventory for the scoop-neck shirt to increase revenues and reduce inventory carrying costs.
• Finance and operating expenses planning: You’re on the finance team for a large mining company. You need to understand costs and forecast what revenue needs to be earned to meet company goals. After running a trend analysis on your historical data, you noticed the cost of machinery maintenance increased during the past couple of years. Armed with this insight, you analyze mining operations and uncover efficiencies to improve the deployment of equipment and reduce wear and tear, lowering maintenance costs and saving the company hundreds of thousands of dollars each year.
• Reporting and getting future plan buy-in from executive leadership: You ran your forecasts and built an ambitious plan based on the results. Now you need executive buy-in for your plan. Thankfully, your forecasting tool provides a breakdown of the seasonality and trend patterns hidden in your data. You present this information with your plans to build trust in the forecasts and demonstrate that what initially seems like an extremely ambitious plan aligns with historic trends and demand patterns.

Although forecasts can never be 100% accurate, understanding the hidden patterns in your data can help planners make better decisions about the future. PlanIQ automatically breaks down historical data to show you seasonal and trend patterns hidden in your data. This data is added to the results export, making it easy to bring the results into Anaplan, allowing analysts and planners to work with the data easily and present it to executives to drive trust in plans.

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How to Do Market Research

Noah Parsons

18 min. read

Updated February 21, 2024

One of the biggest and most expensive mistakes I’ve made in my business career could have been avoided by doing a little homework.

In the late 2000s, my team and I came up with what we thought was a great idea for a product . Tons of businesses would need it, and it was almost guaranteed to be a huge hit!

But, we neglected to do our market research. 

We ended up with a product searching for a market instead of figuring out who our ideal customer was and building a product specifically for them.

You can avoid making this same mistake. 

Let’s learn from my experience and go over the basics of how to conduct market research. 

• What is market research?

Market research is the process of gathering information about your potential customers. 

It helps you define your target market, craft customer personas , and understand the viability of your business, by answering questions like: 

• Who are your customers?
• What are their buying and shopping habits?
• How many of them are there? 

By exploring your ideal customers’ problems, desires, and current solutions, you can build your product, service, and overall business strategy to better serve them.

• Why is market research important?

When starting a business , conducting market research to get to know your customers is one of the most important things you can do. 

If you don’t understand your customer, you don’t know:

• How you can solve their problems . 
• What kind of marketing messages and advertising work. 
• If your product or service is actually something your customers will spend money on.

Beyond that, market research can help you:

• Reduce risk: Inform critical decisions with real-world data.
• Understand your competitors: Know how competitors and alternatives to your business represent themselves in pricing, quality, and placement.
• Identify market trends: Stay ahead by spotting emerging trends and shifts in the market.
• Enhance customer experience: Improve customer satisfaction by addressing their pain points.

Gathering data on your customers should become a regular practice for your business. 

The more in tune you are with your customers, the better you can serve them and the more likely you are to grow your business. You should never just let assumptions about your customers drive business decisions.

Developing primary and secondary data through market research is how you get an accurate reflection of your customers’ needs.

Further Reading: 6 things to consider before entering a market

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Things to consider before conducting market research

Market research can be incredibly time-consuming (and even a waste of time) when done without the right preparation.

Here are a few questions to answer to help ensure you make the most of your efforts.

What are your objectives?

A research objective is a stated purpose that explains why you’re doing market research. It should include a specific result you intend to achieve, using available resources within a certain time frame. 

Without an objective, you’ll pour over a sea of data without knowing what you’re looking for. And if you speak to customers without a goal, you’ll struggle to ask useful questions and dig deeper.

Don’t overthink it.

Your objective should be easy to understand and connected to your business needs. 

For example, if you’re just starting, your objective may be to verify before investing in production if your chosen customer base is interested and willing to purchase your product or service.

What research methods will you use?

You don’t need to have every question prepped or a list of people to interview at the start—but you should know what research methods you intend to use.

The research options you choose will impact the data you collect, and the time it will take to complete it. By doing this ahead of time, you’ll be better prepared to create a timeline of when to take specific actions and what milestones to hit to stay on track.

What tools and resources do you need?

You likely won’t know every resource you’ll need until you start doing research. However, that doesn’t mean you can’t be proactive. 

If you know the methods you’ll be using, research what tools you’ll need to:

• Conduct interviews
• Create surveys
• Observe customer behavior

If you use third-party data, identify reputable sources to provide the information you want.

• How to conduct market research

Every business will do market research differently. The sources, the methods of data collection, and how you’ll use that data are entirely up to you. 

However, the core steps you should take remain the same. Here’s my recommendation for how to structure your research efforts:

1. Start by identifying your target market

Imagine that someone walks into your business, reaches out online, or picks up the phone and calls you. 

It’s your perfect customer: someone who has the problem that you solve and is willing to spend money on your solution. 

Now imagine the details about this person. Who are they? Can you describe them?

Ideal customers and common traits

This “ideal customer” is your target market . Your business might have several target markets, but it will usually serve you best to keep your list of target customers to two or three.

Each of your target markets should share common traits . These might be demographic traits such as: 

• Income levels
• Locations 

They might be psychographic traits—groups of people that like the same things or have similar interests. Or, your target market might be a certain type of employee at another company, such as a Chief Technology Officer or head of marketing.

Most often, target markets are blends of demographic and psychographic groups. For example, you might develop a new type of shoe targeted at female triathletes. Or you might be opening a hair salon targeting urban, hipster men.

Further Reading: Why niche audiences are important and how to find yours

Market segmentation

Creating multiple target markets for your company is doing what’s called “ market segmentation .” 

This sounds complex, but all you’re doing is dividing your target markets into different groups you hope to sell to. Each market segment might have different characteristics and buy your product or service for different reasons.

You might create different marketing campaigns or customize your product or service for each segment.

Further Reading:

Target marketing explained

Your target market is your ideal customer who needs your solution. They share common traits like age, gender, income, interests, or job roles. To start, focus your efforts on one target customer.

Consider focusing on a younger audience

Younger consumers are often overlooked in favor of older customers who currently make purchasing decisions. However, if you can crack the interests of a younger audience, it may lead to long-term loyalty.

2. Find out if your market is big enough

Are there enough potential customers to sustain you and your competitors? If the answer is no, then you need to consider changing your product or service offering.

Use the attributes you defined in the target market step and determine how many people meet your demographic, psychographic, or location criteria. I’ve got some links to resources to help you figure this out at the end of this article.

For example: If your target market only has a few thousand potential customers, you must either sell to them frequently or at a fairly high price to create a sustainable, profitable business.

Further Reading: How to use TAM, SAM, SOM to determine market size

If you are targeting an existing market with established competitors, you do what’s called industry research . 

For example, perhaps you are building a new company in the market for sports drinks or the market for cell phones. In cases like this, understanding how much people buy of existing offerings will give you the best sense of your potential market size. 

In this case, you want to look for industry reports and read trade publications for your industry. These publications often summarize the market size.

Further Reading: Differences between industry and market research explained

3. Talk to your potential customers

Once you have identified your target market, or at least made a good guess at who your target market is, you need to take the most important step in this entire market research process. 

You need to get up from your desk, leave behind your computer, and go outside. That’s right, you need to go and talk to people in your potential target markets. 

Yes, you can do online surveys and other research, but that’s no substitute for actually talking to potential customers. 

You’ll gain more insight into your customers through first-hand accounts than any survey will ever tell you.

Do this one thing, and you’ll be miles ahead of your competition. Why? Because most people skip this step. It’s intimidating to talk to strangers. What if they don’t want to buy what you plan on making?

So, don’t be like most entrepreneurs (including me!) and skip this critical step. 

It can mean the difference between success and failure. Getting this step done early will help you refine your business model and make a clear impact on your future success.

Further Reading: How to Create a Market Penetration Strategy  

4. Identify and analyze your competitors

Part of understanding your customers is knowing what solutions they already use. 

These are your competitors, and they may directly compete with you or provide a reasonable substitution customers settle for. 

You’ll understand how to position your business to take advantage of potential opportunities and mitigate risks by analyzing who they are, what they do, and how customers respond.  

Document your known competitors

To keep things simple, start by listing your known competitors . Account for businesses that offer a similar product/service, and those that indirectly compete with their solution or industry expertise. 

Example:   You operate an outdoor goods retail store. Your mission is to provide hands-on direction for customers to find camping, hiking, and survival gear that they will love. You offer a wide selection of well-known brands, local options, and in-house creations.

Your direct competitors are the large brands themselves, less niche retail stores, and online sellers. You must also account for other businesses that provide expert-level information on outdoor activities. 

They likely don’t sell the products, but may provide guided tours, reviews, or other insights that overlap with your business. 

Analyze your competitors

Once you have your list, it’s time to get to know the competition. Check out their websites, social media, customer reviews, and news stories from the last year. 

Sign up for their email lists, visit their stores (if they have them), and track down any industry reports that give you an idea of their size, performance, and strategic direction.

You don’t have to do everything I just listed. But you must go deep enough to clearly understand your competitors and why potential customers may choose them over you. 

It may even be useful to use the SWOT analysis framework to provide additional structure for your research. 

Further Reading: 10 ways to determine what your competitors are doing

5. Document your findings

The final (and easiest) step is to document your findings. How formal your documentation is will depend on how you plan on using it.

If you only need to share your findings with business partners and others in your business, then you can probably communicate fairly informally. 

However, if you’re looking for investors for your business, you may need to write a more formal market analysis and do a market forecast.

Presenting your market research

The single piece of documentation that every business should create is a buyer persona . 

A persona is a description of a person that hits on all of the key aspects of your target market. And, just like you might have several target markets for your business, you might have several different buyer personas.

Creating a buyer persona converts your target marketing information from dry research into a living, breathing person. 

For LivePlan , we’ve created a persona named Garrett, who drives much of our product development. Garrett embodies the attributes of our ideal customer.

When we think about creating a new marketing campaign or developing a new feature for our products, we ask, “Would Garrett like this?” You can read about the process we used to create Garrett in this article.

How to create a detailed user or buyer persona

Visualizing your customers when reviewing a sea of data can be tricky. So, create a customer persona and turn that data into the living, breathing person you imagine your customer to be.

LivePlan customer persona example

Check out this real-world customer persona used by the business planning and management software LivePlan.

When should you conduct market research?

Market research is vital when starting a business. It will improve your product or service and help you avoid starting a business without customers.

However, market research shouldn’t be exclusive to new businesses. Conditions are bound to change, and you must stay up-to-date on your industry , competitors, and emerging trends. 

Here are a few other business events where market research can make a difference:

• Launching a new product/service or updating current features.
• Expanding into a new market.
• Consistent dips in financial performance. 
• Widespread market changes.
• New competitors enter the market.

Primary vs secondary market research explained

No matter how you decide to gather information, the methods can be boiled down to primary and secondary research. As a business owner, it’s worth understanding the basics of each type of research and how they work together.

What is primary research?

Primary research is the first-hand information collected (by you or someone you’ve hired) from customers within your market. Primary research cuts out the middleman and ensures that the results you are gathering are straight from the source. 

That’s why you should conduct primary research when validating your business idea. 

Furthermore, it can be broken down into two result categories — exploratory and specific.

Exploratory primary research

Exploratory primary research involves non-quantifiable customer feedback. This means you’re not trying to measure results but to record interest or an emotional response. You’ll accomplish this by asking open-ended questions in formats like focus groups or 1:1 interviews.

Asking for open-ended feedback ensures that the results are unfiltered and honest. You aren’t unintentionally leading or hindering their responses. 

Specific primary research

Specific research allows you to dig deeper into issues or opportunities you identified through your exploratory research. 

You may target a smaller segment of customers from the larger group you’ve spoken to, conduct additional interviews, or shift to more quantifiable research such as beta-testing or surveys.

What is secondary research?

Secondary research covers every other piece of data you have available. This includes resources such as:

• Public sources: Typically free and highly accessible information gathered through government-sponsored research projects. 
• Commercial sources: Research studies conducted by private organizations regarding the state of specific markets, industries, or innovations. 
• Internal sources: Data you have collected through everyday business operations. Everything from financial statements to Analytics reports can qualify.

Which is better: primary or secondary research?

Neither primary nor secondary research is better than the other. They simply have different use cases. So, aim for a healthy mix.

When starting, focus on conducting primary research to ensure you get the necessary information to validate your business. 

Compare those findings to secondary resources such as industry benchmarks , market reports, and internal data you’ve collected. 

You’ll likely leverage secondary research more consistently as you grow—but it’s wise to run primary research initiatives occasionally, especially when approaching a strategic decision. Only with both types of research will you fully understand the story of your place in the market. 

Further Reading: Types of market research explained and how to use them

Types of market research to try

1. face-to-face, remote, or phone interviews.

I mentioned this before, but the best thing you can do is get out and talk to your potential or current customers, virtually or in person. 

Be sure you have a refined set of closed and open-ended questions ready, and consider the interviewee’s tone, body language, and interest alongside their answers.

2. Focus groups

Similar to interviews, focus groups can provide direct feedback from your customer mix. Rather than receiving answers or reactions in a bubble, you get to see how customers may act when influenced by others in the market. You can simply ask questions, run product tests, or have them watch a demo.

3. Observational research

Observational research is about watching how potential customers engage with your product or service. You’re attempting to understand what roadblocks or frustrations they may be hitting, what functionality seems to resonate, what they want from your business, etc.

To conduct observational research, you can set up an official testing environment that you control. Or you can just go out and observe your potential customers and see how they shop, make purchases, and what factors encourage or deter them from purchasing.

4. Pricing research

You may include questions about pricing when conducting interviews or focus groups, but you can also specifically develop research around pricing. 

This can be anything from testing different pricing options on your website ( A/B testing ), offering discounts to exclusive segments, or running ad campaigns with different pricing positions. The goal is to understand what your customers are willing to pay and what they consider a fair price .

5. Brand awareness research

This type of research is about understanding if your target market knows about your brand and how much they happen to know. What do they associate with your brand? What competitors come to mind first?

It’s a great way to understand your current market penetration and who your competitors are. You can integrate this type of questioning within your other tests or conduct surveys to get this data.

6. Customer interest

As part of your initial validation process, you should try to understand current customer interest. At its most basic, you’re asking: Are customers willing to buy your product or service? 

You can simply ask questions and look for yes or no answers, but it may be wise to run a limited-time sale or pre-sale to actually line up initial revenue for your business. 

You can offer the chance to purchase during your interviews or focus groups, as well as run pre-orders through a simple landing page or by measuring engagement with a paid ad campaign.

7. Customer satisfaction

This research will help you understand current customer loyalty and what it will take to get customers to come back. Again, you can do this research within focus groups or interviews. 

Still, you can also test loyalty programs, limited-time promotions, customer service initiatives, and other ways to improve customer loyalty. 

Market research tools and resources

Finding market research data depends on the market you are targeting and the industry you are in. 

Here are a few of my go-to sources for market research:

• U.S. Census : If you’re opening a business in the U.S., the U.S. Census site is a goldmine of information. Check out the Census Business Builder to get population data and data on how much people spend in a given area on your type of business.
• Bureau of Labor Statistics : Another U.S.-centric resource, but a fantastic site for information on specific industries: hiring and expense trends as well as industry sizes. If your target market is other businesses, this is a good place to look for data.
• Consumer Expenditure Survey : If you want to know what people spend their money on, this is your source.
• SBDCNet Business Snapshots : You’ll find a great collection of industry profiles that describe how industries are growing and changing, who their customers are, and what typical startup costs are. You should also check out their list of market research resources, sorted by industry .
• ChatGPT : All data generated from AI models like ChatGPT must be verified. But it can still be an excellent market research assistant. With the right prompting, you can generate customer segments, understand their nuances, and prioritize them based on your needs.

Further Reading: 21 best market research resources for small businesses

Market research informs your startup decisions

Effective market research can help you avoid costly mistakes early on in the life of your business. 

However, it should remain a core practice that you regularly implement when approaching crucial business decisions, growth opportunities, or just to reaffirm your understanding of the market. 

Revisit this framework whenever you’re approaching a key strategic decision . Confirm that you still understand your customers, competitors, and where the market is headed.

Then use this information to inform your planning and adjust your strategy if necessary.

Clarify your ideas and understand how to start your business with LivePlan

Noah is the COO at Palo Alto Software, makers of the online business plan app LivePlan. He started his career at Yahoo! and then helped start the user review site Epinions.com. From there he started a software distribution business in the UK before coming to Palo Alto Software to run the marketing and product teams.

Table of Contents

• Before conducting market research
• When to conduct market research
• Primary vs secondary research
• Types of market research
• Tools and resources
• Market research informs your decisions

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What are market trends in a business plan?

Table of Contents

What are market trends?

Why do i need market trends in my business plan, how to keep up with market trends, what market trends to monitor frequently, customer behaviours, technological advances, industry regulations, how to write the market trends in your business plan, using countingup to streamline your business.

Market trends in a business plan are key pieces of information that share where your company sits in the wider picture of your industry. Your business plan should prove why your business is viable, show where you fit in the market and what customers you serve. Examining what the market looks like is a smart business move when starting out.

This article on market trends in a business plan will cover:

• What are market trends
• Why market trends are necessary in my business plan

Market trends are the direction changes of a specific industry and can be influenced by customer behaviours or developing technology. 

Take the mobile phone industry for example, as technology has improved over the last twenty years consumers have moved from bulky handsets to slimmer smartphones, that can do everything a computer can and more. Consumers have even gone back to the fashion of flip phones now that technology has allowed a bigger screen that can be folded to save space. This is a good example where both technology and customer demand has influenced the direction of the industry,

Acknowledging these trends when running a business ensures that you stay on the same path as the industry itself, moving with customer needs and adapting your business as the sector and technology evolve. Ignoring market trends in the long term could mean you are left behind by customers, as they may move to businesses that meet their needs more. 

Your market trend research should be part of wider market analysis in your business plan. Understanding where you fit in a sector and what separates your company from competitors will help you shape everything from your product to pricing and marketing plans.

It’s important to focus on trends in this process so you can understand what appeals to your target audience. By analysing the market landscape and trends, you will be able to serve your customers better. It will also feed into your marketing messaging and content creation strategy later on.

A market and trend analysis should be both quantitative (using numbers and statistics such as projections and financial forecasts) and qualitative (based on experience or observation). Trends will fit into both categories of research and you should be able to find data and non-numerical information to support your examination of trends when writing your business plan. 

It’s important to remember that a business plan is not set in stone. It can be a document that you regularly update to reflect changes in your industry and company.

Keeping pace in a fast-changing market is not easy – after all, you’ve got a business to run. Using social media and subscribing to relevant industry emails make it simpler to get the information you need. Doing this will allow you to stay on top of market trends to include in your initial business plan and for more long-term future planning. 

Follow influencers in your industry to see what they talk about and how they create content for the audience that you serve. This will give you an idea of what resonates with your target customers when it comes to content and the form of content the influencer tends to use (video, written blogs, imagery etc.).

Read relevant publications in your sector to find out what is making headlines. Magazines or online blogs that share up-to-date opinions and thought leadership (influential content) will help you stay on the pulse of what is currently important to the industry.

Reading detailed reports and research can be time-consuming but will give you a good overview of the industry’s current state and any new developments. You can then update your business plan to follow the trends that arise from any data you’ve seen. 

Some common areas will affect the running of your business, the trends in your business plan and the whole market landscape. Keeping on top of the following aspects and regularly checking in on them will ensure your business develops as the market does.

Your customer can make or break your business. If you don’t cater to their needs and wants, your business will not be on the radar of your target audience. 

Let’s take an example – if your target customer is under 45, and you primarily do business online, you will need to ensure your website is optimised for mobile. This is because consumer behaviours have changed in recent years, and most searches are now conducted via mobile . If you don’t pick up on this development, your business risks being left behind when competitors optimise for mobile and you don’t.

Like our previous example, customer behaviour often changes with advances in technology. As mobile phones, and then smartphones, have become more able to operate as a computer, consumers have moved to using their phones out of convenience. 

Keep on top of developments that are relevant to your business and make sure you can move with, and not against, the technology changes.

Every now and again, there will be a law change or new regulation that rocks many industries – such as GDPR in 2018. Staying up to date with regulations that could affect the way you run and market your business will save you weighty fines (especially in the case of data protection).

There may be more frequent regulation updates if you operate in an industry that requires you to follow safety guidelines or best practices, such as those that an electrician or builder will have to follow. 

Ensuring that you are up to date on precautions and rules, as well as renewing any professional certifications you need to operate, will ensure your business plan reflects the changing face of your industry.

Using your research on your target customers and the sector,  use the following steps to write up the market trends section of your business plan:

• Current market overview, including which company has the biggest share or most influence
• Where you fit in that market, what gives your business a competitive edge.
• Current trends that impact your business operation
• Any upcoming trends that may impact your business or the products/services you offer
• Outline any plans on how you will keep up with trends
• Upcoming regulatory changes

You can then follow this with your competitor research in your business plan, to give a full picture of your industry and where you fit in.

Now that you have the answers to questions like ‘what are market trends in a business plan’, you will be able to prepare a thorough market analysis to set up your new venture for success. 

Countingup can help your new business by making your business accounting simple, too. Countingup is the business account with built-in accounting software. The app is helping thousands of business owners across the UK save time and money by automating the time consuming parts of accounting. Find out more here and get started today.

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How does the use of trend analysis fit into the overall workforce planning process?

Workforce planning is the strategic alignment of an organization's human capital with its business direction. It is important for an organization to develop a strategic workforce planning process that will identify the human capital needs that are required to meet business objectives. Typically, workforce planning is a five-step process:

• Set strategic direction.
• Analyze workforce.
• Develop action plan.
• Implement action plan.
• Monitor, evaluate and revise plan.

Assuming, then, that the organization has already completed Step 1 of the process—setting strategic direction—the second step is to conduct a workforce analysis. There are several key steps to the workforce analysis phase of the planning model:

• Supply analysis: which identifies the competencies of the organization, analyzes the demographics of the staff and identifies trends such as turnover and retirement patterns.
• Demand analysis: which measures future activities and anticipated workloads.
• Gap analysis: which compares information from the supply analysis and demand analysis to identify the gaps between the current organizational competencies and those needed in the future workforce.
• Solution analysis: which involves developing strategies for closing the competency gaps and reducing surplus supply.

The trend analysis is an essential element of the supply analysis phase. While the competency analysis provides baseline data on the existing organization and present staff, the trend analysis provides both data describing how trends such as turnover will affect the workforce and is a key element in the overall planning process.

Trend data is not limited to turnover data. It also may include the following:

• Hiring and retirement patterns.
• Years of service.
• New-hire retention rate.
• Promotions.

Trend information can help predict the supply of skills that may be available in the future and project the future workforce supply needed. Using the example of turnover rates, by answering questions such as, "Are there certain groups with increasing worker turnover?", "What are the factors affecting turnover?" and "Has turnover reduced the skill set of a certain group?" you can identify trend.  Analysis of this data can be used to model or predict future workforce staffing needs.

Careful research and a thorough analysis of data can help the workforce planner build a strategic plan for addressing the future needs of the organization.  

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