Market Analysis 5: Predicting Future Market Demands and Trends

This continues our series about preparing the marketing analysis section of a business plan

Your marketing analysis must consider market demands and trends. Understanding what people will buy, when they buy, and why they buy enhances your ability adapt your business to their whims. Luckily, other companies try to predict the same practices. As a result, the resources mentioned in my last post provide the information you desire because so many others do too.

Identify Market Demands

The 3 stages of the business cycle guide your ability to predict market trends for your business:

• Emerging stage represents new or improved products emerging into the market. You expect a higher demand for an emerging product.
• Plateauing stage reflects when supply and demand begin to equal one another. Demand usually levels off with less increase.
• Declining stage indicates that supply saturated demand. Consequently, demand decreases.

You also measure your market niche to determine market demands. The size of your niche, how many new people add to your niche, their buying capacity, and their interest in your product or service helps determine their demand for your business. Expanding the percent of the niche you penetrate also increases your market demand.

Predict Market Trends

Market trends calculate the direction of the market: growing, holding steady, shrinking, or disappearing entirely. It also determines expected cyclical or seasonal fluctuations in the market. Some excellent resources track market trends.

• Investopedia lists several sources
• David Amerland shares how to use Social Media to predict trends
• Opensource Association outlines tools, programs, and more

Product life span or obsolescence also influences market trends. Some businesses can predict when people will replace products. Some people replace their car every 1-3 years. Some people change houses every 5 or 10 years. You can predict when most people replace large and small appliances. While people used to replace telephones every 15 –20 years, now they replace them every 6-12 months today.

Once again, the resources identified in the previous post can help you find the information you need.

Join me Saturday when we review clarifying how many clients live in your market area