Market Analysis 7: Forecast Growing or Shrinking Prices or Competition

This continues our series on preparing the market analysis section of your business plan

Your market analysis needs to forecast whether your targeted population, competition, and even market prices will grow or shrink. Growing populations provide greater opportunity for sales. Shrinking populations reduces sales possibilities. You order or manufacture inventory from  forecasted growth or shrinkage.

Factors Affecting Growing and Shrinking Market

Review this article from Dummies.com:

• Getting a handle on your market through customer descriptions, how customers divide into market segments, and the size of your market and growth trends you see
• Assessing your competition (direct, indirect, and stealth) involves assessing competitive threats, opportunities, and planning how to protect from threats and capitalize on opportunities
• Forecasting your business climate includes looking at how outside forces may affect your company’s success (includes good questions about labor supply, rules & regulations, social trends, regional industrial events, and more)

Research Portals’ article How Advertisers Ignore a Major Market at their Peril warns to watch:

• Demographic trends: “Looking at long-term trends of birth rates many forecasts warn of shrinking populations in Europe and parts of Asia”
• Attitudes vs. Life stages: judging your target by age definition no longer works. For example married 30 year olds purchase things much different than 30 year-old single, fast-paced professionals. So a new method for defining populations becomes necessary.
• Media consumption can also predict market population, price and competition.

How to Forecast Growing or Shrinking Markets

I cite the Dummies.com article Analyzing Your Market Situation again 

“Don't base your projections on a hunch. Cite experts, refer to census data, excerpt industry analyses, present findings compiled by media organizations that serve your customers, or show a recap of your sales history to prove market momentum. Offering proof for what you say about market size and growth is important because this proof is the claim on which you stake your marketing plan — and budget.”

Review my April 7, 2012 post Resources to Help You Conduct Your Market Analysis for links to research resources.

Join me Thursday when we analyze how to segment your market into market niches