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To enter and establish itself in a market, it is very important for an organization to study the market trend. The ever changing preference of the customers is one of the most important factors that makes it necessary to know the current trend and the dominant pattern of market and consumers. Apart from observing the consumer behaviour, trend analysis also helps the organization gain insights into market scenario as well as the macroeconomic environment. Surveys and interviews are some of the important tools that help in trend analysis.

Trend analysis involves assessment of the following aspects:

1. Trends in Consumer Needs and Behaviour:

When a business is able to identify a trend in changing needs, wants, and behaviour of the customers, it prepares itself to be in a position to cater to such needs and project higher growth rates.

2. Shifts in Consumer Perception of Value:

Generally an aspect of a product or service tends to lose its value if the companies don’t position them appropriately in the market. This is because there are various competitors in the market who easily replicate the product and position them in the minds of the customers.

For example, Shop A is a departmental store providing an additional service of free home delivery. The shop gains a better position in the minds of the customers because of the additional service provided by the shop. However, if Shop B replicates similar service, there are higher chances that the value of Shop A may get reduced in the minds of the customers.

3. Trends in Industry Cost Drivers:

Companies need to be aware of ongoing trends in their industries. This helps them come in contact with the innovations in the industry that lead to lower cost alternatives. When companies get an option of a cost effective alternative which provides them with some additional features, it can largely contribute in achieving higher objectives and gain a competitive edge over the competitors.

4. Change and Evolution of the Industry:

When the companies are aware of the current trends in the industries, they will be in a better position to understand the innovation needs of the stakeholders., keep an eye on the most demanded features of the competitors and also know about the emerging trends in operation and delivery methods.

As the essence of trend analysis is studying the past market behaviour and making use of the information obtained in projecting future potential; the focus of trend analysis is on collecting relevant data. Trend analysis is thus an important strategic tool that helps an organization to understand about the market maturity, to project future growth potential of the products or services and to analyze the overall position of their company in the market.

A market trend analysis is an analysis of past and current market behavior and dominant patterns of the market and consumers. An important aspect of conducting a trend analysis for an organization is to obtain insights on the market scenario, consumer preferences, and the macroeconomic environment.

Marketing research methods, such as surveys, interviews, and observations of consumer behavior, help in understanding the trends and behavior in the market.

Trend analysis is a subset of the PESTEL Analysis—an examination of the Political, Economic, Social, Technological, Environmental, and Legal implications of the market as they relate to consumer trends. This analysis provides an all-round perspective of the external factors that impact the business.

While determining future objectives for a product or service, trend analysis is used as a basis on which future market projections are made. Market trend analysis involves analyzing the following areas:

• Trends in Consumer Needs and Behavior—A business that is able to identify a specific trend in changing consumer needs and behavior may be able to cater to these needs and project higher growth rates.

• Shifts in Consumer Perception of Value—Trend analysis involves timely analysis of consumer needs and positioning of the product or service in the consumer’s mind. An aspect of a product or service, which would at one point in time have contributed to the consumer’s perception, may later lose value if the competition replicates it. For example, if Shop A in a particular town was the only department store providing free home delivery for customer orders, it may hold a better perception in the consumer’s mind due to this additional service. However, if competitors start providing the same service, the value perception for Shop A would likely decrease.

• Trends in Industry Cost Drivers—Businesses need to be aware of changes in composition of the cost drivers and also innovations that lead to lower cost alternatives. Companies that are able to find better alternatives, which are more economical or offer additional features, can gain a competitive advantage and achieve higher objectives.

• Change and Evolution of the Industry—Companies continuously analyze trends in terms of product innovations, competitor product features, and new operation and delivery methods. Such analysis helps the business stay ahead of the curve to understand changing market trends and project objectives accordingly.

Trend analysis is a very common strategic tool for understanding the market maturity (i.e., whether the market is in a growth or decline stage) to gauge future market potential and the overall position of a business in the market.

Since market trend analysis involves understanding past market behavior and expected future market innovations, a major effort in conducting trend analysis is dedicated toward collecting relevant data. The authenticity of this data determines the accuracy of the projections, which subsequently impacts the objectives set for a particular product or service.

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