Trend analysis is used to analyse statistical data and recorded market behaviour over a defined period. Analysing market behaviour and dominant patterns of consumers provide valuable insights to an organisation on consumer preferences and the macroeconomic environment. Using this data assists with strategising and forecasting future business plans, understanding various behaviours and the dominant traits of the consumers associated with it.
Why Trend Analysis?
A trend analysis is important for the following reasons:
- It is a necessary process for developing an effective marketing strategy,
- It gives a business an all-around perspective of factors affecting its environment (whether in a growth or decline stage),
- It provides reassurance by means of simulations on scenarios that are most likely to happen,
- The process acts as a boost to one’s confidence when making important business decisions.
It is not always easy to know if a business is going to grow in the future. So, it is necessary to develop techniques and tools to help make these predictions – hence the rising importance of trend analysis.
The Pros and Cons of Trend Analysis
- It can be a costly task to engage in,
- It can be a challenge obtaining tailored information that is directed to a specific subject.
- A business that is able to afford research is in good standing of competing in the markets,
- The advancement of marketing research in South Africa leads to reliable data that positively affects the decision-making process of the business.
Thorough research protocols give way to the authenticity and relevance of the collected data, therefore putting it into real perspective. Typically, research may focus on economic, social, political, technological, environmental and legal factors which are directly or indirectly affecting the business. In marketing, PESTEL analysis is a framework or tool used by marketers to analyse and monitor the external marketing environment that has an impact on an organisation. The result is used to identify threats to and weaknesses in the organisation. PESTEL is, therefore, often used, as it is a common strategy, which simplifies the necessary approach when initiating the research process.
Of course, there are alternative methods (besides PESTEL) available for conducting research, which may include interviews, surveys or perhaps alternative third-party data. Companies may also choose to analyse trends in terms of product innovations, or perhaps competition.
Below is a list of alternative ways in which small businesses may conduct the desired research:
- Start conversations on social media by creating surveys and polls,
- Join industry forums and events,
- Engage clients as a source of feedback,
- Involve yourself with industry influencers and collaborate to gain insights,
- Read articles in the Business Press,
- Conduct telephone interviews.