The importance of business analytics has been making the rounds lately. In a world full of the expanding presence of the internet and big data, it makes sense that analyzing as much raw information as possible and using it to predict future outcomes is a sound business strategy. This is true across a variety of business fields, and that very much includes technology. Technology businesses, especially new tech businesses, must utilize market trends and analytics to help grow their businesses.
This article will explore market trend analysis in technology and why it is an important addition to business plans of all sizes.
What are Market Trends?
A market trend is defined as something that alters the market in which your company operates. In fact, at this very moment, you can rest assured that multiple market trends are currently impacting your business. To what extent is yet to be seen, but we can almost guarantee the presence of multiple market trends. There are a few different kinds of market trends to consider here, and all of them can have a substantial impact on your business and should inform the decisions you make:
- Short-term market trends
- Intermediate market trends
- Long-term market trends
Short-term Market Trends
Short-term market trends are trends that last only a few hours or days. These are temporary trends typically impacted by current events and news, sales events (such as Black Friday), and social media trends. A news story about breaking news in your industry, for example, creates a market trend where interest in everything relating to the news is sought out. In order to capitalize on the popularity and capture as much attention as possible, businesses should create stories about the topic quickly before everyone moves on.
Intermediate Market Trends
Intermediate market trends last a bit longer than short-term trends. They last from two to eight weeks, to be more specific, and are often caused by events like elections, the holiday season(s), tax time, and even compliance deadlines in your industry. Paying attention to these trends can offer an opportunity to capture the public’s interest while they last. Maybe running sales for the duration of the winter holiday season, for example, would naturally draw attention to your business. That is not something you would want to do every day for years, but for a few weeks or months, this can be a solid strategy to drum up interest.
Other factors driving intermediate trends include emerging research and social media influencers.
Long-term Market Trends
Long-term market trends are trends that last for years and, sometimes, decades. These are caused by big societal changes that are permanent, or at least transitional, in nature. Consider issues like COVID-19 and the #MeToo movement. Both of these events and shifts are not likely to stop any time soon. Even with a COVID vaccine, for example, businesses and individuals likely will not stop considering the ramifications that the pandemic brought any time soon. And the #MeToo movement has brought about lasting changes that still echo today in new policies, new discussions, and social norms.
These market trends require more time to consider. Responding to them is not as simple as running a sale for a few weeks or putting together a quick blog post or special podcast episode. On the contrary, long-term trends require a reframing of your market and how your business works within it. One low-stakes example of a long-term market trend and how not to respond to it is mobile design. Mobile browsing is here to stay, but many providers still design primarily for desktop websites. The solution here seems easy, right? Redesign the website so that people can use mobile browsers. While this is an okay stop-gap measure, really responding to the trend and where it is likely to go in the future requires a bit more time.
Are mobile users getting a native experience with mobile-friendly websites? In some instances, maybe so. And if that is the case, perhaps implementing a mobile design really is that simple. For most businesses, however, the answer is “no”. In order to give mobile users the same comprehensive experience that desktop users have, you might want to consider an app instead. Then you’ll need to invest in designing the app to run cohesively with your desktop website for brand consistency, and rollout is also something that must be considered.
Long-term market trends are the most difficult to analyze and respond to. Let’s look at another example.
Market Trend example – AI
Technology itself is a broad market trend in almost all markets, but how does that work in the technology industry, where developing and using it is the norm? Different kinds of technology have the potential to seriously shake up the tech industry. Artificial intelligence (AI), for example, is an ever-evolving field whose implications for the rest of society are constantly growing. A few decades ago, the idea that people might one day talk to AI for answers to their homework or simply to feel less alone would have seemed absurd. After all, technology was not nearly as advanced back then as it is today, and the strides we have made in AI technology have completely transformed the way it operates and the purpose it serves in society.
Today, people use AI in a few different ways. Customer support has largely been outsourced to “chatbots”, for example, which are fed information about company policies and are responsible for answering customer questions. These bots are growing more sophisticated by the day and are now able to understand questions even through poor grammar and typos and can respond accurately (as long as they have the information they need on hand). The future of AI in society is still uncertain, but different sectors see it as something to watch. When paired with machine learning, it is an even more promising technology.
Depending on where the technology goes, AI could have a massive impact on businesses around the world. Tech companies are considering the growing uses for it and are wondering how it might impact their industry moving forward. For technology consultants and other tech professionals offering a service, the industries in which their clients work could be impacted by AI, too. How does this technology stand to impact business? AI is one market trend impacting technology businesses today.
Other kinds of market trends include consumer preferences, new regulations, and even political events that threaten policies or disrupt markets. Similar to AI, these market trends could also significantly impact technology businesses. That’s why paying attention to them is important in growing and expanding a tech-based business.
Why are Trends Important?
We know what trends are, but why do they matter? There are a few different reasons. The most important of these tend to revolve around key performance indicators (KPIs) and financials. The former tracks how your company is operating versus what goals you have identified as successful. If your vision of success is cutting your operating costs by 5%, for example, how well is your company working towards that goal? And what is either helping you along the way or stopping your progress? As the name implies, financials refer to the money transferred in and out of your business on a monthly and yearly basis. This helps spot liquidity and cash flow issues before they become big issues.
The information above outlines the most obvious and “big picture” reasons why market trend analysis is important, but there are other factors to consider. This is especially true for young technology businesses, although we think businesses of any kind will find some useful information here.
Are you interested in how data analytics help businesses? St Bonaventure University offers a 100% online Masters in Science Business Analytics to teach you how to tackle big data in many fields, such as marketing, finance, and cybersecurity. For now, let’s take a closer look at market trends.
Use your Resources Well
Businesses rarely have an abundance of money, and even when they do, owners tend to want to keep as much of that money as possible. Technology businesses, in particular, sometimes have a harder time raising funds as well as earning money early on in the business. For these reasons, resources are often fairly limited. There is no room to spend on something that does not truly matter in the long run, in other words, and doing so will only lead to difficulties later on when the things that do need to be part of the business can’t be added because there is no capital to support them.
Let’s say you want to expand your business by offering to consult on specific and emerging technologies. This would be an incredibly lucrative decision for your business, but you need a certain amount of capital to get started. Unfortunately, you invested a significant chunk of your resources into a product that was not successful, and now you simply don’t have enough to add the consulting service to your portfolio.
Market trend analysis allows you to understand not only the current state of your market but also where it is likely to go in the future. This, in turn, enables tech companies to develop strategies to build better products, find new customers, and stay as far ahead of the competition as possible. More specifically, analyzing market trends can help you develop the right products and invest in the right services, saving you time and money in the long run. You can also better narrow down your target audience using market trends and the data that comes along with them, which will only help you sell more in the future.
Finally, market trends can help you attract investors. Today’s investors don’t want a company that is stuck in the past. They want businesses that are fast, flexible, and intimately familiar with the current market. Everyone wants to invest in the “next big thing”, and if you want to attract investors, you’re going to have to show them that you have what it takes to grow with the market and take advantage of current and future trends. Not spending time analyzing the market before you solicit investors can significantly lower your chances of securing funding for your business.
Identify Consumer Behavior and Market Risks
Two additional reasons that market trend analysis is important to modern tech companies are measuring market risks and identifying consumer behavior that can help or hinder your business. It does no good to develop innovative products that don’t meet a need in the market. Instead, you have to understand what consumers are buying and why. You can develop even better products and offer even more relevant services once you have a good idea of current and historical consumer behavior in your market. Remember that the market is based on supply and demand; if you are not supplying an active demand, you don’t have a business.
Identifying market risks is just as important as understanding consumer behavior. Monitoring trends can illustrate opportunities before they fully manifest, for example, as well as anticipate what kinds of strategies your competitors might be pursuing in the future. This information can be incredibly beneficial in developing strategies to stay far ahead of the competition.
Find Your Place in the Market
Market trends can help tech businesses find their niche. They can help you better understand the market in question and what consumers are demanding. You will also learn more about who is meeting that demand and whether they are doing so successfully. By offering valuable insights into the preferences and needs consumers are exhibiting, businesses can identify new opportunities and even new markets to branch into.
It probably sounds like a lot of these benefits revolve around helping businesses plan great products and relevant services, and there’s a reason for that. These are two of the most important things tech companies of any size can do to find success in the market. In this instance, market trend analysis positions businesses to take advantage of new opportunities or openings in the market before they become apparent and a competitor does the same. Businesses always want to be the first to establish themselves as experts in a certain product or service, and analyzing market trends can help them take their current offering and skillset and fit it into consumer demands.
Predict Future Growth
We’ve done a lot of talking about how market trend analysis can help you build an effective business by recognizing opportunities in the market, but we have not talked about what exactly market trends predict. They don’t only offer information about new opportunities in the market, nor do they simply provide information about the current landscape of the market. On the contrary, market trends do everything above while also allowing you to predict how the potential opportunities you see in the current market might evolve. Have similar trends existed in the past? How did they play out? Market trend analysis answers these questions and allows you to make informed decisions about how to move forward.
With that in mind, it’s also important to note that market trend analysis is not only a measure of the current market and its changes at this time. It also takes historical movement into account and helps determine why certain trends are poised to evolve or fade away. It gives you a good foundation upon which to base your decisions. If you know that three similar trends have all faded away in the past few years, for example, with no lasting change made, you might be more willing to focus on a different trade altogether.
On the contrary, if you see that similar trends have caused lasting changes in the industry, you might consider investing your time and energy in following them. Maybe you create a new service or product designed to take advantage of it and provide it on a limited basis to see how the market reacts. It is a good way to take advantage of a potential opportunity without tying up all of your resources.
What do you think about market trend analysis and the benefits it offers businesses? We think that there’s a lot to love about the process and that most tech companies would be smart to build this analysis into their business strategies.
