A market trend is a pattern in data that suggests the future course of business activity. Trend analysis can reveal a wide range of insights, from potential customer buying patterns to business intelligence on competitors’ performance. Ultimately, this type of analysis empowers businesses to make more informed decisions that boost growth and minimize risks.
Different types of trends exist, ranging from upward to downward and sideways. Each carries different implications for the business. An upward trend, for instance, may suggest a growing interest in products or services that the company is selling. For example, a sustainable increase in organic product sales could indicate an overall shift in consumer priorities that the company can capitalize on through new products and targeted marketing campaigns.
Alternatively, a downward trend may signal a slump in demand that the company can respond to by changing its approach to attracting customers or reducing costs. If a company is losing market share to a competitor, for instance, a downturn in sales might require the company to rethink its pricing strategies and advertising campaigns.
Using market trend to inform business decisions involves identifying an objective and scope, which will determine the time periods, data categories or analytical methods used in the process. Once the goal and scope are set, the next step is to perform the analysis and interpret its findings. This might involve drawing what are known as trend lines that connect two or more price points, extending these lines into the future to forecast where pricing is likely to encounter resistance (a sort of ceiling) and support (a sort of floor) levels.