How to Analyze Trends


A trend is a set of patterns that indicate what people want, whether in fashion or business. The ability to recognize and predict trends can help you avoid bad product choices and capture market opportunities.

In order to analyze a trend, you need to have a good amount of historical data about your company. You can use this data to compare and contrast your company’s performance with that of competitors. This will give you valuable insights into what is working and where your company needs improvement.

Trend analysis can be done with a variety of tools and techniques. Among the most important is benchmarking, which shows how your company performs compared to similar businesses in your industry. You can also use qualitative and quantitative methods to gather information about customer demand, and the success of your marketing campaigns.

You can also use trend analysis to forecast the future. For example, if you are in the fashion industry and have seen an increase in sales of a certain style of garment, you may want to make sure you have enough materials to produce them well before making an order. Likewise, if you are selling an expensive item, you might want to ensure you have enough profit margin before committing to an order.

Many trends evolve from fads, which are novelty items that appeal to a small segment of the population. Trends typically offer a more substantial value than fads, and they tend to be popular for longer periods of time. For example, social media has increased in popularity over the past 20 years, and it offers a valuable means for people to stay connected. Fads, on the other hand, are quick to start and last for only a short period of time. From bellbottoms to pet rocks to telebooth surfing, fads usually have limited applications and appeal.

Human emotions can help sustain a trend, as well. If most traders are collectively fearful, this can create a negative market sentiment, which can cause a downtrend. Conversely, if most traders are collectively confident or greedy, this can create a positive market sentiment, which can lead to an uptrend.

Trends can also change with the seasons, or as a result of key events in society. For example, after Kate Middleton and Prince William’s wedding, there was an 80% increase in demand for high necked lace dresses at boutiques. This caused a trend to develop around the theme. Themes can be broad or narrow and can involve colours, shapes, fabrics or cultural references like Spanish influences.

Some experts believe that trends occur because of a process called “trend blending.” In this scenario, several less significant trends merge into a single more significant one. For example, e-tax filing first appeared as a fad, but it became a trend after it was proven to be effective and meshed with emerging trends such as paperless documentation and spreadsheet programs. The more a trend meshes with other existing trends, the greater its staying power and the easier it is to spot.