A trend is a general direction into which something is developing, changing, or veering. It can also refer to a fashion or fad, such as the current popularity of beards and tattoos. Trend analysis involves identifying and using the patterns that emerge from data, whether it is in sales, stock prices, consumer perceptions, or other business metrics.
Identifying trends is key to ensuring your business is on the right track for success. Trends can be spotted across various types of research methods, including focus groups, interviews, and even in your own customer feedback and review sites. By regularly conducting this research and using a good data analytics tool, you can stay on top of your business’s performance and plan for future growth.
One of the most common ways to spot a trend is by examining historical data points. For example, if your company sees that sales always dip in the winter, you can use this information to predict that sales will continue to be low in the coming months. This will help you prepare accordingly and ensure that your bottom line is not negatively impacted.
Other common types of trend analysis include using a ‘theme’ to guide your design or marketing decisions. Theme-based trends tend to have a short life, with designers focusing on a single theme each season, enjoying their moment in the sun before moving on. Think Balenciaga’s anti-establishment attitude in 2017 or millennial pink in 2016.
Many businesses use trend analysis to identify new markets, reevaluate existing products and services, and develop a strategic marketing plan. This can be done using data from a variety of sources, including competitor market research, consumer reviews and ratings, product sales, industry reports, and financial fluctuations and forecasts.
Another important aspect of trend analysis is understanding how market factors like political and economic conditions can impact your business. For example, if you notice that consumers are buying more vitamins in their beauty creams, this can give you insight into potential future trends for your brand and help shape future product development and marketing messages.
Stock traders often look to trends to determine the best time to buy or sell stocks. They will analyze data such as the price history of the stock, its average volume, and the average daily trading volume over a specific period. This allows them to make informed choices about the best time to buy or sell stocks to maximize their profits.
Identifying a trend can take time, and it is important to use a reliable tool that collects and analyzes data quickly and accurately. Trends are not consistent and often appear in waves – known as a ‘trend cycle’ – so it is important to regularly conduct your research using a suitable cadence (monthly, quarterly, annually, or twice-yearly tracking surveys). In addition to data analysis, you can use qualitative data sources like interviews to gain insights into why a particular trend has emerged. This can be invaluable in helping you to predict the next phase of your trend cycle and develop an effective strategy to maximize your return on investment.