“Does trend forecasting create the trends or does it simply seek to identify major trends in the consumer market?” This is a question that is continuously asked within the business world. Deciphering what is the clearest indicator of a trend or where trends begin, becomes a question that many businesses face. “Trend Forecasting is used by looking at past sales and market growth to predict where the market will go in the future.” Trends can be hard to grasp because they differ and change so frequently. Trends play a major role in all areas of business; from finance, marketing and to the fashion world. It is difficult because with today’s technology there are several ways to shop. Consumers shop Online, through apps on their phone and in store. There are an infinite number of factors that influence trends and can change the way consumers buy. Factors that change trends and how consumers purchase products are factors such as culture, location, and the economy. For businesses it is essential to be aware of these factors and to watch them so they are prepared for any shifts in the market that will pop up and change the way consumers do business and make transactions.
With trends evolving so frequently it is a heavy task to keep up to date on what consumers want. Three major areas forecasters predict in are; Economic Forecasting, Technology Forecasting and Demand forecasting. Each of theses categories rely on the other. As mentioned previously, the economy will have a major impact on how consumers buy. By having the knowledge on how the economy will trend, it will provide businesses with the ability to predict how consumers will behave as well and what type of products will be in demand.
Several methods are used to determine and predict trends, but all of the methods can be narrowed down into two major categories. These are subjective and objective. Subjective approaches are based on consumer opinions and culture and will focus on current trends in the market. This approach is less accurate and is typically harder to predict further into the future. The Delphi approach is a very popular method and is commonly used in trend forecasting. Essentially, Delphi is a group of experts discussing what currently is a trend and where they predict that they will be in the future. Another tool used in subjective forecasting is trend mapping. This tool is useful to visual current trends and how each trend can snowball off the other. The idea behind this is to see how and where current trends originated from in hope to determine where they will go in the future.
The objective approach is grounded on enormous amounts of data that is gathered on past trends and is used to analyzed current trends graphically. The graph shows how that trend will continue in the future, whether is dies out or if it will consistently increase. Many trend forecasting companies say they can predict trends up to 5 years in advance. With all of the available technology in today’s world trend forecasters can rely on compiled data to predict what will happen. Trend forecasting has evolved into a science and can be statistically predicted using regression modeling.
Trends will have a major impact on all areas of a business. A trend can have an influence on new upcoming trends as they are always evolving, making it important to learn how to predict and forecast trends. Trends differ from location, culture, the economic market and through the mode of purchase.
