Measurement

Market Forecast Definition, Benefits, and Techniques

CopyPress

February 8, 2023 (Updated: March 8, 2023)

The more you know about your industry and your audience, the better your business marketing will be. But the real question is, where do you get the information you need to influence your business strategies? There are multiple types of forecasts and analyses you can run to collect the information you need to make informed decisions about your marketing and other areas of your company. Today, we’re looking at the market forecast definition and what its benefits and techniques mean for your marketing and content planning:

• What Is a Market Forecast?
• What Factors Should You Consider When Planning a Market Forecast?
• Benefits of a Market Forecast
• Market Forecasting Techniques

What Is a Market Forecast?

A market forecast helps you predict future engagement, characteristics, and trends in your brand’s target market. It’s one of the main parts of market analysis. Forecasting is a mathematical way to estimate future business performance. Most market forecasts use information like sales data and surveys to better understand what happened in a market in the past and the current climate to understand implications for the future. Some specific areas a market forecast covers include:

• Potential customer behaviors through the marketing funnel
• Number of average leads generated within a period
• Rate of leads as they move through the marketing funnel
• Effectiveness of marketing campaigns and channels in new customer acquisition
• Market potential of a product or service
• Future sales and revenue for your company
• Acquisition, retention, and monetization potential of your brand, products, and services

When you run a market forecast, you can collect information about all these features and consolidate them into a market analysis report.

What Factors Should You Consider When Planning a Market Forecast?

Because a market forecast focuses on multiple areas of your business, there are different factors you can look at to collect the data you want. Some of them include:

Market Size

What is the size of your industry market? Do you belong to a small but dedicated niche? Or do you fit in with a larger, more general group of businesses? Understanding your market size provides context to the other forecast data you collect. All market data is relative to the industry and it’s important to make apples-to-apples comparisons to truly understand where your brand, products, and services fall in the market.

You wouldn’t want to do a comparative market analysis on Walmart vs. Joe’s Corner Deli. They’re not competing within the same market and they might not even target the same customers. Getting an idea of the size of your market and how that affects data collection can help as you progress through the forecasting process.

Market Value

Market value tells you what your products and services are worth in the current industry landscape. Like other factors, market value is relative to industry type and size. While high-end products might cost more money, audience members in those segments may actually buy less. This makes the market value of a high-end item actually lower than one with more repetitive sales and demand for your company.

When you research market value for a forecast, it’s important to look at the value of each of your customer segments. Which group spends the most money? Who returns most often as a repeat customer? This type of data can help you decide who your true target audience is and how you can cater to them to make more sales.

Target Markets

The target markets themselves are your audience segments filled with people to sell your products and services to. Most businesses often have one target market with a bunch of smaller target audiences within it. You can examine the demographics and psychographics of each target audience to learn more about who people are and what they think or believe.

Related: Target Market and Target Audience: What’s the Difference?

Accurate Data

When doing any kind of forecasting and analysis, it’s important to make sure you’re collecting accurate data. This type of data is often raw, meaning it hasn’t undergone any other type of manipulation before your forecasting. And if it has, you know who did the prior analysis and what processes they used to get the results. Accurate data also comes from honest data sources, like your target audience, or correctly calibrated data collection programs.

If you’re not using accurate data in your forecast, you run the risk of skewing your forecast. This can have long-term consequences for your business such as misappropriation of funds or failure to meet your audience’s needs.

Basis in Reality

The results of any kind of forecasting should seem realistic. If you find your projected growth numbers are really high, or you have something like a 99% satisfaction rate with your customers, something is probably off with your data or analysis techniques. Always run a gut check on your forecast results. If something seems too good to be true or “off,” run another test or collect more data. You could also ask for help from another department or an outside consultant to recheck your results.

Benefits of a Market Forecast

Preparing a market forecast helps your team get a better picture of your brand’s future within its industry. Doing so lets you make more strategic marketing and sales plans because you’ve rooted them in data and facts. Here are some other benefits of developing a market forecast:

Learn About Future Trends

Part of a market forecast is learning about current and upcoming trends in your industry. To find these trends you often use market and consumer data to predict the unpredictable: human behavior. You can look at how customers interact with your and competitor brands and review shifts in their purchasing habits over time.

For example, if you run an all-season business, maybe you compare customer buying trends in each season. When do they spend the most money? What are they most likely to buy during these times? This kind of analysis helps you predict when demand for products or services increases and how your customers or clients react when they have a need to be met.

Then you can adjust your marketing and sales strategies accordingly. In the case of a seasonal book, you may budget more money for paid advertising at these times to get better reach when people are already looking for your products and services.

Get More Targeted With Your Marketing

The more you know about your industry and your audience, the better you can target your marketing campaigns to the people who want and need what you offer. Market forecasts study user behavior and try to predict which behaviors throughout the marketing and sales funnel lead to the highest conversion rates. When you know how your customers behave and what gets them to take action, you can create more personalized messaging, among other tactics to entice new clients and keep your old ones.

Understanding how your audience interacts with your content channels or how they move through your website is another factor you can study in your market forecast. Analyzing these activities can help you optimize the user experience on your website to increase conversions and influencer consumer behavior.

Increase Customer Retention

While we often focus on how to gain new customers with content marketing, it actually costs less overall for your brand to focus on customer retention. Doing a market forecast helps you better understand your customer churn rate, or how many customers you’re losing over a period. The forecast can identify behaviors that indicate a churn risk to help you identify clients that need more attention from your brand.

Once you know who might be ready to leave your company for a competitor, you can experiment with marketing campaigns to increase their engagement and boost brand loyalty. For example, you may run an email marketing campaign with this segment where you offer discount coupons or ask clients and customers to fill out a satisfaction survey to get more insight into why these customers want to leave.

Develop Proactive Planning

Image via Unsplash by @sushioutlaw

Doing a market forecast lets you do proactive business planning instead of reactive planning. When you do reactive planning, you’re playing catch-up. Something happened unexpectedly and now your business has to respond. The COVID-10 pandemic, for example, led to a lot of reactive planning for many companies. They had to figure out how to stay in business while navigating a global pandemic.

Proactive planning comes before a major crisis hits. Creating a fire safety plan for your home is a type of proactive planning. So is going to the grocery store and stocking up on essentials before a snowstorm or a hurricane. In business, proactive planning comes from looking at all potential shifts in the economy, politics, technology, and customer behavior. Then you have to decide how to handle those upcoming shifts.

While you may not have to use all your proactive planning like a disaster plan, knowing what’s coming and preparing for it before it arrives can help you stay more focused and stable throughout a change-up than you would if you weren’t prepared.

Get More Precise Budgeting

Part of a market forecast is looking at the different budget allocations for different business activities. Reviewing your sales and revenue forecasting can help you learn how much money you have to spend on certain business activities. It can also help you plan for more staffing and marketing campaigns and initiatives. Understanding your cash flow makes it easier to play for investments in your company’s future and activities that let your brand scale and grow.

Manage Your Inventory Better

When you understand your busy seasons, or what products and services are in demand, you can better manage your inventory or service capacity. Think about it this way, let’s say there are two hardware stores in a town. The owner of one watches the weather every day and the other doesn’t. When a late-season snowstorm is coming to town, which owner is going to be more prepared with the right supplies their customer wants?

The owner who watches the weather forecast will likely have shovels and deicer in stock, while the other owner probably has more gardening supplies than winter gear. The more you know about what your customers want and when they want it, the better you can prepare your inventory. For service-based businesses, this part of the forecast can also help you plan for season hiring and staffing issues that could arise if you have more service requests than you do team members.

Develop More Accurate Salary and Payment Allocation

When you know if the market is on an upswing or downswing, you can better prepare for how business changes affect your staffing. When your market goes into a recession, you may have to deal with salary cuts, decreases in hourly wages, or even layoffs to stay afloat. But in good times, a market forecast can help you predict if you can hire more team members or give raises and bonuses.

Market Forecasting Techniques

Because market forecasts look at a variety of different variables about your business, there are different techniques you can use to find and analyze the information. Each technique gives you different insight and metrics so it’s actually helpful to use multiple methods when developing your market forecast. Here are some of the options you can choose from:

Correlational Analysis

In math, a correlational analysis shows the relationship between two variables. In a market forecast, those two variables are often your clients and customers vs. your products or services. Through a correlational analysis, you can find how certain features of your offerings and the way you market them affect your audience. From a correlational analysis, your team can learn what features and marketing help attract new customers and which ones help with customer retention. You can also learn things that might put off your target audience, based on a competitive correlational analysis.

Predictive Analysis

Predictive analysis lets you analyze specific customer behaviors to see what characteristics certain customers have in common. Then you can segment those groups based on characteristics to drill down deeper and learn more about your audience. Predictive analysis can help you understand how certain groups may react to features like product or service pricing, upselling strategies, and marketing messaging. When you understand what a group has in common, you can then predict how someone else in the same group may react to your marketing and sales strategies.

Customer Surveying

Surveying customers is one of the best and most effective ways to find out what they’re thinking or feeling about a brand, product, or service. You can carry out customer surveys at any stage f the marketing funnel to understand information like:

• Customer intent
• Preferred price ranges
• Satisfaction with a product or service
• Demographic data about the target audience

You can also carry out your surveys in a variety of ways, including:

• Post-conversion on your website
• Pop-up boxes or scroll ads on your website
• Email marketing
• Social media posts or stories
• Links within content

The more information you collect, the more you understand how your audience perceives your brand and its products or services. Use this data and compare it to what you find from your competitor analysis to see if customers are more satisfied with your brand and offerings than others.

“CopyPress gives us the ability to work with more dealership groups. We are able to provide unique and fresh content for an ever growing customer base. We know that when we need an influx of content to keep our clients ahead of the game in the automotive landscape, CopyPress can handle these requests with ease.”

Kevin Doory

Director of SEO at Auto Revo

Expert Advice

Believe it or not, asking for help from an expert is a true market forecast technique. Experts in your business or industry may include influential higher-ups in your company or external consultants who have worked with many different organizations in the field.

Consulting an expert about the state of your market has several advantages. First, they may have access to more data or information than your sales or marketing team alone. They may also have more experience with analysis frameworks and how to arrange and manipulate data to get more accurate results. Finally, the external experts likely won’t hold any kind of bias toward your business. They won’t just tell you what you want to hear. Instead, they’ll give you the truth about the state of your industry and where your business fits within it.

Sales Team Analysis

Your sales team often knows a lot about what’s going on with your customers and with the market in general because they’re in the thick of it every day. Who’s selling comparable products at the lowest price? what new advancements are hitting the market? What does the audience really want? If you’re looking for information about your current products and services and the way your audience reacts to them, a sales team analysis could be the right option.

You can also use the team’s insight to determine how you structure content and marketing materials for the funnel. Your sales team likely knows what draws your audience in and what stage of the funnel they’re in when they get to your company. Knowing these tricks and being able to replicate them could help your future campaigns.

Time Series Techniques

Time series analysis techniques look at sales patterns over specific periods. You can look at the data by month, quarter, or year. Most teams use a times series technique to predict financial figures like revenue or return on investment. You can also use a time series technique to predict scaling and growth.

For example, if you look at all your sales data during the second quarter of the last three years and see growth, there’s a good chance you can predict you’ll see growth at the same time this year. You can then use mathematical formulas to calculate an average growth percentage to see just how much to expect sales to go up this year.

Market Forecasting Makes for Better Strategies

The more you know about a market, the better prepared you’ll be to do business within it. Whether you’re trying to amp up your content marketing campaigns, better segment your audience, or stay more competitive in your industry, a market forecast can help. Staying consistent with your forecasts and updating them as new information becomes available helps them stay relevant and keeps your business aware of any surprises that could be on the horizon.

CopyPress

February 8, 2023 (Updated: March 8, 2023)