Business Trend Analysis
Business trend analysis is a way for companies to determine future results in economic marketplaces. Reviewing past information can help management understand current trends and where a market niche may be for a product. Current operations may also be reviewed by trend analysis to determine the strength of certain product lines and if the market will maintain the current supply of goods.
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Definition
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Business trend analysis is a tool used by management to gauge past economic history and prepare for future events. Many types of trend analysis may be used depending on the business industry. Most trend analysis involves gathering several types of information, inputting the information into a computerized system, generating reports and analyzing the reports for meaning. Companies will review current year information against the previous year to analyze the business cycle.
Importance
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Trend analysis can provide critical economic information about current business situations. Identifying current product trends, determining the strength of an industry or capitalizing on emerging markets are all results of trend analysis. Trend analysis also helps to eliminate uncertainties in business, such as slow sales, inventory overstock and seasonal consumer demand. Reliable information allows management to make crucial business decision regarding current operations.
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Types
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Three types of trend analysis are commonly used for trend analysis: intuitive, temporal, and market segmentation. Intuitive is the least accurate; information is gathered and predictions on future outcomes are estimated. Temporal involves looking at past information and assumes the same outcome based on the frequency of results. Market segmentation is the best trend analysis technique; while time consuming and costly, it usually produces the best results.
Market Segmentation
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Market segmentation is the process of breaking down the marketplace into measurable items or groups. Classifying individuals by age, sex and location; products by type, function and price; or geographical regions into states, zip codes and counties. This allows management to review the marketplace by very specific demographics, creating trend analysis to determine the economic impact each group has on the company.
Computer Systems
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Trend analysis is largely created by computer programs in today's business world. Most customer information can be extrapolated from the company's management information system into a spreadsheet program and prepared in a trend analysis chart. Microsoft Excel, to name one, has strong trend analysis programs that are user friendly. This allows companies to generate large amounts of analysis data with very little work.
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References
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Comments
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what are the ways of analysis?
