Forecasting The Markets by Managing the Data Monster

Accurate forecasting data is paramount to successfully trending the market and creating strategic advantages. A paper by Bill Stringer discusses the use of big data programs and how this influences the success of the chemical industry. For the purposes of my own research, I am considering the merits of big data in proper market forecasting. 

Big data can uncover information that is not easy to find or discern. The relationship between the data pieces offers an opportunity to find trends and information that is not contained in standalone measurements.  When organizations use big data well they can more accurately assess performance and variability to meet market trends. 

The author believes that big data is the next frontier of nearly every economic sector. Companies will find ways to appropriately analyze large and complex data sets in both the private and public arenas. The ability to harness the data monster will allow for greater waves of growth, productivity and innovation. 

Most of the world’s electronic data has been generated in the past few years and executives have yet to come to grips with the virtual world. As organizations get better at analytics they will be able to make more informed decisions. Using data to create better pricing strategies helps in providing greater profitability.

Market forecasting is complex and often relies on experience and the overall feeling of the analyst. This makes traditional methods relatively inaccurate. Larger data can afford the possibility of finding future demand and trends in order to encourage higher levels of organizational growth. 

The paper targets Dow as a primary big data leader. In fostering their growth they recruited 10 PhDs in computer sciences and supported them by a team of advanced analytic experts that mesh their skills with a business intelligence team. Their success is based on a number of important factors:

-Improved accuracy of forecasting. 

-Early indications of targets to correct actions.

-Cost and exchange rate analysis that offers better purchasing of materials.

-Greater staffing abilities that offer better skill levels at the times they are needed. 

The author indicates that data can be drawn from a number of important sources that include social networking and publically available data. Companies can use this data to make a better environmental scan and then incorporate that information to encourage stronger decision making. As companies improve in their ability to forecast the market, they will be able to stay ahead of market trends. 

The report highlights a few important issues. If we think about how public information encourages or discourages business decisions we will find that in general available pubic data is helpful. The problem is that many cities and states don’t have enough information to encourage investment and reduce risk. Offering better data, even if not analyzed, will allow for greater transparency as well as resources for public consumption for strategic decision making. 

Philinkiene, V. (2008). Competitive market demand: the conception and types in the context of forecasting. Economics & Management.

Presentation on How to Conduct Competitor Analysis

How to Conduct Competitor Analysis from Digimind

Analysis for Overcoming Global Business Challenges

A paper in the Journal of Knowledge Management, Economics & Information Technology by Siddhartha Ghosh attempts to explore the methods in which a business may implement a strategy after the global downturn. He argues that the three components includes innovation promotional practices, social and organizational welfare, and ethical behavior.  He discussed the concept of innovation and the overall process of development that should occur. As firms implement new strategies, they will find an increase in market success through the use of proper analysis to meet global challenges. 

I-Ideas

N-New Plan or Design

N-Noticeable Changes

O-Optimum Change Evaluation

V-Variety

A-Adaption to the New Environment/New Business

T-Thought process for planned change.

I-Ideological developments in business.

O-Optimization of changes.

N-Numero Uno (Being at the top of the market).

The author further contends that there are four major strategies to competing within the market 1. Holistic Business Strategy, 2. Polymorphic Business Strategy, 3. Green business strategy and, 4. Country-club business strategy.  Each of the four strategies help organizations navigate the market in different ways. Through the development of strategy frameworks organizations can finder higher competitive frameworks. 

Country-Club Business Strategy:  Such organizations seek to find innovations and development in the human arena. They look at human innovation, human behavior, human productivity, and other human elements. The goal is to develop people and manage them well to create advantages for the organization.  Organizations can consider the SMIRNOFF Analysis or MEDICATION Technique.

Polymorphic Business Strategy: When organizations are already moving upwards they should seek to design strategies for how far they can go. They may use a HAIRL Analysis, encouraging employee decision making, and define their strategies to maintain their growth. Such organizations should seek to maintain their current growth but set longer-term sights to perpetuate their growth to the top of their market. 

Green Business Strategy: As one of the most practical methods, organizations should seek to develop their product lines and offerings to create greater revenue. They may consider MARCO-POLO Analysis, SWOT and other opportunity-based evaluations.  Such businesses seek to continue to develop and grow their customer’s bases using existing platforms. 

Holistic Business Strategy: The holistic strategy attempts to predict where the business will be at certain points in the future so that the proper decisions can be made. They may consider CATAPULT Planning or PERFECT Forecasting in an effort to determine likely market trends and outcomes. The goal is to stay ahead of these trends so that management decisions and operations can be adjusted.

The author proposes that there are four basic innovative strategies in the market. He categorizes these four strategies and offers analyses that may be used in forecasting and understanding the business. As businesses march out onto the global gladiator, arena they will need to ensure they are seeking multiple methods of understanding their prospects and designing appropriate methodologies. 

Ghosh, S. (2012). Change in strategy-the answer to overcome the global downturn. Journal of Knowledge Management, Economics & Information Technology, 2 (4).

Market Research and Market Forecast

Understanding the needs of the customer is a fundamental activity that coincides with the development of the business. As customers and their patronage are the lifeblood of an organizations existence it is extremely important for organizations understand their needs and wants. One way to do this is to determine the market trends and attempt to find products and solutions that will appeal to customers. To do this well would require a level of market research and market forecasting.

The American Marketing Association defines market research as, “the systematic gathering, recording, and analyzing of data with respect to a particular market, where market refers to a specific customer group in a specific geographic area” (2011).  Market research collects specific information to study market characteristics while a marketing analysis puts the information into a framework that is understood for prediction purposes.

Some assessment tools, such as Ansoff’s Matrix Analysis, provides for a systematic analysis of four general classes product/market growth strategies which include 1.) market penetration; 2) market development; 3) product development; 4) and diversification (Finch, 2012). Even though the analysis is beneficial one must go into greater detail and research to understand these concepts to make them useful.

Market Penetration: Increasing current sales to existing markets.

Market Development: Increasing sales by selling existing products in new markets.

Product Development: Selling additional products to current customers.

Diversification Growth: Selling new products in new markets to create diversification.

Each strategy has its own particular benefits and detractors. For example, if a market is currently saturated it may not be beneficial to create additional market penetration. Likewise, sometimes it can be beneficial to diversify products and markets when traditional products and services are on the decline. To know when each strategy is likely to be successful requires the ability to forecast the market properly.  Inaccurate or misaligned strategies can cost companies their competitive abilities and possibly their future sustainability.

When one has useful information and has analyzed trends it is possible to forecast the market. In general, forecasting the environment should be completed in the context of competitive market demand of both internal and external factors within the market (Pilinkiene, 2009). This means that one should understand the trends, available products, and even the company’s internal abilities to determine whether or not its offerings are competitive.

The constantly changing market requires a new way of thinking about forecasting. As most forecasting models use mathematical models they often ignore the qualitative aspects of the market and therefore become stale (Pilinkienu, 2008).  It is necessary to understand that older models may be limiting in terms of their accuracy. Relying too heavily on one strategy, means that one is not getting the full market picture. 

When organizations do not take into account the full spectrum of relevant information the market has to offer or take in multiple methods of evaluating that market there is a high potential of poor judgment. Executives cannot make proper decisions unless proper information and analysis is conducted. Ensuring that analysis are thorough take into account varying circumstances and offer contingency plans can be helpful in the decision making process.

 Companies should seek to reevaluate their marketing strategies at least once every five years with yearly adjustments. Adjustment periods depend on the type of industry one is in. For example, traditional services have a longer projection time than fast paced technology bubbles. In fast paced markets it may be necessary to develop a marketing plan for each product or service and continue to adjust it as needed or new information arises.

American Marketing Association. (2011). Retrieved from http://www.marketingpower .com/_layouts/Dictionary.aspx

Finch, J. (2012). Managerial marketing. San Diego, CA: Bridgepoint Education, Inc.

Pilinkiene, V. (2009). Forecasting environment and its factors when assessing the competitive market demand. Economics & Management, p. 878-883. 

Pilinkienu, V. (2008). Market demand forecasting models and their elements in the context of competitive market. Engineering Economics, 60 (2).