Megatrends, Macrotrends, Microtrends and Fads.
In an ever-changing, volatile world driven by trends, fads and shiny new toys, whether they are products, services, tools or technologies, identifying underserved or unserved consumer needs can be challenging. Sometimes they are right there staring you in the face and sometimes they are less obvious. Either way it is not always easy to spot trends given all the ‘noise’, copious amounts of data and often conflicting, information overload that we all fall victims to. This is a phenomenon that affects solopreneurs, small businesses, and large enterprises alike, albeit in different ways and to different degrees.
The lifecycle of products and services is getting shorter and the last couple of decades have been characterized by the development and manufacture of products and services that have shorter term appeal and not built to last. According to SupplyChain.com, one of the most profound changes in the last decade is the dramatic shrinkage of product life cycles and 50 percent of annual company revenues across a range of industries are derived from new products launched within the past three years.
Fast fashion, tech, electronics, retail and consumer packages goods are a few examples with an emphases on speed of consumption, frequency, high demand and affordability. This has implications for product development, supply chain, inventory management, technology, forecasting, sales and even customer service in the seemingly unstoppable race for quantity over quality.
So what’s driving this trend? Is it consumer demand or enterprise profitability?
It is important for businesses to understand how to react to changes in consumer behavior, how they can cut through the clutter to focus on what’s important. How they identify the most relevant trends that are likely to have significant impact on the success and longevity of their business. There are 4 categories of trends – Mega, Macro and Microtrends, and Fads and studying all of these will provide a robust canvas for decision making.
Let’s start with defining what each of these are, how they manifest, how they are related and then dive into how to identify and analyze them.
Trends to find business opportunities
Megatrends
Macrotrends
Microtrends
Fads
#1 Megatrends
These are major changes, shifts and movements that take place over sustained periods of time, impact large populations, wide geographical areas and longer phases. Some examples of these are population increases or decreases, demographic shifts, urbanization, climate change, technological advancements etc. Typically, megatrends can be observed and evidenced over decades or even longer swathes of time. They cannot easily be influenced or halted and provide a bigger picture view of slow progression of behavior and developments over time.
#2 Macrotrends
These are the offspring of mega trends and tend to be results of the larger long-term shifts and changes but are more numerous and focused on specific topics, territories, industries, demographics – in other words - parts of the bigger picture. For instance, floods, earthquakes, forest fires in relation to climate change; green communities, smart cities and solar energy in relation to urbanization; IoT, AI, Robotics and Space exploration in relation to technology; migration of large populations due to natural disaster or wars. These trends tend to have major impact within the period of a decade or less, affect specific regions or territories and populations of people in multiple and varying ways. Macro trends generally tend to be out of the sphere of control for most organizations and businesses as they are external and environmental factors that will have an impact on the business.
#3 Microtrends
These are the opposite of Macro trends. They tend to be very short term shifts and changes in behavior and are more reactive, solution oriented and responsive to immediate unmet or underserved needs. They are driven by new technologies, innovations, disruptions to existing systems and processes and are typically characterized by their newness and uniqueness. They are numerous, iterative, continuous and evolving in nature. Examples are new developments in fintech such as decentralization, crypto currency, blockchain; Media channels such as social media platforms, AI tools, Search engine algorithms; Entertainment releases via OTT and gaming; Customer service via human interaction or technological enhancements. Microtrends generally tend to be within the sphere of control of organizations and businesses as they are often driven internally or can be influenced by making relevant changes to processes and operations.
# 4 Fads
These are a subset of micro trends. Although these are considered passing fancies they should not be taken lightly or disregarded. They occur quickly and sometimes surprisingly and often die out just as fast as they came into being. Their perceived impact is generally short lived but, in many instances, profound and often give birth to new micro trends. They have the intensity and capacity to influence large or small populations, tend to be more localised or specific to certain industries and professions. Examples of these are seen in the fashion, entertainment, media and political arenas and manifest as short-term news items that have the propensity to ‘go viral’. In some regions they also can influence longer term change and socio-political movements.
Credible research, data and information sources to identify and study trends
There are literally thousands of sources of research and information that one can tap into for trend analysis. There is also a lot of fake information out there so it is critically important to get your information from reliable and credible sources, cross reference and validate it with a number of different sources, before using it for any kind of decision making.
Government sources, International governing bodies such as OECD, IMF, WHO, WEF, UN are good sources for Megatrend research.
Depending on the business category or specialist field of interest, Industry journals and publications, Consultancies such as McKinsey, KPMG, Deloitte, PwC, EY, BCG, Gartner, etc. that specialize in industry specific data, Key Opinion Leaders and Industry Influencers are credible sources for Macrotrend research.
For Microtrends and consumer behavioral data, there are several web analytic tools such as SEMrush, Similarweb, SparkToro, Ahrefs (way too many to list comprehensively) Industry specialized syndicated research sources such as Statista, online chat forums such as Reddit, Social listening tools like Google trends, Buzzfeed etc. and of course, good old customer feedback.
Strategic frameworks to analyze trends
Whether you are a solopreneur, startup, SME or part of a large organization, the ability to constantly identify current and more importantly anticipate future trends to find business opportunities, is imperative to thrive in business. As the saying goes – “You snooze you lose.” So let’s look at two specific strategic frameworks you can you use to capture and analyze macro and micro trends to mitigate risks and capitalize on opportunities.
Macro Environmental factors
As discussed earlier, Macrotrends are driven by external and environmental factors that are generally not within the sphere of control of an individual or organization. Capturing these key factors in a succinct framework can help immensely in making strategic business decisions. It will provide the helicopter view of external factors within which a company has to survive and thrive.
The PESTLE framework
Political
Economic
Social
Technological
Environmental
Legal
Political: The impact that government policies may have on the business environment such as taxation, fiscal policies, trade tariffs, subsidies, regulations, interest rates, licensing etc.
Economic: The economic performance based on demand and supply, global trends, Inflation rates, interest rates, economic growth, imports and exports etc.
Social: The demographic factors such as culture, lifestyle, education, income, age distribution, gender, beliefs, values, buying habits, social classes and community support.
Technological: The technological trends and possible risks, platforms, tools and digital advancements that impact industries and businesses in positive transformative ways.
Environmental: The direct and indirect effects that the physical and natural environment has on a business and vice versa such as the impact of tourism, farming or agriculture, geographical location, weather, climate etc.
Legal: Laws, policies and regulations that directly impact the operations of a business and may accelerate or retard its growth such as social laws, consumer protection as well as standards that need to be met among others.
Micro Environmental factors
Microtrends are driven and often controlled by internal business factors such as new product development, commercial strategy, operational excellence, customer service, competition, shareholders, employees, marketing, communications and financial considerations. These factors need to be analyzed in greater detail within specific parameters and specific contexts. They may be related to small incremental shifts in behavior that may have big impact on business in the short term to medium term.
Strengths
Weaknesses
Opportunities
Threats
Strengths: This relates to the unique value propositions and selling points that a business may have that gives it an advantage over its competitors in a given market or environment
Weaknesses: The factors that put the business at a disadvantage and could have a negative impact to the business.
Opportunities: This relates to the gaps and unserved or underserved needs in a marketplace that the business can fill and capitalize on in the short to medium term.
Threats: The factors both direct and indirect, obvious and non-obvious, that pose a risk to the survival and longevity of the business in the short to medium term.
Ongoing analysis of the various factors that impact a business at a macro and micro levels using good quality data that is gathered from external or first party sources is critical to the success, survival and longevity of a business. These strategic frameworks should be employed at regular intervals and in tandem to assist in strategic planning and decision making throughout the product lifecycle. For new businesses these frameworks can be valuable to validate business ideas, new product development and market entry.
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