The Challenges of Market Forecasts

By this time, the planning process for 2011 marketing activities should be well underway at most companies. High-tech firms often examine analysts' forecasts when sizing up the market for hardware/peripherals/software and related goods and services. But Matthew Miller's recent post on ZDNet asks a very important and intriguing question that can be generalized beyond smartphones:

Is there really any value to 3-year smartphone forecasts?

Miller comments on a Gartner prediction that the Android smartphone operating system will gain share over the next few years as Symbian, Windows Phone, and RIM lose share. He points out that Apple's iOS skyrocketed in popularity as the iPhone became a best-seller, coming seemingly from nowhere to capture significant share in a hurry. Symbian is far from dead, he notes, and is likely to gain because of its ties to Nokia. Android is also likely to gain, but Miller doesn't think it will win to the degree that Gartner suggests.

His bottom line: the next three years will be a "wild ride" and analysts can only guess at how the market will look that far out. And that's probably true in any number of electronics categories. Even experienced forecasters examining non-tech markets have difficulty looking a year out--just consider the real estate market, for instance, and how its ups and downs (mostly downs) have confounded analysts. There are lots of complex elements to factor into any forecast, and tech markets generally move faster than non-tech markets.

So what's a marketing planner to do? My thoughts:

1. Look at multiple analyst reports to tease out insights into and ideas about how buyers in your target market think, feel, behave, and buy.
2. Think of analysts' reports as a starting point. They're no substitute for doing your own research into buying behavior and market trends.
3. Examine both micro- and macroenvironmental forces. What role do suppliers and distributors play in your target market? How are global economic issues and governmental standards/regs influencing tech developments? What is the competitive situation and how is that likely to change? What do all these developments mean for your market?
4. Be prepared to adjust your forecasts and activities during the planning process and after implementing your plan. Some markets can change so rapidly and evolve in such unexpected ways that you may need to think in terms of months rather than years.