Your company can glide to the top using a similar approach, dynamically positioning itself to anticipate the market's direction and competitors' responses. That's one way strategic planning gives you an edge. Unlike operational planning, strategic planning focuses on where you need to be in three to five years. Failing to look ahead is like skating blindfolded. You never know how close you are to the goal.
Are you going up in smoke?
In the sea of information available to help you identify and track long-term industry trends, some is industry-specific and some is more broadly applicable. Demographic data can be valuable to virtually any type of business.Demographic information typically reflects long-term, systemic market changes likely to affect demand. Sometimes the changes are so subtle that you don't notice them until, like the frog in the pan of boiling water, you look around one day and discover that your market has evaporated and your business is dead.
One demographic indicator is "household formations." The more households that are formed, the greater the demand for residential housing. When fewer households are created, demand is lower. The outlook for household formations is important to any company dependent on residential housing construction as a direct or indirect source of revenue.
Right now, things look rosy, but the long-term forecast for housing formations is bleak. Baby boomers have inflated the demand for housing over the last five years, but their less-numerous offspring are throwing cold water on the construction industry. In 1998, when housing demand was at its peak, 1.25 million households were formed. In contrast, fewer than a million household formations are projected for 2006 (Wall Street Journal, 2/8/99). If your industry is driven by residential housing, ignoring or overlooking this trend is a good way to get burned; having an eye on the forecast and planning ahead for reduced demand will keep you out of hot water.
Keep cool like the great one!
Maybe housing formations don't affect your company as much as other demographics. Every industry is vulnerable to changes in the makeup of the marketplace. Which demographic indicators are relevant to your business?- Are your customers concentrated in a certain age group? Is that segment of the population growing or declining?
- Is your market limited to a particular geographic area? Is that area gaining or losing population?
- Does your product or service appeal to a specific income group? If so, is that group growing or shrinking?
Check out the Right Site, where an easy-to-use demographic database gives you access to a million pages of census data. You can search by state, city, county, zip code, TV market, area code, region, and other variables. The site's regularly updated statistics, reports, and analytical tools for market profiling - all free - offer a window to the future. Look through it and see where the puck's going to be. That way, like Wayne Gretzky, you can be in the right place at the right time.
