A vital component of any marketing strategy is thinking about what the future might look like. In strategy parlance, that's called having industry foresight.
But what does industry foresight mean—and how do you get such a view of your future market?
Industry foresight is a point of view about...
- Future customer needs and behaviors
- Future technologies
- Future competitors
- Future regulations, environment, etc.
- Future competencies
People tend to forecast the future in several ways:
- Draw a straight line from today into the future (known as extrapolation).
- Look at your product or industry life cycles and use those cycles to predict the future.
- Isolate trends that are predictable and look for areas of instability in your industry.
A Useful Forecasting Method
Over the years, I've worked with various companies on thinking about the future. It started with my work with Northrop Grumman, a huge defense contractor, which, it seems, was always thinking about the future.
Based on those experiences, I've constructed a forecasting method I call convergent viewpoints. Here is basically how this works.
First and foremost, you cannot do this exercise alone. I typically break up the group into four or five teams to work on this problem.
Future forecasting starts by choosing a time frame you want to think about—maybe 5 or 10 years into the future.
That choice can depend on the nature of your industry. For example, when I did this exercise with Virgin Records, the Internet was quickly moving to make the traditional music business untenable. Spotify began in 2006, at the height of a privacy problem in the music business (begun by peer-to-peer file-sharing app Napster in 1999). That was the same year Tower Records (a mainstay on Sunset Blvd. in Los Angeles) ceased operations. Nobody really knew what was to become of the traditional music business. In that context it was important to make decisions today about the near future—so five years was chosen.
Your situation could be much different: Typically, if it's a slowly changing environment, longer time horizons are more reasonable.
Then, have each team identify and list possible developments/changes in customer needs, competitors, technologies, major stakeholders (e.g., OEMs, stockholders), economics, and other relevant areas over the chosen time frame.
Next, each team would review and prioritize the listed items (the highest on the list would have the greatest impact on your company/product/service future direction if it were to occur as expected). (Note: you're not prioritizing according to how likely the occurrence!)
Then build scenarios, plausible/internally consistent stories:
- Using primarily the items you listed, look for different themes or stories that can be based on different groupings of items.
- Those themes should be distinctly different so that they encompass a range of alternatives for the future (business as usual, customer-driven, technology-driven, etc.).
- Separate the full list into the selected themes.
Next, write out scenarios (either start from today and unfold to the future, or just the future); try to weave a credible tale:
- The theme is the starting point. Use the items to develop your scenario; add others as needed.
- Don't try to be accurate or prophetic. The goal is to be plausible and credible.
Finally, have each team present their story to the group about how the future will unfold.
More than likely, you will get different stories about the future. Here is a visual representation of those varying stories of the future:
Translating Forecast Scenarios Into Strategy
Now, nobody can predict the future. If they could, they would not be in this process—instead, they could make billions betting on financial interest rate futures.
But what you can do is take the varying scenarios about the future and ask yourself this question:
What marketing (or business) strategy would be successful regardless of which future unfolded?
What you're doing is looking for a marketing strategy that is robust across alternative scenarios of the future. In other words, no matter what happens in the future—you'll be OK. Engaging in this process will help you think about strategic possibilities.
Here is an example. A few years ago, I was working with a major car company in China. The company sold cars in the lower end of the market, much like some cars in the US. I was helping the company execs think about the future of their market. We chose a long-time frame (10 years). At the end of the exercise, it became clear that a robust strategy would entail entering the car rental business.
Of course, without thinking about the future, the company would have just focused on selling cars to individuals and families.
* * *
Thinking about the future is a critical part of any marketing strategy.
Most of the time, we must think about today and the near term to respond to present-day demands. But if you don't think about the future, you could be like Tower Records—one day, enjoying the prestige on Sunset Blvd. in the heart of the Hollywood music business, and then the next filing for bankruptcy.
Unless you're driving your marketing or business with a view of where you're going, the future can catch up with you and leave you in the rear-view mirror.
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