3.1. Market & Competition

Market movements can be distinguished. They have a direct impact on the assumptions made when planning sales in the business plan. The market movements are, metaphorically speaking, the "general weather situation", in which there are certainly different regional climates.  

1.       Business cycle fluctuations are movements in economic development that recur at regular and irregular intervals. They are like wave movements. They show typical changes in sales, price development, employment, investment propensity or capital procurement. They are a barometer for the climate in the economy. Every company is affected by them. A distinction can be made:

a.       Boom means the full utilisation of the production forces of an economy; it can also refer to individual sectors.

b.       Upswing means the increase in investment activity by companies, as a result of which general economic activity increases. With an upswing, economic growth increases noticeably.

c.        Downturn means the slowdown of sales in the economy or in branches. The seller's market changes to a buyer's market, a downward trend in growth can be seen. A severe downturn can lead to recession. Recession means the "significant" economic decline in sales and production. Finally, depression follows. Depression means the low point of economic activity, entire industries can come to a standstill. The economy and society enter a profound crisis.   

2.       The trend describes a direction of development. It is superficially known as a "fashion trend". The trend is a cycle in society, economy or technology that sets a new direction of march. The trend can be seen as tendential changes in the economy. A reversal of a certain development is also called a trend reversal. Then there is a fundamental change in previous perceptions, for example in buyer behaviour or political opinions. Megatrends are spoken of when they are profound and sustainable changes.

The trend has different triggers: e.g. through population development, which is demographically influenced; through district-related ageing, through migration, emigration and immigration; through revolutionary inventions, such as micro-technology; through state intervention in the health sector, through wars; through the globalisation of markets. Long- and medium-term developments are linked to the trend, which can also include economic leaps and breaks in production, sales, employment, transport or trade.

Trends are attempted to be ascertained within the framework of trend research. Dealing with trends is a special skill that companies can learn. The entrepreneurial possibilities of trends must be used. The effects can be positive or negative for the individual company.

3.       Periodic fluctuations (e.g. the season) recur at regular intervals and at certain times of the year or occasions. Thus, the seasonal weather (summer, winter) has just as much influence on purchasing behaviour as certain payment dates (Christmas bonus) or special occasions (start of school, trade fairs, regional markets). Such economic fluctuations can be included in the sales forecast as seasonal business.

4.       Random movements influence the course of the market irregularly and unpredictably. They can be triggered by "novelties" that affect the zeitgeist, sensibilities or fashion. This is according to the motto, what is "in" this summer, what is "out". Unusual weather conditions (storms, snow) or major events (demonstrations, events) can also have invigorating or disruptive influences on individual business.

The handling of economic fluctuations should be considered in the business plan if it is apparent that the sales forecast will be affected.