Every manager would like to know how large their market will be three or five years from now. In market and competitive intelligence (M&CI), we work with market size forecasting.

At Link Estratégia, we have been developing market forecasts since 2014. The technical term for this approach is system dynamics modeling because the methodology enables us to model and forecast markets, which are dynamic systems. Today, we are building these models using MarketModeler and CorrelationLens within Hub Link Estratégia. In addition to allowing clients to visualize market dynamics, these tools make analysis much easier.

This is important because dynamic systems involve many variables, numerous drivers to consider, and often a lack of comparable data for forecasting.

Building system dynamics diagrams can be highly complex, and while specialized tools help with the calculations, the real challenge lies in selecting the right factors and understanding how they fit into the system. Does a particular flow have a positive or negative impact? Is it a causal relationship or merely a correlation?

This capability of our intelligence platform allows analysts to select a dependent variable (in the example shown in the image, the size of Brazil’s motorcycle market) and compare it with a wide range of other variables and drivers.

By combining these two Hub capabilities, our analysts can estimate a market’s current size and forecast its future behavior.

Of course, correlation does not imply causation. Determining whether a causal relationship exists is the analyst’s responsibility. However, when the analysis is presented visually, the work becomes easier and more accurate. This enables analysts to define the relationships among variables with greater confidence in a causal loop diagram and deliver more accurate market size forecasts for our clients.