What role does market trends play in figuring out your product strategy?
The more differentiated & sticky your core value proposition is, the less you'll need to worry about market trends, as you'll have more and more of a market all to yourself. Make this your goal.
Few companies find themselves in that position. For the rest, market trends give us a better sense of consumer demand – what's driving it, how it's evolving, what it's most responsive to. Understanding those deeply will help you develop the customer & market intuition you need to create a differentiated product strategy.
That being said, keep in mind that what's happening in the market is generally a result of product strategy decisions made by competitors years ago and is not always representative of where a market might be headed.
For that, you'll have to get to know your customer and their problems deeply and deliver a compelling solution that they can't live without. Understanding what's happening in the market can help with that but it's a poor substitute for high-quality customer development.
Market trends matter a lot less than user insights. I rank user research way higher than industry trends which are aggregate data and usually not base on strong user paradigms like Jobs to be Done.
It really depends on your leadership team, company, vision, and industry. If strategy is "bets on how to close the gap from the current reality to the future vision," then use whatever is most helpful. Often (in my opinion) we don't even operate with a shared definition of 'strategy.' Define what the internal expectation is, and if leaders give you an honest definition, you'll probably have your answer.
Market trends are what I would call a "sensing mechanism" in product strategy. These trends show you one set of behaviors in the general landscape of the product context that may shape how your product will need to react and behave. Your product is not just competing with like products, it is competing with all sorts of other technology and experiences for people's attention. As a result, as product technologists and practitioners, we must be intentional about the context in which the product lives - which is what a market trend signifies.
Trends tend to be high risk, high reward. You have to be careful not to assume too much.
There's a long list of heavily-hyped social media trends that turned out to be pretty niche and unimportant over a 5+ year timeframe:
Vine's 15s videos,
Clubhouse and audio social media,
Anonymous social networks like "Secret" from 2014.
But sometimes there are huge opportunities due to shifts in the market.
New regulations like GDPR created market opportunity for a lot of companies,
The decline of Twitter/X is creating opportunity for competitors,
Music-backed short-form videos like those on TikTok are capturing an increasing share of user engagement in many social products.
Think of an opportunity to pivot toward a market trend as a bet. You have to evaluate this high risk, high reward bet compared to the opportunity costs.
What's your likely range of outcomes, growth, & increased revenue if you make safer investments for the next year?
What's your potential range of outcomes if you chase the trend?
If you're willing to bet on the upside of the trend being durable and your company and team can also bear the risk of it being temporary (and the wasted investment), then go for it. Otherwise wait and reevaluate in 12 months.