Market Potential Estimation in International Markets: A Comparison of Methods

Market Potential Estimation in International Markets:A Comparison of Methods

Presentation Outline • Introduction • Objectives of the Study • Literature Review • Research Methodology • Findings of the study • Conclusion and Future direction

Objectives of the Study • Discuss various approaches to demand or market potential estimation • Test the models/methods for demand estimation • Compare/evaluate the methods • Provide direction for future research

Literature Review • Market Potential Estimation Approaches • Time series growth models • Stock adjustment models • Diffusion models • Consumer behavior studies • Market potential estimations in marketing

Evaluation of Estimation Methods • Estimation Methods • Method of Analogy • Proxy Indicators • Chain Ratio Method • Time Series Modeling • Multiple regression modeling • Criteria for evaluation • Precision • Prediction • Price • Pragmatism

A Research Methodology Durables: Washing Machine Emerging country markets: Argentina, Brazil, Chile, China, Colombia, Egypt, Hungary, India, Indonesia, Israel, Malaysia, Mexico, Peru, The Philippines, Poland, Singapore, South Africa, Thailand, Turkey and Venezuela. (20 countries) Variables in the study: Income (INCOME), Per Capita Energy Consumption (ENERGY), Life Expectancy (LIFEXP), Female Labor (FEMALE), Urbanization (URBAN) Time period: 1977-2006 (30 years). Data analysis: Correlation, Regression Analysis Sources: The World Bank, Euromonitor, Freedom House, Central Intelligence Agency, and Globaledge of Michigan State University

Findings of the Study • Table 1: Evaluation of Estimation Methods • Table 2: Time Series Model Results • Table 3: Variables in Multiple Regression • Table 4A: Correlation Matrix • Table 4B: Regression Analysis • Table 5A: Basic Statistics for Thailand • Table 5B: Comparison of Different Methods • Table 6: Literature Review (Approaches in the Study of Durables)

Table 1Evaluation of Estimation Methods

Table 2Time Series Model Results (Washing Machine)

Table 3Variables in Multiple Regression

Table 4ACorrelation Matrix

Table 4BRegression Results

Table 5ABasic Statistics for Thailand

Table 5BComparison of Methods

Conclusion and Future Direction • Summary of results • Managerial Implications • Future Direction • Questions?

Time Series Growth and Stock Adjustment Models Studies The primary goal of these studies was to estimate the demand for various consumer durables from a macro perspective using various types of stock adjustment models. Statistical techniques including regression, logit or probit analysis were used for the purpose of estimation. Alessie, Devereux and Weber 1995; Anderson 1986; Barrett and Slovin 1988; Bayus, Hong and Labe 1989; Bulow 1982; Clarida 1996; Fernandez 2000; Fine and Simister 1995; Grieves 1983; Kugler and Bossard 1987; Madsen 2001; Nadenichek 1999; Orlov 1978; Ruiter and Smant 1999; Sadka and Yi 1996; Steffens 2001; Weder 1998 Table 6Approaches in the Study of Durables

Diffusion Models Studies The cornerstone of these studies is the Bass (1969) diffusion model. It assumes that the current consumption can be predicted on the basis of the number of innovators and imitators (two-group categorization) in a social system. The goal of estimation is to determine the coefficients of innovation and imitation and to understand the nature, timing, peak and decline in consumption. Various extensions of the Bass model have been proposed and used for different products in different countries. Bass 1969; Bass, Krishnan and Jain 1994; Ganesh, Kumar and Subramaniam 1997; Gatignon, Eliashberg and Robertson 1989; Gatignon and Robertson 1985; Golder and Tellis 1997; Heeler and Hustad 1980; Helsen, Jedidi and DeSarbo 1993; Islam and Meade 2000; Jain and Rao 1990; Kamakura and Balasubramanian 1988; Kalish, Mahajan and Muller 1995; Kohli, Lehmann and Pae 1999; Kumar, Ganesh and Echambadi 1998; Mahajan, Muller and Bass 1990; McMeekin and Tomlinson 1998; Parker 1993; Parker 1994; Parker and Gatignon 1992; Preble 2001; Putsis et al 1997; Srinivasan and Mason1986; Sultan, Farley and Lehmann 1990; Talukdar, Sudhir and Ainslie 2002; Tigert and Farivar1981; Wilson and Norton 1989 Table 6Approaches in the Study of Durables

Consumer Behavior Studies Studies The consumer behavior studies basically investigated durables from the perspective of the individual or household. The popular consumer behavior models in marketing can be applied to understand the consumption of durables. It is difficult to generalize the findings of this group as the nature and characteristics of the studies vary substantially. A good number of demographic, social and economic variables were suggested. Bayus and Carlstrom 1990; Besley and Levenson 1996; Brucks, Zeithaml and Naylor 2000; Bryant 1988; Guillou 1991; Hensher and Milthorpe 1986; Homberg and Giering 2001; Jennings and McGrath 1994; Johnson 1988; Kamakura and Gessner 1986; Lusch, Stafford and Kasulis 1978; Medina, Beatty and Saegert 1996; Page and Rosenbaum 1992; Paroush 1965; Schultz and Rao 1986; Sultan 1999; Throop 1992; Wells 1977; Winer 1985; Zikmund-Fisher and Parker 1999 Table 6Approaches in the Study of Durables

Market Potential Estimation in International Markets: A Comparison of Methods

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