Incorporating heterogeneity to forecast the demand of new products in emerging markets: Green cars in China

Emerging markets are becoming increasingly important for many companies and it is not surprising to see that an increasing number of new products, especially technology products, are now being launched in these markets fairly quickly after they are launched in Western markets. However, most of the research on forecasting demand for new products focuses on developed markets. Marketing managers in multinational companies may therefore be tempted to use models that have been applied in developed markets to forecast demand of new products in emerging markets. However, there is ample evidence that supports the contention that emerging markets are different to markets in developed economies. This research proposes a dynamic segmentation approach to forecast demand that explicitly incorporates heterogeneity of consumers within and across segments: a key distinguishing feature of emerging markets. The research is applied in the context of the Chinese green car market but can be replicated for other products and in similar market conditions.