An Application of Econometric Models to International Marketing

Abstract

This article has discussed changes in the past thirty years in the use of econometric models for measuring geographical markets. The major advance was found in the recent emphasis on use of a priori information. The results for a particular case, the international market for still cameras, indicated that econometric models, at their current level of development, provide useful information for estimating international markets. A test in which the use of the additional information from the econometric model led to improvement in backcasting showed that the mean absolute percentage error for an 8-year backcast was reduced from 30% to 23%. The model has other benefits beside its improved predictions over time. An examination of the value of a priori analysis showed a reduction of mean absolute percentage error for predictions of the 1960-65 market sizes of 11new countries from 52% to 31%.

Keywords: Econometric models, international marketing, priori information, forecasting, marketing