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Presented by: Cassie Eyring, Nga Nguyen, and Rebecca Thompson

Are Emerging Markets Catching Up with the Developed Markets in Terms of Consumption? By A.N.M Waheeduzzaman. Presented by: Cassie Eyring, Nga Nguyen, and Rebecca Thompson. Introduction. Consumption Revolution in Emerging Nations Consumption in Developed Nations has Slowed

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Presented by: Cassie Eyring, Nga Nguyen, and Rebecca Thompson

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  1. Are Emerging Markets Catching Up with the Developed Markets in Terms of Consumption?By A.N.M Waheeduzzaman Presented by: Cassie Eyring, Nga Nguyen, and Rebecca Thompson

  2. Introduction • Consumption Revolution in Emerging Nations • Consumption in Developed Nations has Slowed • Primary Goal of Study is investigating consumption convergence between 2 groups

  3. Rise of Emerging Markets • Most of growth is recent (1980-2009) • Contributors • globalization supported by stabilization 1970's • Political Reforms in 1980's • Opening Up/ Liberalization of Markets 1980's • End of Cold War/Fall of Berlin Wall 1989 • Technology/Computer Revolution 1990's

  4. Characteristics of Emerging Markets • Positive • Rapid Economic Growth • Fast Paced Modernization • Urbanization • Large Middle Class • Increased Consumer Expenditure

  5. Increased Consumer Expenditure • Negative • Economic Growth Comes With • Growth of Urban Slums • Pollution • Environmental Degradation • Increasing Inequality • Confrontational Politics

  6. Who are the “Emerging Markets”? • List is not 100% agreed upon • 12 BEM • Brazil, China, Egypt, India, Indonesia, Mexico, Philippines, Poland, Russia, South Korea, South Africa, Turkey • BRIC (subset of 12 BEM) • Brazil, Russia, India and China

  7. Who are the “Developed Markets”? • G7 Nations • Canada, France, Germany, Italy, Japan, the United Kingdom, the United States • Most recently Russia ***In this study Russia is included in Emerging Nations

  8. Understanding Convergence • 3 approaches of economists • β- convergence • σ- convergence • Conditional convergence

  9. Convergence in International Marketing • International Marketing • Standard Adaptation (S-A) • Focuses on 4 P’s of marketing • “More standardized” = “More Convergence” • Diffusion Research • Innovators • Imitators

  10. Convergence • For the purposes of this article we are going to refer to convergence like ECONOMISTS

  11. Study Focus and Objective • Discuss Growth of Emerging Nations • Defines Consumption Convergence over 30 years • Determine influence of socioeconomic variables • Suggest implications and future direction

  12. Modeling Consumption Convergence

  13. Time Growth Model • Explains presence of difference on a time horizon • Historical pattern of consumption • B- coefficient (slope) • Indicates direction of growth

  14. Trend Difference Model • Captures change in variance • Difference between groups indicates convergence or divergence • Slope: trend or direction of growth • Variance • Dispersion • Regressed over time

  15. Socioeconomic Influence Model • Influences on consumption convergence • Explains why convergence is taking place • 4 Variables • Per capita income • Per capita energy consumption • Life expectancy at birth • Per capita total trade

  16. Methodology • Data collected • Global Market Information Database (GMID) • % as reported • Euromonitor International • % at household level • Expenditure amounts divided by total population and per capita expenditures

  17. Market Growth Trend

  18. Overall Findings • Consumption is taking place but slowly • Brazil and Russia are catching up faster • China consumption power • PCI • strong influence in consumption convergence

  19. Implications and Future Research • Investigating of consumption convergence between developed and emerging nations • TGMs • TDMs • SIMs

  20. TGM Implications • Forecasting & indicating the difference among countries • Help understanding the lead-lag hypothesis • Determining the order of countries for enter strategy.

  21. TDM Implications • Forecasting, market penetration/saturation purposes • By setting TGMs managers can estimate the level of saturation of markets. • Determine the penetration strategy based on the level of market saturation

  22. SIMs Implications • Socioeconomic variables used for market segmenting and country profiling • The influences of variables used for predictive purposes

  23. Similarities and Differences in Models • Similarities • All are linear models • Penetration strategy • Differences • TGM and TDM are time series models; SIM is a causal model • All explain from a different perspective

  24. Future Research • Investigating other time frames, more variables and countries • Planning economic strategies for different countries • Application for international organization

  25. Conclusion • Explore the consumption convergence hypothesis in international markets • Consumption convergence is taking place but the rate is very slow

  26. Conclusion – Interpreted with Cautions • The model carries both economic and social- cultural aspects • Considering the impact of globalization  Understand better the consumption convergence idea in this study

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