Market Forecasting for Dual Economies: The Application and Accuracy of Income Elasticities

Abstract

Forecasts for rapidly growing urban consumer markets of dual economies are badly needed. The marketing forecasting task is complicated by a lack of resources and data. This article explores a possibility to overcome these constraints by using projections based on income elasitcites. Estimation and projection regression models are constructed and applied, using cross-sectional household income and expenditure data for various urban South African population groups. Based on relatively favorable comparisons with some alternative extrapolations and the actual data, replication in other similar markets seems possible. The development of more comprehensive and realistic models should be undertaken as additional data become available.