Universality or Differences in Marketing Elasticities in Emerging versus Developed Markets? The Moderating Role of Brand Equity

Hannes Datta, H.J. van Heerde, Marnik Dekimpe, J.E.B.M. Steenkamp

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Abstract

Consumption in emerging markets is growing much faster than in developed markets. Accordingly, many global brand manufacturers venture into emerging markets, where they battle vigorously for market share. At the same time, emerging-market brands increasingly expand to more developed markets. While most firms have considerable expertise competing in similar markets, they lack insights on how consumers respond to marketing activities in economically dissimilar markets. Therefore, this paper quantifies the market-share elasticities of (i) three key marketing-mix instruments (price, distribution and line length), for (ii) 1,600+ international and domestic brands, across (iii) 14 durable categories (covering more recent categories like smartphones and mature ones like refrigerators), in (iv) 7 emerging and 7 developed markets from Asia and Australasia, for (v) up to 11 years. The findings suggest that differences in marketing elasticities between emerging and developed markets depend not only on the type of marketing variable (strongest difference for distribution), but also on brand equity (which affects elasticities more favorably in emerging markets than in developed markets). The paper discusses implications for marketing theory and practice.
Original languageEnglish
Publication statusPublished - 13 Sep 2019

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