Olomoze is choosing between Argentina and Hungary to expand its operations and fanchises. Among other things, demand estimation was done by relationship analysis based on certain assumptions. Olomoze’s products are food items purchased and consumed by individual persons. So the estimation is done on the basis of the population of the countries considered.
Quantitative market research information are not available at this point which could provide an estimate of how much of a country’s population consume the products. Assumptions were thus made to get some comparative figures between the two countries.
Argentina
The World Bank classifies Argentina as Upper Middle Income country lower than either Taiwan and Hungary. Its GNI per capita is also lower than those of the two countries. As a country for investment, the country fairs poorly compared to the two. (See Table 1.) However, it seems to have a bigger demand potential than Hungary.
Assuming for instance that the Olomoze is able to reach about 1% of the country’s population, it may be safe to assume that that would also be the maximum potential of demand in Argentina in number of customers. So, at 1% of Argentina’s population, Olomoze’s maximum potential in the country would be about 407,646 persons. To make this maximum estimate more conservative, it can be adjusted by factoring in the proportionate difference of Taiwan’s GNI per capita to that of Argentina. The country’s GNI per capita is only 63% of Taiwan’s. So the maximum potential demand would only be 196,588. (See Table 2.)
Hungary
Meanwhile, the World Bank classifies Hungary as a High Income country. However, its GNI per capita is much lower than Taiwan’s US$20,200 at only US$12,730. While Hungary is a more developed country and has a higher per capita income than Argentina, its population may have a smaller demand than that of Argentina. For one thing, the country’s population is less than one-half that of Taiwan, and one-fourth that of Argentina. This population difference alone is a hindering factor. The consumption of dessert products after all is more a function of the number of consumers rather than price, especially given Olomoze’s pricing strategy and market positioning. Moreover, the confectionery market in Hungary is showing signs that it is in a mature state so the potential for growth may also be lower. (See Table 1.)
Again as done with Argentina, assuming that Olomoze’s could reach about 1% of its population, this would only about 99,710 persons. Since Hungary has a GNI of only US$12,730 or about 63% of that of Taiwan, the maximum potential consumers in the country would only be 62,837. (See Table 2.)
Conclusion
Between the two country’s potential, Argentina seems to the bigger demand potential. While Olomoze’s products may have some degree of price elasticity, they are not luxury products and the upper segment of any country’s population can afford. As Table 2 shows, the maximum demand potential in Argentina is still closer to that of Taiwan’s. Hungary’s maximum demand potential is way below than those of Argentina and Taiwan.
References and Bibliography
Thompson, Beverly. Demand Forecasting in Marketing. Sydney: The University of Western Sydney, n.d.
World Bank. Doing Business 2013. New York: World Bank, 2013. Web. 24 Feb 2013.
