This research looked to find an econometric model to forecast future sales of 32” LCD televisions in the world. Determining demand for a new high tech product that is replacing an older technology presents challenges to manufacturers and price setters. Understanding the market and where it is headed are necessary for decisions regarding manufacturing investments. The concept of the product lifecycle and the categories of adopters were explored to help understand where the market stood and what changes might be coming in the future.
The model was broken into five regions, North America, Japan, China Europe and the rest of the world, before aggregating them to predict total world demand. Data was obtained through secondhand sources, Display Search, the IMF and the World Bank. The goal was to see if price and income were the mitigating factors to predict demand. The strengths of the models were compared to naïve forecasts through the root mean square error term. Through multiple regression it was found that price held the strongest relationship to demand. Income was only a significant variable in three of the five markets. In the China and Japan regions income was not found to be statistically significant due to autocorrelation and multi-colinearity issues. Alternative indicators of income could be further studied to test for validity.

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