Brand Potential Index (BPI)
The brand potential index (BPI) is a measure of the correlation between a brand's development index (BDI) and its market development index (MDI) for a specific market or area. Say that a brand gets 5% of its sales in an area that is also home to 15% of the nation's population; then that area's brand development index is the product of 5 x 100 / 15 or 33.33%. If the total number of customers in that area is 10,000 while the number of potential customers is 100,000, then the market development index will be the result of the ratio: 10,000 / 100,000 or 0.1. The brand potential index would be the relationship between those two factors, or 0.33 / 0.1 = 3.3. The brand potential index (BPI) is a measure of the correlation between a brand's development index (BDI) and its market development index (MDI) for a specific market or area. To figure a brand potential index, the brand's market development index and the brand development index must be utilized. The BPI makes use of the brand development index and the market development index, each of which is used extensively in marketing.
What Is the Brand Potential Index (BPI)?
The brand potential index (BPI) is a measure of the correlation between a brand's development index (BDI) and its market development index (MDI) for a specific market or area.
The Brand Potential Index (BPI) takes the number of actual and potential customers within a market area and compares it to the percentage of consumers within a geographic area in a nation who buy a product. Then the BPI compares that number to the percentage of all consumers in the entire nation who buy the same product.
The BPI is always calculated for a limited geographic region to give its users a better idea of how specific areas factors into its sales and marketing planning and forecasts.
Understanding the Brand Potential Index
The brand potential index is a tool that can be used to forecast future sales and assist in the budgeting process for advertising allocations.
Using the brand potential index can be part of a firm's arsenal to find a competitive advantage. The index, which can help identify key drivers that have the greatest influence on brand strength, is based on the rational, cognitive, emotional, and behavioral characteristics of perception.
Companies ranging from giants like the major airlines to small and mid-sized businesses use the BPI as part of their brand management and development strategies.
Brand Potential Index Calculation
To figure a brand potential index, the brand's market development index and the brand development index must be utilized.
In particular, the BPI is computed as the ratio of the BDI divided by the MDI.
Brand Potential Index Example
Say that a brand gets 5% of its sales in an area that is also home to 15% of the nation's population; then that area's brand development index is the product of 5 x 100 / 15 or 33.33%.
If the total number of customers in that area is 10,000 while the number of potential customers is 100,000, then the market development index will be the result of the ratio: 10,000 / 100,000 or 0.1.
The brand potential index would be the relationship between those two factors, or 0.33 / 0.1 = 3.3.
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