The Market Potential Index Development | Free Essay Example

The Market Potential Index Development

Words: 575
Topic: Business & Economics

The indicators used in developing the Market Potential Index (MPI) include the market size, which is based on the amount of electricity consumed in a specific market and the urban population with an aggregate weight of 25/100. According to Eizenberg (2014), economists use the Market Growth Rate (MGR) to determine the Real GDP Growth Rate and the Average Annual Growth Rate of Primary Energy Use among the population based on a five year historical analysis of the growth rate and the current one-year statistics with an accumulated a weight of 12.5/100 in 2004. Besides, market intensity that weighed 15/100 in 2004 combines both the gross domestic product with the Private Consumption expressed as a percentage of the GDP and the GNI per Capita Estimates using PPP with an accumulated weight of 15/100.

The market consumption capacity was another indicator economists used to develop MPI and had a weight of 12.5/100 in 2014. It was calculated on consumer expenditure index in 2013 and Income Share of Middle-Class in 2011 (Market Potential Index (MPI), 2014). Other indicators include Commercial Infrastructure with an accumulated weight of 10/100 based on the analytical results of Cellular Mobile Subscribers in 2013, the Percentage of Households with Color TV, Population per Retail Outlet, Households with Internet Access, Paved Road Density, and Population per Retail Outlet in 2013 and Number of PC’s in 2012. Market Receptivity weighed 10/100 is an indicator that is based on Trade as a Percentage of GD P in 2012 and Per Capita Imports from the US in 2013.

Economic Freedom depends on the degree of autonomy of the citizens such as political freedom and was analysed based on the economic and political index in 2013 and 2014 respectively and had a weight of 7.5/100. The Country Risk indicator provides an analysis of the risk factors that could be encountered when investing in a specific country such as political, country, and business risks, which had an accumulated weight of 7.5/100.

Indicators with a great impact for a company that sells laptop computers

The market size is one of the best indicators that show a greater impact for a company that sells laptop computers (Beise & Cleff, 2004). Other indicators include market growth, Market Consumption Capacity, Commercial Infrastructure, and market receptivity. The rationale for making the conclusion is based on the size of the population that depends on the amount of electricity consumed, GDP, and infrastructure development in the target markets.

According to Terpstra, Foley and Sarathy (2012), the market size for both developed and emerging markets is a strong indicator of the potential for buying new laptop computers because the indicator provide the description of potential purchasing powers of the population and the infrastructure such as electricity that is a necessary component for operating computers. A measure of the general market size in 2014 showed a weight of 20/100, which later changed to 25/100 registering a difference of 5 units.

Countries ideal for the company to enter and why

The ideal countries for the company selling laptop computers to invest in include China with the highest growth rates and a market size of 100. Besides, the country has an overall score of 100 based on other MPI indicators, which is the highest among the countries that were analysed. Other potential countries to invest in include Australia (MPI=40), Canada (MPI=53), Japan (MPI=54), Mexico (MPI=31), Germany (MPI=47), and India (MPI=46). Those countries have relatively big scores for all the MPI indicators.


Beise, M., & Cleff, T. (2004). Assessing the lead market potential of countries for innovation projects. Journal of International Management, 10(4), 453-477. Web.

Eizenberg, A. (2014). Upstream innovation and product variety in the us home pc market. The Review of Economic Studies, 81(3), 1003-1045. Web.

Market Potential Index (MPI). (2014). Web.

Terpstra, V., Foley, J., & Sarathy, R. (2012). International marketing. Naperville, USA: Naper Press. Web.