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Market Potential Index (MPI) - 2016

March 10, 2016

You are currently viewing an old version of the Market Potential Index (MPI).

About the Index

Global marketing has become more and more important over the years with the increasing trend of internationalization. Faced with too many choices, marketers have the challenge of determining which international markets to enter and the appropriate marketing strategies for those countries.

The purpose of this study is to rank, with a U.S. focus, the market potential of the largest economies and to provide guidance to the U.S. companies that plan to expand their markets internationally. While the U.S. is not included in the rankings, the insights provided by the index are still applicable to companies located in other international markets.

This indexing study is conducted by the Michigan State University — International Business Center to help companies compare prospect markets on several dimensions. Eight dimensions are chosen to represent the market potential of a country on a scale of 1 to 100. The dimensions are measured using various indicators and are weighted in determining their contribution to the overall Market Potential Index(MPI).

Between years 1996 and 2014, the MPI has been calculated for 26 countries identified as "Emerging Markets" by The Economist magazine. However, in order to cover a wider range of markets, a decision has been made in 2014 to increase the number of countries according to the criteria explained below.

Please see the bottom of the page, or click the following links for the changes implemented in the past years.

Dimensions and Measures of Market Potential for 2016

Dimension Weight Measures Used
Market Size 25/100
  • Electricity Consumption (2012)1
  • Urban Population (2014)1
Market Intensity 15/100
  • GNI per Capita Estimates Using PPP (2014)1
  • Private Consumption as a percentage of GDP (2014)1
Market Growth Rate 12.5/100
  • Compound Annual Growth Rate (CAGR) of Primary Energy Use (2008-2013)2
  • Compound Annual Growth Rate (CAGR) of GDP (constant 2005 US$) (2009-2014)1
Market Consumption Capacity 12.5/100
  • Consumer Expenditure (2014)4
  • Income Share of Middle-Class (2013)1
  • Household Annual Disposable Income of Middle-Class (2014)4
Commercial Infrastructure 10/100
  • Cellular Mobile Subscribers (2014)3
  • Households with Internet Access (2014)3
  • International Internet Bandwidth (2013)1
  • Number of PC's (2014)4
  • Paved Road Density (2014)4
  • Population per Retail Outlet (2015)4
  • Available Airline Seats (2015)11
  • Logistics Performance Index (LPI) (2014)12
Market Receptivity 10/100
  • Per Capita Imports from US (2015)7
  • Trade as a Percentage of GDP (2014)1
Economic Freedom 7.5/100
  • Economic Freedom Index (2015)5
  • Political Freedom Index (2015)6
Country Risk 7.5/100
  • Business Risk Rating (2015)8
  • Country Risk Rating (2015)9
  • Political Risk Rating (2015)10
Data used are those available for most recent year. All sources were accessed in January 2016.

Changes as of 2015

As of 2015, the MPI will be calculated according to the following changes:

  • The Compound Annual Growth Rate (CAGR) of Primary Energy Use will be used instead of Average Annual Growth Rate of Primary Energy Use while calculating the Market Growth Rate.
  • The Compound Annual Growth Rate (CAGR) of GDP (constant 2005 US$) will be used instead of Real GDP Growth Rate while calculating the Market Growth Rate.
  • A third measure, Disposable Income of Middle-Class, will be added to the calculation of Market Consumption Capacity.
  • International Internet Bandwidth, Available Airline Seats and Logistics Performance Index (LPI) will be added to the calculation of Commercial Infrastructure, and Main Telephone Lines and Percentage of Households with Color TV will be removed.

Changes as of 2014

As of 2014, the MPI is going to be calculated for those 87 countries which have been selected according to the following criteria:

  • Countries that are in the top 100 performers in terms of Total GDP
  • Countries with a population of one million or more.
  • Countries for which reliable data is available for the majority of the indicators used.

Also, the weighting of the dimensions used to calculate the index has been changed as follows:

Dimension Until 2014 After 2014
Market Size 20.00 25.00
Market Intensity 14.00 15.00
Market Growth Rate 12.00 12.50
Market Consumption Capacity 10.00 12.50
Commercial Infrastructure 14.00 10.00
Market Receptivity 12.00 10.00
Economic Freedom 10.00 7.50
Country Risk 8.00 7.50
TOTAL 100.00 100.00

For More Information:

For the indexing methodology, please refer to:

"Measuring The Potential of Emerging Markets: An Indexing Approach" - S.Tamer Cavusgil,
Business Horizons, January-February 1997, Vol. 40 Number 1, 87-91: doi .

" Complementary Approaches to Preliminary Foreign Market Opportunity Assessment: Country Clustering and Country Ranking " - S. Tamer Cavusgil, Tunga Kiyak, and Sengun Yeniyurt
Industrial Marketing Management, October 2004, Volume 33, Issue 7, 607-617: doi .

For additional inquiries, please contact MSU-IBC.

MPI
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Previous Emerging Market MPI
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Industry MPI
Advanced Manufacturing Aerospace Agriculture Alternative Energy Automotive Parts Biosciences Chemicals Food Processing Information Technology Land-Based Products Machinery Medical Devices