Market Potential Index (MPI) - 2019
May 23, 2019
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 2019
| Dimension | Weight | Measures Used |
|---|---|---|
| Market Size | 25/100 |
|
| Market Intensity | 15/100 |
|
| Market Growth Rate | 12.5/100 |
|
| Market Consumption Capacity | 12.5/100 |
|
| Commercial Infrastructure | 10/100 |
|
| Market Receptivity | 10/100 |
|
| Economic Freedom | 7.5/100 |
|
| Country Risk | 7.5/100 |
|
Data used are those available for most recent year. All sources were accessed in April 2018.
|
||
Changes as of 2019
As of 2019, the MPI will be calculated according to the following changes:
- '% of Household Annual Disposable Income' is replaced with 'Median Disposable Income per Household'.
- Due to data availability, 'Households with Internet Access' is replaced by the 'Fixed-broadband subscriptions per 100 inhabitants' indicator.
- 'Available Airline Seats' is replaced by 'Airport Connectivity'. Airport Connectivity is also calculated by the World Economic Forum and published in the Global Competitiveness Report. The Airport Connectivity indicator measures the degree of integration of a country within the global air transport network. It is based on the number of available seats offered in flights originating from a country.
- Due to data availability, 'International Internet Bandwidth' is be replaced by 'Fixed Broadband Internet Speed'
Changes as of 2017
As of 2017, the MPI will be calculated according to the following changes:
- Iraq, Myanmar, and Papua New Guinea are removed from the rankings due to the lack of information available to rank these three countries.
- Also, the following countries are added bringing the total number of countries ranked to 97: Angola, Bolivia, Cameron, Democratic Rep. of Congo, Cote d'Ivoire, Ethiopia, Ghana, Jordan, Kenya, Lebanon, Panama, Tanzania, and Uganda.
- Two indicators used measuring the commercial infrastructure dimension, 'Number of PCs' and 'Households with Internet', became highly correlated in the recent years due to the fact that the majority of households that have a computer also increasingly have internet now, which was not the case in the past. Therefore, 'Number of PCs' is not going to be used as an indicator to measure the commercial infrastructure dimension anymore.
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.