Market Potential Index Essay
Market Potential Index
What are the indicators used in developing this index?
Market Potential Index was developed to help companies compare emerging market with each other so they can determine which market to enter and the appropriate marketing strategies for those countries. Eight dimensions were used to create the index; each measured using different indicators (Global EDGE). Market size is measured using indicators such as urban population and electricity consumption. Market growth rate is measured using Average annual growth rate of primary energy use and Real GDP growth rate. Growing markets will show increase demand for products. Market intensity is measured using GNI per capita and private consumption as a percentage of GDP. Market Consumption Capacity is measured using Percentage share of middle-class in consumption/income.
Commercial Infrastructure is measured using indicators like Cellular mobile subscribers, Main Telephone lines, Number of PC’s bought, number of internet users, Paved road density, percentage of household with TV and population per retail outlet. Economic freedom relates to the degree of economic and political freedom residents enjoy. It is measured using indicators such as economic freedom index and political freedom index. Market Receptivity related to amount of imports a country consumes and the willingness to try forging products. It is measured using Per capita imports from US and Trade as a percentage of GDP from country trade data. Country risk is measured using the indicator country risk rating from country risk survey
Which of the indicators, in your opinion, would have a greater impact for a company that markets laptop computers?
I think the dimension of Commercial Infrastructure would have a greater impact for a company that markets laptop computer because it is measured using a very relevant indicator of number of Pcs (per 1000 habitants). This dimension also created using indicators such as number of cellular mobile subscribers, main telephone lines and number of internet users. All these indicators are very useful in determining if the market is favorable to enter because if the market has high number of internet users or telephone and PC owners, it might show the company that the market has already been tapped by other companies and maybe prompt them to look at other markets, where commercial infrastructure is moderate or low.
Using the MPI, which countries would be ideal for this company to enter? Why?
I think that China would be ideal for the laptop company to enter because it has a high market size and market growth rate but a moderate to low commercial infrastructure. The way I am reading the MPI, It means that china has room to grow in the commercial infrastructure area and a laptop company could capitalize on this great opportunity. Whereas, Hong Kong, Czech Republic and South Korea are rated high for commercial infrastructure, which could means that those markets might have well established laptop companies and not worth it for this company to enter and compete.
On the other hand, you also have to take into account other seven dimensions because a market might have low commercial infrastructure and potential to grow but also have very high country risk, low economic growth and market size for this laptop company to enter. Using the same logic and taking into account other seven indicators, I think some other ideal countries for this company to enter along would China would be Turkey, India, Singapore, Peru, Mexico, and Malaysia.