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Definition: Brand Potential Index (BPI)
The Brand Potential Index compares the actual and potential customers for a brand in a market compared to the percentage of customers by the product in a specific geographic region compared to the percentage of customers for that product in the entire country.
The BPI is a relationship between the brand’s market development index and the brand development index. It is used to predict future sales and also plan for the future advertising budget allocations. The index can help identify the key drivers that have the greatest influence on brand strength. The market development index is a business development tool used to determine when maximum market penetration will occur and is expressed as a ratio between actual consumers and potential consumers in a market. Brand development index is defined as the ratio of percentage of sales of a brand in a particular area to the percentage of the country’s population in that area. This helps us identify where majority of the brand’s customers live and helps us in directing the marketing efforts.
Example: if a brand has 10 percent of its sales in the area where 20% of countries population live, then the brand development index of that area will be 10*100/20 which is equal to 50. If the actual customers of the brand in that area is 5000 customers and the potential customers in the same market are around 20,000 customers, then the market development index will be 5000/20,000 which is equal to 0.25. The brand potential index is calculated as a combination of these two factors.
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