There are eight indicators that make up the Market Potential Indicator (MPI) Index. These eight indicators are market size, market growth rate, market intensity, market consumption capacity, commercial infrastructure, economic freedom, market receptivity, and country risk.
The indicator with the greatest weight in the MPI index is the market size which accounts for 10/50 or 20 percent weight of the entire index. Market size refers to urban population as well as electricity consumption. The indicators with the next greatest weight at 7/50 each are market intensity and commercial infrastructure. Market intensity refers to per capita GNI estimates using PPP (USD) as well as private consumption as a percentage of GDP. Commercial infrastructure has numerous components including telephone lines, cell phone subscriptions per 100 inhabitants, number of PCs per 1000 inhabitants, internet users per 100 inhabitants, population per retail outlet, and percentage of households with TV in 2012 (global EDGE, 2013).
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Next on the index in terms of weight are market growth rate and market receptivity at 6/50 each. Market growth rate refers to average annual growth rate of primary energy use between 2006 and 2011 as well as real GDP growth rate. Market receptivity refers to per capita imports from US as well as trade as a percentage of GDP. Market consumption capacity and economic freedom comes next at 5/50 or 10 percent each of the weight in the index. Market consumption capacity refers to consumption/income share held by the middle-class and economic freedom refers to both economic and political freedom in a country. The indicator with the lowest weight in the MPI index or 4/50 is country risk (global EDGE, 2013) which includes different components such as political risks, structural risks, and access to capital (Euromoney, 2013).
The indicators that would have a greater impact for a company that markets laptop computers are market consumption capacity and commercial infrastructure. Desktop computers tend to be the cheapest and are usually bought by people with limited income while laptop computers tend to be price a little higher. Thus, the potential consumers of laptop computers will mostly be not first-time buyers of computing products but those looking for more portable form of computing even if it is priced a bit higher. Thus, the laptop marketer may benefit from targeting a country with a growing middle class. This will be particularly important if he is targeting an emerging economy because consumers tend to be more price-sensitive in developing nations due to lower average income levels as compared to developed countries.
It is also important to choose a country with a strong or improving commercial infrastructure both due to the nature of the product in this case as well as the marketing concept of 4P (MindTools). Computing products such as laptop computers have also been growing in popularity because they continue to be the most advanced and convenient technology products to utilize internet. As a result, the laptop marketer will have to make sure the targeted market has a developed internet infrastructure. Similarly, the number of PCs in the targeted market will also provide useful information such as the prospective customers of laptop computers and the expected growth rates of market for laptops in the near future.
The marketing mix or 4Ps is an important marketing tool because the success of a product is not only determined by the product itself but also other factors such as pricing and distribution channels. The commercial infrastructure will help the laptop marketer understand the nature and state of distribution network in the country.
Using the MPI, India and China may be the best targets for the laptop marketer. China and India have the greatest market sizes and while China has the highest market growth rate, India is also among the highest. The huge market sizes along with high market growth rates would alone give China and India a significant edge over other countries but the advantage only grows due to the fact that both countries have huge population and a strong, growing middle income class. While China and India still have poor infrastructure as compared to other countries on the list including Singapore, Hong Kong, and South Korea, the disadvantage is more than offset by the long-term attractiveness of these two economies. In fact, Indian Prime Minister understands the importance of a strong commercial infrastructure and has pledged to invest $1 trillion in infrastructure over the next few years (Overdorf, 2012). But both countries have some of the largest number of internet users in the world which creates an ideal opportunity for the laptop marketer. There were 389 million internet users in China in 2009 (CIA) while the corresponding rate for India was 61.34 million (CIA). In other words, the population of internet users in China and India is greater than the entire population of most countries in the world. The fact that China and India have been growing at record economic growth rates also mean these markets will continue to generate significant business for the marketer in the near long-term.
The laptop marketer should target India and China but the market for laptops in both countries is still in infancy as compared to the actual populations of these countries. In addition, both countries are now witnessing strong and growing middle class which constitute an ideal market for the laptop marketer. The commercial infrastructure may still be in poor shape but both countries have significant number of internet users.
- CIA. (n.d.). China. Retrieved October 19, 2013, from https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
- CIA. (n.d.). India. Retrieved October 19, 2013, from The World Fact Book: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html
- Euromoney. (2013, October 4). Euromoney Country Risk. Retrieved October 19, 2013, from http://www.euromoneycountryrisk.com/Home/Return/Countries
- global EDGE. (2013, April 5). Market Potential Index (MPI) for Emerging Markets – 2013. Retrieved October 19, 2013, from http://globaledge.msu.edu/mpi
- MindTools. (n.d.). The Marketing Mix and 4 Ps. Retrieved October 19, 2013, from http://www.mindtools.com/pages/article/newSTR_94.htm
- Overdorf, J. (2012, November 1). India: Singh calls for $1 trillion in infrastructure investments “at any cost”. Retrieved October 19, 2013, from http://www.globalpost.com/dispatches/globalpost-blogs/india/india-infrastructure-investment
