What is the 'Brand Potential Index (BPI)'

The brand potential index (BPI) is the correlation between a brand's development index and its market development index for a specific market or area. The Brand Potential Index (BPI) takes the number of actual and potential customers within a market area and compares it to the percentage of consumers within a geographic area in a nation who buy a product, then compares that to the percentage of all consumers in the entire nation who buy the same product. BPI is always calculated for a limited geographic region to give its users a better idea of how specific areas factors into its sales and marketing planning and forecasts. 

Breaking Down 'Brand Potential Index (BPI)'

The brand potential index is a tool that can be used to forecast future sales, and to assist in the budgeting process for advertising allocations. Use of the brand potential index can be part of a firm's arsenal in finding a competitive advantage. The index, which can help identify key drivers that have the greatest influence on brand strength, is based on the rational, cognitive, emotional and behavioral characteristics of perception. Companies ranging from giants like the major airlines to small and mid-sized businesses use the BPI as part of their brand management and development strategies.

Brand Potential Index (BPI) Calculation

To figure a brand potential index a brand's market development index and its brand development index must be utilized. A market development index is used in business development to figure out at what point maximum market penetration will happen. It is expressed as a ratio between the actual number of consumers vs. potential consumers in a specific market. The brand development index is defined as a ratio that is a comparison of the percentage of sales earned in a specific area or region to the percentage of the total population of that area or region. Such data can help companies tailor their sales, marketing and advertising efforts because it gives insight into where most of their customers live.

Brand Potential Index (BPI) Example

If a brand gets 5% of its sales in an area that is home to 15% of the nation's population then that area's brand development index is the product of 5 x 100/15 or 33.33%. If the total number of customers in that area is 10,000 while the number of potential customers is 100,000 then the market development index will be the result of 10,000 / 100,000 or 0.1. The brand potential index would be the relationship between those two factors.

RELATED TERMS
  1. Brand Recognition

    Brand recognition is the extent to which the general public (or ...
  2. Product Line

    A product line is a group of related products manufactured by ...
  3. Cult Brand

    A cult brand refers to a product or service that has a loyal ...
  4. Total Return Index

    Total return indexes include any dividends in the calculation ...
  5. Brand Piracy

    Brand piracy is a term for when products use names or logos similar ...
  6. Index Fund

    An index fund is a portfolio of stocks or bonds that is designed ...
Related Articles
  1. Financial Advisor

    Why These Are the Most Valuable Brands of 2018

    A company's brand can be worth billions of dollars. Here are the most valuable global brands in 2018.
  2. Small Business

    How Companies Create A Brand

    We take a hands-on approach to creating a brand, and see what it can mean as an investor.
  3. Small Business

    Top 100 Most Valuable Global Brands 2016

    A look at the BrandZ 100 Most Valuable Global Brands Report
  4. Investing

    Brand Value Comes to Life in an ETF

    Investors that like big brands might just like this new ETF.
  5. Insights

    Tech and Auto Companies Dominate World's Most Valuable Brands List (AAPL, GOOG)

    Brand consultancy firm Interbrand released its 2016 ranking of the most valuable brands in the world, and technology and automotive brands dominated by holding a combined 29 positions. According ...
  6. Insights

    Apple Named Most Valuable Brand on Steve Jobs's Death Anniversary (AAPL, TSLA)

    Interbrands released this year's ranking of the hundred most valuable brands in the world, and U.S. companies Apple, Google and Coca Cola hold the top three spots.
  7. Personal Finance

    5 Dead Auto Brands And Why They Died

    These auto brands had their run, and have been sent off to rust.
  8. Financial Advisor

    Top Tips for Creating a Financial Advisory Brand

    A properly constructed brand can help capture more business. Here are some tips to achieve that goal.
  9. Small Business

    9 Brands Resurrected Into Household Names

    All of these brands saw a dip in their popularity, only to have a revival to even greater heights.
  10. Small Business

    6 Branding Tips For Small Business Owners

    One of the most important areas for all businesses to utilize is branding.
RELATED FAQS
  1. How does brand image and marketing affect market share?

    Building a positive brand image is a must for companies that want an edge over the competition. Learn how marketing and branding ... Read Answer >>
  2. What impact does brand equity have on profit margins?

    Learn how both positive and negative brand equity affects profit margins by influencing profit per customer, sales volume ... Read Answer >>
  3. What are some examples of companies or products that have outstanding brand equity?

    Brand equity is the heart of reputation-building for companies and products. With solid equity, the quality of a service ... Read Answer >>
  4. How do tangible and intangible assets differ?

    Tangible assets are physical assets that are used in a company's operations. Intangible assets are nonphysical, long-term ... Read Answer >>
Trading Center