## 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.

Next Up

## 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. ### Private Brand

A private brand is a good that is manufactured for and sold under ...
2. ### Brand Awareness

Brand awareness is the extent to which consumers are aware of ...
3. ### Brand Piracy

Brand piracy is a term for when products use names or logos similar ...
4. ### Total Return Index

Total return indexes include any dividends in the calculation ...
5. ### Index Investing

Index investing is a passive strategy that attempts to track ...
6. ### Index Option

An index option is a financial derivative that gives the holder ...
Related Articles

### 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.

### The Power of Branding

Power of branding is the ultimate economic moat, and we look at the approaches and effects of good and bad branding.

### How Companies Create A Brand

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

### Top 100 Most Valuable Global Brands 2016

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

### Best Buy Betting On House Brands

Best Buy uses its house brands strategically, but is this hurting the company or helping it to stay on top?
8. Investing

### The Hidden Flaws of Index Investing

Index investing isn't always better than active investing. Here's why.
9. Investing

### The Pros and Cons of Indexes

Learn about the advantages and disadvantages of stock indexes and passive index funds. Discover how there is an opportunity cost to using index funds.

### 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.
RELATED FAQS
1. ### What are some of the benefits of positive brand equity?

Learn how having positive brand equity enables companies to make a higher margin on sales and spend less money on marketing ... Read Answer >>
2. ### 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 >>
3. ### 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 >>
4. ### 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 >>
5. ### Is it possible to invest in an index?

While you cannot buy indexes, which are just benchmarks, there are three ways for you to mirror their performance. Read Answer >>
Hot Definitions
1. ### Intrinsic Value

Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
2. ### Current Assets

Current assets is a balance sheet account that represents the value of all assets that can reasonably expected to be converted ...
3. ### Volatility

Volatility measures how much the price of a security, derivative, or index fluctuates.
4. ### Money Market

The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
5. ### Cost of Debt

Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
6. ### Depreciation

Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account ...