Brand Development Index (BDI) and Category Development Index (CDI) are useful tools utilized by marketers to analyze market sales and understand the performance of a brand of category within a specified segment. This data can prove beneficial to marketers when making decisions regarding media distribution and selecting the best markets or regions to disperse heavier media weight.
The brand and category development indexes allow marketers to identify weak and strong segments, most often by demographic or geographic data, for specific categories or brands of goods and services. For example, by analyzing the CDI, the company ELEMIS has determined that consumers on the East Coast purchase twice as much skincare products per capita as the general U.S population while those on the West Coast purchase less than the national average. This would be incredibly useful information for the launch campaign targeting of a new product. If the marketing team realized that a particular product had a low BDI in a segment with a higher CDI within its category, it might be worth investigating why the specific brand or product had a poor performance within that segment.
Understanding BDI and CDI
BDI and CDI compare the relative strength of a market segment to overall sales within the population. The BDI measures the brand compared to overall brand sales while the CDI measures the category compared to overall category sales. The formulas are:
BDI = (Brand Sales / Market Population) x 100
CDI = (Category Sales / Market Population) x 100
The markets falling over 100% are the best-performing markets. Marketers can use this data to decide to add more promotions, campaigns, and media weight to boost and support the market’s performance. Markets that fall below 100% are the weaker markets, and marketers should analyze these to discover why those markets are underperforming. Markets that have a higher BDI than CDI may show the marketer that the market is oversaturated, the marketer can then consider campaigns that push reach and awareness to bring more consumers into the category. Markets with an above-average CDI and below-average BDI may be facing issues with distribution or maybe underperforming due to the competitive landscape; this would require marketers to conduct more research to ascertain the exact cause and decide what can be done.
BDI and CDI are used by marketers to determine the most effective allocation of their marketing spend. Depending on the marketing strategy, the brand may allocate more or less marketing dollars to develop either the BDI or CDI. For example, “A marketing strategy that calls for x dollars of advertising spending in direct proportion to sales requires that the percent of brand sales component of the BDI be used exclusively in allocating media expenditures to each market. At the other extreme, if a marketing strategy requires that brand advertising be allocated based only on category development, the media planner would have to use only the percentage of category sales component of the CDI in deciding spend by market.” Alternatively, a brand may choose to maintain sales where BDI is high but increase market spend where CDI is high, and BDI is low. If the brand chooses a defensive strategy, a higher amount of it’s marketing dollars will be allocated towards segments with higher BDI or CDI. In most cases, if the BDI of a particular segment is lower than the national average, the brand may spend more marketing dollars on improving the BDI.