As a marketer, you will likely have to analyze the performance of your product compared to the broader market or products in the same category. To do this, you will have to become familiar with Brand Development Index (BDI) and Category Development Index (CDI).
Brand Development Index:
BDI represents the number of sales (either in dollars or units) in a specific market compared to your broader market. This measurement usually appears on a per capita basis.
BDI = Brand Sales in Specific Market / Brand Sales in Broader Market
Let’s say that you are the Marketing Director of a cookie factory (Delishos) that sells cookies all over the US. You have the task of boosting cookie sales in Florida and want to know how sales have responded to your efforts. As such, you have decided to evaluate Delishos’ BDI in Florida. Delishos sells 12 cookies per capita in Florida and 8 cookies per capita in the US. Using the BDI formula, you know that:
BDI = Delishos Sales in Florida/ Delishos Sales in the US
BDI = 12/8
BDI = 150%
In this example, Delishos’s BDI in Florida is 150% which appears to be quite positive as Delishos cookie sales in Florida are considerably higher than the national average. However, before jumping to any conclusions, it is advisable to measure cookie CDI.
Category Development Index:
CDI is very similar to BDI, but instead of reflecting the sales of a specific brand, it reflects the sales of a category in a particular market compared to your broader market. This measurement appears, once again, on a per capita basis.
CDI = Category Sales in Specific Market / Category Sales in Broader Market
After calculating Delishos’ BDI, you want to know how well all cookies are selling in Florida compared to the US and you recognize that you must conduct a CDI calculation. There are 42 cookies per capita sold in Florida compared to 25 cookies per capita sold in the US. Using the CDI formula:
CDI = Cookie Sales in Florida/ Cookie Sales in the US
CDI = 42/25
CDI = 168%
Cookie CDI in Florida is 168% which means that cookies are selling at a greater rate in Florida than in the US average. But what exactly does this mean for Delishos?
Comparing BDI and CDI:
Although Delishos’ BDI suggests a positive trend, sales are lagging compared to cookie CDI in Florida. Delishos’ BDI is 150%, while Cookie CDI is 168%. This comparison shows that people in Florida buy more cookies per capita than the rest of the US. Delishos is underperforming by 10.7% when comparing BDI to cookie CDI (BDI/CDI). You have some work to do as the Marketing Director of Delishos in Florida if you wish to catch up with category sales.
Remember to utilize BDI to gauge how well your product performs compared to your category and the broader market. In addition, don’t forget to compare your BDI to CDI to determine if your sales are meeting or surpassing category sales. Good luck!