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2.3 Brand Development Index and Category Development Index

Purpose: To understand the relative performance of a brand or category within specified customer groups.

The brand and category development indexes help identify strong and weak segments (usually, demographic or geographic) for particular brands or categories of goods and services. For example, by monitoring the CDI (category development index), marketers might determine that Midwesterners buy twice as many country-western music CDs per capita as Americans in general, while consumers living on the East Coast buy less than the national average. This would be useful information for targeting the launch campaign for a new country-western performer. Conversely, if managers found that a particular product had a low brand development index in a segment that carried a high CDI for its category, they might ask why that brand suffered relatively poor performance in such a promising segment.

Construction

    Brand Development Index—BDI (I): An index of how well a brand performs within a given market group, relative to its performance in the market as a whole.

Brand Development Index––BDI (I) = [Brand Sales to Group (#)/Households in Group (#)]/[Total Brand Sales (#)/Total Household (#)]

The BDI (brand development index) is a measure of brand sales per person or per household within a specified demographic group or geography, compared with its average sales per person or household in the market as a whole. To illustrate its use: One might hypothesize that sales per capita of Ben & Jerry's brand ice cream would be greater in the brand's home state, Vermont, than in the rest of the country. By calculating Ben & Jerry's BDI for Vermont, marketers could test this hypothesis quantitatively.

Example: Oaties is a minor brand of breakfast cereal. Among households without children, its sales run one packet per week per 100 households. In the general population, Oaties' sales run one packet per week per 80 households. This translates to 1/100 of a packet per household in the childless segment, versus 1/80 of a packet in the general populace.

BDI = (Brand Sales/Household)/(Total Brand Sales/Household) = 1/100/1/80 = 0.8

Oaties performs slightly less well in the childless segment than in the market as a whole.

Category Development Index—CDI: An index of how well a category performs within a given market segment, relative to its performance in the market as a whole.

Category Development Index (I) = [Category Sales to Group (#)/Households in Group (#)]/[Total Category Sales (#)/Total Household (#)]

Similar in concept to the BDI, the category development index demonstrates where a category shows strength or weakness relative to its overall performance. By way of example, Boston enjoys high per-capita consumption of ice cream. Bavaria and Ireland both show higher per-capita consumption of beer than Iran.

Data Sources and Complications

In calculating BDI or CDI, a precise definition of the segment under study is vital. Segments are often bounded geographically, but they can be defined in any way for which data can be obtained.

Related Metrics and Concepts

The term category development index has also been applied to retail organizations. In this application, it measures the extent to which a retailer emphasizes one category versus others.

Category Development Index (I) = Retailer's Share of Category Sales (%)/Retailer's Total Share of Market (%)

This use of the term is similar to the category performance ratio (see Section 6.6).

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