To be able to survive the intense competition in any industry, a business must be able to calculate some important metrics that would help the business to understand the market dynamics and the potential opportunities for growth in that market. These metrics would give the business competitive advantages as they provide the business useful insights such as market share in a specific market, market share within specific geography or market segment, and potential opportunities for category product growth. In this article, I will be talking about the benefits of both, Brand Development Index and Category Development Index.
Market Metrics:
- Brand Development Index (BDI):
The essence of Brand Development Index is that it assesses how well a brand is performing in terms of local sales compared to its overall market reach. It helps the business to identify the strength of their brand within a particular geographic region or target market segment. You can calculate the BDI through comparing brand’s sales within a specific market segment to the total brand’s sales in all market segments. The outcome is represented as a percentage, with a value above 100 indicating that brand sales within the market segment are higher than anticipated based on population size and a value below 100 indicating underperformance. Important note, you will need to calculate the category development index metric and compare the results with the BDI. This comparison will help in making decision because it confirms if a business is above performing or underperforming in a specific category or market segment. For example, if Apple’s BDI in USA is 150 and the CDI is 180 in Florida, the first impression by looking at BDI would be that Apple is doing well in Florida. However, when comparing BDI with CDI, we can see that Apple is actually underperforming in Florida because the CDI number tells us that the population of Florida consume Apple’s products at higher rate than our BDI. If the BDI was higher than CDI, then Apple would be above performing in Florida. Therefore, it is important to consider this comparison to get the full benefit of the market analysis.
2. Category Development Index (CDI):
The Category Development Index (CDI) is a metric that aids companies in determining the scope for expansion within a given product category or market segment. It offers information on how well a particular product category is doing locally compared to its overall market reach. Businesses can determine the level of consumer demand for a particular product category in a given market by using the CDI calculation. To calculate the CDI, compare the category sales in a specific market segment to the category sales across the entire market, which are typically expressed on a per-capita basis. The results of CDI are also represented by percentages where a value over 100 means above performing and under 100 means underperforming.
In any case, it’s critical not to forget that the results of each metric represent the objectives of the metric itself and not all metrics. For example, let’s assume that the result BDI of Apple’s cellphone sales in USA is 110%. This indicates the performance of Apple’s cellphone sales in the US market in general is above performing, but it does not indicate that Apple is above performing in selling cellphones in Florida by %10; as they this specific market segment is calculated by CDI. Therefore, as I mentioned earlier in the BDI section, it is necessary to compare the results of the two metrics (BDI and CDI) in order to understand the dynamic of a given market and make correct decisions that help the business to grow in the market.
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