Source: Sales & Marketing Management, September 2001.
The BDI compares the percentage of the brand's total U.S. sales in a given market area with the percentage of the total population in the market to determine the sales potential for that brand in that market area. An example of this calculation is shown in Figure 10-10. The higher the index number, the more market potential exists. In this case, the index number indicates this market has high potential for brand development (see Appendix B for targeted cities).
3. The category development index (CDI) is computed in the same manner as the BDI, except it uses information regarding the product category (as opposed to the brand) in the numerator:
Percentage of product category total sales in market
Percentage of total U.S. population in market
The CDI provides information on the potential for development of the total product category rather than specific brands. When this information is combined with the BDI, a much more insightful promotional strategy may be developed. For example, consider the market potential for coffee in the United States. One might first look at how well the product category does in a specific market area. In Utah and Idaho, for example, the category potential is low (see Figure 10-11). The marketer analyzes the BDI to find how the brand is doing relative to other brands in this area. This information can then be used in determining how well a particular product category and a particular brand are performing and figuring what media weight (or quantity of advertising) would be required to gain additional market share, as shown in Figure 10-12.
While these indexes provide important insights into the market potential for the firm's products and/or brands, this information is supplemental to the overall strategy
Percentage of brand sales in South Atlantic region
Percentage of U.S. population in South Atlantic region
Figure 10-10 Calculating BDI
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Co-op Mailing means that two or more businesses share in the cost and distribution of a direct mail campaign. It's kind of like having you and another non-competing business split the cost of printing, assembling and mailing an advertising flyer to a shared same market base.