Category development index (CDI) is an index that is calculated by taking the percentage of a product category’s total sales that occur in a given market area as compared to the percentage of the total population in the market.
Example of category development index (CDI):
The CDI is mainly focused on providing potential information for the development of the total product category within a market, as opposed to just a brand within a category in that same market.
For example, let’s say that a pastry company plans on entering a specific market within San Diego, California. The company’s marketing department will calculate the category development index or CDI percentage for the total sales of pastries (the category) within the San Diego market. The total percentage of sales within that market will then be divided by the total population within the U.S., (or population of any country where the pastry is planning on making an introduction).
When combining the values of both CDI and BDI, advertisers can determine how well a product category and brand are doing within a specific market, allowing them to figure out the quantity of advertising needed to gain market share within that market.
Category development index (CDI) formula:
CDI= percentage of product category total sales in a market / total population of market region x 100
Note: total number of market region is the overall region, such as the U.S. or a specific state, or country.
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