Ju-Pak Handout (CDI & BDI) Page 1

Understanding the Market Selection and Weighting Process

Background on CDI/BDI Usage:

Often planners have to make decision about selection of a set of markets when the budget is tight
and/or placement of additional advertising weight in a market. CDI/BDI's can help you decide
whether a market (or a set of markets -- region) deserves extra marketing/advertising dollars.
BDI and CDI are two of the most useful tools available in evaluating sales potential of a product
category or brand in a geographic market so that the markets where the product is distributed
can be ranked by their relative sales potential.

Category Development Index (CDI)

CDI is the first step in assessing a market’s sales potential. When the brand-specific sales data
are not available, this index takes on additional value in the market selection or geographic
weighing decisions.

The CDI compares the percentage of total U.S. sales of a product category in a specific market
with the proportion of the total U. S. population base that lives in that same market. The CDI is
calculated as:

% of product category's total U.S. sales in Market A x 100

% of total U.S. population in the same market

For example, assume the product category is ski boots, and the Los Angeles metro market
generates sale of 7.25% of all brands of ski boots (in the entire category) in the U.S.
Additionally, assume the Los Angeles market has 5.09% of U.S. population.

(7.25 x 100) / 5.09 = 141.4 CDI (for Ski Boots)

What does this index of 141 mean? The product category -- ski boots - __________ in this
market.
An index (CDI or BDI to be discussed next) number higher than 100 means that the product
category's (brand's) sales in the market is ________ than the average. With this size of index,
you may conclude that the product category (brand) is doing ________ in that market.

When a new product is introduced, there will be no brand sales data available. Then, CDI may
be used as a sole indicator of sales potential for a given market.

Brand Development Index (BDI)

The BDI is calculated much like the CDI, with one major exception. The BDI is based on the
percent of a brand's total U.S. sales in a market rather than the sales of the product category. For
example:

% of brand's total U.S. sales in Market A x 100

% of total U.S. population in the same market

For example, if the sales of Nordica Ski Boots in Los Angeles accounted for 8.35% of total U.S.
sales, while its population accounted for 5.09% of total U.S. population, the BDI for Nordica in
Los Angeles is calculated like this:
Ju-Pak Handout (CDI & BDI) Page 2

(8.35 x 100) / 5.09 = 164 BDI (for Nordica Ski Boots)

An index of 164 means that the brand Nordica is doing quite well. For an established brand with
market sales data available, both BDI and CDI can be used in the ranking process.

General Guidelines in Evaluating a Market (Markets) Using CDI/BDI

When using CDI and BDI it must be noted that this data is rarely the only marketing data used in
making a media decision. However, if we assume all other marketing criteria are equal, then
CDI and BDI would likely take on added importance.

How do we use BDI and CDI then in deciding where to advertise or whether or not to place
additional emphasis to a given market (or a set of markets like southern region)?

Sometimes an advertiser might choose to give added weight to CDI over BDI; at other times the
reverse might hold true. He might also choose to combine the CDI and BDI in a joint index
number, or she might compare the index numbers based on one the following four scenarios:

Scenario 1. High CDI and High BDI

Scenario 2. High CDI and Low BDI
Scenario 3. Low CDI and High BDI
Scenario 4. Low CDI and Low BDI

Scenario 1 represents a market where both the category and the brand are doing very well and,
therefore, is a promising market. If all other factors are the same, then this would be a market to
single out and target for added emphasis.

Scenario 2 is a market where the brand is doing poorly compared to the category. This market
might be seen as one where there is room for the brand to grow. However, some research must
be done to find the reasons for the poor showing of the brand and subsequently, marketing or
advertising must address the problem.

Scenario 3 is a market where even though the brand is doing well, the product category seems to
be showing low potential. This is a situation where reasons for the poor showing of the category
must be investigated. If the category has been showing continuous decline, then it might be
doing well. However, if research shows that the product category itself can be potentially
rejuvenated, then advertising for the brand might be worth the investment although the message
might have to encourage product usage rather than brand usage exclusively.

Scenario 4 is for the most part a no-win situation. When both the product category and the
brand are not doing very well, it might not be worth the added investment of advertising in that
market unless there are some other very convincing reasons.

It make sense for a planner to concentrate media pressure in markets where his brands are
already doing well or are likely to do well because the product category shows promise.