Category Development Index (CDI) is a marketing tool used to measure the sales performance of a particular product category in a specific geographic area compared to the overall sales of the same product category in a larger market. It is an important metric for advertisers and chief marketing officers as it helps them identify the potential of a product category in a specific area and make data-driven decisions on advertising and promotional strategies.
The CDI is calculated by dividing the percentage of total sales of a specific product category in a particular geographic area by the percentage of the total population in the same geographic area. The resulting number is then multiplied by 100, giving you the CDI percentage.
The formula can be expressed as:
CDI = (% of product category sales in geographic area / % of total population in geographic area) x 100
For example, let’s say the sales of soft drinks in Miami account for 5% of the total soft drink sales in the United States, while the population of Miami accounts for 2% of the total US population. Using the CDI formula, we can calculate the CDI for soft drinks in Miami as:
CDI = (5% / 2%) x 100 = 250
This means that the soft drink category in Miami is performing better than the overall US market by a factor of 2.5. Advertisers and chief marketing officers can use this information to make data-driven decisions on how to allocate their advertising and promotional budgets in Miami.
The CDI is an important metric as it allows advertisers and chief marketing officers to identify areas where a particular product category has high potential for growth. They can then focus their advertising and promotional efforts on these areas to maximize sales and profitability. The CDI also helps advertisers and chief marketing officers to understand the unique characteristics of a particular geographic area and how they influence consumer behavior.
In addition, the CDI can be used to compare the performance of different product categories in the same geographic area. The category with a higher CDI percentage indicates a greater potential for growth and provides valuable insights into consumer behavior in that area.
Overall, the Category Development Index is an important tool for advertisers and chief marketing officers as it provides valuable insights into consumer behavior and helps them make data-driven decisions on advertising and promotional strategies.