WHY YOUR BUSINESS NEEDS TO MONITOR BDI & CDI

Determining if your business is doing well in a particular market may seem pretty cut and dry — if you’re selling more in one market than another, the one with more sales is better…right? Well, not necessarily. You might want to calculate your business’ BDI and CDI. 
 
What are they? Let’s find out.

What is the Brand Development Index?

Your brand development index or BDI refers to your per-capita brand sales in a specific segment of the market compared to the overall market. 
 
For instance, let’s suppose you’re a nationwide towel business called Tony’s Towels and you want to measure performance in a small town. Your revenues in the small town are lower than in some of your other more populous markets, and you are considering discontinuing distribution to the small town.
 
You calculate sales per capita (per person) in your small town, and realize you sell are 4 towels per capita in the small town as opposed to 3 towels per capita in your larger markets. Relatively speaking, you are selling more towels per person in the smaller market.
 
But wait, there’s more! Let’s suppose your brand’s per-capita sales in the U.S. overall are 2 towels per capita. By dividing the small town sales per capita by U.S. sales per capita (4/3) we calculate our BDI of 133%

Why does this matter?

BDI is really important for Tony’s Towels because not only do we know that Tony is selling more towels per capita in the small town than in big towns, but that the small town is selling 133% more of Tony’s towels per capita than Tony sells in the U.S.
 
Apply this to your business to gain a much better understanding of your sales in specific market segments. You may think that your sales are much too low, but if you consider the population, you may be outperforming other markets. Before you make major decisions with implications to your markets, calculate BDI. 

What is the Category Development Index?

Your category development index or CDI can inform your BDI much further by analyzing your category as a whole.
 
For instance, “Tony’s Towels” is in the “towel” category. Let’s suppose per capita sales of all towel brands in the small town is 1 and the per capita sales of all towel brands in the U.S. is 3. By dividing 1 by 3 we can determine the CDI is 33%, meaning that compared to the U.S, the small town is consuming 33% fewer towels per capita.
 
What does this mean for Tony’s Towels? Considering that the small town is doing well in per-capita-sales of Tony’s towels at 133% BDI and the CDI of that same small town is just 33%, Tony is dominating the market of the small town.
 
This is an important insight because Tony was considered discontinuing distribution to the small town, but the BDI and CDI indicate that he is dominating the market. 
 
Even though sales are not as high as other markets, he will continue to sell in the small town.

Conclusion

You may not be in the towel business, but Tony’s story can be applied to your business. Track the sales in your different markets and consider the population as you make your business decisions. 
 
With BDI and CDI calculations, you equip yourself with the knowledge you need to make fully-informed business decisions in different markets.

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