The Category Development Index (CDI) is a metric used in marketing and advertising to measure the potential of a specific product category within a particular geographic area. It compares the sales of a product category in a specific market to the average sales of that category across all markets. The CDI is calculated by dividing the percentage of total category sales in a specific market by the percentage of the total population in that market and then multiplying it by 100.
Significance and Uses- Category Development Index (CDI)
The CDI provides valuable insights to marketers and advertisers about the demand and potential growth of a product category in a specific market. It helps them identify markets with high potential for their products and allocate their resources effectively. A high CDI indicates a strong demand for a product category in a market, suggesting a favorable environment for advertising and marketing campaigns. On the other hand, a low CDI may indicate a saturated market or low consumer interest in the category.
Example – Category Development Index (CDI)
Let’s say a company wants to introduce a new line of organic skincare products. They can use the CDI to identify markets with high potential for organic skincare products. For example, if the CDI for organic skincare products in a particular city is 150, it means that the sales of organic skincare products in that city are 50% higher than the national average, considering the city’s population. This would indicate a strong market for organic skin care products, encouraging the company to focus its marketing efforts and allocate resources to that specific city.