The American Marketing Association defines BDI as a measure of the extent to which the sales of products for a brand in a market category have captured the total potential in a geographical area, based on the population of that area and the average consumption per user nationally. The BDI is usually calculated for separate metropolitan areas, and is used to determine high-potential (underdeveloped) areas for new product entries or for primary demand promotions.”
The purpose of the BDI metric is to quantify the relative performance of a brand within specified customer groups. The Development Index helps marketers identify strong and weak segments (usually demographic or geographic) for individual brands.
The BDI is especially useful in conjunction with the Category Development Index (CDI). It can be used in deciding the allocations in the media to which a specific brand is advertised. It can also be used to determine how much advertising, or promotion effort is, or should be put in that specific market.
Brand Development Index (BDI): An index of how well a brand performs within a given market group, relative to its performance in the market as a whole.
BDI (I) = [Brand sales to group (#) ÷ Households in group (#)] ÷ [Total brand sales (#) ÷ Total households (#)]
Note: Although defined here with respect to households, these indexes could also be calculated for customers, accounts, businesses, or other entities.
To illustrate its use: One might hypothesize that sales per capita of Ben & Jerry’s brand ice cream would be greater in the brand’s home state, Vermont, than in the rest of the country. By calculating Ben & Jerry’s BDI for Vermont, marketers could test this hypothesis quantitatively.
- ^ Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; and David J. Reibstein (2010). Marketing Metrics: The Definitive Guide to Measuring Marketing Performance (Second Edition). Upper Saddle River, New Jersey: Pearson Education, Inc.
- ^ American Marketing Association, AMA Dictionary. (April 2014)