The CDI Calculator is a tool that calculates the Category Development Index (CDI), a metric widely used in market analysis to evaluate a product category's performance in a particular geographic area. CDI gives insights into whether a specific market is over- or under-performing in comparison to the national average for a given product category.
Businesses use CDI to:
- Determine potential markets for expansion.
- Identify areas where marketing efforts may need adjustment.
- Understand regional demand trends for certain products.
By providing a CDI score, the calculator assists marketers and business analysts in making data-driven decisions, such as reallocating marketing resources to areas with high potential or assessing the effectiveness of a category-specific marketing strategy in different regions.
Formula for Calculating CDI
The Category Development Index (CDI) formula evaluates how well a product category performs in a specific market. The formula for CDI is:
CDI = (Category Sales in Market / Population in Market) / (Category Sales Nationwide / Population Nationwide) * 100
Where:
- CDI: Category Development Index, expressed as a percentage, representing the strength of the category in the target market relative to the national average.
- Category Sales in Market: The sales volume of the product category in the market area under consideration.
- Population in Market: Population size of the specific market area.
- Category Sales Nationwide: The total sales volume of the product category across the entire national market or broader reference market.
- Population Nationwide: Population size of the broader national or reference market.
The CDI formula calculates the category’s relative performance in the target market compared to its performance across the broader market. By multiplying by 100, the CDI result is expressed as a percentage.
CDI Interpretation
Interpreting the CDI score helps businesses understand if a specific product category has higher or lower demand than average in a target area. Here’s how to interpret the CDI values:
- CDI > 100: A CDI score above 100 indicates that the product category is performing better in the specific market than the national average. This suggests high potential or demand for the category in that market, making it a favorable location for expansion or marketing investment.
- CDI < 100: A CDI score below 100 suggests that the category is performing below the national average in that market. This lower score may indicate limited demand or the need to reassess the marketing strategy for that category in the target area.
CDI helps businesses make targeted marketing and sales decisions by identifying which regions have higher potential and which may require more attention or resources.
General Terms Table
Below is a table with definitions of the key terms related to the CDI calculation:
| Term | Definition |
|---|---|
| Category Sales in Market | Sales volume of the specified product category in the local market or geographic area of interest. |
| Population in Market | Population size of the local market or geographic area of interest. |
| Category Sales Nationwide | Total sales volume of the specified product category across the entire reference market (e.g., a country or national market). |
| Population Nationwide | Population size of the reference market used for comparison, typically a country or larger region. |
| CDI Score | A relative index showing the performance of a product category in a specified market compared to the national or reference average. |
Example of Using the CDI Calculator
To clarify how the CDI Calculator works, let’s look at an example. Assume we want to calculate the CDI for a specific market region to see how a beverage category is performing compared to the national market.
Example Data:
- Category Sales in Market: $2,000,000
- Population in Market: 500,000
- Category Sales Nationwide: $50,000,000
- Population Nationwide: 10,000,000
Step 1: Calculate the sales per capita for the market region: Category Sales in Market / Population in Market = $2,000,000 / 500,000 = $4.00 per person
Step2: Calculate the sales per capita nationwide: Category Sales Nationwide / Population Nationwide = $50,000,000 / 10,000,000 = $5.00 per person
Step3: Divide the market sales per capita by the national sales per capita and multiply by 100: CDI = ($4.00 / $5.00) * 100 = 80
Result: In this example, the CDI is 80. Indicating that the beverage category is underperforming in this market compared to the national average. This insight could prompt further investigation into market trends, consumer preferences, or marketing strategies specific to that region.
Most Common FAQs
The CDI, or Category Development Index, measures a product category's market performance in a specific region relative to the broader national or reference market. It helps companies identify where demand is strong or weak, allowing them to make informed marketing and sales decisions.
The CDI score indicates whether a category is over- or under-performing in a particular market. High CDI scores suggest high demand or market potential, encouraging businesses to invest more resources in those areas. Low CDI scores indicate the opposite, prompting businesses to reassess or pull back resources.
Calculating the CDI can be beneficial for businesses on a regular basis. Particularly in markets where demand and consumer behavior are dynamic. Many businesses calculate CDI quarterly or annually as part of their strategic market reviews.