Posted in Marketing and Strategy Terms, Total Reads: 1590
Definition: Category Development Index (CDI)
The category development index (CDI) is an indicator of how well a product or service category performs in a given market segment as compared to its performance in the total market as a whole. To determine CDI, a category’s percentage sale in a specific market is divided by the total population percentage of that market and then multiplied by 100. A CDI value above 100 is considered good.
The Category Development Index helps marketers identify strong and weak segments for categories of goods and services. These segments are mainly formed on the basis of demographic or geographic information. CDI gives information about the areas which are doing well as compared to others and thus advertising budget allocation can be done easily to maximize a product category knowledge and profit.
For example, let’s say that a soft drink company plans to enter a specific market within Delhi, India. The company’s marketing department will calculate the category development index or CDI as percentage of the total sales of soft drink (the category) within the Delhi market. The total percentage of sales within that market will then be divided by the total population within the India.