A brand development index (BDI) is a ratio that shows the level of a brand’s performance in a defined segment of customers. It indicates the relation between the total sales of a company and the population of a particular market and helps brands improve their marketing and advertising techniques.
Why is a brand development index important?
Companies use various marketing approaches to come up with the most appropriate budget allocation. By doing this they try to achieve the main marketing aim — to reach the largest possible number of people with the help of advertising without making any unnecessary spendings. Brand development index is one of them. It’s used to identify the relation between the total sales of a specific company and the population of a certain market.
Depending on the company’s strategy, BDI influences the number of funds allocated to a particular region. The data obtained enables businesses to tailor their marketing, advertising, and sales efforts because it gives insights into where most of their consumers live. The index is usually associated with aggressive and defensive marketing approaches.
For instance, a brand with a defensive marketing strategy will invest more in the regions where the company is more popular (the brand development index is higher) to strengthen its hold in those areas. If the company uses an aggressive strategy, it’ll allocate more money for advertising in those regions where the brand’s products aren’t very popular and the BDI is low.
When a brand development index in a certain region is low, a company needs to improve it by allocating more funds to that region for advertising, for example. So, BDI is essential for a brand's marketing initiatives. Let’s find out how to calculate this index.
How to Calculate a Brand Development Index
BDI can be essential in the development of audience segmentation, targeting strategy, and company’s positioning as it gives a measure of the brand with respect to its market and number of consumers. Below you can see a formula to calculate BDI for your business.
The result obtained after using this formula should be a whole number.
Now that you know the formula to calculate BDI for your firm, let’s explore the distinctive features of the brand development index and category development index.
Brand Development Index and Category Development Index
Companies calculate brand development index to qualify the relative performance of their business in a certain group of customers. You need to own information such as demographics or psychographics. As a result, you’ll obtain data on strong and weak segments for specific companies. Besides, you can use this index to evaluate the presence of a company within a particular target audience.
The category development index defines the level of sales of goods’ category within a market related to the average performance among customers. It helps companies receive information on the performance of a particular product category among certain customers and determine strong and weak groups for product categories.
CDI when used with BDI is useful in any marketing strategy as they enable companies to access data necessary for the right advertising budget allocation to certain areas aimed at maximizing product category awareness and revenue.
Example of a Brand Development Index
Let’s imagine that you need to obtain the BDI of Samsung laptops in one of the country’s cities (further called city A). To get this indicator, first of all, calculate its sales in city A as a percentage of its total sales in the country. Secondly, you compare it with the population of city A as a percentage of the country’s total population. Thirdly, use the obtained percentages to calculate the BDI for city A.
Let’s say if the population of the country is 50000, the population of city A is 10000, sales of the Samsung laptops in the country is 1000 units, sales of these laptops in city A is 100 units.
Let’s proceed to the calculations to obtain the BDI of Samsung laptops.
BDI in city A = (100/1000) x 100 / (10000/50000) = 50.
So, the brand development index of Samsung laptops in city A is 50.
Brand development index is an essential measure that can show you the performance of your company in different segments of customers. Understanding the index allows you to efficiently segment your audience, allocate resources to the right regions, etc. You can easily calculate BDI for your company by using the formula above.
Last Updated: 17.02.2021