By Claudia Perez

Dear owners of small and medium-sized businesses, todayI bring you and intriguing topic: market analysis metrics, specifically Category Development Index (CDI) and the Brand Development Index (BDI). In this post, we will explore these concepts and discuss their importance and application, particularly in the context of launching and operating a prospective local business.

Key Concepts

Dear readers, in today’s post, we will delve into two fundamental metrics that help us better understand business performance in specific markets. Below is a brief explanation of these key concepts:

• CDI (Category Development Index): Measures the sales of a category (in revenue or units) within a specific segment compared to the total sales of that category in the general market.
• BDI (Brand Development Index): Measures the sales of a brand (in revenues or units) within a specific segment compared to the brand’s total sales in the entire market.

Application of concepts: Case of Study of “Mama Ines Coffee”

Now that we understand the concepts of CDI and BDI, let’s explores how they can be applied to a local business and how data can contribute to greater success.

Application of CDI

Recently, I spoke with a friend (and potential client) interested in opening a coffee shop in Tampa. For privacy reasons, let’s call this person Entrepreneur A

To better assess the potential success of Entrepreneur A’s business, one of the first steps would be to research the per capita coffee consumption in the Tampa area and compare it to the national average. In short, conducting a cdi analysis would allow us to make a more accurate and detailed evaluation of the feasibility and potential business.

According to our study, the average per capita coffee consumption in the United States is approximately three cups per day. While we couldn’t find the exact per capita coffee consumption figure for Tampa, business reports like-WalletHub’s report-indicate that the city ranks sixth nationwide as a preferred destination for coffee lovers. Based in this, we infer that coffee consumption in Tampa is near or above the national average, suggesting significant growth potential for the business.

Recommendations Based on Data

Given the scenario above, we can also infer that competition in the region will be higher. Therefore, we recommend that Entrepreneur A conduct a study of the local market’s demographic characteristics using tools such as data.census.gov. This data will help her decide which coffee specialties to focus on and which ones should not be excluded from the menu.  

Upon consulting the site, we found that Hillsborough County (where Tampa is locates) has approximately 1,535,564 Hispanic or Latino residents, representing more than half of the county’s total population, with Cubans being the largest group (approximately 118,116). Based on this information, we recommend that Entrepreneur A include or focus on offerings such as: Colada” or “Espresso”, styles of coffee that embody and internationalized Latino, particularly Cuban, culture.

Calculating BDI: Interpretation and Application

Let’s assume that Entrepreneur A decides to launch the coffee shop “Mama Ines Coffee” in Tampa based in her CDI analysis. I must confess that we haven’t reached this phase of the business yet. Once the business is operational, it would be advisable for Entrepreneur A to understand how well “Mama Ines Coffee” is performing compared to other coffe shops in the area.

To obtain this information, it would be necessary to conduct a BDI study for “Mama Ines Coffee”, which requires knowing:

1. The average per capita coffee consumption in coffee shops in Tampa.
2. The average per capita coffee consumption specifically at “Mama Ines Coffee”

With these data, we can calculate the portion of coffee consumption that Mama Ines represents out of the total coffee consumption in Tampa’s coffee shops.

Let’s assume this analysis reveals that Mama Ines Coffee has a BDI of 1.3%, meaning the brand captures only 1.3% of the market in the region. Consequently, we could conclude that Mama Ines has moderate or low performance at the local level. Since we inferred a high CDI in the region (above average), the brand has potential to continue growing and expanding locally because the market allows for it.

Recommendations based on data:

Based on this scenario, if Mama Ines Coffee operates with a low or moderate BDI, we recommend the brand adopt a more aggressive strategy. For instance: investing more in advertisement, leveraging digital marketing and developing a meticulously calculated Share of Voice to expand market reach.

Conclusion:

Dear readers, through this simple example, I wanted to demonstrate the importance of utilizing the data available to us to conduct analysis and make informed decisions. By doing so, we can achieve a better performance for our brands and businesses.

If you aspire to develop a local business like “Mama Ines Coffee”, I encourage you to start with a CDI analysis and later conduct a BDI analysis to understand how well you are performing against competitors and to identify ways to improve, maintain or expand your success. Don’t underestimate the power of these tools in today’s dynamic, saturated and demanding market.

I bid you farewell not with a goodbye, but with a “see you next week” as we continue to explore the wonderful world of marketing.

If you want to learn more about the world of marketing, I invite you to read my latest post: Analytics: The Art and Science of Decision-Making with DataLinks to an external site.