Exercise 7 Category And Brand Development Indexes (CDI & BDI) Media Flight Plan Exercise 7 Category And Brand Development Indexes (CDI & BDI)

Category And Brand Development Indexes (CDI & BDI) 1) If San Francisco accounts for 1.24 percent of total U.S. population, and has 1.43 percent of total U.S. laundry detergent sales, what is the CDI for this market? Also, what does this index mean? Remember the convention for CDIs and BDIs—they are expressed as whole numbers. Interpreting the 115 CDI: Detergent sales in San Francisco are about 15 percent above what would be expected given the population in the area.

Category And Brand Development Indexes (CDI & BDI) Market %US %Red Baron %Frozen Pizza Seattle 0.9 1.6 1.9 San Francisco 1.7 2.8 3.0 2. You are marketing Red Baron frozen pizza, and you are looking for some place to spend $50,000 in surplus advertising budget. You have narrowed the choice down to two markets: Seattle and San Francisco. Calculate the BDI/CDI for both markets. If the surplus can only be spent in one market, based on BDI/CDI ONLY, which market should you choose? Seattle: San Francisco: Both markets are potentially good candidates; both are above average for the category and brand. But based solely on the indexes, Seattle gets the money. In ‘real life’, however, there may be other factors, such as distribution, that would tip in favor of San Francisco, but in this specific scenario, Seattle wins.

Category And Brand Development Indexes (CDI & BDI) 3. You are the Marketing Director for Great Lakes Cherry Treats, a regional company headquartered in Traverse City, MI. You distribute cherry-based snack products made from Michigan cherries exclusively to the markets that surround Lake Michigan. Your competition is primarily fruit snacks and fruited baked goods – called "Fruited Snacks" in this problem. TIPS: To simplify this problem, assume that these seven markets comprise the total universe for your brand. Likewise, the 6,308.5 (000) Households in the table below represent 100% of the population. The $3 million in sales for Great Lakes and the $27 million for Fruited Snacks also represent totals for the “universe”.

Category And Brand Development Indexes (CDI & BDI) 3. (Cont.) Using data provided in the table, calculate the BDI and CDI for each market. Begin by converting the data to percentages; then calculate the BDIs and CDIs using the formulas illustrated in the examples above. Example using Chicago:

Category And Brand Development Indexes (CDI & BDI) 4. Name the markets with both high BDI and high CDI, and advise your client on the best advertising/marketing action in light of your brand, the category, and potential competitive threats. High BDI/High CDI: Traverse City and Lansing. Clearly, cherry treats are popular in these areas, which are close to the manufacturing source. One strategy might be to do no advertising in these areas at all—since they may be self-sustaining because of knowledge about product, word-of-mouth, and preference for the local brand. However, if stiff competition came into play, advertising to protect these markets would be appropriate. It is likely that advertising might also boost sales in these areas where little ‘convincing’ is necessary—just keeping a product top of mind will probably boost sales.

Category And Brand Development Indexes (CDI & BDI) 5. Name the markets with high BDI and low CDI, and advise your client on the best advertising/marketing action in light of your brand, the category, and potential competitive threats. High BDI/Low CDI: Grand Rapids and Milwaukee. Though these markets fall in the same scenario, it's likely they are different. Brand sales are better than average, but the category does not do well at all, especially in Grand Rapids with CDI of 69. This could be due to low category penetration in the market, or to local perception. Great Lakes appears to enjoy a good reputation, perhaps due to higher quality and/or better distribution. Milwaukee is less anemic for the category, but Great Lakes BDI of 108 is short of stellar. While these two markets may well be worth defending, marketing research would be in order before you make a significant addition to your advertising budget here. For example, you would want to know if the category is stagnant or actually growing.

Category And Brand Development Indexes (CDI & BDI) 6. Name the markets with low BDI and high CDI, and advise your client on the best advertising/marketing action in light of your brand, the category, and potential competitive threats. Low BDI/High CDI: Green Bay and South Bend. These two markets need some study. Because the category does better than the brand, these might be considered ‘opportunity’ markets—places where there is potential for growth. Clearly this is more likely to happen in South Bend, where the category is indexing 133. Perhaps there is a distribution problem. As things stand, Green Bay appears less of an opportunity—where the brand is below average (89) and the category is just above average (104).

Category And Brand Development Indexes (CDI & BDI) 7. Name the markets with both low BDI and low CDI, and advise your client on the best advertising/marketing action in light of your brand, the category, and potential competitive threats. Low BDI/Low CDI: Chicago. Based solely on the 82 BDI and 95 CDI, Chicago doesn’t have much going for it. In other circumstances, it might even be a market Great Lakes would walk away from. But, not so fast. Do the math: Chicago accounts for nearly half of all Great Lakes sales, ($1.35 million). Also, the category, though below average, is still doing better than the brand, suggesting there could be some growth potential. Great Lakes would have to think long and hard about not advertising here—it’s almost a necessity given the near 50% share of brand sales! This is a good example of why one cannot ignore other important marketing intelligence when looking at BDI and CDI.