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BDI CDI Analysis - Budget Allocation (Weighted Sum Method) - Department of Marketing
BDI CDI Analysis - Budget Allocation (Weighted Sum Method) - Department of Marketing
CDI analysis – Budget allocation (Weighted sum method) Department of Marketing
BDI CDI analysis – Budget allocation (Weighted sum method)
Last Updated on Friday, 31 March 2017 14:50 Hits: 2629
by Anna Oanh P. , Department of Marketing, MSME, Assumption University
March 27, 2017
BDI and CDI are easy and effective tools for marketers to analyze local market sales. Marketers typically look at both when considering which
markets or regions should receive more budgets.
Formulas
The purpose of the BDI metric is to quantify the relative performance of a brand within specified customer groups. The Brand Development Index helps marketers identify
strong and weak segments (usually demographic or geographic) for individual brands.
The purpose of the CDI metric is to quantify the relative performance of a category within specified customer groups. The Category Development Index helps marketers
identify strong and weak segments (usually demographic or geographic) for categories of goods and services.
Example:
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3/1/2019 BDI CDI analysis – Budget allocation (Weighted sum method) Department of Marketing
BDI and CDI are indices comparing the relative strength of a market to overall sales. The Brand Development Index (BDI) is an index compared to overall brand sales. The
Category Development Index (CDI) is an index compared to overall category sales. Like any index, a score of 100 is average.
From example above, we combine BDI and CDI to examine descriptors of the High CDI/Low BDI cell as shown below:
The Interpretation of BDI & CDI
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3/1/2019 BDI CDI analysis – Budget allocation (Weighted sum method) Department of Marketing
Budget allocation base on BDI and CDI
One approach to resource allocation uses a weighted sum of BDI and CDI – spending money in each geography in proportion to a combined BDI plus CDI score. With this
approach, marketers need to first assign a weight to the BDI and to the CDI. These two weights represent the relative importance of the BDI and CDI, and the sum of two
weighted should equal 1.
To assign the weight, marketers might choose a high weight on CDI if they feel their brand is representative of the broader category and they expect their brand to attain a
geographic pattern of sales that matches that of the category. On the other hand we might place high weight on BDI if their brand is unique, the category is very diverse, or
the company wants to grow sales among current customers.
Base on the example above, marketers think the BDI is three times more important than the CDI in allocating spending. They would use a weight of 0.75 or 75% with the BDI
values and 0.25 or 25% with the CDI values of each geographical area to calculate a weighted sum and percentage for each of the markets.
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3/1/2019 BDI CDI analysis – Budget allocation (Weighted sum method) Department of Marketing
75% 25%
Weighted Spending
Regions BDI CDI Weighted Weighted
Sum Percentage
BDI CDI
If the company plans to spend total 25 million baht for the marketing campaigns, marketers can allocate the budgets base on the results of spending percentage above for
each area:
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3/1/2019 BDI CDI analysis – Budget allocation (Weighted sum method) Department of Marketing
Total 100 25
BDI and CDI are useful indicators to find insights from data. However, marketers should remember that indices rarely provide a definitive answer to marketing questions. In
this case marketers should consider other factors and integrate with insights from indices in decision making.
Sources:
1. ‘How to Use BDI and CDI for Planning (Updated)’ by Brian D. Spencer
2. ‘Advertising Media Planning: A Primer’ from https://www.slideshare.net/sjhus/mediaplanningexplained
3. https://en.wikipedia.org/wiki/Category_Development_Index
4. https://en.wikipedia.org/wiki/Brand_Development_Index
5. “Marketing Matrics”, by Paul W.Farris, Neil T. Bendle, Phillip E. Pfeifer, Devid J. Reibstein, 3rd edition, (Pearson Publishing, 2015)
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3/1/2019 BDI CDI analysis – Budget allocation (Weighted sum method) Department of Marketing
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