What is the category development index (CDI)?

The category development index (CDI) is a powerful marketing metric that helps brands pinpoint how well a particular product category performs in a specific market or demographic segment compared to its performance in the overall market.

Think of it as a heatmap for category strength: it tells you where a category is thriving and where it might need extra attention. For marketers and product managers, this insight is gold. It guides smarter decisions about targeting, resource allocation, and even product innovation.

Let’s break it down further.

Why marketers use the category development index

It’s not enough to know how your brand is doing – you also need to understand the underlying health of the category you play in. CDI shines a light on this by answering questions like:

• Is there strong demand for this category in a particular region?
• Are there untapped markets where the category could grow?
• Should we double down on high-performing areas or invest in building up weaker ones?

It’s particularly useful for brands planning geographic expansion or assessing new customer segments. Pair it with the brand development index (BDI), and you get a clear picture of both category and brand performance.

How to calculate CDI

The formula for CDI is straightforward:

CDI = (% of category sales in the market / % of population in the market) * 100.

Here’s what this means:

• % of category sales in the market = The percentage of total national sales for the category that comes from a specific market.
• % of population in the market = The percentage of the total population that lives in that market.

By comparing these two percentages, CDI tells you if a category is overperforming or underperforming relative to population size.

Interpreting CDI scores

The result of your calculation will fall into one of these buckets:

• CDI > 100: A CDI above 100 means the category is outperforming the national average in that market. Demand is strong, and the category has captured more than its “fair share” of sales relative to the population.
• CDI < 100: A CDI below 100 signals underperformance. The category isn’t resonating as strongly with consumers in that market, which could point to low awareness, cultural preferences, or competitive challenges
  

Example: premium coffee

Let’s say your company sells premium coffee. Across the country, premium coffee accounts for 10% of total coffee sales. But in Region A, it represents 15% of coffee sales – even though Region A only makes up 8% of the national population.

Using the CDI formula: CDI = (15%/8%) * 100= 187.5

A CDI of 187.5 means Region A is a stronghold for premium coffee and punching well above its weight.

Why CDI matters: practical applications

So, how do brands actually use CDI? Here are some of the most common (and impactful) applications:

Targeted marketing strategies

CDI highlights where consumers already have an appetite for the category. Brands can use this information to tailor campaigns to regions with high CDI, reinforcing their dominance, or to low CDI areas where education and awareness-building might unlock growth.

High CDI scores can signal regions with potential for new product launches, while low CDI areas may indicate the need for increased awareness or tailored marketing strategies.

Market expansion and entry decisions

High CDI regions are prime candidates for new product launches or expanded distribution. Low CDI markets might require a more nuanced strategy – maybe local partnerships, cultural adaptations, or more aggressive promotions.

Resource allocation and budgeting

By understanding category performance geographically or demographically, brands can allocate budgets more efficiently. There’s little point in pouring marketing dollars into a market where the category struggles unless there’s a clear plan to turn things around.

Sales territory planning

Sales teams use CDI data to focus their efforts where they’re most likely to succeed, avoiding wasted energy in underdeveloped areas unless there’s a deliberate strategy for growth.

CDI vs BDI: why you need both

While CDI looks at the overall health of a category, the brand development index (BDI) zeroes in on how a specific brand performs within that category.

When used together:

• High CDI + high BDI = Strong market for both the category and your brand. Defend your position.
• High CDI + low BDI = The category is strong, but your brand is lagging. Time to investigate why.
• Low CDI + high BDI = Your brand is overperforming in a weak category. Proceed cautiously.
• Low CDI + low BDI = Both category and brand are struggling. Consider whether it’s worth the effort.

This dual perspective helps marketers fine-tune their strategies with more precision.

CDI: the bottom line

The category development index is a practical tool that can help brands uncover hidden opportunities, avoid costly missteps, and win in the markets that matter most.

By measuring how well a product category performs in specific markets, CDI helps marketers answer a critical question: “Where should we play, and how should we win?” When combined with BDI and other insights, it becomes part of a data-driven playbook for growth.

Interested in learning more ways your brand can stay ahead? Check out these resources:

• Audience segmentation tools for smarter marketing
• The cross-channel marketing guide for driving customer loyalty
• Audience building: Best practices for enterprise marketing campaigns