is relatively more developed than the category in Seattle. Portland has a BDI of 65,
which means that the brand in Portland is relatively underdeveloped. Normally, the
lower the BDI, the higher the market opportunity, in that there is room to grow the
brand. However, other marketers would argue the opposite, that marketing funds
should go into the brand’s strongest markets—where it might be easy to capture more
brand share.^36
After the company decides on the city-by-city allocation of its budget, it can re-
fine each city allocation down to census tracts or zip4 code centers. Census tractsare
small, locally defined statistical areas in metropolitan areas and some other counties.
They generally have stable boundaries and a population of about 4,000. zip4 code
centers(which were designed by the U.S. Post Office) are a little larger than neigh-
borhoods. Data on population size, median family income, and other characteristics
are available for these geographical units. Marketers have found these data extremely
useful for identifying high-potential retail areas within large cities or for buying mail-
ing lists to use in direct-mail campaigns.
Industry Sales and Market Shares
Besides estimating total potential and area potential, a company needs to know the
actual industry sales taking place in its market. This means identifying its competi-
tors and estimating their sales.
The industry’s trade association will often collect and publish total industry sales,
although it usually does not list individual company sales separately. Using this in-
formation, each company can evaluate its performance against the whole industry.
Suppose a company’s sales are increasing 5 percent a year, and industry sales are in-
creasing 10 percent. This company is actually losing its relative standing in the in-
dustry.
Another way to estimate sales is to buy reports from a marketing research firm
that audits total sales and brand sales. For example, Nielsen Media Research audits re-
tail sales in various product categories in supermarkets and drugstores and sells this
information to interested companies. These audits can give a company valuable in-
formation about its total product-category sales as well as brand sales. It can compare
its performance to the total industry and/or any particular competitor to see whether
it is gaining or losing share.
Business-goods marketers typically have a harder time estimating industry sales
and market shares than consumer-goods manufacturers do. Business marketers have
no Nielsens to rely on. Distributors typically will not supply information about how
much of competitors’ products they are selling. Business-goods marketers therefore
operate with less knowledge of their market-share results.
ESTIMATING FUTURE DEMAND
We are now ready to examine methods of estimating future demand. Very few prod-
ucts or services lend themselves to easy forecasting. Those that do generally involve
Gathering Information
and Measuring
Market Demand^125Calculating the Brand Develop-
ment Index (BDI)TABLE 1.8
(a) (b)
Percent of Percent of
U.S. Brand U.S. Category BDI
Territory Sales Sales (ab) 100