Transition Matrix      (Download)

ODI is a new company, formed to market an agri-business innovation -- a "contact lens for chickens" -- as described in the ODI case.  To market it successfully ODI needs to understand the "dynamics" of the impact of its marketing efforts.  These efforts will focus on disseminating knowledge about the product through the potential market -- and then turning this knowledge into interest and orders. To do so ODI needs to understand the size, structure, and product adoption behavior of farmers in its potential market segments – how they learn about, try, and adopt products and practices.

In class we will look at some of these issues and consider the relative sensitivity of sales to such ODI decisions as:

• Product characteristics
• Customer characteristics
• Price
• Number of Salespeople
• Number of Salescalls/Salesperson
• Spending on other Marketing activities
• Overheads

The ODI Markov Model

Professors Eng and Rao have developed a "Markov Model" to help model the adoption prrocess.  You can download this model at: (Download"r")   Before class you should meet with your team in person or elctronically and discuss your understanding of ODI's business and the Markov Model.  You will see that the key to this model is the "Transition Matrix" (Exhibit 1a)  that "drives" the model.  Exhibit 1a contains some "guesses" about the market made by prior teams.  So, in preparation for class, try to make your own best guesses as to what the numbers/probabilities in this matrix should be -- and how these peobabilities of adopting the ODI product will change as you raise or lower prices, add sales calls or do advertising.   In class we will focus on these "guesstimates".  Once you have nmade your cases, go to the ODI model and change the assumtions to reflect your best guesses.  Then make a "trial run" of the "r" model to see whether you can find a strategy for ODI to make money. We will discuss your strategies in class.

Using the ra and rr Models

The "odi7r" version is the original model and you should begin with it.  This version requires you to fill in the full salesforce allocation, one period at a time -- which is a time consuming process.  As a Team, please fill in a version of it prior to the class.

To assist you in working with the model, Prof. Isaacson has developed 2 variations that make it easier for you to speed up your data entry processes as described below.  You will find them on the course Website at
"Clean" ODI Model for EXCEL 95/97  (Download"r")   (Download"ra")   (Download"rr")
"Clean" ODI Model for EXCEL 97/2000 (Download"r")   (Download"ra")   (Download"rr")

For the second class, you may prefer to use the "odi6ra" or the "odi6rr" versions of the model.  The "ra" version has set priorities for salesforce assignment -- assuming that farmers who reject the product once will never purchase.  The "rr" version has set priorities assuming that farmers who reject may change their minds and become "triers" if you contact them  We will discuss these assumptions in this class and you can then decide which version to use for the next class and for your final submission. (See assignment for next class)  (Please do not "cheat" by starting with these versions.  You will learn something important from using the original version first and then "up-grading".)

For instructions on using the model(s) go to:

on the course Web site. Your team should then download the model(s) and use them.

As you prepare this case, please think about these issues:

• Does ODI have "the right product, at the right time"?
• Does it provide identifiable advantage/value to its target customers?
• What will it take to convince potential customers that the ODI product is worth buying/using?
• How will they make this decision?
• How would you segment this market?
• Are some market segments more attractive targets than others? How well do your segments "map on to" your plans for channels, pricing and promotion?
• Based on your answers to the above, what sort of "model" will predict sales?
• Use the Markov Model to make an 8-quarter sales forecast.
• The model will  help you forecast sales, costs and profits.
• Many students feel that the ODI Team has set very high cost levels. Feel free to reset them to levels you feel are more appropriate.
• Based on all of your decisions, what will your marketing program cost for each of the next 8 quarters?
• Given your forecasts, will be the cash flow of the company over this period? Use the Model to test sensitivities. Can you revise your plan until it is realistic in cash flow terms?