AssODI2

revised August 31, 1999

Babson College
F.W. Olin Graduate School of Management

MARKETS & MARKETING
MARKETING SYSTEMS STREAM

Topic: Modeling Channels Decisions
Case: Optical Distortion, Inc. (A)
Read: Optical Distortion Inc.: Using The Markov Model (Read on Web)
Download Model (Download"r")(Download"ra")(Download"rr")
"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")
Transition Matrix (Download)

In this class we will focus on the results of your efforts to model the economics of ODI's channels decisions. Please work with the models to develop the most profitable -- practical -- plan you can. In class we will look at some of these plans and discuss the relative sensitivity of sales to such decisions as:

Transition Matrix probabilities
Price
Number of Salespeople
Number of Salescalls/Salesperson
Spending on other Marketing activities
Overheds

Prior to class, please develop -- for yourself -- a very brief -- 1-page maximum -- DRAFT strategy memo and a filled in spreadsheet. showing your best DRAFT strategy. As you prepare your memo, please consider the following:

ODI proposes to start in just one region? Does this make sense, or should they go to multiple regions?
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 be 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?

MID-TERM ASSIGNMENT

After this class, please prepare and submit in e-campus your Team or individual FINAL memorandum and spreadsheet, showing your best strategy -- due as shown in the course syllabus.