MathSoft

1
MathSoft

• Distribution Channel Strategy
• Spring 2000

2
Marketing Errors in MathSoft

• Misidentification of major decision influence
  among buying group members
• Ineffective reaction to field sales reports
• Lack of appreciation of
• advertising potential
• the distributor/ retailer role
• Absence of adequate marketing research

3
Buying Group Identification

• Misperception of MIS role in Buying Group
• Key decision makers were individual end-users
• Each end-user had a budget for soft-ware
• Fostering creativity among engineers is more
  important than saving pennies on software that
  may be seen as inappropriate
• MIS managers were not in a position to evaluate
  the capability of the software
• Finance managers were largely out of place

4
Ineffective Reaction to Slow Sales

• Sales force early inability to close sales was
  not recognized as a serious problem
• Inability to close large volume sales of
  MathStation was a warning shot off the bow
• MathStation product had not won plaudits
• Nine sales may have involved discounting
• Assessment of a longer sales period not backed by
  detailed sales call analysis

5
Sales Force Economics

• Initiation of account relationships has high
  start-up costs, requires multiple sales calls
• Time consuming prospect identification seriously
  reduces sales force efficiency
• The absence of repeat sales opportunities
  prevents capitalizing upon front end costs
• Detailed tracking of early sales force call
  activity sheds light on sales cycle

6
Potential for Advertising

• Millions of potential buyers plus students
• Decisions made individually according to each
  buyer's needs
• Buyers highly qualified to judge product
• Word-of-mouth important from early adopters
• Only a small portion of the market tapped
• Continuing potential for upgrades

7
Economics of Pull Marketing

• Typical telemarkers resellers have limited
  capability to deliver intensive information
• Continuous advertising required because of
  competition from other information sources
• Planned promotional programs
• provide an important spark to maintain reseller
  interest in supplier
• Offset aggressive pressure by major resellers for
  price advantage

8
Assortment Information

• Broad-assortment resellers (such as the
  distributor channel) facilitate
• easy accessibility across the market
• end-user product selection and availability
• Broad-assortment distribution systems
• seldom provide intensive information to
  end-users
• Price, convenience are the bases for intra-brand
  competition among these resellers
• VARs, w/ narrow assortments are more effective in
  using persuasive information

9
Telemarketing's Effectiveness

• Product availability must not be critical
• End-users must have good product evaluation
  capability to offset risk
• Weaker end-users require strong-return product
  guarantees, product support
• Enhanced by catalog mailers, demonstration
  diskettes to visualize product
• Depends upon a continuous stream of high-quality
  leads

10
Telemarketing Relationships

• Conflict potential of telemarketing
• High with regard to information (pre-sale)
  service channels
• Low with regard to logistic-service channels
• Telemarketing provides opportunity for the sale
  of complementary products
• Build up of end-user information files over time
  provides basis for cross-selling
• Opportunity to develop cooperative marketing
  programs with other sellers, e.g., Sun

11
Ingersoll Rand Deja Vu

• Background of executive chosen to choose the
  channel may determine channel choice
• Executive ability to transcend channel boundaries
  is limited
• Culture of a direct channel often antithetical to
  the indirect
• Knowledge, relationships, attitudes of sales
  executives derived from prior channel experience