MathSoft, Inc Case Analysis

Context
• • • • • • MathSoft, a software company specializing in providing productivity
tools for technical

professionals.
Mathcad – company’s core software product was launched in 1986 and has enjoyed good
success in the market. It expanded product line by introducing MathStation in 1988.
It is a high-end software

package to run on Sun Microsystems workstations.

Also introduced series of Mathcad add-on products – Mathcad Application Packs
(APs). President and CEO David Blohm is troubled by company’s marketing and sales
expenses. Sales channels – distributors/retailers, field sales staff and
telemarketing/direct mail.

In face of declining sales and increasing costs, CEO Blohm needs to address 3
critical
questions of venture capitalists.
The tussle
• Tussle between Thomas Stone (VP- Sales) and Gordon Gossage (VP – Marketing).

•
• •

Stone wants to increase field staff by reducing advertising expense.

Gossage insists on advertising being the revenue drivers and points to inability of
field sales in increasing revenue. Decision needs to be made on allocation of
resources and channels.
What channel structure would provide best fit for growing product line?
• Two objectives of the company – increased penetration of Mathcad and boosting
sales of MathStation.

•
• •

Without a solid network, even a superior product can fail in the market.
Company should not be altering its channel options but instead better manage it and
add new partners to cater to highly technical products. Maintain its hybrid channel
structure but allocate products in channel based on their

position in PLC.
• Mathcad is in growth phase but is a core product and has attained awareness .
Channel allocation – more to distributors. • MathStation – introductory product and
highly technical in nature. Channel allocation –

field sales
• • Channel structure allocation is also on basis of segmentation. Single
distributor cannot provide market coverage and penetration.
Evaluating channel structures
Product Distributors/ retailers Mathcad MathStation AP 80% 20%** <20% Channel
distribution Field sales 0% 80% 0% Telemarketing/ direct mail 20% 0% >80%

** Distributors for MathStation should be specialized distributors who can focus

their energies on selling this technical product. •Training and support should be
provided to distributors for MathStation specifically.

•Channels should be evaluated on a timely basis by top management and

regionalterritory evaluation to ensure sustained performance.
What types of communication appropriate for its target markets?
•

programs

were

most

Communication programs need to be directed towards target market with highest

potential.

Advertising:
• Cutdown advertising for Mathcad. • Maintain higher advertising budget for
MathStation with focus on electronic and mechanical journals as they are the
highest potential users and conversion rate is highest

in these journals.
• Telemarketing: • Continue focus of telemarketers on selling APs as MathStation is
very technical for them.

• Use for Mathcad promotion by outbound telemarketers.

How should MathSoft change its channels and communication programs over time? In
particular, how should company allocate its limited marketing and sales resources?
• Change communication programs and channels with product position in PLC.
• • Allocate higher resources to a new product. Pull back field sales and reduce
communication program for products in growth or maturity phase.

Field sales should be more aggressive strategy during product launch and in case of
highly specialized product with attractive commissions provided to sales staff.

•
• • •

Large distributors should be retained for core products with needs of increased
penetration
and spread. Specialized distributors should be developed for highly technical
products. Advertising expense should be reduced and focussed more on MathStation
kind of products

as against Mathcad.
Change with buyer’s level of sophistication.
• As buyer’s requirements and understanding of product technology and market
changes, company’s approach should change.
Thank You