ENM 555 Week 1 Assignment 1: Business Shift Model

Dr. Daniel Zalewski

Manisha Pamulaparthi

ENM 555

8th Aug 2014

Business Shift

MODEL DESCRIPTION:

This model is basically about shifting an in-store business firm to an online E business. And the challenge is to move in-store customers to online. The goal is to make the e-business a much larger percent of the overall business. So we take in-store and online customers as stocks and we use a flow pipe to move the store customers in to online customers.

The simple way to gain customers or shift customers to the online business is through word of mouth (WOM). One way to accelerate word of mouth process is through raising market awareness of the e-business. There is a process of building awareness. There’s also a process whereby awareness is lost.

INFLOWS: awareness_resulting_from_spending = marketing_spending*awareness_of_e_business_per_$

OUTFLOWS:

losing_awareness = Awareness_of_E_Business/2

E_Support_Quality(t) = E_Support_Quality(t - dt) + (building - losing) * dt

INIT E_Support_Quality = 0

INFLOWS:

building = investment_spending

OUTFLOWS:

losing = E_Support_Quality/12

Instore_Customers(t) = Instore_Customers(t - dt) + (-converting_to_online_customers) * dt

INIT Instore_Customers = 1000000

OUTFLOWS:

converting_to_online_customers = Online_customers*instore_to_online__WOM

Lost_online_Customers(t) = Lost_online_Customers(t - dt) + (losing_online_customers) * dt

INIT Lost_online_Customers = 0

INFLOWS:

losing_online_customers = Online_customers*online_customer_loss_fraction

Online_customers(t) = Online_customers(t - dt) + (converting_to_online_customers + gaining_new__online_customers - losing_online_customers) * dt

INIT Online_customers = 100000

INFLOWS:

converting_to_online_customers = Online_customers*instore_to_online__WOM gaining_new__online_customers = Online_customers*actual_new_customer_wom

OUTFLOWS:

losing_online_customers = Online_customers*online_customer_loss_fraction actual_new_customer_WOM =

(0.00, 6.10), (10.0, 6.00), (20.0, 5.75), (30.0, 5.65), (40.0, 5.30), (50.0, 4.85), (60.0, 4.40), (70.0, 4.10), (80.0, 3.55), (90.0, 2.80), (100, 0.05) base_new_customer_WOM = GRAPH(Awareness_of_E_Business)

(0.00, 0.005), (10.0, 0.025), (20.0, 0.05), (30.0, 0.07), (40.0, 0.105), (50.0, 0.135), (60.0, 0.17), (70.0, 0.195), (80.0, 0.255), (90.0, 0.32), (100, 0.405) impact_of_lost_customers_on_WOM = GRAPH(Lost_online_Customers)

(0.00, 1.00), (100000, 0.99), (200000, 0.982), (300000, 0.945), (400000, 0.907), (500000, 0.847), (600000, 0.795), (700000, 0.72), (800000, 0.675), (900000, 0.63), (1e+006, 0.585) instore_to_online__WOM = GRAPH(Awareness_of_E_Business*Instore_Customers)

(0.00, 0.00), (1e+007, 0.09), (2e+007, 0.18), (3e+007, 0.255), (4e+007, 0.31), (5e+007, 0.345), (6e+007, 0.36), (7e+007, 0.39), (8e+007, 0.405), (9e+007, 0.41), (1e+008, 0.42) investment_spending = (100-marketing_%_of_budget)/100*total_budget marketing_%_of_budget = 75 marketing_spending = marketing_%_of_budget/100*total_budget online_customer_loss_fraction = GRAPH(E_Support_Quality)

(0.00, 0.74), (10.0, 0.725), (20.0, 0.68), (30.0, 0.56), (40.0, 0.35), (50.0, 0.255), (60.0, 0.15), (70.0, 0.105), (80.0, 0.065), (90.0, 0.035), (100, 0.02) total_budget = 20

Total_Customers = Instore_Customers + Online_customers