Optical Distortion, Inc.

(A)
23P066 - Abhijit Bose
23P068 - Abhishek Srivastava
23P075 - Arunav Akshat
23P104 - Rutuja Sanjay Dhamse
23P118 - Srivatsa Patnaik
23P121 - Vaibhav Suvarna
23P122 - Varun Acharya
ODI
Overview
In 1974, Daniel Garrison (President & CEO) asked Ronald Olson (Marketing VP) to develop a marketing plan
for ODI’s new and only product - ODI Contact Lens
Daniel hoped to introduce ODI lens in atleast one region in 1975
He wanted to achieve national distribution by the end of 1977

Company Background
1965 - Robert D Garrison invented the ODI lens
1966 - Robert D Garrison, Robert Olsen (farmer) and James Arnold (businessman) established ODI
1968 - The problem of retention in chicken’s eyes is resolved
1969 - A US patent for the lenses was issued
1973 - D. Garrison obtained license from New Plastic World for the exclusive use in nonhuman application
1973 - Daniel bought 25% of ODI stock and was elected as President & CEO. Ronald Olsen - VP, Marketing

Poultry Industry
1930 - Farmers decided to use henhouse to improve production effeciency
1950 - Increased concentration of use of cages in the poultry industry
1974 - 2.5M birds in US; 25% of nation’s chickens - California, North Carolina & Georgia
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Forces Analysis
Cannibalism among Chickens
What is Cannibalism?
Chickens had a definite social structure.
They established a hierarchical type of social organization through fighting and pecking
If a submissive bird raised its head too high, it was immediately pecked by a superior bird to lower its head
Cannibalism caused less production of eggs by submissive birds and sometimes death of birds

Solutions to Cannibalism?
Debeaking ODI Lens
Advantages Advantages
Peck order remain unaffected Reduced cannibalism mortality from 25% to 4.5%
Reduced the efficiency of beak as a weapon Feed savings
Reduced mortality due to cannibalism from Savings on egg production
25% to 9% Labor cost on inserting lens vs. that of debeaking
Disadvantages No great trauma
Considerable trauma (Weight loss, Disadvantages
retardation of egg for atleast a week) Difficult to replace or remove

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PROBLEM IDENTIFICATION
To develop a marketing plan and pricing strategy which would convince
farmers of benefits such as reduced cannibalization, less trauma and
greater feeding efficiency than using debeaking and encourage them to
buy it.

To find a solution which would enable them to reuse the lenses as melting
point of polymer is very close to sterilization temperature.

Training of new staff- Installation of lenses would require manual effort

and they would require either trained professionals or train their personnel
to install lenses effectively.
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SWOT Analysis

Strengths: Weakness:

1)First mover advantage 1)High price

2)Technology Patent 2)Limited resource
3)Cannibalization Reduction 3)Difficult to market to small poultry
4)Reduced trauma
5)Reduced feed cost
farms
4)No recycling of lenses
5)Profitable business only for medium
and large scale farms
SWOT
Threats:
Opportunities:
1)Competition from new entrant
1)No Competition 2)Regulatory challenges
2)Big and untapped market 3)Limited usability
3)Growing market of large poultry 4)Protests from Animal Rights body
farms

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PORTER’S 5 FORCE ANALYSIS
Threat of New Entrants Threat of Substitutes
Low threat of new entrants. Low threat of substitutes.
Strong patent portfolio protects IP. No direct substitutes available.
Difficult for newcomers to replicate tech. Competing with established players in poultry industry.

Bargaining Power of Suppliers Bargaining Power of Customers

Low supplier bargaining power. Moderate buyer bargaining power.
Small, dedicated team at the company. Relatively expensive product.
Limited supplier bargaining power due Product's proven effectiveness provides
to company size. company leverage.

Competitive Rivalry
Moderate competitive rivalry.
Facing established players with more resources.
Opportunity for expansion due to growing market.

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New Product Development Process
EVALUATION OF ALTERNATIVES (1/2)
Below are the data to quantify the savings that would accrue to the farmers regarding these
three factors.
A) Savings due to reduction in mortality
Purchase cost per hen = $2.40
Cost of dead birds = $0.21 Total cost = $2.61
Reduction in cost due to decreased mortality through lens usage
= 2.40 / (1 - 0.045) = $2.51
(Due to usage of lens the mortality reduces to 4.5%)
Savings per chicken = $0.10
B) Savings due to usage of less feed
As given in the case, 156 pounds of feed is saved per day for a population of 20000 birds.
Cost of feed is $158 per tonne on an annual basis savings per hen
= (156*158*365) / (2*1000*20000) = $0.2249
C) Savings due to increased egg production
There is a saving of 1 egg per 5 months due to Debeaking process
Cost of a dozen eggs is $0.50 So savings per year per hen due to increased egg production
= (0.50*2.4) / 12 = $0.099
Total Savings per hen = 0.10 + 0.099 + 0.2249 = $0.4239
EVALUATION OF ALTERNATIVES (2/2)

Hence, we are able to provide a saving of $0.4239 per hen due to the effective
tackling of the three above mentioned issues through usage of ODI lenses.
An optimal price to be charged is around $0.25 - $0.30.
Keeping in mind the increased competition in future and the first mover
advantage of ODI, it should charge a price within this range as it has a two-fold
advantage:
Price ensures a sufficient contribution margin.
Supports ODI's future nationwide lens rollout.
Farmers save over $0.12 per hen.
Aids quick market penetration.
Increases ODI's market share before competition.
 Consumer Education

Promotional activities must be high on focus; since it is a new product. A dedicated

team to achieve this objective and push the product
4P Analysis
Product Features Placement
- Hydrophilic Polymer material - Choice to enter market region by region from California
- Red tint - Each salesperson covers maximum 80 farms
- Distortion built into crown - One technical representative per 5 salespersons
- Slightly larger than human lenses - Technicians are involved in distribution since the
- Revolutionary technology product is hard to apply without technical help

Price Promotion
- Minimum price is $0.08: Savings per bird for - Monthly advertising through 8 industry leading
farmer will be $0.34 publications and participation in trade shows
- Maximum price is $0.36: Savings per bird for - Promotion on a national basisi up to 2-3 years
farmer will be $0.06 - Use of personal selling to each farmer using
specialized technicians
- ODI cannot count on much Word of Mouth in the
short term since the technology hasn’t been
implemented yet

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STP Analysis
SEGMENTATION
Farm Segmentation based on size
Geographical Segmentation
Size of
Characteristics
flocks

• Family operated, local selling

Small
< 10,000 • Low Cannibalism (not
Farms
concerning)

Medium 10,000 - • Professionally operated

Farms 50,000 • Large transactions

• More than one hundred

While South Atlantic has the larger share of chicken employees and product
Large
population overall, the intensity of population is much higher > 50000 differentiation
farms
at California and easier to target • Complex negotiations with
large grocery chains
Benefits will be more evident in larger farms

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TARGETING

Target areas: California coast >

South Atlantic > West Central

Target Segment: Large farms

POSITIONING
Non-differentiated product
Only producer of contact lenses for non-human purposes
More focus required on customer education / category creation
Target: 50% penetration of farms in farms with greater than 10000 birds within 5 years
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Financial Analysis

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Key Recommendations
ODI proposes a $0.25–$0.30 price range for their product, with room to err on the
higher end for a more aggressive approach.

The company should consider external factors such as patent expiration and
competition when deciding on its price strategy.

Initially focusing on the California market, which has the highest concentration of
chicken ranches, ODI plans to introduce the product countrywide by 1977

Farms with over 50,000 birds should be the primary focus of ODI due to their
bigger revenue streams, since this would result in $1,147,00 in significant cost
savings

To transform into a multi-product, multimarket enterprise, ODI had to aim for a

progressive expansion across the country while simultaneously creating and
innovating