CASE ANALYSIS

Optical Distortion, Inc. (A)

MARKETING-II DATE O S!"MISSION-#$.%%.#&%#

S!"MITTED "Y'SECTION-C, GRO!( %)' A*+i,it Das- #&%#(G(&&As+.in /i,a0an- #&%#(G(&1) K23ar A*+is+45- #&%#(G(%16 (a0al Anan7- #&%# (M%& Ra,at- #&%#(G(#8# S23it "ap2,i G47a3- #&%#(G()6# /i5as+ K23ar- #&%#(G($)6

SWOT Analysis
criteria examples The product is the new and only product of ODI The company was issued a US patent on the lens in Dec, 1969. The patent for this polymer were controlled by ew !orld"s plastic. Strengths 'ot the (irst mo)er ad)anta%e . Weaknesses +i%h price of the product. criteria examples *inimum price they considered was -./ per bo0 of two pair, or - /.1/ per pair. Smaller firms mar$et their e%%s locally throu%h small %rocery mil$ or mil$ and e%% stores or at their own farms. (or the pro2ect, 3/ people were re4uired but they 2ust had the team of four.

Technolo%ical patent holder. Difficult to mar$et to smaller farms

,ac$ of s$illed manpower. #educed chic$en mortality *inimisin% cannibalism due to cannibalism,ODI had the potential of reducin% farmer&s feed cost. criteria examples ODI"s patent and license protection should hold off competition for at least 5 years. Number of Chickens growing and expected to grow further in future. 80% of the 440,000,000 laying hens in ! were housed on "% of the known chicken farms. ODI obtained a lon% term license from ew !orld for e0clusi)e use of hydrophilic polymer for nonhuman applications Opportunities o 6ompetition Threats ,imited usability of the product

criteria examples The lenses could not be re9used as sterili:ation of the lenses could result in permanent dama%e due to meltin% of the lenses ,ar%e a%ricultural firms can find find ways around their product.

7i% potential mar$et Idea can be easily stolen *edium and ,ar%e firms constitutin% the ma2or part of the mar$et

,imitin% the raw material producer under the licensin% terms

8rotest from animal ri%hts or%anisations +urtin% the birds for personal %ains may attract attention of animal ri%hts acti)ists.

Situation analysis & Frameworks for situational analysis

C2sto34rs' #he customer for $%& would be on the "% of the ! chicken farms with '0,000 or more chickens. #his also includes the medium ('0,000 to )0,000 birds* and large firms(o+er )0,000 birds*. ,edium -arms (o+er which were operated professionally, were usually still owned and managed by the farmers. #he farmers most likely negotiate with the large corporate purchaser of the farms. egg production. /arge farms (o+er )0,000 birds* that had sufficiently complex administration to re0uire the re0uired skill and effort of se+eral people. #heir egg production may be sold through complex negotiated contracts with regional offices of large grocery chains. Cont49t' &n '124 the largest commercial flock of laying hens in the ! was 3.) million birds and 80% of 440,000,000 laying hens in the ! were housed in "% of the known chicken farms. 4ccording to 5arrison.s estimation, the ! chicken population will grow +ery slowly from '12) to '121. 5arrison belie+ed that a farm would ha+e to ha+e at least '0,000 birds to be sold profitably by $%&, but the )0% penetration of such farms within fi+e years was a realistic pro6ection. Co3pan0'

$ptical %istortion &nc is a company that has in+ented special contact lenses for chicken to partially reduce the eyesight of egg7laying chickens. #he reduced +ision due to the contact lenses helps preser+e the life of chickens, increase the producti+ity of egg laying and reduce costs for farmers using the lenses for their flocks. 4t the end of '124, $%&8s owners and management were finali9ing a strategic marketing plan to introduce the lenses commercially early in '12) and work towards nationwide penetration within ) years. Colla*orations' #he company was issued a ! patent on the lens in %ec, '1:1. #he patent for this polymer were controlled by New ;orld.s plastic. nder the terms of the license, New ;orld agreed not to produce the polymer for other firms seeking non7human markets, nor to carry out de+elopment work on related polymers for such firms. $%& agreed to pay New ;orld <)0,000 and to purchase it.s lenses exclusi+ely from New ;orld. Co3p4titors' 4s per the $%& forecast, by '180, big players are expected to compete by finding a way through their patent. (ro*l43 I74nti:ication' a. #o de+elop a marketing plan and pricing strategy which would con+ince farmers of benefits such as reduced cannibali9ation, less trauma and greater feeding efficiency than using debeaking and encourage them to buy it. b. #o find a solution which would enable them to reuse the lenses as melting point of polymer is +ery close to sterili9ation temperature. c. #raining of new staff7 &nstallation of lenses would re0uire manual effort and they would re0uire either trained professionals or train their personnel to install lenses effecti+ely.

E;al2ation o: alt4rnati;4s' #he " main benefits that farmers would be recei+ing from the utilisation of $%&8s lenses are7 =eduction in chicken mortality &ncrease in egg production %ecrease in feed costs >elow are the data to 0uantify the sa+ings that would accrue to the farmers regarding these three factors. 4* !a+ings due to reduction in mortality ?urchase cost per hen @ <3.40 Cost of dead birds @ <0.3' #otal cost @ <3.:' =eduction in cost due to decreased mortality through lens usageA 3.40 B (' 7 0.04)* @ <3.)' (%ue to usage of lens the mortality reduces to 4.)%* !a+ings per chicken @ <&.%& >* !a+ings due to usage of less feed 4s gi+en in the case, '): pounds of feed is sa+ed per day for a population of 30000 birds. Cost of feed is <')8 per tonne $n an annual basis sa+ings per hen @ ('):C')8C":)* B (3C'000C30000* @ <&.##$8

C* !a+ings due to increased egg production #here is a sa+ing of ' egg per ) months due to %ebeaking process Cost of a do9en eggs is <0.)0 !o sa+ings per year per hen due to increased egg production @ (0.)0C3.4* B '3 @ <&.&88 Total Sa;in=s p4r +4n > &.%& ? &.&88 ? &.##$8 > <&.$#)8 Dence, we are able to pro+ide a sa+ing of <0.43"1 per hen due to the effecti+e tackling of the three abo+e mentioned issues through usage of $%& lenses. 4n optimal price to be charged is around <&.#--<&.)&. Eeeping in mind the increased competition in future and the first mo+er ad+antage of $%&, it should charge a price within this range as it has a two7fold ad+antageA '. #his price would allow a sufficient contribution margin that would support $%&8s future expansion plans regarding a nation7wide rollout of the lenses. 3. -armers would get a sa+ings of more than <0.'3 per hen, which will help in 0uick market penetration and increasing $%&8s market share as much as possible before competition sets in. C+oic4 o: opti3al ar3 si@4' #he next decision that $%& will ha+e to take is regarding the si9e of the farms to be targeted. $%& should consider the following segments on the basis of flock si9e7 '. 30,000 F 41,000 birdsBfarm 3. )0,000 and more No of farms with 30,000741,000 chickens @ 38): No of sales people re0uired @ 38):B80 @ ": Cost of sales representati+e @ ": C 40000 @ <'440000 Cost of technical representati+e @ ":C")000B) @ <34)000 Total costs :or #&5-$85 @ '440000 G 34)000 @ <%,A8#,&&& No of farms with )0,000 and more flock si9e @ ))2 G "'4 @ 82' No of sales people re0uired @ 82'B80 @ '' Cost of sales representati+e @ '' C 40000 @ <440000 Cost of technical representati+e @ ''C")000B) @ <'0)000 Total costs :or -&,&&& an7 3or4 :ar3s @ 440000 G '0)000 @ <-,$-,&&& %ifference in sa+ings @ ':130007)4)000 @ <''42000 "as47 on t+is .4 .o2l7 r4co334n7 ODI to tar=4t :ar3s .it+ :loc5 si@4 o: 3or4 t+an -&,&&&. inal R4co334n7ation' >ased on our calculations, we belie+e that $%& should charge farmers a price in the range of <0.3)7<0."0. %epending on how aggressi+e the company would like to be, it can price itself on the higher end of this range. Dowe+er, it should keep in mind factors such as the expiration of its patents and de+elopment of alternati+e products by competitors and the impact that these factors will ha+e on the company. 4s $%& is planning a national introduction of the product by '122, it should focus on penetrating the current market, California, as much as possible as it has the highest number of chicken farms. >ased on the response the company gets from this market, it can then focus on simultaneously launching the product nation7wide in phases and inno+ating and creating new products so as to de+elop into the multi7product, multimarket company that it wants to be. 4s $%& is currently a small firm with limited financial and manpower resources, it should target the farms with more than )0,000 birds as this would result in a sa+ings of <''42000 for the firm. #hese large farms ha+e cash flows of more than '3 million and it would be easier to pitch to these farmers the

benefits of sa+ing <0.'3 per bird as it would translate into enormous cost sa+ings for these firms.