Professional Documents
Culture Documents
Management – Marketing
Giampaolo Viglia November 3rd,
2010
Francisco Vargas Vaz Garcia
Kashif Khan
CASE:
Appealing attributes
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can be taken especially by medium and large farms and made into big
savings, and greater revenues afterall.
Medium to large farmers should be appealed by a fast process of
installing the lenses: it’s even faster than debeaking (225 contact lenses
per hour, comparable to 220 debeaked birds per hour). It is also a product
that can be tried on a small fraction of the flock/population of chickens –
therefore making sure the lenses work well. This might be especially
appealing for a farmer of large farms –less risk in the beginning without
trying it on a smaller sample.
Unappealing attributes of ODI contact lenses
The first place where we can concentrate our effort are the California
and Oregon market. This way of conducting our business relies on the fact
that we need to create a wider support in a restricted area where we are
able to concentrate our sources. In addition, if we focus only on these
markets during the first year, we can use only a 5% of the total budget if
we use a low strategy and a 30% with a fast strategy for advertising.
These lands are also the place where such a product was tested
successfully and where our main offices and headquarters are located.
After the first year, however, we have also to invest in other markets,
because we have patents only for a limited amount of years, therefore we
need to be present in those regions before competitors are able to be
there. We can enter after the first year in Washington and West North/Sud
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Central. The additional market size in those regions is composed by
40752930 chickens that is substantially the same amount of California and
Oregon (41421605)
Our market target are medium and large farms, in small farm it’s
difficult to convince farmers how are addicted to traditional techniques.
Moreover, small farms are a decreasing business. The number of such
farms has been declining in recent years, at a rate of ~25% per year.
First, we would like to examine the buying behavior of ODI Lenses. It will
provide the bird’s eye view of how poultry industry regulated.
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What is the buyers’ requirement? ODI contact lens for
chickens.
When will the buyer need the product? When chickens
are about 8 to 10 weeks of age. It is at this time that a complete
pecking order is established.
Why will the customer buy? To reduce the chickens’
vision and hence cannibalism and feed cost.
Where will the customer buy? The buyer will get them
through ODI's salesperson with technical representatives to
make sure that lenses are being used in such a way to maximize
benefits to the farmer.
UNDERLYING ASSUMPTIONS
Following are few basic assumptions which help to formulate effective
marketing strategy to achieve the desired result;
The target population of chickens per quarter is about
10 million growing at 1% a year.
The unit price is set to 35 cents with 1 regional office
and a total of 582 target farms (20.000 chickens or more each).
At the end of the second year we have a cash balance
of $2.174.854.
We use this cash flow to finance our expansion in
North Carolina and Georgia before going national.
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First Two Years
From the beginning of the second year we increase our investment in
advertising and trade shows to $40.000 a year from $15.000 a year
invested before. For the first 2 years the salespeople were advised not to
cover more than 60 farms each, which would increase the adoption
probability in the transition matrix of visited farms. Below you will see the
transition matrix of sales force for visited farms:
Ending state
Reject 0 0 0 1
Ending state
Reject 0 0 0 1
Ending state
Reject 0 0 0 1
3rd Year
The company after becoming the market leader in the 3 major states
expands to other parts of U.S. It will then also set up a R&D lab with a high
investment. It would be necessary to do this so to keep the market share
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through a new and innovative product. The price of the lenses would be
reduced in this year to 18 cents to capture the small size and
unprofessionally managed farms.
4th Year
Reinvent the product following changing trends and rising competition.
Try to come up with more products for the poultry industry. The investment
in R&D department should start paying by now. The company would start
making a shift towards a multiproduct company rather than a single
product company. The company would start looking at new avenues in the
poultry industry, like poultry management services.
5th Year
This year ODI should come out with new products in this year.
Concentrate on launching and marketing the new products for the next two
years. By this time the R&D department should be booming with new
innovative ideas. From this year the target of the company would be to
come out with new products every 1.5 years. The lenses should be re-
invented following the technological advances. Become the number one
company in the poultry products and services industry in the U.S.
Complexity
The concept of chickens using contact lenses might be difficult to grasp
for a consumer who is less educated and more stuck in his or her own
ways. This is especially true for farmers owning small farms as compared to
those owning large farms. This can only be reduced if ODI provides
technical and marketing support to the farmers.
Compatibility
Debeaking crew needs to be re-trained (one-time cost). This is a small
switching cost for the farmers. But the idea of chickens using contact
lenses is very incompatible to the existing way of life and beliefs of the
farmers. Hence, ODI is compatible in the sense that the switching cost from
debeaking to using ODI is less, but is also incompatible in the sense that
it’s a bizarre idea for the farmers.
Communicability
It is hard for a farmer to comprehend putting a pair of contact lenses into
chicken will improve their overall operation, therefore, large degree of work
is needed to educate the farmers. Also, no amount of advertising would
help here – personal selling needs to be done. Communicability also entails
how observable the benefits are. The benefit of reduced cannibalism can
only be observed after 1 year. The benefit of reduction in feed level can be
observed in a month or so in large farms. But smaller farms would take
around 6 months or so to fully observe the feed saving benefits. The benefit
of reduced egg laying traumas can be observed in a week.
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Divisibility
The product is divisible in the sense that the farmer can try out the
lenses on a small fraction of the population of chickens. If the lenses work
well for the small sample, then the farmer can buy the lenses for his/her
entire stock.