OPTICAL DISTORTION INC

CASE ANALYSIS
MARKETING -II

SUBMITTED BY : GROUP 5
SECTION F
Abhinav Utkarsh (2018PGP013)
Bhavana H (2018PGP096)
Jaskiran Kaur(2018PGP161)
Ratik Katheriya(2018PGP293)
Rishabh Sancheti(2015IPM087)
Swarnava Majumdar(2018PGP395)
Vaishali Jaishanker(2018PGP474)
Case Background:
ODI is a single product company specialized in contact lenses for chicken. It’s believed that use
of lenses is a superior solution to prevent cannibalization, compared to available alternatives
like debeaking. The report analyses this claim and brings into light the potential benefits
farmers could receive by switching to ODI lenses. The quantitative comparison reveals the
savings that large farms can make. This can be communicated to devise a successful marketing
strategy. Since the alternative debeaking, is a low cost method, the pricing scheme of lenses is
decided by keeping in mind the perception and willingness of farmers.

Problem Statement:
To decide on the optimum launching strategy of the product so as to drive first mover
advantage and the optimum price for the product given the value derived from it by the
farmers.

Case Analysis – Based on 5c’s, Rogers Factors and Stages of buying new product:
i. 5C’s Analysis:
Company:
 ODI lens was invented by Daniel Garrison’s father and Ronald Olson.
 Businessman James Arnold invested $5,000 in the venture.
 There were several technical difficulties in the product in 1967.
 By 1968, most of these problems were resolved.
 Daniel Garrison purchased 25% of the stock of ODI from the previous owners and was
elected president and CEO of the firm.
 Garrison was able to raise $2,00,000 in the venture capital markets.
 Further reduce chicken mortality.
 Reduce egg production costs due to trauma caused by debeaking
 Reduce feeding cost

Customer :
 As per 1974 chicken census: 3,00,000 farms, 440 million birds
 80% of these housed on 3% of the farms
 Characteristics- Large base, highly concentrated

Competitors:
 As this is a new product and the company acquired the patent for the next 3 years. So
patent and license will protect it from entry of other competitors for at least three
years.
 Debeaking is considered as an indirect competition.

Collaborators:
 It should build a sales network on geographic basis in order to keep strong relationship
with the farmers and convince them to switch to contact lens instead of debeaking.
 Each salesperson should cover at least 80 farms with 1 technical representative.
 Technical representative would take care of the uses of lenses in such a way as to
maximize the benefits to the farmers.

Context:
 The company is launching a new product targeted to a niche segment. It is a B2C
business, where the farmers are the customers.

ii. Roger’s Factors:

Roger’s Five Factors is a product-focused framework for analysing innovation, adoption and
diffusion. ODI being a novel solution to the long known problem of cannibalization among
chicken, it would be effective to use this framework in analysis of the case and the consumer
adoption lifecycle.
In considering these factors, we should keep in mind two issues:
1. Perceptions matter
2. Innovation is relative to the consumer group

a. RELATIVE ADVANTAGE
It refers to the degree to which a product is better than the product it replaces.
From the calculations, it’s evident that the savings obtained by farmers is high and significant
when they switch to ODI lenses from debeaking.
b. COMPATIBILITY
• Compatibility is the degree in which an innovation is perceived as consistent with existing values
and experiences of the potential adopter. This compatibility can be with any of the following:
• Previously introduced ideas • Values and beliefs • One’s needs
In ODI case, the existing solution is debeaking. Considering the trauma and related losses to it,
ODI lenses are seemingly superior in performance.
It reduces the mortality rate and loss in number of eggs, and hence superior in terms of values.
The needs of the farmers here is to reduce cannibalism with minimum casualties and losses. The
innovation in the product aligns perfectly well with the needs of consumers here.
c. COMPLEXITY
Complexity refers to the degree to which a product is difficult to understand and use.
Debeaking was the only solution to cannibalism for nearly 50 years. In the case of these lenses,
it might be difficult for the farmers to understand about the product and its advantages in the
initial stages. However by careful action of personnel from the company, they can identify the
benefits and can see for themselves the reduced ill effects in comparison with debeaking. The
process of installation of lenses is easy and less time consuming, however, care must be taken in
order to avoid casualties regarding incorrect placing of the lenses. Lenses are however not
reusable and the hydrophilic polymer is very expensive.
d. TRIALABILITY
It refers to the degree to which a product may be experimented with on a limited basis. By being
able to try and test a product, the consumer can discover the personal relevance of that product,
thus dispelling uncertainty or apprehension in the process. This factor is most important and
relevant when it’s in the early life of the innovation—i.e. when uncertainty about the benefits of
a product is at the highest. This factor is also very important for higher-risk products—i.e. those
that present a major sacrifice of time, money, or effort.
ODI lenses can be introduced in any of the large farms in an area on an introductory basis.
This can work as a trial run as well as a marketing campaign for the product. As the product and
the idea are so alien to the farmers, the trial run can help them understand the products’ benefits
and change the perception of a higher initial investment. It would back the company’s claims that
suggest a good amount of savings and ethical considerations compared to debeaking.
e. OBSERVABILITY
Observability is the degree to which the results of an innovation are visible to others. Highly
observable products may spur others to adopt the same new products.
In the case of ODI lenses, we can’t say that the product itself is highly visible, but the benefits of
the product compared to its alternative is visible. The insertion of lenses won’t result in great
trauma like debeaking. The chickens can be up and about within a few hours, and neither weight
loss nor reduction in egg production are noticeable.
Stages of buying a new product:
1. Awareness: Farmers are unaware of the advantages of using ODI lenses over the
traditional debeaking process in fostering productivity. Hence, aggressive measures to
create awareness among farmers regarding gains they would get in moving to ODI from
debeaking should be created.
2. Interest: ODI lenses are a product of new innovation that provides cost advantages
against the traditional alternatives. Since ODI lenses might be priced higher than
debeaking cost per bird (without calculating savings from other losses), it might provide
the impression of higher costs. Further, since the ODI lenses have not been
implemented on any farm, there are no observable benefits to be showcased. Farmers
may not understand the value proposition and skepticism to new innovation might be
main barriers to creating interest.
3. Convenience: Farmers are familiar with debeaking and hence, would like to choose the
same over ODI lenses. However, ODI offers lesser implementation time and costs
4. Trial: By offering trial products and showing proof of effectiveness by taking
responsibility of sample farms to reduce skepticism among the farmers.
5. Adoption: Initially, farmers would be reluctant to shift from the traditional methods to
ODI’s innovative method. However, by employing effective promotional strategies and
positioning the product among the identified target group, ODI can ensure higher
penetration in the segment.

Marketing Plan:
Product:
The ODI lenses are a new product with a potential to “revolutionize the business of animal behaviour”.
Features:

 It is made of hydrophilic polymer, and the lens is to be fitted into the eyes of the
chickens.
 The product has been proven to be less traumatising the chickens than the current
process of debeaking.
  The product is not reusable, and it is harder to take out than put in, due to the nature of
the material used.

Manufacturing:

The lens is currently being manufactured by New World Plastics, who are the patent holders for
the hydrophilic polymer. ODI has entered into a contract with them, under which New World
cannot supply the polymer-based products for non-human use to any other firms, effectively
giving ODI a monopoly in the segment to begin with.

Product Viability:

The lens is intended as a deterrent towards cannibalism in chickens and as an alternate to

debeaking. Thus, it is essentially entering the market as a substitute product to the existing
debeaking practice.

ODI management considers the product to be a paradigm shift in the way the industry
operates: however, they believe it will take considerable effort to gather momentum to punch-
through and land an effective market share.

Price:

The following pricing strategies can be adopted by ODI:

a. Pricing at a Premium:
Pros:
ODI can set the price at a high level, because they are the only such product available in the
market. Since premium pricing is ideal for businesses that sell unique goods, this strategy might
work well for ODI.
Cons:
 Since this is a new product launch by a small firm, it will be difficult to sell the product at
a premium.
 The chicken farmers will not be pleased with a future reduction in prices, if ODI needs to
use that strategy for gaining market share.
 b. Pricing for Market Penetration:
Pros:
i.ODI can set the price at a low level, which can be expected to get them a large
market share quickly.
ii.ODI will have better leverage against any future competitors, which they expect to
start entering the market in the next 5 years.
Cons:
i. Lower pricing will result in initial lower profits. ODI being a bootstrapped
organisation with minimal resources, it will be difficult to achieve scale with a
minimal pricing
ii. It will be difficult to raise prices later and justify the same to the customers, until
they achieve a breakthrough in terms of product quality.

c. Economy Pricing:
Pros:
i. ODI can set the price at a level such that they get the most price conscious farmers.
Cons:
i. Since ODI is planning to target only larger farmers, economy pricing might not be a
relevant option to them.
ii. Since ODI is a small business, it will be difficult for them to sustain a lower price by
cutting costs, since they are already operating on a shoe-string budget.
d. Price Skimming:
Pros:
i. ODI can recover its development and initial fixed costs by setting a high price initially,
and then resort to a differential pricing scheme for price-sensitive and quality-sensitive
customers separately when competitor products start appearing.
Cons:
 i. It will be difficult to raise prices later and justify the same to the customers, until they
achieve a breakthrough in terms of product quality.
ii. The chicken farmers who were the initial customers will not be pleased with a future
reduction in prices.

e. Bundle Pricing
Pros:
i. By bundle pricing, ODI can sell different unit multiples of the lenses to the customers at
different prices. This will help them to effectively achieve the target of differential
pricing, without impacting their existing customers negatively.
ii. This strategy will also make it viable for ODI to enter the market of farmers with smaller
flock-sizes, who might be willing to spend more to get a superior alternative to
debeaking.
Cons:
i. Bundle-pricing can come only when ODI has established a foothold in the market. It is a
strategy for expanding their share, not to establish them initially which is their target
right now.

Placement:

The ODI team wants to start offering the product in California, which accounts for one of the
largest potential markets for the product in the United States.

Current Strategy:

The ODI team currently intends to set-up a distribution network via its own salesforce, with
each salesperson covering up-to 80 farms. A technical representative would be providing
support regarding the product to 5 salespersons, and the ODI team intends to scale-up from
this.

Product Delivery:
The product will be delivered in a plastic box, and would be shipped by ODI to the customer
farm. The shipping charges would be included in the price of the product itself, and ODI would
need to have personnel trained in the technique of putting the lens into the chickens eyes.

Promotion:
ODI should identify target group for optimum promotion strategy.
For innovative products, the following categories of buyers define the adoption/innovation
curve:
1. Innovators: Buyers who are constantly seeking innovation in their business.
2. Early Adopters: Cautious buyers with an interest in innovation and trying out new ideas
that improves profitability.
3. Early Majority: Buyers who accept change more frequently than average buyers.
4. Late Majority: Skeptic buyers who administer innovation only when the majority uses it.
5. Laggards: Traditional buyers who advocate the old ideas and critical to new innovation

The target groups should be inclusive of buyers in the first 3 categories – Innovators,
Early Adopters, Early Majority.
There should not be any focus in promotion towards Laggards/Late majority since no
route of promotions would cater to conversion of these buyers.

a. ODI requires qualified sales people to make sure the farmers understand the
advantages of the product and use them in the right way.
b. Providing appropriate number of trial products for the farmers in order to
create awareness regarding the use of the product
c. Adoption of farms by taking complete responsibility, thus creating word of
mouth promotion through those particular farmers
d. Posters with attractive slogans showcasing advantages of ODI lenses over
debeaking (Refer Exhibit 1)
Evaluation of Options:
Based on the price sensitivity analysis, we observe the following:
 Net Contribution for price level $0.08 is least. The company’s objective is to recover
costs at the earliest. Further, for break-even the company needs 40% market share. For
a new product, creating such a large market share would not be feasible given the
prevalent low awareness regarding the product. Also, to increase the price level in
among customer to accept the higher price. Therefore, this price level would not be in
alignment with the company’s objective.
 For Price level $0.20, price level and contribution is highest. However, considering
limited resources available to ODI and the possibility of new companies entering the
segment, this would threaten ODI’s position. Given the profitability and market size of
this segment, competitors would be willing to sell the product at a low price than ODI
which can create hurdles for the company’s survival in the future.
  For prices $0.10, $0.12, $0.15, we need to determine the price sensitivity of the market
using customer surveys and by performing conjoint analysis by compounding this with
offers on service options like free service, discounted service and fixed service prices.
 Since most favorable options that offer benefits on both categories would be the
preferred choice of customers, we do not include the combination of double benefits
for the customers.
Recommendations
 For a successful market penetration, ODI have to convince the farmers about the risk and
benefits which they can achieve through target promotions & education campaigns using
the salesmen, newsletters & trade shows.
 ODI needs to target farms having capacity of chickens more than 50,000 (62.08% of total
market share of the farms having more than 20000 chickens) for achieving break-even
and therefore have to proceed with a B2B marketing strategy by building good sales
network across different geographies
 It is not just lenses but ODI should sell its entire product (guarantee, fixing of lens, packing,
delivery, technical & financial assistance) to the farms for deriving maximum response
 As ODI Headquarters are located in California, it should roll out its product for the first
time in this place and gradually expand to the more profitable areas in its neighbourhood
(South Atlantic & West South Central) for saving distribution cost

Exhibit 1