Optical Distortion, Inc.

Written Case Analysis

SUBMITTED BY:
Group 9

Akshay Shenoy (2016PGP046)

Devika Sachdeva (2016PGP117)
Jayti Singh (2016PGP154)
Kritika Kapoor (2016PGP181)
Krupal Patel (2016PGP261)
Rushit Mehta (2016PGP213)
Vandan Vamsi K (2016PGP417)
 Identification of the problem

The main problem faced by Optical Distortion Incorporated is to develop a pricing strategy
and marketing plan for ODIs new product, a contact lens for chickens. ODIs patent is valid for only
three more years till the end of 1978 post which it will face fierce competition in the industry. ODI
intends to gain back all the costs it incurred over development of its revolutionary product and also
intends to have competitive edge in the industry by 1980 by following an aggressive go-to-market
strategy.

Analysis of the situation and the problem

Product: The poultry industry traditionally used debeaking as a method of reducing

cannibalism. In 1962, Ronald Olsen discovered by accident that chickens that had developed optical
occlusion (cataract) were less aggressive and better behaved than normal chickens. This led to the
creation of ODIs first and only product lenses for chickens. The comparison of ODIs lenses over
traditional debeaking is given in the following table:

Effects Debeaking Lenses Savings with ODI lens

Mortality Cost of Cannibalization = 9% x Cost of Cannibalization = 4.5% x $0.216 - $0.108

cost of each chicken = 0.09 x cost of each chicken = 0.045 x =$0.108/chicken
$2.40 = $0.216 $2.40 = $0.108

Reduced Labor Cost ($2.5/hr x 3)/220 ($2.5/hr x 3)/225 =$0.03409 - $0.0333

=$0.03409/chicken =$0.0333/chicken =$0.0007575/chicken

Reduced Food Costs Farmer had to put in extra feed Farmer with 20,000 bird flock (365 x 156 x 0.453 x
in the trough due to billing and can save 156 pounds per day. 0.158)/20000
short beaks = $0.203771/chicken

Cost of Equipment Zero $0.08/pair -$0.08/chicken

Trauma/Productivity Loss: 1 egg per 5 months per (2.4 x $0.5/dozen)/12

Loss chicken No loss =$0.1/chicken
=2.4 eggs/yr

$0.108 + $0.00076 + $0.203 +

Total Savings $0.1 - $0.08
=$0.3316/chicken

Place: There are several factors to think about while choosing geographic areas to launch
the product (a) Effective use of sales force (b) Size of the market in terms to of total lenses that may
be sold (c) Relative distribution of small, medium and large farms in different areas (d) ODIs
perceptions about the willingness of farmers willingness to accept new technologies.
Apart from Geographical Segmentation, ODI can also employ market segmentation is based
on the size of the chicken farms. The large farms with more than 50000 birds are managed like small
manufacturing firms and so may be more likely to accept the more effective new technology.

Price: From 1975-1977 ODI will try to achieve 50% penetration in California markets. This
gives a market size of 0.5 x (9,517,453 + 7,459,944 + 22,952,283) = 19,964,840 pairs. On this basis,
we can calculate the breakeven point in time for ODI. The analysis shows that ODI will be able to
cover its fixed asset investments from a conservative market penetration estimates at the price it has
proposed.

Promotion: ODI will be marketing to poultry farmers through eight leading poultry industry
publications along with participating in trade shows. They can try selling personally to big farmers
by try-and-buy promotional strategy. They can also leverage the humane treatment of chickens that
their product delivers while at the same time increasing productivity as a USP.

Recommendations
ODI should launch in 2 markets: California and South Atlantic with focus on Southern
California, North Carolina and Georgia.
ODIs price projection of $0.08/pair is sound and viable as they per annum breakeven is
achievable even by conservative estimates.
Due to the limited cash constraints of ODI, they need to select the highly profitable segments to
achieve profitability quickly. The cost savings for farms scale with size of the farms and larger
farms allow ODI to better use their sales force (one per 80 farms). Thus, ODI should first target
the largest farms with more than 100000 birds, then the ones with 50000 birds, and finally the
smaller sized farms with 10000-50000 birds in any given region.