Optical Distortion Inc. is a small new company with a patent for an innovative new product which is a contact lens designed to impair the eyesight of chickens. The analysis in this paper provides recommendations for ODI on their marketing and pricing strategy to launch this new product. Market Segmentation
There is substantial evidence in the case to suggest that ODI should segment the market based on flock size of the farms and focus their marketing and sales strategy towards farms with more than 10,000 birds. As illustrated in Exhibit 4 of the case study, number of chicken farms with flock size less than 10,000 has vastly shrunk between 1964 and 1969. This trend has continued and it is estimated that between 1975 and 1979 80% of the chicken population would be on farms (3%) with 10,000 or more birds. With limited resources and sales personnel it makes sense for ODI to characterize their served available market (SAM) as medium and large farms only and not focus on small farms at all.
Besides, Small farms have smaller henhouses and cannibalism in birds may not be a real concern for these farmers. The production loss because of cannibalism may not be large enough to make ODI's product appealing to these customers. Also, Garrison believes that a farm would have to have at least 10,000 birds to be sold profitably by ODI. With these arguments and the fact that small farms market segment has been declining at a rate of 25% every year, ODI can wisely exclude this segment from their marketing focus.
Geographically, ODI should focus on the pacific region, starting with California and Oregon because that's where ODI's lens has been tested on a number of farms with satisfactory results. Acquiring 20 farms in just two Southern California counties can give them an impressive start with a market penetration rate of 7% in the first year. As they acquire farms in California, ODI should extend their operations to North Carolina and Georgia which along with...