Optical Distortion Case Analysis
In an effort to solve the cannibalization problem of chickens and to find a more efficient alternative for the practice of debeaking, Robert D Garison, owner of a large farm in Oregon, and Ronald Olsen, a businessman, formed the Optical Distortion Lens Inc. in 1965. They invented a revolutionary product, a lens for chickens that would stop the cannibalization between chickens and received a patent on it. In 1973, Optical Distortion got into an agreement with New World Plastics (manufacturer of hydrophilic polymer, which eliminates the irritation problem) which spun-off the products into the markets. This paper will first take a closer look at the ODI lens, will then discuss into what geographical regions ODI should expand and what pricing strategy to implement. Furthermore, the paper will gives suggestions on marketing activities and concludes with recommendations for ODI.
Closer look at ODI lenses
The revolutionary technique of using contact lenses may be appealing to a large number of medium and big scale farmers. Foremost, because it actually confronts the cause of chicken cannibalization instead of just minimizing its effects, as debeaking does. By altering the chickens vision the chicken cannot establish a peck order which is the main reason for cannibalization, thus reducing the mortality rate significantly from 9% to 4,5%. In contrast to debeaking, it does not traumatize the chickens and thus there is no loss of productivity due to fewer eggs laid or mortality of traumatized chickens. Furthermore the lenses have the potential to reduce the farmers feed costs by, especially important for farmers with large flocks.
The question whether these new lenses are more ethical to use remains controversial, yet we believe as this technique at least does not traumatize the chickens and hence may be quite appealing to many farmers. Same holds for the difficult topic of introducing this new technology to the traditionally conservative chicken farmers, especially smaller family owned farms might be reluctant. Since there are no high concerns of cannibalization at small farms (where less birds are confined in cages) these farmers may find the new technology unnecessary and unappealing. Furthermore, most farmers will find unappealing that the new lenses can hardly be removed once in use and are not reusable. Nevertheless, the process may still be very appealing to them since the process takes just as long as the debeaking and significantly reduces costs such as feed, labor or losses in productivity.
Recognizing the geographic areas to focus on and the market segments to introduce the lenses in is really important to ODI. In order to know where ODI should focus its efforts, we have to examine its profitability by regions within US. As we know, profitability is the business's ability to generate earnings as compared to its costs. As for ODI, there are 4 regions of US with the highest profitability: the pacific region, the south Atlantic region, the west south central and the east north central (further details on profitability regions in US are given in Appendix I). Of these 4 regions, we will take in consideration the two most profitable ones: the Pacific Region (including California with the highest amount of farms) and the South Atlantic Region (including Georgia and South Carolina with the highest amount of farms).
It is important to examine the market size of these regions. Sizing the market is a necessary task for business and marketing planning. To evaluate the potential market size of the highest profitable regions, we will consider an estimated penetration rate of 50%. For Pacific Region the market value size is $22,758,010 and for South Atlantic Region is $23,186,046. As we can see, the market value size is high; therefore it will be convenient to invest in such high potential markets (details and calculations of the markets values are given in...
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