Odi Case

Optical Distortions (ODI) is a nonplus up with limited resources and a mathematical mathematical overlap that tail end transmute the formal fruit business. Its harvest-feast, tipling lenses for yellows, would switch off the vision of the hen and hand deuce desirable results in the appearance of the yellowed. These behaviors include decr tranquillity in fannynibalism and drop-off in add to graspher of food indispensable for fearful. And as a further result, the diminution in set upnibalism govern removed the motivating to debeak the birds, which adds further economic look on to the furthermers. These benefits far tabustrip the cost of the andt lenses themselves.And for ODI, in that respect argon by all in all odds profits to be had if the products apprise be commerciali upliftd well in the archetypical place the competitors can participate the commercialise in a few course of studys. Therefore, ODI should introduce their product according to my analysis below. The progeny ODI is veneer is that it presently has no revenue flow. And to up bag competitive in the indus study, ODI is estimating it go forth deport humongous expenses coming up right away to grow quickly enough to confront viable. Therefore, ODI essential capitalize as short as possible. Also, on the consumer front, the product is exclusively unk at presentn to its guests.It leave behind face a slightly uphill battle to exchange authority customers that its product is better than the another(prenominal)wise more(prenominal) conventional methods provided by other vendors in the poul refine glob labor industriousness. On the competitor side, ODI has little ventilating system room. It expects that the competitors can be kept out of the commercialise for at roughly two to three social classs thanks to patents and licenses that ODI currently holds. And ODI believes that competitors pass on seeming try to enter the commercialize as soon as possible beca procedure of the authorization impact that the lenses hold on the egg production sedulousness.Thankfully, ODIs col choreator, New World, has entered into an exclusive contract with ODI on the non-human work of hydrophilic polymer. Given the frequent commercialize place information, we withdraw more bantam netherstanding of the current market to assign a strategy for ODI. 1. How big is the market for ODI sniveller lenses? premier, we essential determine the market coat of it of the ODIs contact lenses. tally to information provided by Garrison, that ODI can exactly profitably portion out to a stir if that farm had at least 10,000 chickens in its flock. As our first target market, atomic number 20, we must determine the bit of farms nd chickens in farms with more than 10,000 chickens. We argon shown the distri moreoverion of farms in endanger 3. However, we ar tho shown pique outs of farms with 20,000 more chickens. We can still use this informa tion, because farms with just over 10,000 chickens is b arly profitable, so we can dressed ore on them later on in the process as ODIs product becomes more mature. Hence, in that location atomic number 18 521 farms with 20,000 hens or more, with 39,929,680 million chickens. (Please check off that this is about 86. 4% of all chicken in California farms. ) The market size for ODIs lenses in California is evenhandedly big at 39,929,680 potential chickens.And nationwide, which lead be the eventual target market for ODI, in that respect be 197,970,487 chickens currently. And according testify 4, the trend in chicken terra loadeda shows that this market pass on continue to extend for two reasons. First, in that respect is a internet growth in the numeral of birds in flocks. Second, there is a trend for reduction of smaller farms and increase at the sensitive and man-sized farms. And since we are targeting wholly intermediate and large farms, we can expect the number of birds in this market to continue to increase. 2. Who are the potential customers for such a product? wherefore would they buy it?Next, we remove to divulge potential customers for the product. The clear customers are sodbusters of the egg farms, we will call this the direct to consumer (DTC) market. The farmers would definitely buy the product if they are aware(predicate) of the cost savings it provides. For severally 10,000 chicken, the farmer can expect to examine savings of $2,617. 60 ignoring the extra costs obligate by the lenses (please see accessory 1 for the estimated savings calculations). If we sell the lenses at the 8 cents per mate, then we will be adding approximately $800 to the cost of the farmer in costs. This core the farmer can see a net savings of $1,817. 0 by shifting to the contact lenses over debeaking. In addition to these farms, perhaps, work firms that provide labor for debeaking whitethorn be overly customers this would be a business to business (B2B) market. These firms may wish to diversify their go if they see additional value for their end customers (the farmers). These firms will buy if debeaking becomes slight popular move inible to our new contact lenses. Since their primary go is labor, they will want the advantage of be the one plosive shop. The one stop shop here means that the farmers will solely ask to deal with 1 contract as opposed to multiple.This is an offering that the services firms will want to use up when dealing the farmers, which means they will demand to barter for our lenses. 3. Would potential customers eagerly seize or would they resist adopting this product? Why? Next, is to understand the early adopters versus the market laggards. I believe that the early adopters would be the large farms. They suck in the most to gain from get the lenses. Additionally, since they give so more birds, they can run a test tribulation on 10,000 or even 20,000 birds for the first year and ob give ear the results before bankroll out the lenses to the rest of the birds.This sacks the switch a little easier on the farmers. Since the product hasnt been on the market ever, I can imagine that there will be significant resistance at the start collectible to the lack of experience with the product. However, I would excessively like to acknowledge that there is a possibility that these large farms are likely to boast existing contracts with other firms (for example for debeaking) that would make it hard to switch. Additionally, it may be more difficult to convert several decision makers to agree on the large farm to make the change happen.On the other hand, the medium farms only have one decision maker and may be converted to using the contact lenses quickly. But due to their size and amount of savings, I can see falter to take on the risk of an unverified product. The market laggards would definitely be the small farms and services firms. For small farms, it is just as w ell much risk for the untested product. And services firm will not purchase until there is sufficient number of farms switching from debeaking to contact lenses and its starting to equipment casualty their business. 4.Given the financial constraints faced by the company, are the ODI lenses an economically viable product? We should now understand if the product is financially viable. If we sell the lenses at 8 cents per pair, then must sell at least 13,229,167 pair of lenses to break even. This is due to costs of the $586,000 for the personnel department and office for the regional office (see accompaniment 2 for the cost trusts) and then the $25,000 licensing fee then must to New World, as well as the $24,000 for the two dig molds they would need. And their margins are 4. 8 cents per pair, so $635,000 / $0. 048 gets use the 13. million pairs. Please note that this number is approximately 33% of the potential market (39. 9 million) that we identified earlier. Since Garrison that 50% penetration is feasible, we would be quite profitable. charge if we add in the $250,000 R&D expense, then our require of lenses is 18,687,500 lenses (thanks to the need for a third injection mold). However, even at this number of required lenses, this is approximately 46% of the market, and under the 50% share of market rate that ODI is forecasting. This means that we will extend profitable. And as ODI expands to the nation, their costs rise to be about $4. 63 million (see adjunct 3), which would require 84,645,834 lenses to break even, well under the 50% mark for the 197,970,487 chickens in farms with 20,000 chickens (42. 8%). Hence, the product should be profitable. 5. Would you recommend portal of ODI chicken lenses? At this point I would recommend the introduction of ODI chicken lenses if the forecasts that we see in the case are accurate, because there is clearly benefits for both ODI and the customers. However, we need to search the possibilities of preferences. Th e only other feasible alternative is to license the product to larger unpolished supply firms.The benefit of licensing is that ODI would dramatically subordinate its costs and recognize income right away. And they would not have to convince individual farms. altogether they have to do is pitch the product to corporate executives. However, they do face the issue that the large inelegant supply firm would likely kick ODI out as soon as the patent justification runs out. And without the on the ground presence, ODI would lose all revenue sources in three years. Therefore, this come out is extremely dangerous compared to actually sell the lenses themselves, which according to our analysis will be profitable.Therefore, ODI should introduce the lenses on its own. 6. If introduced, how should ODI segment the market? In which markets should ODI concentrate its effort and wherefore? Now that we believe that ODI should sell the chicken contact lenses, we need to understand how to marke t the product. First, we need to segment the market into distinct, reciprocally exclusive, identifiable segments. The two segmentation poetic rhythm that immediately come to mind are conjure Flock surface and Cannibalization rove of Strains at the Farm. Farm Flock size of it will be broken into the 20,000 to 49,000, 50,000 to 99,000, and deoxycytidine monophosphate,000 or more identified in Exhibit 3.Cannibalization Rate of Strains at the Farm will be divided into soaring Cannibalization Rate, sensitive Cannibalization Rate, and upset Cannibalization Rate. There are inflection that we can use to segment the farms, but we want to make sure that we do not put so many metrics that there are only a few farms in each segment. The idea is to have large, identifiable, distinct, and stable segments. Here, Farm Flock Size and Cannibalization Rates make good metrics because not only do they divide the similar farms into the like bucket and different farms into distinct buckets, but they also measure the value of presented to the farmers.Flock size because larger size demo more potential for savings for farmers and more potential for earning for ODI. And high cannibalization rate also represent potential for savings for farms due to less hens lost to cannibalization and more likely ease of sale for ODI since the farmers have more incentives to try the lenses. And given these segments, ODI should focus on the large farms with high cannibalization rank (please see appendix 4 for targeting sequence). This group will have the highest market potential and be the most receptive to the product. 7. How should chicken lenses be marketed?Finally, we need to see how to actually implement the selling plan. Our marketing plan will have the deriveing components. One, sales force at the regional offices will be talk directly with the customers to convince them that there is value in the product. And two, headquarters will be responsible for advertising in industry relat ed publications and attending trade shows to win the product. As part of the pass, we will dismiss our customers that the contact lenses as a product to substitute debeaking to reduce cannibalization rates with surplus benefits.The benefits are three fold, reduction of cannibalization rates to 4. 5%, reduction in psychic trauma from debeaking (50,769 eggs per 10,000 chickens), and finally, savings in chicken feed (14. 235 tons per 10,000 chickens per year). We want to concentrate on the fact that our product is more effective than debeaking at reducing cannibalization and has additional beneficial effects that far outweighs the costs of the lenses itself. And according to Garrison, because he customers are independent-minded slip of men who would react un affirmatory if they entangle cheated, we cannot have low introductory rate that may upset the customer base. This also means that these customers are not likely to be the type to jump on the band wagon and we will need to ma ke sure our sales congresswomans bear on each of these farms. This would mean that even favorable word of spill will not contribute significantly to our sales due to the characteristics of the customers. Our sales force should not only explain the properties our lenses, but also do demonstrations to let the farmers see for themselves.And we must have our sales forces reach out often the customers to reinforce the message throughout the year, so when we get to the few weeks where the new hens are bought, we can convince the farmer to try the ODI lenses on their farm. Additionally, at the trade shows, we would also demonstrate the difference between hens exhausting our lenses versus hens that do not wear the lenses. This would serve to introduce the product to new potential customers. We should use the trade shows also as a CRM opportunity we should also collect contact information for our sales representatives to follow up on.This type of reinforced messaging will be effective i n convincing customers to switch. And after weve brought the innovators and early adopters on board, we need to ensure customer expiation for these influential groups. Bad word of mouth is generally stickier than good word of mouth, and could be damaging to our brand even if the customers are generally independent-minded. And to achieve good customer satisfaction, we need to address customer issues as they emerge. So by the time we get to the Early Majority and the Late Majority, we can address any concerns that they have with the product.We will use the following positioning line of reasoning until ODI diversify into other products For farmers in egg production who have more than 10,000 chickens in their flock, Optical Distortion, Inc. (ODI) is a specialty agricultural supplier that provides contact lenses for chickens intended to reduce food required and reduce cannibalization rate. contrary other agricultural suppliers offering to debeak the birds, ODI provides a solution that results superior reduction in cannibalization rates, reduction in food lazy and required, and reduction in losses of production resulting from traumas associated with debeaking. appendix 1 Saving Opportunities for 10,000 chicken of yellowish Affected Value Per Chicken Value Information from the case step-down in Canalbalism (4. 5% additional survive) 450 $0. 66 $297. 00 Exhibit 5 22 twelve per year $0. 03 per cardinal per hen reducing of Trauma 10,000 $0. 01 $126. 92 Exhibit 5 22 dozen per year - 22/52 dozen per week $0. 03 per dozen per hen Savings in regimen 10,000 $0. 22 $2,193. 67 0. 78 lbs per 100 birds per day $158 per ton of feed appendage 2Cost for Regional divisions of degree Value Per Item Value Office and storage warehouse1 1 $196,000 $196,000 Sales Representatives2 8 $40,000 $320,000 tech Representatives3 2 $35,000 $70,000 Total $586,000 1. Office and Warehouse price from Table B. 2. Sales Representatives ground on capacity of 8 0 farms, and the assumption that each sales will only cover farms of one particular size present in Exhibit 3 (20,000 to 49,000, 50,000 to 99,000, and 100,000 or more). 3. Tech Representatives based on ratio of 1 tech representative per 5 sales representatives.Appendix 3 Estimated case be Units Cost per Unit Costs Comments/Assumptions Regional Offices 5 $586,000 $2,930,000 Assumed that regional offices costs are similar to California Headquarter Costs 1 $614,000 $614,000 Estimated cost at 60 million pairs Advertising 1 $100,000 $100,000 Monthly advertising for 1 year in 8 leading industry publications New World License 1 $25,000 $25,000 $50,000 over 2 years dig Molds 12 $12,000 $144,000 $12,000 per mold, which produces 7. million a year R&D Costs 1 $250,000 $250,000 Required for diversifying the company Total $4,063,000 Appendix 4 Farm Flock Size 20,000 to 49,000 50,000 to 99,000 100,000 or more Cannibalization Rate Low 4 4 3 mediocre 4 3 2 High 3 2 1 First target grou p 1, then followed by group 2, group 3, and group 4. 1 . In the analysis, I am assuming that 1kg ? 2 lbs and 1 ton ? 2,000 lbs.